Suresh Kumar Wadhwa vs State Of M.P .

2. Facts of the case lie in a narrow compass. They, however, need mention, in brief, to appreciate the controversy involved in the appeal.

3. The appellant is the plaintiff whereas the respondents (State of M.P. and its officials) are the defendants in a civil suit out of which this appeal arises.

9. The appellant, on receipt of aforesaid letter, replied to respondent No.3 on 29.01.1996 stating that the “special terms and conditions" mentioned in the letter were neither published nor informed to him at any point of time earlier and nor was he ever made aware of any such terms and conditions till he received the letter dated 25.01.1996. The appellant, therefore, declined to accept the “special terms and conditions" and requested respondent No. 3 to return the security amount of Rs.3 lakhs, which he had deposited at the time of submission of the bid.

10. On 08.02.1996, respondent No. 2 issued a show cause notice to the appellant stating therein 6 as to why the amount of Rs.3 lakhs be not "forfeited" and the plot in question is re-auctioned. The appellant, vide his reply dated 12.02.1996 replied that since he has not accepted the "special terms and condition" offered by respondent No. 3 in their acceptance letter, the appellant is entitled to ask for refund of the security amount of Rs.3 lakhs from respondent No. 3 and that respondent No. 2 has no right to forfeit such amount.

11. Respondent No. 2, by his letter dated 24.02.1996 informed to the appellant that a sum of Rs. 3 lakhs deposited by him (appellant) towards security has been forfeited.

12. The appellant, on 28.02.1996, then served a legal notice to the respondents under Section 80 of the Code of Civil Procedure, 1908 and demanded refund of Rs. 3 Lakhs. The respondents, however, did not refund the money. The appellant was, 7 therefore, constrained to file the civil suit against the respondents for a declaration that the letter dated 24.02.1996 forfeiting the security amount of Rs 3 lakhs be declared as bad in law and further prayed for refund of Rs. 3 lakhs along with interest at the rate of Rs.18% p.a..

13. In substance, the appellant's suit was founded on the allegations, inter alia, that firstly, the appellant was within his right to refuse to accept the "special terms and conditions" contained in the acceptance letter dated 24.01.1996 of respondent No.3 because according to the appellant these terms and conditions were never part of the original public auction notice pursuant to which he had submitted his bid and nor such terms and conditions were communicated to the appellant till his bid was accepted and hence these conditions were not binding on him; Secondly, in the absence of any 8 terms and conditions published in the public notice empowering respondent No. 2 to forfeit the security amount (Rs.3 lakhs), respondent No. 2 had no right/authority to forfeit a sum of Rs. 3 lakhs deposited by the appellant; and lastly, the appellant had performed his part by ensuring compliance of all necessary terms of the public notice whereas it was the respondents, who committed breach of the terms.

15. The Trial Court framed issues. Parties led evidence. By judgment/decree-dated 23.12.1997, the Trial Court dismissed the suit. It was held that the appellant failed to deposit the 1/4 th amount immediately as per the terms of the public notice inasmuch as the appellant deposited the amount by cheque and later stopped its payment, which constituted a breach on his part of the terms of the public notice. It was also held that the demand of certain money by way of "special terms and 10 conditions" mentioned in the acceptance letter dated 24.01.1996 was in accordance with the Rules of RBC and, therefore, such terms and conditions were binding on the appellant for ensuring its compliance and lastly, in the light of the two breaches committed by the appellant, the respondents were justified in forfeiting the security amount deposited by the appellant.

16. The appellant, felt aggrieved, filed first appeal before the High Court. The Division Bench, by impugned order, dismissed the appeal and upheld the judgment/decree of the Trial Court. The High Court held that since the similar issue was the subject matter of another appeal (F.A. No. 794/2000- M/s Priyanka Builders vs State of MP decided on 11.11.2006) and the said appeal having been dismissed, this appeal also deserves dismissal in the light of judgment rendered in 11 Priyanka Builders' case. The impugned judgment, however, neither recorded any reason given in the Priyanka's case and nor mentioned the facts of Priyanka's case with a view to show similarity between both the cases and nor recorded any independent reasoning for dismissal of the appeal.

35. In our considered opinion, the object behind publishing all material term(s) is/are three fold. First, such term(s) is/are made known to the contracting parties/bidders; second, parties/bidders become aware of their rights, obligations, liabilities qua each other and also of the consequences in the event of their non-compliances; and third, it empowers the State to enforce any such term against the bidder in the event of any breach committed by the bidder and lastly, when there are express terms in the contract/pubic notice then parties are bound by the terms and their rights are, accordingly, determined in the light of such terms in accordance with law.

40. In the light of foregoing discussion, we are of the considered opinion, that the appellant did not commit any breach of the term(s) and condition(s) of the notice inviting bids and on the other hand, it was the respondents who committed breaches. In 24 these circumstances, the State had no right to forfeit the security amount and instead it should have been returned when demanded by the appellant.

44. We are in respectful agreement with the aforementioned observations as, in our considered opinion, they apply fully to the case in hand against the State.

45. We are, therefore, of the considered opinion that both the Courts below were not justified in their respective reasoning and the conclusion in dismissing the appellant's suit. The appellant's suit should have been decreed against the respondents. We hereby do so.

46. The appeal thus succeeds and is allowed with cost throughout. Impugned judgment and decree of the High Court and the Trial Court are set aside and the appellant’s (plaintiff) suit is decreed against the 27 respondents (defendants). It is declared that letter dated 24.02.1996 of the respondents forfeiting the security deposit of the appellant is illegal and bad in law. A money decree for refund of Rs.3 lakhs is accordingly passed in favour of the appellant(plaintiff) and against the respondents (defendants) along with interest payable on Rs.3 lakhs at the rate of 9% p.a. from 01.02.1996 till realization.

47. Cost of the appeal Rs.10,000/- be payable by the respondents to the appellant.

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