Smt. Krishna Rani Kwatra vs Delhi Development Authority And ...
1999 Latest Caselaw 62 Del

JUDGMENT

K.S. Gupta, J.

1. Plaintiff filed suit, inter alia, alleging that she is the sole proprietor of Quotation Exports and has been carrying business at N-233, Greater Kailash Part-I, New Delhi. In a public auction held on February 4, 1986 by the DDA, defendant No. 1, she was allotted shop No. 77, Community Centre, Friend's Colony, New Delhi against the amount of Rs. 2,54,000/-. A sum of Rs. 63,500/- being 25% of that amount was deposited by her on the said date itself. In fact, this amount of Rs. 63,500/- was towards advance instead of being earnest money. By the letter dated April 4, 1986 defendant No. 1 intimated the plaintiff that the bid of Rs. 2,54,000/-has been accepted and the balance consideration together with other charges amounting to Rs. 1,96,540/- be deposited within 30 days. It is further alleged that because of the business activities and visits abroad in connection with the business the plaintiff could not deposit the amount as per the said letter dated April 4, 1986. However, she has been always willing and ready to make the payment of the balance amount. By another letter dated June 14, 1986 defendant No. 1 conveyed to the plaintiff that the bid in respect of the said shop has been cancelled and earnest money forfeited because of her failure to deposit the balance amount. Prior to June 14, 1986 no letter was received by the plaintiff from defendant No. 1 giving her opportunity to pay the balance consideration. After the receipt of the said letter dated June 14, 1986 the plaintiff made a number of representations to defendant No. 1 to receive the balance consideration and issue lease-deed in her favour of the said shop No. 77. She even offered to pay interest on the delayed payment. She also personally met the Deputy Director (C.E.) and offered payment of Rs. 1,96,540/- through pay order No. 010304 dated July 29, 1986 which he declined to receive.

2. It is also pleaded that defendant No. 1 re-auctioned the said shop on March 3, 1987 against the premium of Rs. 6,10,000/- to defendant No. 5. After reauction plaintiff received a letter dated March 18, 1987 under the signature of Deputy Director (C.E.) of defendant No. 1 conveying that the offer for making payment of the balance consideration cannot be acceded to. Decision to reauction the shop by defendants 1 & 2 is totally illegal. It is stated that the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1981 neither make the time the essence of the contract nor do they place any restriction on the power/discretion of defendants 1 & 2 to enlarge the time for making the payment of the balance consideration. Decision of defendants I& 2 to cancel the plaintiff's bid and forfeit the amount of Rs. 63,500/- is illegal. It is stated that even if the interpretation of the said Rules is that the time mentioned therein for payment of the balance consideration is mandatory and is not extendable, then the provisions of Rules 29 & 32 are arbitrary, unreasonable and hit by Art. 14 of the Constitution of India.

3. It is further alleged that under the aforesaid Rules the bid of the plaintiff could be confirmed only by the Vice Chairman (defendant No. 2) of defendant No. 1 whereas in this case it is purported to have been accepted by defendant No. 1. The period of 30 days for making the payment would commence only after the bid is confirmed by defendant No. 2. It is alleged that Rule 45 of the said Rules gives an overriding power to the Central Government to relax the requirement of any rule and there was sufficient material for the Central Government to have relaxed the rigours of the rule in the matter of extending time to make the payment of the balance consideration by the plaintiff. It is claimed that apart from specific performance of the contract the plaintiff is entitled to interest @ 18% per annum on the said amount of Rs. 63,500/- from June 14, 1986 up to the date of the execution of the lease-deed in her favour. She is further entitled in the alternative for refund of the said amount of Rs. 63,500/- and compensation of Rs. 3,56,000/- for breach of the contract besides interest @ 18% per annum on Rs. 63,500/- from February 4, 1986 and at the same rate on Rs. 3,56,000/- from the date of the plaintiff's notice dated March 13, 1987. It was prayed that a decree of specific performance of the contract directing the defendants to execute the lease-deed and deliver possession of the shop in suit in addition to payment of Rs. 11,060/- by way of damages be passed in favour of the plaintiff. In the alternative it was prayed that a money decree for Rs. 4,47,925/- with interest pendente lite and future be passed in favour of the plaintiff and against the defendants.

4. Defendants 1 to 4 have contested the suit by filing a joint written statement while defendant No. 5 by filing a separate written statement.

5. Defendants 1 to 4 in their written statement have not disputed that Quotation Exports offered the highest bid of Rs. 2,54,4007- for shop No. 77 in the public auction and a sum of Rs. 63,500/-being 25% of the bid money was deposited by it on February 4, 1986, as alleged. However, it is alleged that by the letter dated April 4, 1986 plaintiff was informed about the acceptance of the bid. She was further asked to deposit balance 75% within 30 days of the issue of the letter. Plaintiff although aware of the terms and conditions of the auction and also the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1981 failed to deposit the demanded amount within the stipulated period. Consequently, the plaintif' s bid was cancelled and also the earnest money of 25% forfeited. In the reauction said shop No. 77 was sold to defendant No. 5 for Rs. 6,10,000/-. It is alleged that there is no provision under the said Rules for extension of time for making payment of the balance bid money. It is denied that Rules 29 & 32 of the Rules are arbitrary, unreasonable and violative of Art. 14 of the Constitution of India. It is asserted that the bid made by Quotation Exports was confirmed by the Vice-Chairman (defendant No. 2) it is denied that any representation was made by the plaintiff to the Central Government seeking relaxation of any of the rule of said Nazul Rules, 1981.

6. In the written statement filed by U.P. State Handlooms, defendant No. 5 the stand taken is that it is the bona fide purchaser for valuable consideration of the shop in question and the plaintiff has no cause of action against it.

7. On the pleadings of the parties following issues were framed :--

1. Whether the cancellation of the bid of the plaintiff and forfeiture of the earnest money was arbitrary, void and illegal?

2. Whether the amount of Rs. 63,500/- was paid as advance and not as earnest money?

3. Whether the time was the essence of the contract?

4. Whether the Rules 29 and 32 of the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1981 are oppressive, arbitrary and unconstitutional? If so, its effect.

5. Whether the non-restoration of allotment of the plaintiff is discriminatory and hit by Articles 14 & 19 of the Constitution of India, as alleged? If so, its effect.

6. Whether the plaintiff has been and is ready and willing to perform her part of the contract?

7. Whether the plaintiff is entitled to specific performance of the contract?

8. If the above issue is not decided in favour of the plaintiff, whether the plaintiff is entitled to refund of the money already paid and any damages? If so, what amount?

9. Whether the plaintiff is entitled to any interest? If so, for what period and at what rate?

10. Relief.

8. It is admitted case of the parties that a sum of Rs. 63,500/- being 25% of the bid money of Rs. 2,54,000/- was deposited by the plaintiff with defendant No. 1 on the date of the auction itself i.e. February 4, 1986. Plaintiff alleges that the said amount of Rs. 63,500/- was towards advance while according to the DDA, defendant No. 1, it was by way of earnest money. It is in the deposition of the plaintiff (PW 1) that the terms and conditions of auction were supplied to her before auction and she signed the terms and conditions after having read them. Ex. PW. 1 /2 is the copy of those terms and conditions filed by the plaintiff herself. Clause 2(iii) of it which is relevant provides as under:--

"The officer conducting the auction shall normally accept subject to the confirmation by the Vice- Chairman the highest bid offered at the fall of hammer at the auction and the person whose bid has been accepted shall pay as earnest money a sum equivalent to 25% of his bid either in cash or by bank draft in favour of DDA. If the earnest money is not paid the auction already held in respect of that shop shall be cancelled by the officer conducting the auction."

9. It seems that the aforesaid amount of Rs. 63,500/- was deposited by the plaintiff with defendant No. 1 pursuant to above clause 2(iii) of the terms and conditions of auction Ex. PW. 1/2. Obviously, this amount was towards earnest money and not the advance as alleged by the plaintiff. Issue is answered accordingly.

10. Case set up by the plaintiff in para 12 of the plaint is that the bid given by her could have been accepted only by the Vice-Chairman, defendant No. 2 but the same was purported to have been accepted by the DDA, defendant No. 1. In support of the case set up to this effect Shri K.R. Gupta appearing for the plaintiff invited my attention to para 1 of the letter Ex. PW. 1/3 dated April 4, 1986 and Clauses 2(c) and (n) of the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1981. It is not in dispute that under Rule 29 of the said Rules, 1981, the bid is to be accepted by the Vice-Chairman of defendant No. 1. Said Ex. PW. 1/3 is the letter sent by the Deputy Director (C.E.) of defendant No. 1 to Quotation Exports, bidder calling upon it to make the payment of Rs. 1,96,540/- being the amount of balance bid money etc. within 30 days of the date of issue of the letter. Para 1 of the letter reads thus :--

"I am directed to inform you that the bid of Rs. 2,54,000/- offered by you in the auction held on 4-2-86 in respect of the unit mentioned above has been accepted by the Authority."

11. Said clauses (c) & (n) of Rule 2 of Rules 1981 read as under :--

(c) "Authority" means Delhi Development Authority constituted under Section 3 of the Act:

(n) "Vice-Chairman" means the Vice-Chairman of the Authority appointed under Section 3 of the Act;"

12. It may be noticed that the deposition of the plaintiff (PW1) who chose to examine herself alone in support of the case, is absolutely silent on the point that the bid offered by her was not accepted by the Vice-Chairman, defendant No. 2 as pleaded in said para 12 of the plaint. Needless to say that in corresponding para 12 of the written statement plea taken by defendants 1 to 4 is that the plaintiff's bid was accepted by the Vice-Chairman, defendant No. 2. It was not even remotely suggested in cross-examination to R.C. Singh, Asstt. Director (C.E.), DW. 1, that the bid made by the plaintiff was not accepted by defendant No. 2. Defendant No. 1 being a body corporate constituted under Section 3 of the Delhi Development Act, 1957, acts through its officers and there is presumption in favour of the official acts performed by it as having been regularly performed. That being the position, the plaintiff must be held to have failed to establish that the bid offered by her was not accepted by the Vice-Chairman, defendant No. 2. Expression used in above clauses (c) & (n) of Rule 2 are meant only for interpreting the provisions of the said Rules of 1981 and they cannot be pressed into service for interpreting the word 'Authority' as used in said para 1 of the letter Ex. PW. 1/3.

13. This brings me to the crucial point if the defendants 1 to 3 were legally justified in cancelling the bid of the plaintiff and forfeiting the amount of Rs. 63,500/-. On that point condition No. 2 (vi) as incorporated in Ex.PW. 1/2 is relevant and the same provides as under :--

"In case the bidder fails to pay the balance 75% of the amount of his bid to the Authority within 30 days of acceptance of the bid or within such period as may have been specified otherwise in accordance with the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1981 the bid will be cancelled and the earnest money shall be forfeited and the Vice-Chairman shall be competent to reauction the shop."

14. Para 5 of the letter Ex. PW.1/3 which too is material says that if the amount demanded in the letter is not paid within the prescribed period, it will be treated as breach of condition No. 11(6) of the terms and conditions of auction and the earnest money deposited by the plaintiff will be forfeited as provided under the said condition. As is manifest from the admissions made by the plaintiff in cross-examination the said condition was read over to her at the time of the auction and accepting the same she signed the terms and conditions of the auction (copy Ex. PW. 1/2). Since the amount of Rs. 1,96,540/- as demanded in letter Ex. PW. 1/3 was not deposited within 30 days time, the defendants were fully justified in cancelling the plaintiff's bid pursuant to aforementioned condition No. 2 (vi).

15. Coming to the forfeiture of the amount, in Shree Hanuman Cotton-Mills v. Tata Air-Craft Ltd., it was held on page No. 139 of the report thus (at page 1994 of AIR) :

"From a review of the decisions cited above, the following principles emerge regarding "earnest" :--

(1) It must be given at the moment at which the contract is concluded.

(2) It represents a guarantee that the contract will be fulfillled or, in other words, 'earnest' is given to bind the contract.

(3) It is part of the purchase price when the transaction is carried out.

(4) It is forfeited when the transaction falls through by reason of the default or failure of the purchaser.

(5) Unless there is anything to the contrary in the terms of the contract, on default committed by the buyer, the seller is entitled to forfeit the earnest."

16. Having regard to the said principles and the fact that the aforesaid amount of Rs. 63,500/- was deposited by the plaintiff towards earnest money, the defendant No. I was totally justified'in forfeiting it on failure of the plaintiff to deposit the amount as claimed in the letter Ex. PW. 1/3 within the period allowed therein. Decision in Maula Bux v. Union of India, relied on behalf of the plaintiff, has no applicability to the facts of this case as in that case the plaintiff had deposited the amounts claimed as security for guaranteeing due performance of the contracts and such deposits were not regarded as earnest money. Issue is answered against the plaintiff.

Issues 3 & 6

17. Under the Terms and Conditions of auction Ex. PW. 1/2, the time was, the essence of the contract.

18. It is in the cross-examination of the plaintiff that she left for Italy on April 10, 1986, again stated on 7th May 1986 and the letter Ex. PW. 1/3 dated April 4, 1986 was not received by April 10, 1986. It is further in her cross-examination that her two sons were looking after the business while she was away to Italy. It is in the testimony of R.C. Singh DW 1 that the letter Ex. PW. 1/3 was sent to the plaintiff for depositing the balance 75% of the bid money by registered AD post. In ordinary course said letter should have reached the plaintiff by April 10, 1986. Be that as it may, in all probabilities Ex. PW. 1/3 must have been received before May 7, 1986 when the plaintiff is alleged to have left for Italy to participate in an Exhibition there. Failure to deposit the amount by the plaintiff as demanded in the said letter within the stipulated time clearly goes to show that she had not been willing and ready to perform her part of the contract. Both the issues are answered accordingly.

Issues 4 & 5

19. Both the issues were not pressed on behalf of the plaintiff during the course of arguments. Issues 7, 8 & 9

20. Relying on the decisions in Delhi Development Authority v. Grih sthapana Co-operative Group Housing Society Ltd., and Delhi Development Authority v. Shilpa Co-operative Group Housing Society Limited etc., it was contended by Shri K.R. Gupta that taking a lenient view in the matter entire amount of Rs. 63,500/- may not be permitted to be forfeited by the DDA. In the facts and circumstances of the present case, both the said decisions have no applicability. No fault can be found with the decision taken by the DDA in forfeiting the said entire amount of the earnest money.

21. Yet another submission made on behalf of the plaintiff that because of the communication of the decision in regard to rejection of the representations made by the plaintiff only after the reauction of the shop in question by the DDA, she was deprived of the right to approach the Central Government for enlarging the time to pay the balance consideration beyond 30 days, has to be stated to be rejected. The plaintiff will be presumed to have the knowledge that under the said Nazul Rules of 1981 the DDA did not possess the power to extend the time to deposit the balance consideration beyond 30 days of the communication of the decision regarding acceptance of the bid and it was thus open to her to move the Central Government in the matter without waiting for the result on the representations. The plaintiff is, therefore, not entitled either to the refund of the amount of Rs. 63,500/- or to a decree for specific performance of the contract or to recover any amount towards interest as claimed.

22. In view of the findings on the aforesaid issues, the suit deserves to be dismissed.

23. Suit is, therefore, dismissed. In the circumstances of the case, parties are left to bear their own costs.