M/S. Kailash Nath Associates vs Delhi Development Authority & Anr

2. The present appeal arises out of a public auction conducted by the Delhi Development Authority ("DDA") wherein the appellant made the highest bid for Plot No.2-A, Bhikaji Cama Place, District Centre, New Delhi for 3.12 Crores (Rupees Three Crores Twelve Lakhs). As per the terms and conditions of the auction, the appellant, being the highest bidder, deposited a sum of Rs.78,00,000/- (Rupees Seventy Eight Lakhs), being 25% of the bid amount, with the DDA, this being earnest money under the terms of the conditions of auction. The relevant provisions in the conditions of auction read as follows:

3. On 18.2.1982, the DDA acknowledged the receipt of Rs.78,00,000/- (Rupees Seventy Eight Lakhs), accepted the appellant's bid and directed the appellant to deposit the remaining 75% by 17.5.1982. However, as there was a general recession in the industry, the appellant and persons similarly placed made representations sometime in May, 1982 for extending the time for payment of the remaining amount. The DDA set up a High Powered Committee to look into these representations. The High Powered Committee on 21.7.1982 recommended granting the extension of time to bidders for depositing the remaining amount of 75%. Based on the High Powered Committee's report, by a letter dated 11.8.1982, the DDA extended time for payment upto 28.10.1982 with varying rates of interest starting from 18% and going upto 36%.

4. Another High Powered Committee was also set up by the DDA in order to find out whether further time should be given to the appellant and persons similarly situate to the appellant.

5. The second High Powered Committee recommended that the time for payment be extended and specifically mentioned the appellant's name as a person who should be given more time to pay the balance amount. Despite the fact that on 14.5.1984 the DDA accepted the recommendations of the second High Powered Committee, nothing happened till 1.12.1987. Several letters had been written by the appellant to DDA from 1984 to 1987 but no answer was forthcoming by the DDA.

7. The appellant replied to the said letter on the same day itself in the following terms:

9. By a judgment and order dated 2.9.1993, the Delhi High Court held that as the auction was held as per terms and conditions of the auction, a dispute regarding the same is a matter of contract and cannot be gone into in proceedings under Article 226 of the Constitution. It was further observed that on facts, the Court found no force in the contention raised on behalf of the appellant regarding discrimination. An SLP against this order was also dismissed on 16.12.1993 by the Supreme Court stating that the appellant is at liberty to take whatever steps are permitted to the appellant under law to challenge forfeiture of earnest money, which had been done by a letter of 6.10.1993. This letter is also important for the correct determination of this appeal and is set out hereinbelow:-

11. The learned Single Judge by a judgment and order dated 10.9.2007 dismissed the appellant's suit for specific performance and damages but ordered refund of the earnest money forfeited together with 9% per annum interest. The learned Single Judge held:-

69. In view of the prolonged period, exchange of communications, the plaintiff making various offers but not complying with the initial terms, defendant no.1 taking its own time in the decision making process, I am of the considered view that the plaintiff is entitled to the refund of the earnest money of Rs.78.00 lacs but no further amount is liable to be paid to the plaintiff."

47. In the result, the appeal is allowed. The judgment and order of the Single Judge is restored. Parties will bear their own costs.

January 09, 2015.