Haryana Financial Corporation & Anr vs Rajesh Gupta

2. The respondent had approached the High Court with a prayer that the order dated September 30, 1998 by which the Haryana Financial Corporation (hereinafter referred to as the appellants/Corporation), had forfeited, amount of Rs.2.5 lakhs, deposited by the respondent by way of earnest money, be quashed. The respondent had also prayed that the 2 appellants /Corporation be directed to refund the amount illegally forfeited along with interest.

4. On 8.1.1998, the appellants/Corporation issued an advertisement for sale of various units, including the land of M/s. Unique Oxygen Private Limited(hereinafter referred to as the defaulting unit), Old Hansi Road, Jind. On 28.1.1998 respondent initially made an offer of Rs.25,00,000/-, which was subsequently during negotiations enhanced to Rs.50,00,000/-. On that very day the respondent deposited an amount of Rs.2.5 lakhs by way of earnest money. On 29.1.1998 the respondent wrote a letter to the Managing Director of the appellants/Corporation as follows:

7. In spite of the aforesaid factual position, the appellants/ Corporation issued the letter dated 18.5.1998 to the respondent advising him to deposit balance amount of 25 per cent of the bid amount within 15 days from the date of issue of the letter failing which the amount of the earnest money deposited would be forfeited without further notice. The respondent, however, again raised the issue regarding the passage at the open house held by the appellants/Corporation at Hissar on 12.6.1998. According to the appellants/ Corporation, as per the revenue record and the demarcation report of the revenue officials dated 27.6.1998, therein 16.5 ft. rasta is provided in the west of the Unit. However, not 7 satisfied, the respondent did not pay the balance amount. Therefore the appellants/Corporation invited fresh tenders for sale of land. On 30.9.1998 the appellants/Corporation forfeited the sum of Rs.2.5 lakhs which had been deposited by the respondent as earnest money.

9. The aforesaid writ petition has been allowed by the Division Bench. The order dated 30.9.1998 by which the earnest money had been forfeited has been quashed and set aside. A further direction has been issued to the appellants/Corporation to refund the amount along with interest at the rate of 12 per cent per annum w.e.f. 1.2.1998 to the date of payment. The High Court also imposed costs on the appellants/Corporation assessed as Rs.5,000/-. Further directions were issued to release the amount to the respondent within two months from the receipt of a copy of the order of the High Court. It is this order which is challenged in the present appeal.

14. Factually the appellants have accepted that on 28.1.1998 the respondent had in no uncertain terms informed the appellants/Corporation about the non-existence of the independent passage. No denial could possibly be made in the face of the letter dated 29.1.1998 which makes a reference to the visit of the respondent to the factory premises on 21.1.1998. There is a categorical assertion that premises do not have an independent appropriate passage from the road. When enquiries were made from the branch office, the respondent, was simply informed that copy of the site plan and building plan were not available, and would be available at the Head Office only. Thereafter, there is a studious silence from the appellants/Corporation with regard to the aforesaid grievance made by the respondent. Again, on 7.3.1998 the respondent informed the appellants/Corporation as follows:

18. In our opinion, the appellants cannot be given the benefit of Clause 5 of the advertisement. The appellants /Corporation cannot be permitted to take advantage of their own wrong. Clause 5 undoubtedly permits the forfeiture of the earnest money deposited. But this can only be, if the auction purchaser fails to comply with the conditions of sale. In our opinion the respondent has not failed to comply with the conditions of sale. Rather, it is the appellants/Corporation which has acted unfairly, and is trying to take advantage of its own wrong.

22. The aforesaid observation would be clearly applicable to the Corporation as it is exercising the rights of an owner in selling the property. The appellants/Corporation is not selling the property as an official liquidator.

23. In any event, the facts of this case as narrated above would clearly indicate that the respondent had made all 19 necessary inquiries. It was the appellants/Corporation that failed to perform its obligations in giving a fair description of the property offered for sale. Learned counsel had also relied on another judgment in the case of U.T. Chandigarh Administration and Anr. vs. Amarjeet Singh and Ors. (2009) 4 SCC 660. In our opinion, the aforesaid judgment is wholly inapplicable to the facts and circumstances of this case as it relates to the duties of a developer who carries on activities of development of land and invites application for allotment of sites in a developed layout. In our opinion the aforesaid judgment is not applicable to the facts of this case. We see no merit in any of the submissions, or the grounds of appeal. The appeal is accordingly dismissed.

24. It appears that the judgment of the High Court had been stayed by this Court on 2.9.2002. In view of the dismissal of the appeal, we direct that the forfeited amount be refunded to the respondent with 12 per cent interest w.e.f. 1.2.1998 till payment. The amount be paid to the respondent within a period of two months of producing the certificate copy of this order. We also direct that in the event the aforesaid amount is 20 not paid within the stipulated period the respondent shall be entitled to interest at the rate of 18 per cent per annum till payment. We also direct the respondent shall be entitled to costs which are assessed as Rs.50,000/-.

........................................J (J.M. PANCHAL) ......................................

...J (SURINDER SINGH NIJJAR) NEW DELHI DECEMBER 15, 2009