Bombay High Court
Umang Sugars Private Limited vs The State Of Maharashtra on 10 December, 2013
Bench: B.P. Dharmadhikari, R.V. Ghuge
WP/6331/2013
1
IN THE HIGH COURT OF JUDICATURE OF BOMBAY
BENCH AT AURANGABAD
WRIT PETITION NO.6331 OF 2013
Umang Sugars Private Limited,
10, Siddhi, Keshavnagari,
Shanoorwadi, Aurangabad
Through its Director,
Satish Jagannath Ghatge Patil,
Age-40 years, Occupation : Business,
R/o.10, Siddhi, Keshavnagari,
Shanoorwadi, Aurangabad ..PETITIONER
VERSUS
1. The State of Maharashtra,
Through it's Secretary
Department of Co-operation,
Mantralaya, Mumbai-32.
2. The Maharashtra State Co-operative
Bank Limited,
Head Office at Mumbai,
Regional Office at Aurangabad,
Through its Authorized Officer
Plot No.10, Town Centre, Cidco,
Aurangabad. ..RESPONDENTS
...
Mr. V.D.Sapkal h/f Mr. Y.V.Kakade, Advocates for petitioner,
Mr. P.P.More, A.G.P. for respondent No.1, and
Mr. S.B.Gorade Patil, Advocate for respondent No.2.
...
CORAM: B.P.DHARMADHIKARI &
RAVINDRA V.GHUGE, JJ.
RESERVED ON : 19/10/2013
PRONOUNCED ON :10/12/2013
WP/6331/2013
JUDGMENT : (Per Ravindra V. Ghuge, J.):-
1. Rule.
2. Rule made returnable forthwith by consent of the parties
and heard the respective advocates.
3.
The petitioner is a Private Limited Company registered
under the Companies Act. Respondent No.1 is the Department of
Co-operation, State of Maharashtra. Respondent No.2 is the Co-
operative Bank & a Secured Creditor which has taken possession
of the assets of borrower the Ghrushneshwar Sahakari Sakhar
Karkhana Ltd., under the provisions of The Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (hereinafter referred to as SARFAESI Act). It then
issued the tender for the sale of movable and immovable assets of
the said Karkhana.
4. The contention of the petitioner is that respondent No.2
has its Regional Office at Aurangabad. The said Bank had given
loan to the Ghrushneshwar Sahakari Sakhar Karkhana Ltd.
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Khatnapur, Tal.Khultabad, Dist.Aurangabad. (Hereinafter referred
to as the G.S.S.K.L.). G.S.S.K.L. went into liquidation and
accordingly respondent No.2 took over movable and immovable
assets against the loan sanctioned by it and other consortium
members of the said Bank.
5.
Certain dates and events germane to the controversy
before us need to be recorded. With the assistance of
Mr.V.D.Sapkal and Mr.S.B.Gorde, learned advocates representing
the petitioner and respondent No.2 respectively, we have compiled
the dates and events in chronological order, which are as follows :
08/01/2013 Proclamation about the tender/bid for sale of
movable and immovable properties of G.S.S.K.L.
was published in "Dainik Sakal" and "Economic
Times", newspapers having wide circulation.
14/01/2013 The time frame for purchase of tender/bid forms.
to
31/01/2013
07/02/2013 The last date up to 5.00 p.m. for submission of
tenders at the Head Office of respondent No.2 at
Mumbai.
07/02/2013 The petitioner submitted its tender/bid form within
time.
11/02/2013 Opening of the tender/bid forms. It is found that the
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petitioner was the highest bidder.
08/02/2013 S.A. filed alongwith Misc.Appl.(Delay) No.11/2013
and interim application No.96/2013 in the Debt
Recovery Tribunal (D.R.T.) by One Uttam
Engineering Ltd. - Not a party to the instant
proceeding.
12/02/2013 The petitioner's bid is accepted. Respondent No.2
has directed the petitioner to pay the remainder
portion from the initial 25% amount to be deposited
within a period of 7 days and the rest of the
amount to be deposited within a period of 30 days
as per tender terms.
18/02/2013 The petitioner deposited the balance of the 25% of
the amount with respondent No.2.
20/02/2013 The petitioner communicated to respondent No.2
seeking some documents so as to enable the
petitioner to approach financial institutions for aid
in order to generate funds and deposit rest of the
75% amount.
25/02/2013 The Debt Recovery Tribunal passed an order on the
interim application No.96/2013 filed by M/s Uttam
Engineering Ltd. The appearance of respondent No.
2 is shown recorded as respondent No.2 appeared
in the matter on oral instructions. Notice is issued
to respondent No.2/Bank on 25/02/2013 and
made returnable on 06/03/2013.
27/02/2013 The notice of Debt Recovery Tribunal is formally
served on respondent No.2/Bank.
06/03/2013 Respondent No.2 formally filed its appearance on
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its behalf and sought copies of the interim
application no.96/2013 and M.A.No.11/2013 to
enable it to file reply.
11/03/2013 The petitioner once again communicated to
respondent No.2 seeking draft copies of the
certificate of sale, sale/purchase agreement/deed.
16/03/2013 Petitioner again communicated to respondent No.
2/Bank vide its letter dated 16/03/2013 once
again seeking copies of the documents.
16/03/2013
Legal opinion dated 16/03/2013 (Page 58 of the
petition paper book) is forwarded by the Advocate
for respondent No.2 Mr.S.B.Gorde intimating
respondent No.2/Bank that in view of the interim
order passed by the Debt Recovery Tribunal on the
application made by Uttam Industries Limited. Not
a party to the instant proceeding, the petitioner
should make a request for extension of time to
deposit 75% amount since it is permissible to get
such extension by an agreement in writing and the
decision thereon can be taken in light of Rule 9(4)
of The Security Interest (Enforcement) Rules 2002
(Hereafter referred to as Rules of 2002).
01/04/2013 Respondent No.2 suo-motu granted extension of
time for depositing the remainder amount
mentioned in its letter, in view of the status-quo
order issued by the Debt Recovery Tribunal.
Extension of time by one month @ 8% interest was
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granted. It is further informed that in case it is
further felt appropriate, extension would be granted
for a period of 3 months @ 12% interest and any
further extension thereafter would be charged @
18% interest.
04/04/2013 The petitioner communicated to respondent No.2
that it had never sought an extension for depositing
the remaining 75% amount and that the time has
been extended by respondent No.2 on its own
volition. Grievance is therefore made by the
petitioner that a demand of 8% interest followed by
12% and thereafter by 18% is un-reasonable and
un-sustainable.
24/04/2013 Misc.Appl.(Delay) No.11/2013 is heard by the Debt
Recovery Tribunal and fixed for orders on
10/05/2013.
10/05/2013 Since the Presiding Officer of Debt Recovery
Tribunal is on leave, date for orders is extended to
11/06/2013.
11/05/2013 The petitioner submitted one letter to respondent
No.2 stating therein that 25% of the amount was
already deposited on 18/02/2013 and despite
demands, necessary documents are not supplied to
the petitioner. Further activity like taking
possession of the movable and immovable property,
repairs of the machinery, civil work, new machinery
to be installed etc. would be required to be done in
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5-6 months and therefore respondent No.2 was
called upon to act diligently and supply necessary
documents to the petitioner.
11/06/13 The Debt Recovery Tribunal passed an order
rejecting the Misc.Appl. (Delay) No.11/2013.
Interim application No. 96/2013 is therefore
disposed of.
12/06/13 The applicant before the Debt Recovery Tribunal
moved an application for continuation of the
interim order. Order of status-quo continued till
25/06/2013 for enabling the said applicant to
approach the Debt Recovery Appellate Tribunal at
Mumbai. (DRAT)
13/06/2013 The petitioner submitted its letter dated
13/06/2013 to respondent No.2 setting out reasons
which compelled the petitioner to withdraw from
the tender proceedings. It is pointed out that the
pending litigation has created obstacles and the
dis-concern shown by respondent No.2 in supplying
the documents to the petitioner, have contributed
to the petitioner taking decision of withdrawing
from the said tender. 25% amount deposited as a
security deposit is sought to be returned.
However, it is clarified by the petitioner that if the
said tender proceedings are cleared from the
litigation under the SARFAESI Act, the petitioner
would be willing to deposit the entire 100% amount
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and take the property under auction.
24/06/2013 The petitioner, once again, submitted its letter
dated 24/06/2013, re-iterating the contents of the
earlier letter and requesting for the return of the
deposited amount with interest.
26/06/2013 The applicant before the Debt Recovery Tribunal i.e.
M/s. Uttam Industrial Engineering Ltd.,
(Hereinafter referred to as M/s.Uttam for short)
submitted an application for extension of the
status-quo till 01/07/2013 before the Debt
Recovery Tribunal.
05/07/13 Appeal No.177/2013 filed by M/s. Uttam before the
Debt Recovery Appellate Tribunal is allowed. Delay
in approaching the Debt Recovery Tribunal is
condoned and the application is directed to be
registered.
18/07/2013 M/s.Uttam filed an application for continuation of
status-quo order. Respondent No.2 opposed the
said application on the ground that the Debt
Recovery Appellate Tribunal had not continued the
status-quo order and the applicant M/s. Uttam did
not seek such orders from the Debt Recovery
Appellate Tribunal . However, the Debt Recovery
Tribunal granted status-quo and directed
respondent No.2/ Bank to maintain the position as
on date.
14/08/2013 The S.A. was listed before the Registrar, Debt
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Recovery Tribunal for compliance and for
respondent No.2 to file its affidavit in reply. Time is
extended up to 29/08/2013.
31/07/2013 Refund of EMD is rejected by the Respondent No.2.
6. From the dates and events listed out hereinabove, the
factual and un-disputed position between the parties becomes
clear. The entire controversy now boils down to as to whether the
petitioner should be allowed to withdraw from the tender
proceedings, quash and set aside the impugned communication
dated 31/07/2013 issued by respondent No.2, rejecting the claim
of refund and direct respondent No.2 to refund 25% Earnest Money
Deposit (Hereinafter referred to as E.M.D.)
7. The petitioner contends that respondent No.2 ought to
have halted the tender proceedings from the very moment M/s.
Uttam lodged its proceedings i.e. Misc. Application (Delay) No.
11/2013 with interim application no.96/2013 before the Debt
Recovery Tribunal. Submission is that, knowledge of the said
proceedings should have invited an appropriate interception by
respondent No.2 by staying the tender proceedings in order to
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avoid further complications. The amount of the tender was to the
tune of Rs.35,62,71,000/- and the 25% amount deposited by the
petitioner was to the tune of Rs.8,90,67,750/-. Further contention
is that the petitioner was allowed to participate in the tender
proceedings and move ahead with the same, despite issuance of
notice by the Debt Recovery Tribunal on the proceedings filed by
M/s. Uttam.
8. The petitioner has further contended that on the one
hand, respondent No.2 is guilty of suppression of the proceedings
before the Debt Recovery Tribunal and on the other hand is equally
guilty of suo-motu extending the period of depositing the remainder
amount of 75% along with 8% interest, which was sought to be
enhanced to 12% gradually and thereafter to 18%. Sum and
substance of the petitioner's contention is that the conduct of
respondent No.2 is unpardonable and unsustainable. The above
submissions of the petitioner are on the premises that respondent
No.2 was aware of the proceedings initiated by M/s. Uttam.
9. The grounds for consideration raised by the petitioner are
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as follows :
a) The act of respondent No.2 is contrary to the provisions of
Law and the terms and conditions of the tender/bid.
b) The terms and conditions of the tender/bid mandated the
completion of the entire transaction within a period of 30 days
from the opening of the bid and in view of the same, not
happening, the tender process was vitiated.
c) Condition No.15 in the tender/bid mandated that the time
fixed for observance and performance by the bidder of any of
the obligations to be observed, was deemed to be the essence
of the tender/bid and since the said time frame having not
been complied with, renders the tender process vitiated.
d) Several communications made by the petitioner time and
again to respondent No.2 seeking documents from respondent
No.2 and showing its readiness to deposit the remainder 75%
shows the bonafides of the petitioner and this could not be
achieved owing to the failure on the part of respondent No.2.
e) Delay caused can not be attributed to the petitioner due to the
technical faults on the part of respondent No.2 and it cannot
justify awarding of more interest on the remainder 75%
amount against the petitioner.
f) Failure in completing the tender/bid and passage of 5-6
months thereafter resulting in the petitioner missing the
crushing season of 2013-14 by actually commencing
operations, can not be attributed to the petitioner and the
blame lies on respondent No.2.
g) The proceedings initiated by M/s.Uttam and orders passed
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thereon were not disclosed by respondent No.2 to the
petitioner, which renders the tender/bid bad in the eyes of
law.
h) The circumstances beyond the control of the petitioner and
conduct of respondent No.2 can not be used against the
petitioner and therefore the petitioner is justified in
withdrawing from the tender/bid process.
i) Losses caused to the petitioner owing to several factors which
have not been contributed to by the petitioner, entitles it to
seek refund of the 25% amount of E.M.D.
j) Condition No.30 of the terms and conditions of the tender/bid
mandates that the sale in favour of the bidder should be
confirmed by the A.O. And if the same does not occur, the
E.M.D. or purchase money, as the case may be, without
interest, should be returned to the bidder.
k) Contract is rendered impossible of performance.
For clarity, clauses no.21 and 30 of the terms and
conditions are reproduced hereinbelow:-
21. Payment of Sale Price:
The successful bidder would be informed in writing about the
acceptance of his/her/their bid/offer by the AO. The
successful Bidder shall deposit 25% of the amount of sale
price, after adjusting for EMD already paid, within (7) seven
days of the acceptance of offer by the AO in respect of the sale
failing which the EMD shall be forfeited. The balance 75% of
the sale price is payable on or before 30 days of confirmation/
WP/6331/2013
acceptance of the sale by the AO. In case of failure to deposit
this balance amount within the prescribed period, the amount
deposited shall be forfeited. Balance payments other than
EMD shall be made by way of crossed A/c Payee Demand
Draft/Pay Order drawn in favour of "The Maharashtra State
Co-operative Bank Ltd., Mumbai" issued by any Nationalised/
Schedule Bank or through RTGS (RTGS/NEFT : IFSC : MSCI
0082002) of The Maharashtra State Co-operative Bank Agro
Department, Mumbai having its Account No.116459.
30. In the event of the said sale in favour of the Bidder not
being confirmed by AO, otherwise than on account of the
wilful default of the bidder or if the sale is set aside by an
order of the Court/Tribunal, then in that event the sale shall
be void and the bidder shall, in that event be entitled only to
receive back his/her/their Earnest Money Deposit (EMD) or
purchase money as the case may be, but without interest and
the bidder shall not be entitled to be paid his/her/ their costs,
charges and expenses of and incidental to the said sale and
investigation of title or any other costs incurred by him/
her/themselves.
l) Respondent No.2 had knowledge of the claim of M/s. Uttam
and non disclosure of the same is contrary to the Law.
m) Respondent No.2 has committed breach of Rule 8(6)(f) of the
Rules of 2002.
n) Rejection of the claim for return of the E.M.D. by respondent
No.2 on 31/07/2013 is contrary to the provisions of Law.
WP/6331/2013
10. The contesting respondent in this proceeding is
respondent No.2 which has filed its affidavit in reply. The affidavit
is sworn by the Assistant Manager of the M.S.C. Bank Limited. It
is not disputed that 25% of the amount was deposited by the
petitioner as E.M.D. It is contended that the petitioner failed to
deposit the remainder 75% amount within 30 days from
12/02/2013, which is the date of acceptance of the offer. It is
specifically contended in para no.7 as follows.
"In reply to para no.9, I say that the fact of
depositing 25% amount with the bank is not disputed but
the contention that the petitioner had taken necessary
steps for depositing balance 75% amount is not accepted.
In fact as per agreed terms of contract and the terms and
conditions therein it was obligatory on the part of
petitioner to deposit 75% balance amount within 30 days
from the date of acceptance of offer i.e. 12/02/2013.
There is non compliance of the said condition by the
petitioner/ purchaser. Merely communicating the secured
creditor showing willingness to deposit 75% amount
would not amount to compliance of the mandatory
condition of the tender document. As the petitioner had
after agreeing to the terms of sale had participated in the
sale process cannot know back out from the sale
process."
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11. Respondent No.2 has further submitted that pendency of
the proceedings before the Debt Recovery Tribunal and the various
interim orders passed thereunder prevented respondent No.2 to
handover the possession of the secured assets to the petitioner. It
is stated that respondent No.2 was not aware of the transaction
between the borrower Karkhana and M/s. Uttam at the time of
putting the secured assets for sale. They were not aware of any
charge of any unsecured creditor on the property extract. There is
no fault on the part of respondent No.2 Bank in not completing the
sale process. The communications made by the petitioner
regarding showing willingness to pay the balance 75% amount
were an eye wash, aimed at coming out of the provisions of Rule
9(4) of The Rules of 2002. It is further submitted that the sale
certificate can be issued by A.O. only after the due compliance of
Rule 9(6) of the Rules of 2002.
12. Respondent No.2 has further alleged that the petitioner
was never ready to deposit the 75% amount and there was no
positive arrangement made by it in furtherance to it's intentions to
pay the 75% amount. It was not the outlook of respondent No.
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2/Bank as to the manner in which the petitioner was to generate
funds. The petitioner could have been entitled for refund of
E.M.D. or purchase money only if the sale had not been confirmed
by the A.O. or set aside by the orders of any Court or Tribunal.
Since the A.O. has not yet passed any order in view of the sale
having not been completed under Rule 9(4) of the Rules of 2002,
the petitioner is not entitled to refund of the E.M.D. and the
respondent No.2/bank is justified in forfeiting the 25% amount.
13. Respondent No.2 has also contended that the pendency
of the proceedings in any Court, can not be a ground for the
petitioner to back out from the sale process. It is further stated
that the application for extension should have been made by the
petitioner itself for depositing the remainder 75% amount. If the
petitioner wants to withdraw from the sale process, the only option
with the Bank is to cancel the sale forfeiting the E.M.D. and issue a
fresh sale notice as per Rule 9(5) of the Rules of 2002.
14. Respondent No.2 further states that the E.M.D. was
deposited by the petitioner on 18/02/2013 and the petitioner
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should have made an application for the refund of E.M.D. Prior to
the acceptance of its offer by the respondent No.2/Bank.
15. Respondent No.2 thereafter has made a specific
statement in para no.13, which is as under:
"In reply to para no.16-C and 16-D, I say that
the contention of petitioner that the bank was having
knowledge of the claim of Uttam Industry is not accepted.
It was for the first time by letter dtd. 25/08/2012 the
bank got knowledge of the said alleged claim. The
Borrower has availed consortium finance from 9 Bankers
therefore their claim was within the knowledge of MSC
Bank, being a lead bank, but the claim of Uttam Industry
is a unsecured claim. The Bank is having first charge
over the assets of Borrower Karkhana and to that
security documents are executed by the Borrower in
favour of the Bank. Though there is claim of Uttam
Industry that would not preclude the lead bank in
initiating recovery proceedings under SARFAESI Act,
2002. At the most, the claim of Uttam Industry can be
termed as unsecured creditor and claim of such
unsecured creditor can be satisfied only after full recovery
of first charge holders and if something remains then the
unsecured creditor can be satisfied only after full recovery
of first charge holders and if something remains then the
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unsecured creditor can enforce their right."
16. By the said statement, respondent No.2 has attempted to
establish that it did not have any knowledge about the proceedings
initiated by M/s. Uttam till 25/08/2012. However in the
chronological dates, supplied in writing by respondent No.2
through its learned Advocate dated 19/08/2013, Item No.2 with
reference to date 25/02/2013 indicates that the respondent No.
2/Bank had appeared on oral instructions before the Debt
Recovery Tribunal on 25/02/2013, had received notice from the
Debt Recovery Tribunal on 27/02/2013 and had formally filed its
appearance on behalf of respondent No.2/Bank on 06/03/2013.
Nevertheless, the tender/bid of the petitioner which was opened on
11/02/2013, was accepted on 12/02/2013 and the petitioner
deposited E.M.D. on 18/02/2013.
17. Respondent No.2 has also raised an objection that the
petition is not maintainable in view of the remedy available to the
petitioner to ventilate its grievance before the Debt Recovery
Tribunal u/s. 17 of the SARFAESI Act and also that the issue
pertains to contractual obligations between the parties.
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18. The petitioner, in support of its contentions, has relied
upon following judgments :
a) AIR 2000 SC 1806 (Mohd Gazi Vs. State of Madhya
Pradesh and others).
b) An un-reported order of the Division Bench of the Madras
High Court in W.P.No.27079/2009 (Jai Logistics Vs. The
Authorized Officer, Syndicate Bank).
c) AIR 2008, Gauhati 38 (M/s.Rose Valley Real Estate and
construction Limited Vs. United Commercial Bank and another) -
Single Judge.
d) 2006(5) Bom.C.R. 207 (Bholenath Trading Co. Vs. State
Bank of India) - Division Bench.
e) 2011(1) Bankers' Journal 315 (Chemstar Chemicals and
Intermediates (P.) Ltd., Vs. Commercial Tax Officer, Purasawalkam
Assessment Circle and others) - Single Judge, Madras High Court.
f) AIR 2010 SC 338 (Haryana Financial Corporation and
another Vs. Rajesh Gupta).
19. Respondent No.2 has placed reliance upon the following
judgments :
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a) 2010 STPL (Web) 546 SC, (United Bank of India
Vs.Satyawati Tondon and others),
b) Un-reported judgment of the Bombay High Court in W.P.
6039/2010 - Division Bench,
c) 2011(1) Bankers' Journal 588 SC (Kanaiyalal Lalchand
Sachdev and Others Vs. State of Maharashtra and others),
d)
2010(2) Banker's Journal 277 - Bombay High Court -
Division Bench (Anand Jayant More Vs. Bank of India and others),
e) 2009 AIR SCW 4949 (Authorized Officer, Indian Overseas
Bank and another Vs.M/s. Ashok Saw Mill),
f) Un-reported Division Bench judgment of the Bombay
High Court dated 19.7.2013 at principal seat in W.P.No.3243/2013
(Aaditya Kumar Clearing Agency and Transport Vs. Union of India
and others),
g) 2000 AIR SC 2573 (Kerla State Electricity Board
Vs.Kurien E.Kalathil),
h) 1989 AIR SC 1076 (Bareilly Development Authority
Vs.Ajay Pal Singh),
i) 1993(1) Mh.L.J. Page No.1 - Bombay High Court - Full
WP/6331/2013
Bench-(Shamrao Vitthal Co-operative Bank Ltd., Vs. Padubidri
Pattabhiram Bhat and another,
j) 1954 AIR SC 44 (Satyabrata Bhose Vs.Mugneeram
Bangur and Company),
k) 2003 AIR SC 3823 (National Highway Authority of India
Vs. Ganga Enterprises) and
l)
AIR 1955 Madras 606 - Single Judge (V.R.Lakshmanan
Chettiar and another Vs.S.K. Kamarajendara Kadirveluswami
Pandian and another).
20. We have gone through the judgments cited by the
petitioner as well as respondent No.2.
Somewhat similar questions have been raised before the
Honourable Apex Court and various High Courts. We do not
propose to refer to all the judgments cited before us. We prefer to
advert to a few of the leading judgments looking to the facts set out
therein and the law as applicable.
21. We find it appropriate to first deal with the objections
raised by respondent No.2 that the petitioner has an alternate
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remedy in light of Section 17 of The SARFAESI Act.
22. Section 17 comes into operation when any person is
aggrieved by any of the measures referred to in Section 13(4), taken
by the secured creditor or his authorized officer under the chart.
Section 13(4) of the SARFAESI Act reads as under :-
"In case the borrower fails to discharge his
liability in full within the period specified in sub-
section (2), the secured creditor may take recourse to
one or more of the following measures to recover his
secured debt, namely :-
(a) take possession of the secured assets of
the borrower including the right to transfer by way of
lease, assignment or sale for realizing the secured
asset;
(b) take over the management of the business
of the borrower including the right to transfer by way of
lease, assignment or sale for realizing the secured
asset:
Provided that the right to transfer by way of
lease, assignment or sale shall be exercised only where
the substantial part of the business of the borrower is
held as security for the debt:
Provided further that where the management
of whole of the business or part of the business is
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severable, the secured creditor shall take over the
management of such business of the borrower which is
relatable to the security for the debt.
(c) appoint any person (hereafter referred to
as the manager), to manage the secured assets the
possession of which has been taken over by the
secured creditor;
(d) require at any time by notice in writing,
any person who has acquired any of the secured assets
from the borrower and from whom any money is due or
may become due to the borrower, to pay the secured
creditor, so much of the money as is sufficient to pay
the secured debt."
23. Similar to the view expressed by the Apex Court in Mohd.
Gazi's case (supra), the Madras High Court in Jai Logistic's case
(supra) has observed in para no.5 as under :
"We have considered the submissions. Of
course, in the aforesaid judgment, the Supreme Court,
while considering a sale by the Official Liquidator, has
held that it is the duty of the intending purchaser to
satisfy himself as to the encumbrance before
participating in the bid. Having participated in the
bid, the intending purchaser cannot later on turn
around and question the Official Liquidator on the
ground that the encumbrance was not notified. In that
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case, the provisions of the Rules as applicable in the
present case are not applicable to the Official
Liquidator. But in the case on hand, once possession
is taken over under section 13(4) or under Section 14 of
the SARFAESI Act, whenever the secured creditor
contemplates a sale of immovable property, they will
have to follow Rule 8 of the Rules of 2002. Rule 8(6)(f)
mandates the secured creditors to set out in the terms
of sale notice any other thing which the authorized
officer considers it material for a purchaser to know in
order to judge the nature and value of the property. A
reading of the said rule, in our opinion, would also
include the encumbrance relating to the property. We
are inclined to read the rule in that way keeping in
mind the interest of the intending purchaser to be put
on notice as to the encumbrance, as otherwise he/she
will be purchasing the property and simultaneously
buying the litigation as well and an intending
purchaser may not bid in the event he/she came to
know of any encumbrance over the property. That is
why the rule specifically contemplates a provision for
the authorized officer, while notifying the sale, to
specifically state as to the encumbrance. It will be a
different issue in the event the auction notice indicated
that it is the duty of the intending purchaser to verify
not only the encumbrance by way of alienation of the
property, but also the other statutory liabilities and in
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that case, the intending purchaser cannot later on turn
around and seek for either the refund of the earnest
money deposited or insist the bank to clear the
encumbrance. In the absence of such indication in the
sale notice, in our considered view, the respondent-
bank would not be justified in compelling a purchaser
to go ahead with the sale by depositing the balance
sale consideration together with the encumbrance."
Madras High Court, therefore, allowed the writ petition
and set aside the impugned order of forfeiture. Respondent was
thus directed to return the E.M.D.
24. In order to consider the objections raised by respondent
No.2, with due circumspection, it is necessary to consider the
phraseology used in Section 13(4) of the SARFAESI Act. It begins
with a clarification pertaining to the failure on the part of the
borrower to discharge his liability in full within a specified period
which gives rise to a right and remedy to the secured creditor to
initiate measures to recover the secured debt as per sub clauses (a)
to (d). In our view, the petitioner in the instant case has raised a
limited issue to the extent of recovering the E.M.D. and to
withdraw from the tender proceedings. The petitioner is a bidder
WP/6331/2013
and is naturally neither a borrower nor a secured creditor.
25. Section 17 of the SARFAESI Act gives a right to appeal to
any person including the borrower aggrieved by any of the
measures referred to in sub section 4 of Section 13 taken by the
secured creditor or his authorized officer under the said chapter.
Needless to state, section 17 is a remedy to a person who is
aggrieved by any measures taken by the secured creditor u/s.
13(4).
26.M/s. Uttam claims to posses needed locus and has therefore
already moved an application M.A.No.11/2013 along with an
interim application No.96/2013. The said proceedings are
presently sub-judice before the Debt Recovery Appellate
Tribunal and we are not required to make any observations
as regards the merits of the said proceedings. No doubt,
interim orders passed by the Debt Recovery Tribunal and
subsequently by the Debt Recovery Appellate Tribunal have
applied brakes on the tender proceedings.
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27. We find from the admitted facts before us that neither
respondent No.2/Bank nor the secured creditor has resorted to
any measures u/s. 13(4) of The SARFAESI Act.
28. Respondent No.2/Bank has placed reliance on the United
Bank of India's case (supra) to drive home the point that the
petitioner has precluded from prosecuting this petition in view of
the alternate remedy u/s 17 of The SARFAESI Act. We have gone
through the facts of the said judgment and find that the same are
quite different than those before us.
29. Nevertheless, para no.18 of the said judgment deals with
the powers conferred upon the High Court under Article 226 and
self imposed restraints. Paragraph No.18 reads as follows:
"While expressing the aforesaid view, we are
conscious that the powers conferred upon the High Court
under Article 226 of the Constitution to issue to any
person or authority, including in appropriate cases, any
Government, directions, orders of writs including the five
prerogative writs for the enforcement of any of the rights
conferred by Part III or for any other purpose are very
wide and there is no express limitation on exercise of that
WP/6331/2013
power but, at the same time, we cannot be oblivious of the
rules of self-imposed restraint evolved by this Court,
which every High Court is bound to keep in view while
exercising power under Article 226 of the Constitution. It
is true that the rule of exhaustion of alternative remedy is
a rule of discretion and not one of compulsion, but it is
difficult to fathom any reason why the High Court should
entertain a petition filed under Article 226 of the
Constitution and pass interim order ignoring the fact that
the petitioner can avail effective alternative remedy by
filing application, appeal, revision etc. and the particular
legislation contains a detailed mechanism for redressal of
his grievance. It must be remembered that stay of an
action initiated by the State and/or its
agencies/instrumentalities for recovery of taxes, cess,
fees, etc. seriously impedes execution of projects of public
importance and disables them from discharging their
constitutional and legal obligations towards the citizens.
In cases relating to recovery of the dues of banks,
financial institutions and secured creditors, stay granted
by the High Court would have serious adverse impact on
the financial health of such bodies/institutions, which
ultimately prove detrimental to the economy of the nation.
Therefore, the High Court should be extremely careful and
circumspect in exercising its discretion to grant stay in
such matters. Of course, if the petitioner is able to show
that its case falls within any of the exceptions carved out
WP/6331/2013
in Baburam Prakash Chandra Maheshwari V.Antarim
Zila Parishad AIR 1969 SC 556, Whirlpool Corporation V.
Registrar of Trade Marks, Mumbai (1998) 8 SCC 1 and
Harbanslal Sahnia and another V. Indian Oil Corporation
Ltd., and others (2003) 2 SCC 107 and some other
judgments, then the High Court may, after considering all
the relevant parameters and public interest, pass
appropriate interim order."
30.
It is thus concluded that the rule of exhausting of an
alternate remedy is a rule of discretion and not one of compulsion.
31. Respondent no.2 has also relied upon an unreported
judgment delivered by the Division Bench of this Court in the case
of Ramchandra D. Pere (supra). Having gone through the said
judgment, we find that the petitions were filed by such persons
who either were shareholders of the Co-operative Society or were
non secured creditors of the said society for setting aside the
auction and not by the successful auction purchaser.
32. In the case before us, respondent No.2 has specifically
averred in para no.8 of its affidavit in reply on page no.69 and 70 of
WP/6331/2013
the petition that M/s. Uttam is one of the unsecured creditor who
is aggrieved by the measures taken by the Bank under the
SARFAESI Act. It is further stated that respondent No.2 Bank was
unaware about the transactions between borrower Karkhana and
M/s. Uttam, in as much as, there is a charge of the said unsecured
creditor on property extracts.
33. In para no.13 of the said affidavit in reply, on page no.72
of the petition, respondent No.2/Bank has further averred that the
claim of M/s. Uttam is an unsecured claim whereas the bank has
the first charge over the assets of the borrower Karkhana. It is also
averred that the claim of M/s. Uttam can be termed as unsecured
creditor and claim of such unsecured creditor can be satisfied only
after full recovery of first charge holders and further if something
remains, then the secured creditor can enforce their right.
34. We have given a close look to the phraseology of Section
13(4) of the SARFAESI Act. Section 13(4) clearly appears to be a
provision meant only for the secured creditor to take recourse to
one or more of the measures mentioned in sub clauses (a) to (d).
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As such, we are of the view that measures initiated u/s. 13(4) by
M/s. Uttam can not be termed to be the measures initiated by a
secured creditor. As such, though for the purposes u/s. 17 (Right
to appeal) of the SARFAESI Act, the petitioner is presumed to fall
within the meaning of 'any person', it can not be held to be
aggrieved by the appeal filed by M/s. Uttam. Our view is fortified by
the phraseology of Section 17 as well in light of the words 'any of
the measures referred to in s/s 4 of Section 13 taken by the
secured creditor'. As such, in our considered view, the petitioner
would not have an alternate remedy of right to appeal u/s. 17.
35. Gauhati High Court has dealt with a somewhat similar
situation in the case of M/s. Rose Valley Real Estate Case (supra).
In para no.11, the Court has concluded that a bidder in auction
sale is not a person aggrieved and has no reason to file an appeal
in respect of forfeiture of 25% deposited bid amount. Based on
such conclusion, the contention of the Bank in that case was
rejected in paragraph no.12.
36. Observations of the Gauhati High Court in para no.11
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and 12 are as under :
"11. A careful reading of Section 13(4) shows
that Section 13(4) embodies various modes of recovery of
the secured debts of the secured creditor. If anyone,
including a borrower, feels aggrieved by the mode of
recovery, which a secured creditor may adopt, he has a
right to prefer an appeal in terms of Section 17. The writ
petitioner, in the present case, is, admittedly, not a
borrower nor is the writ petitioner a person aggrieved by
the mode of recovery adopted by the respondent bank as
secured creditor. Thus, the controversy is not covered by
the provisions contained under Section 13(4) of the Act.
Since Section 13(4) has no application to the transaction
at hand, the question of Section 17 being applicable to
the present case does not arise at all. Hence, the
present petitioner has no right of appeal under Section 17
of the Act in respect of the forfeiture of the amount in
question or as regards the writ petitioner's demand for
refund of the said deposited sum of Rs.60.75 lac.
12. In view of the fact that the respondent
bank's contention has no substance, as indicated
hereinabove, an examination of Section 31 is not really
necessary."
37. For the reasons set out hereinabove, we hold with respect
WP/6331/2013
that the judgment of the Hon'ble Apex Court in the case of United
Bank of India's case (supra), Kanaiyalal Lalchand Sachdev's case
(supra), Division Bench view of the Bombay High Court in the case
of Ramchandra Deorao Pere (supra), Anand Jayant More (supra),
Adityakumar Clearing Agency & Transport (supra), Madras High
Court's view taken in the case of Authorized Officer, Indian
Overseas Bank (supra) are not applicable to the case before us.
Reliance placed on all these judgments by respondent No.2 Bank is
mis-conceived. Obvious reason is if an auction purchaser is
permitted to challenge the action or measures resorted to under S.
13(4), he cuts his own legs & indirectly, will be assisting the cause
of borrower also. It will thus be prejudicial not only to his own
interests but to the interests of Respondent 2 as well.
38. Hence we are unable to accept the contention of the
advocate for respondent No.2 that Section 17, in the face of M/s.
Uttam, having already invoked Section 17, is an alternate remedy
to the petitioner in relation to his prayers made in the petition as
regards refunding of the E.M.D. and withdrawing from the tender
proceedings.
WP/6331/2013
39. Respondent No.2/Bank has attempted to canvass the
limitations of this Court dealing with cases falling in the realm of
the Law of Contract. It is contended that though the petitioner
may be aggrieved by the impugned order of forfeiture passed by the
respondent No.2/Bank, the said issue being covered by the Indian
Contract Act, would render the petition untenable before this
Court. He further contended that the petitioner should be
relegated to an alternate remedy in the nature of initiating civil
proceedings for alleged violation of contract before the competent
Civil Court and that this Court should not exercise its writ
jurisdiction in adjudicating this petition.
40. Per contra, the petitioner contended that an alternate
remedy need not purely be an alternative available, but should
amount to it (such a remedy) being efficacious and expeditious in
order to redress the grievance of the petitioner. Respondent No.2,
in para no.17 of its affidavit in reply at page no.73 has canvassed
this objection by stating that the petition is not maintainable since
"the issue pertains to contractual obligations between the parties".
WP/6331/2013
41. In the Shamrao Vitthal's case (supra), Full Bench of this
Court has concluded that the Co-operative Society registered under
the provisions of the Maharashtra Co-operative Societies Act, 1960
and under the Multi State Co-operative Societies Act, 1984, which
carries on business of banking and is therefore governed by the
Banking Regulation Act, 1949 and does not fall within the
expression "State" under Article 12 of The Constitution of India.
42. The petitioner has relied upon Madras High Court
judgment in the case of Chemstar Chemical (supra). The view
taken by the High Court in the said judgment is that writ
jurisdiction can be exercised by the High Court despite availability
of an alternate remedy whenever there is a contravention or
violation of principles of natural justice. Extra-ordinary power
under Article 226 of the Constitution of India can be invoked even
in such situation. In paragraph 18 of the United Bank of India case
(supra), the Apex Court has thus concluded that an effective
alternative remedy must be available. As such, merely because
some alternate remedy could be available, is not enough to relegate
a litigant to avail of such remedy.
WP/6331/2013
43. In the instant case, the State of Maharashtra through its
Secretary, Department of Co-operation has been impleaded as
respondent No.1. The said Department has overall control over
the respondent in respect of the tender of G.S.S.K.L. which was the
borrower Karkhana. Respondent No.2 is the Co-operative Bank
which has seized the said borrower's movable and immovable
property under the provisions of the SARFAESI Act. In these
circumstances, we find that the contention of respondent No.2 that
the petition is not maintainable and that this Court should refrain
itself from entertaining a dispute falling within the realm of the
Indian Contract Act, is a feeble and unsustainable objection. In
Aaditya Kumar Clearing Agency and Transport Vs. Union of India
and others, supra, the Division Bench of this Court, in paragraph 9
appreciated the law laid down by the Hon'ble Apex Court in
Harbanslal Sahnia and another V. Indian Oil Corporation Ltd., and
others, supra & noted the situations in which the High Court may
exercise writ jurisdiction. When there is violation of principles of
natural justice or when the proceedings are without jurisdiction,
the High Court may pass suitable orders in exercise of writ
jurisdiction. In present facts, time of 30 days to deposit 75%
WP/6331/2013
amount was to expire on 14.3.2013 & direction rendering its
deposit impossible was issued by the DRT on 25.2.2013. The
respondent no. 2 Bank did not disclose the legal notice sent by
M/s Uttam Industries in its tender invitation though it was aware
of that claim or encumbrance. Just as speedy recovery of loan is
must for respondent no. 2 Bank, for auction purchaser like
petitioner, the certainty also assumes great significance. It is not
expected to wait indefinitely & in the process, suffer & loose on all
fronts. Time has to be of essence for the secured creditor like
respondent no. 2 & also for auction purchaser like present
petitioner. If loan recovery through the auction process has to be
an expeditious process, spirit of SARFAESI Act also warrants that
an auction purchaser can not be made to wait indefinitely or watch
helplessly with the huge money blocked. The secured creditors
must act in such matters by taking the auction purchaser in
confidence & with his consent, or then return back the EMD or
other deposits if they wish to succeed. They can not jeopardize the
very existence of the auction purchaser by withholding such
deposits. The conduct of secured creditors must be conducive to
encourage more & more persons to participate in its auctions. In
WP/6331/2013
present facts, we do not find any force in contentions & objections
being raised by the respondent 2 and we hereby turn down the
same.
44. Having held that the petition is maintainable before this
Court, we are required to deal with the issue as to whether the
petitioner deserves to be refunded the E.M.D. and as to whether
the impugned order dated 31/07/2013 deserves to be quashed and
set aside.
45. It is an admitted position that the tender was opened on
11/02/2013 and was accepted on 12/02/2013. E.M.D. has been
deposited on 18/02/2013. Sum and substance of the contention
of the petitioner is that it could not proceed with the tender in view
of the pending litigation which it was not aware of. It is also the
case of the petitioner that it had consistently requested respondent
No.2/Bank to supply necessary documents so as to enable the
petitioner to seek financial assistance from financial institutions on
the strength of the said documents which eventually were not
supplied to the petitioner despite adequate persuasion. It is also
WP/6331/2013
the case of the petitioner that it had not sought extension of time to
pay the remaining 75% amount and that it was through
correspondence at the behest of respondent No.2 that it had
requested the petitioner to defer the payment of the remaining
amount in view of interim orders passed by the Debt Recovery
Tribunal and later by the Debt Recovery Appellate Tribunal.
46. We have already adverted to these facts in the earlier part
of our judgment. To add to the woes of the petitioner, respondent
No.2 extended time to deposit the remaining amount and at the
same time, informed the petitioner that 8% interest would be levied
for a period of one month on the remaining amount and that would
be followed by 12% interest for a period of 3 months and thereafter
@ 18% interest. According to the petitioner, this has been an
atrocious approach adopted by respondent No.2 which has
resulted in penalizing the petitioner for no fault on its part.
47. We find from the dates and events which we have already
adverted to in the earlier part of this judgment a word against word
between the petitioner and respondent No.2 as the petitioner
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contends that respondent No.2 was aware of the Debt Recovery
Tribunal proceedings initiated by M/s. Uttam on 12/02/2013. Per
contra, respondent No.2 contends that it got the knowledge of the
pending proceedings on 25/02/2013 and appearance on behalf of
respondent No.2 was under oral instructions. The stand of
Petitioner that on 25.2.2013 DRT passed an order which mentions
a notice dated 25.8.2012 sent by Uttam Engineering Ltd warning
Respondent 2 Bank that sale of property of G.S.S.K,L. would be
subject to its encumbrance, is not demonstrated to be incorrect.
Respondent no. 2 has invited the tender on 8.1.2013 ie long after
getting the knowledge of said claim & did not point it out to
petitioner. The fact remains that the Debt Recovery Tribunal
proceedings were initiated by M/s. Uttam on 08/02/2013.
48. Notwithstanding the fact that there appears to be a blame
game between the petitioner and respondent No.2, which neither
bothers us nor deters us from arriving at a conclusion. From the
facts narrated hereinabove, we find that on account of no fault on
the part of the petitioner and no laches being attributable to the
conduct of the petitioner, it has suffered & therefore said blame
WP/6331/2013
game is not relevant. On the one hand, it is constrained to
withdraw from the tender/bid and on the other hand it has
suffered the impugned order dated 31/07/2013 issued by
respondent No.2 to the extent of rejecting the claim of refund of
25% E.M.D. In short, respondent No.2 has forfeited the amount.
49.
In the Mohd. Gazi's Case (Supra), the issue was whether
a person can be penalized for no fault of his, merely by resorting to
an equity clause in favour of the respondent-State particularly
when such person is found to have not been benefited or the State
deprived of the benefits on account of the stay order issued by the
Court. Another related question requiring determination is as to
whether on account of the pendency of the writ petition filed by
another party without impleading the affected person as a party in
which the stay order granted by the Court, such person can be
directed to forfeit a part of the security amount deposited by him
particularly when the Court itself found that even the equities were
equally balanced between the State and such person.
50. In the above case before the Hon'ble Apex Court, the facts
WP/6331/2013
are somewhat similar to those in the case before us except that the
highest bid of respondent No.4 was not accepted and the tender
was cancelled in that case. Fresh notices for tenders were issued
and the appellant was declared the highest bidder. In the
meanwhile, said respondent No.4 challenged the order of
cancellation of tender and the re-tender notice. The High Court,
vide its interim order, restrained the respondent's officials from
proceeding with the fresh tender. It was in these circumstances
that the E.M.D. was sought to be refunded by the appellant.
51. The Court in that case has considered that the appellant
was at no fault since he had offered the bid and was prepared to
accept the Tendu leaves which he could not lift on account of the
stay order. The Court observed in para no.7 as follows:
"In the facts and circumstances of the case,
the maxim of equity, namely, actus curiae neminem
gravabit an act of the Court shall prejudice no man,
shall be applicable. This maxim is founded upon justice
and good sense which serves a safe and certain guide
for the administration of law. The other maxim is, lex
non cogit ad impossibilia - the law does not compel a
WP/6331/2013
man to do which he cannot possibly perform. The law
itself and its administration is understood to disclaim as
it does in its general aphorisms, all intention of
compelling impossibilities and the administration of law
must adopt that general exception in the consideration
of particular cases. The applicability of the aforesaid
maxims has been approved by this Court in Raj Kumar
Dev Vs. Tarapada Dev, (1987)4 SCC 398 : (AIR 1987 SC
2195) and Gursharan Singh Vs.NDMC, (1996) 2 SCC
459 : (1996 AIR SCW 749 : AIR 1996 SC 1175). "
The appeal was thus allowed and the appellant was held
entitled to refund of the whole amount of E.M.D.
52. The Division Bench of the Bombay High Court in
Bholenath Trading Co.'s case (supra) observed that the bidder, who
had withdrawn the bid and sought return of the E.M.D. prior to the
acceptance of its bid by the bank, would not entitle the
respondent/bank in forfeiting the security deposit. The facts of
the case at hand are different since the bid was accepted by
respondent No.2/Bank and refund of the E.M.D. is made much
later. The view of the Bombay High Court in the said case is
therefore not applicable to the present case.
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53. In the Haryana Financial Case (Supra), considering the
totality of circumstances, the Apex Court concluded that the action
of the respondent in forfeiting the E.M.D. was wholly arbitrary and
unfair. While upholding the power to forfeit the E.M.D., the Court
concurred that the view of the Division Bench that there must be
failure on the part of the bidder to go ahead with the contract in
normal circumstances. The Court concluded that in its opinion,
the respondent authority had failed to comply with the conditions
of sale and had acted unfairly. This led to the conclusion that the
totality of the circumstances are required to be considered while
coming to a conclusion as to whether the E.M.D. needs to be
returned or should be forfeited.
54. The Apex Court in the case of Haryana Financial
Corporation and Another (supra) has concluded that the totality of
the circumstances need to be taken into consideration in order to
conclude that the petitioner was not at fault and that the
respondent is not entitled to forfeit the amount. Similarly, in the
Mohd. Gazi's case (supra), the Apex Court has held that when the
appellant was prevented from taking benefit of acceptance of his
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bid by stay orders in proceedings to which the appellant was not a
party, penalty of cut in security amount can not be imposed on the
appellant who was in no way at fault. In any case, the doctrine of
equity will apply in such situations. The maxim of equity namely
actus-curiae neminem gravabit, an act of the Court shall prejudice
no man, needs to be invoked and make applicable in this case. As
has been held by the Honourable Apex Court in the Mohd. Gazi's
case (supra), this maxim is founded upon justice and good sense
which serves a safe and certain guide for the administration of
Law.
55. In the Jai Logistic's case, the Division Bench of Madras
High Court, considering the comparative hardships faced by the
rival parties concluded that the respondent Bank in that case, was
not justified in compelling a purchaser to go ahead with the sale by
depositing the balance sale consideration together with the
encumbrance.
56. In the instant case, on the one hand, respondent No.
2/Bank desired that the petitioner should proceed with the tender
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proceedings and complete the sale and on the other hand issued
letters to the petitioner to defer depositing of the balance amount in
view of the interim orders passed by the Debt Recovery Tribunal
and Debt Recovery Appellate Tribunal. 25% amount i.e. Rs.
8,90,67,750/- is already deposited by the petitioner & to enable it
to deposit the balance 75% amount of Rs. 26,72,03,250/-,
respondent no.2 unilaterally extended time & further imposed
interest at penal rate for such extended period. Vacation of
restraining orders by the DRT is an uncertain event & time it may
take is not known even today. This extension, not being bilateral,
can not revive or continue the contract after expiry of time to
deposit balance amount.
57. Learned Single Judge of the Gauhati High Court in the
case of M/s. Rose Valley Real Estate and Construction Ltd., (supra)
also arrived at a similar conclusion that a successor bidder can not
be penalized and the deposit of 25% of bid amount can not be
forfeited. The doctrine of frustration of contract was held to be
applicable in the said situation. Para No.9 of the said judgment is
as follows :
WP/6331/2013
"19. In the present case, the writ petitioner
was completely unwilling t6o enter into any extension of
time. At the same time, the respondent Bank has also
not expressed willingness to extend the period of
deposit. Thus, the balance amount having not been
deposited within 27-2-2007, the amount deposited by
the writ petitioner would either stand forfeited in terms
of sub-rule (5) of Rule 9 or the same would have to be
refunded. In the present case, the interim directions,
issued in WP(C) 41/2007, were admittedly, in operation
restraining the respondent bank from proceeding with
the notification dated 30/12/2006 aforementioned.
Since the present writ petitioner was also one of the
respondents in WP(C) No.41/2007, it logically follows
that neither the respondent Bank could have accepted
the balance amount from the present writ petitioner not
could have the present writ petitioner deposited the
balance amount with the respondent bank so long as
the interim directions passed by the Court on
15/02/2007 and further extended on 21/02/2007,
were not interfered with or modified. Thus, by operation
of Law, the respondent bank was prevented from
accepting the balance amount from the present
petitioner on or before 27/02/2007. In the face of such
embargo imposed by the Court, omission to deposit the
balance amount within 27/02/2007, by the writ
petitioner cannot be treated as a default on the part of
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the writ petitioner in making the requisite deposit. When
the writ petitioner has not defaulted, it cannot obviously
be penalized and the amount of Rs.60.75 lac, deposited
by it cannot be forfeited by taking recourse to sub-rule
(5) of Rule 9."
58. In the case on hand, we find that the petitioner had not
purposefully or for any oblique motive rescinded from the tender
proceedings or refrained from depositing the remainder 75% of the
bid amount. While dealing with the said case, the Apex Court has
considered the doctrine of fairness to mean that it is the duty to act
fairly and reasonably and that the said doctrine is evolved to
ensure a fair action. Nevertheless, the appeal was dismissed by
the Apex Court, but on other grounds.
59. In the light of the above, we hereby allow this writ
petition with the following directions:-
(a) The impugned order dated 31/07/2013 is quashed
and set aside.
(b) We direct respondent No.2 to refund the 25%
amount of EMD along with simple interest @ 6% p.a.
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(c) The said amount along with interest shall be
refunded within a period of 3 months from today, failing
which the petitioner will be at liberty to recover the said
amount by executing this judgment as decree of civil court as
per law.
60. Rule is made absolute in the above terms with no order
as to costs.
(RAVINDRA V. GHUGE, J.) (B.P.DHARMADHIKARI, J.)
...
khs/Nov.2013/FINAL_wp6331-13
