Case: ODISHA FOREST DEVELOPMENT CORPORATION LTD Vs. M/S ANUPAM TRADERS

For the purpose of narration of facts, the case as in Civil Appeal arising out of SLP(C) No.17627/2019, titled Odisha Forest Development Corporation Ltd. vs. M/s Anupam Traders & Anr. is taken note, which reads as hereunder3. The appellant OFDC Ltd. issued an e¬tender notification dated 22.11.2016 inviting offers online from intending purchasers for advance sale of phal Kendu leaf (KL) of 2017 crop as per the lots indicated in the notification. The private respondent had responded to the notification and made its offer. The bid was opened on 07.12.2016. The private respondent being the successful bidder was required to execute an agreement and deposit the provisional security deposit of Rs.5,00,000/- (Rupees Five Lakh). The private respondent herein executed an agreement dated 20.01.2017. In terms of the agreement, on the actual quantity of leaves collected, the additional security deposit covering 25% of the purchase price of the lot was to be deposited before 31.05.2017. The private respondent in the instant case was therefore required to deposit the differential security amount of Rs.27,14,765/¬less, the security amount of Rs.5,00,000/¬ (Rupees Five Lakh) already paid4. In view of the requirement to pay the same before 31.05.2017, the private respondent addressed a letter dated 02.06.2017 seeking extension of time to pay the said security amount. The extension sought was declined by the appellant through the communication dated 06.06.2017. Since the amount required to be deposited was not made, the appellant cancelled the agreement dated 20.01.2017 by issuing the notice dated 21.08.2017. Since such cancellation would be at the cost and risk of the private respondent, the lot was to be put to re-tender. The appellant accordingly proceeded to issue a fresh e-tender notification on 22.08.2017 for sale of the same lots of the phal Kendu leaves5. At that stage the private respondent aggrieved by extension of time not being granted, filed the writ petition in W.P.(C) No.11498/2017, the same was withdrawn and a writ petition bearing W.P.(C) No.18718/2017 was filed wherein the order dated 21.08.2017 passed by the appellant cancelling the agreement dated 20.01.2017 as also the subsequent Auction Notice dated 22.08.2017, were assailed. In the said writ petition, interim order against the subsequent auction through notice dated 22.08.2017 was sought. While considering the same, the High Court while allowing the appellant to proceed with the subsequent tender process, had stayed the finalization of the sale subject to the private respondent herein depositing an amount of Rs.20,00,000/¬ (Rupees Twenty Lakhs only) within one week with the appellant herein. The said order was passed on 08.09.2017 wherein it was further directed that the said amount would be kept in a separate deposit by the appellant. The application filed by the appellant herein seeking vacation of the interim order was considered and at that stage since the vacation of the stay was not opposed by the private respondent herein, it was vacated on 28.03.2018 due to which the subsequent sale was completed on 24.04.2018. The private respondent herein thereafter sought leave to withdraw the writ petition in W.P.(C) No.18718/2017 thereby giving up the challenge to the cancellation of the auction process wherein the private respondent had taken part and also the challenge to the subsequent auction which had been conducted by the appellant. The High Court while disposing of the writ petition as withdrawn, despite objection put forth by the appellant herein directed refund of the deposit which was made pursuant to its interim order dated 08.09.2017. The appellant herein is, therefore, aggrieved by the order dated 30.04.2019 only to the extent whereby the High Court has directed refund of the amount available with the appellant6. The facts in the connected appeals is to the same effect except the variation in the lot number, quantity of Kendu leaves which was purchased by each of the private respondents therein and the number of the writ petition filed before the High Court. The names of the different tenderers in the individual writ petitions that were filed and the quantum of amount ordered to be deposited by the High Court will be detailed in later part of this judgment. However, in all the cases the writ petitions have been withdrawn and the refund of the deposit ordered is directed to be refunded. In that view, the basic contention which is common, on consideration would answer all the appeals herein.

Court's reasoning:
8. As noticed, though the private respondents herein had filed the writ petition at the stage when the earlier agreement entered into pursuant to the tender process in their favour had been cancelled and a subsequent auction was notified, keeping in view the fact that all the private respondents herein had chosen to withdraw the writ petitions, which was permitted by the High Court through the order dated 30.4.2019, the consideration of that aspect is not required to be madeThe High Court does not specifically indicate that the amount is relatable to the additional security that was required to be deposited by the writ petitioners15. In a circumstance of the present nature, when it is noticed that the termination of the agreement itself was for non-deposit of the additional security amount to the extent of 25% of the value, the deposit ordered by the High Court cannot be classified as additional deposit in terms of the contract, at that stage. If ultimately the writ petition was taken to its logical conclusion and the private respondents had succeeded in such proceedings, only in such event the said amount could have been considered as a belated payment towards additional security deposit and in any event, the consideration in that regard would be in terms of the directions that would have been issued by the High CourtHence even if the said amount is not considered as the additional security amount in its true spirit as per the agreement and the right of forfeiture at this stage is not accepted in its technical sense in favour of the appellant, the right of the appellant to recover the loss suffered in terms of the agreement cannot be ignored17. In that regard, it is to be noticed that in the instant case in a circumstance where the private respondent had filed the writ petition, even though the High court had permitted the process of re-tender to progress, the finalization thereof had been stayed. If that be the position, the appellant herein was not in a position to immediately bring the Kendu leaves for re¬auction by receiving the amount from the subsequent purchaser and the same is likely to have dissuaded purchasers to offer the best price due to uncertainty looming large. Whether all these and any other factor has caused the loss to the appellant and the public exchequer is a matter to be determined based on materials and evidence but the fact remains that such resultant delay was at the instance of the private respondent. As noticed from the terms of the agreement, any loss caused was permissible to be recovered from the respondent after adjusting the security deposit available. Therefore, even if the amount of deposit made pursuant to the order passed by the High Court is not considered as an additional security deposit, the right of the appellant to proceed in accordance with law to assess the damage suffered and to recover the same from the private respondents, would still remain intact. As such the deposit ordered will have to be considered as a conditional deposit to protect the interest of the appellant as wellIt is no doubt true, dehors the writ proceedings initiated by the private respondents and in the absence of such deposit, option in any event was open to the appellant to make the recovery through such proceedings. It is noticed that apart from the right available to recover the amount by forfeiting the additional security deposit, the appellant had also clearly indicated that the subsequent sale would be made at the ……cost and risk of the private respondents herein which would mean that the difference of the cost between the first and second auction and the resultant loss to the appellant if attributable to the private respondents, is recoverable from the private respondents. However, it is no doubt true that such recovery is to be made after quantifying the same by following due process of law19. Presently, though the learned senior advocate for the appellant had furnished a chart showing the original price as against the resale price, thereby projecting the net loss suffered by the appellant, the correctness of the same cannot be adjudicated in a proceeding of the present nature arising out of a writ proceeding. The matter being contractual and also requiring factual determination, the same can only be done in an appropriate proceeding. Therefore, though at this stage the said amount of deposit as ordered by the High Court cannot be considered as additional security deposit nor the actual determination of the loss suffered, when in a circumstance the action of the appellant to re-tender was caused to be deferred, through a proceedings initiated at the instance of the private respondent, the condition to deposit the amount should have been considered by the High Court in the background of its intent to protect the interest of appellant. In that circumstance, when the contention of loss being caused was put forth the amount ought to have been allowed to be retained till the procedure as contemplated in law is followed and a decision is taken though not directly as forfeiture20. As noticed above, the appellant in any event would have the right to determine the loss suffered and recover the same in accordance with law as the process to re¬ tender, was at the …...cost and risk of the private respondent as stated in the notice of termination. In that circumstance, when it is prima-facie indicated that due to the delay caused at the instance of the private respondents the value of the Kendu leaves had reduced, thereby causing loss, in view of legal proceedings initiated by the private respondents, the Court will have to bear in mind the maxim actus curiae neminem gravabit, namely, no party should suffer due to the act of Court. In such event, since the interim order was at the instance of the respondent the appellant should in our opinion be permitted to retain the amount and complete the process by providing opportunity to the private respondents.