Case: AGGARWAL ASSOCIATES (PROMOTERS) LIMITED Vs. DELHI DEVELOPMENT AUTHORITY

1. The Delhi Development Authority (hereinafter referred to as DDA) invited bids for the sale of commercial plot CSC site, Block B, Nand Nagri, Delhi, measuring about 1268.32 sq m. The appellant participated in the auction held on 31-3-1994. He was the successful bidder. The bid amount was Rs. 30 lakhs. As per terms and conditions of the allotment by auction, the highest bidder was required to deposit a sum equivalent to 25% of his bid at the fall of hammer either in cash or by bank draft in favour of DDA. In case the earnest money was not paid, the auction already held in respect of that plot would be revoked/withdrawn. Further, the highest bidder was required to collect the allotment-cum-demand letter not later than the second working day after the date of auction from the special counter. The highest bidder was required to make the payment of the balance 75% amount within 45 days from the date of issue of the demand letter. It was provided that:In case the bidder fails to collect the demand letter as stipulated above, the earnest money shall stand forfeited and if the bid is not accepted the earnest money will be refunded to the bidder without any interest.2. The appellant did not collect the allotment-cum-demand letter. On 4-4-1994 he wrote a letter to DDA for removal of the tubewell in the middle of the plot and the drain which ran throughout the plot. DDA issued a demand notice on 7-4-1994 calling upon the appellant to pay the balance amount i.e. 75% of the bid amount being Rs. 22,50,000 plus Rs. 50 towards documentation charges.3. The appellant thereafter entered into further correspondence with DDA saying that DDA was not in possession of the property as DDA had transferred the possession of the property to MCD (Horticulture Department). That the appellant would not pay the amount till the possession was handed over to him. The stand taken by DDA was that the plot was sold to the appellant on as-is-where-is basis. As per terms and conditions it was for the appellant to inspect the site and familiarise with the prevalent site conditions in all respects before giving the bid. The relevant clause of the terms and conditions reads:(ii) The bid shall be for the amount of the premium offered for the perpetual leasehold rights in the plot. The plot is being auctioned on `as-is-where-is basis. It is presumed that the intending purchaser has inspected the site and has familiarised himself with the prevalent site conditions in all respect before giving the bid.On 13-4-1994 the appellant addressed the following letter to DDA:We refer to your bid acceptance/demand notice dated 7-4-1994 regarding the plot auctioned by DDA at CSC, Pocket B, Nand Nagri (G.T.B. Enclave). According to the directions given by the Delhi Development Authority, we visited the site and tried to erect our board at site. However, the MCD (Horticulture Department) objected, damaged and removed the board from the site.MCD says that the site in question has been handed over to MCD and as such DDA has no authority to hand over or sell the site/land without their consent as it is MCD property now.Kindly look into the matter and issue necessary instruction to the department concerned of MCD.4. The appellant on 13-4-1994 lodged a complaint with the SHO against MCD. On 15-4-1994 the appellant sent a communication to the Horticulture Department, the second respondent, for the return of the material of the appellant at site. On 16-4-1994 the appellant sent a letter to DDA in the following terms:This is in continuation of our letter of even number dated 13-4-1994 (DDA Dy. No. 12066 dated 13-4-1994). Subsequently, we discussed the matter personally with you in this regard.CSC site at Pocket B, Nand Nagri (Guru Teg Bahadur Enclave) was auctioned in public on 31-3-1994. Our bid for Rs. 30,00,000 has been accepted by DDA on deposit of 25% of the bid value i.e. Rs. 7,50,000 vide your confirmed Demand Notice No. 790, File No. 15(01)94/CL dated 7-4-1994. The date for payment of final premium has been fixed by DDA as on 22-5-1994 i.e. 45 days from 7-4-1994. However, DDA has not replied to our letter dated 13-4-1994 as yet.As informed you earlier, on 11-4-1994 evening we erected our board 20 x 10 at site on 18 high rails, publicising the project. To our surprise the next morning i.e. on 12-4-1994, the board was removed. On inquiry we came to know that the Horticulture Department of MCD has removed the board after damaging it, along with rails and other fittings. On inquiry we are told by the staff concerned that the site in question was handed over to MCD on 21-4-1993.We made further inquiries from DDA and MCD (Horticulture Department) and as per record maintained at both the offices the plot which was auctioned by DDA as CSC is handed over to MCD on 21-4-1993 and since then the whole area is maintained by MCD.We are, therefore, put to a loss by this act on the part of MCD and DDA and mental torture and sentimental value of our company which the public has a great regard for our achievements as promoters and builder in this area has suffered a lot.DDA has fixed 22-5-1994 for payment of final premium. The plot in question seems to be in dispute between MCD and DDA.Therefore, before we make final payment to DDA, we require a confirmation in writing that the plot in question is free from dispute, encumbrances and will be handed over to us peacefully without any hitch. As DDA is at fault which has put us in trouble, therefore, the payment of the final premium would be made only after 45 days from the fresh confirmation.5. On 18-4-1994 the appellant wrote another letter to DDA to look into the matter and restore the site to enable the appellant to pay the final premium in time. On 19-4-1994 the appellant wrote to MCD another letter. The contents of the same are reproduced below:This is in continuation of our letter dated 15-4-1994. As you are aware that we are the successful bidders for the whole site - CSC, Pocket B, Guru Teg Bahadur Enclave, Nand Nagri auctioned by DDA on 31-3-1994. As per intimation given by DDA, we erected one board at site indicating among other things our intention to construct a shopping centre. Our board has been removed from the site for the reason known to you.At present, the site is covered from all the sides and there is no entry point as MCD has put a boundary wall, according to the plan circulated by DDA, the main entrance to the site is from the main road side. This area has been blocked by a wall.We are removing a part of the wall to get an entry into the site and will arrange to erect our board there on 28-4-1994. You are, therefore, kindly requested to intimate us if you have got any objection in the matter so that necessary steps are taken in this matter.6. As the dispute continued between the parties without any solution in sight, the appellant filed Writ Petition No. 2388 of 1994. It was alleged in the petition that MCD, Respondent 2, was claiming title to the plot which had been auctioned by DDA in favour of the appellant. That DDA did not inform the intending buyers about the dispute between DDA and MCD. That the appellant was justified in his expectation that the property which had been auctioned by DDA would be free from encumbrances. In view of the dispute between MCD and DDA, DDA could not hand over the vacant possession of the property to the appellant. It was further stated that since DDA was not in a position to hand over the peaceful possession of the plot, the auction held by DDA could not be implemented. The appellant in addition to the other reliefs claimed that he was entitled to refund of the earnest money.7. DDA contested the writ petition and inter alia pleaded that the auction conditions provided for forfeiture of the earnest money in case the bidder did not act in consonance with the terms and conditions of the auction-notice. DDA was always ready to hand over possession of the property and, as a matter of fact, the appellant by letter dated 16-4-1994 asked for extension of time by 45 days for the payment of the balance amount. The possession of the plot was always with DDA and in terms of Clause 2(viii) of the terms and conditions of the auction, the auction was liable to be cancelled and DDA was entitled to pass an order forfeiting the earnest money.8. The High Court dismissed the writ petition by observing:In the instant case, the petitioner Aggarwal Associates must have inspected the site before bidding at the auction. DDA was bound to deliver possession of the property only on the petitioners depositing the balance 75% of the bid money. Admittedly, the petitioner had not deposited the amount. The petitioner wanted to project a case that DDA was not in a position to put the petitioner in possession. It is merely a make-believe affair. The case of the petitioner cannot be accepted. Therefore, the reliefs prayed for by the petitioner cannot be granted in law. The writ petition, accordingly, stands dismissed. There shall be no order as to costs.9. To hold that the appellant was not entitled to the refund of the earnest money, the High Court placed reliance on two judgments of this Court, namely, Delhi Development Authority v. Grihsthapana Coop. Group Housing Society Ltd., 1995 Supp (1) SCC 751 and Chandigarh Housing Board v. Avtar Singh, (1995) 5 SCC 313.

Reasoning:
10. We agree with the view taken by the High Court. Before complying with the terms and conditions provided in the auction-notice the appellant tried to take possession of the property by putting up his board at the site. The appellant could claim possession of the property only after collecting the allotment-cum-demand letter and on deposit of 75% of the balance bid money. Admittedly, the appellant had not deposited the amount and instead started projecting the case as if DDA was not in a position to deliver the possession of the auctioned property to him as DDA had already transferred the possession of the auctioned property to MCD. The appellant could take all these pleas only after performing his part of the obligation under the terms and conditions of the auction-notice. DDA in its written statement before the High Court had taken a categorical stand that the appellant did not act in consonance with the terms and conditions of the auction-notice. That DDA was in possession of the plot and was always ready to hand over possession of the property provided the appellant complied with the terms and conditions of the auction-notice. We are of the considered view that since the appellant had failed to comply with the terms and conditions of auction, he had no right to claim either the possession or the allotment of the plot in his favour. The plot was sold to him on an as-is-where-is basis. It had been made clear in the terms and conditions of the auction that it would be presumed that the intending purchaser has inspected the site and had familiarised himself with the prevalent site conditions in all respects before giving the bid. The appellant cannot be heard to say that he did not familiarise himself with the prevalent conditions which existed on the site. Instead of collecting allotment-cum-demand letter and paying the balance amount the appellant tried to enter into possession of the property by erecting its board at the site. The appellant did not have the right to enter into possession of the property before collecting the allotment-cum-demand letter and the payment of the balance amount. Since the appellant failed to comply with the terms and conditions of the auction-notice there was no concluded contract between the parties.We do not find any merit in this submission. As the transaction fell through by reason of the default or failure of the purchaser, the earnest money could be forfeited as per terms and conditions of the auction-notice. The terms agreed between the parties have to be considered while considering the question of the forfeiture of the earnest money. On facts we find that the appellant tried to play smart to take possession of the property without getting the demand-cum-allotment letter in his favour and the payment of the balance bid money. A person who pleads for equity has to act fairly. Since the appellant did not act fairly, he is not entitled to any sympathetic consideration of his demand for refund of the earnest money. The prayer is rejected.