Delhi Medicos vs M.C.D. And Anr.
2002 Latest Caselaw 1300 Del

JUDGMENT

Sanjay Kishan Kaul, J.

1. Rule.

2. With the consent of learned counsel for the parties the petition is taken up for final disposal.

3. The petitioner has filed the writ petition aggrieved by the cancellation of the bid of the petitioner which was accepted in the auction dated 17.8.2001 in respect of shop No. 15 at Nigam Bazar, Asaf Ali Road in front of LNJP/GB Hospital, New Delhi.

4. The terms and conditions of the auction as set out in the advertisement issued in Hindustan Times of 29.7.2001 are as under:-

"Terms & Conditions of Auction:-

1. The main terms and conditions of auction will be announced at the time of auction.

2. The highest bidder shall be required to deposit at the fall of hammer 25% of the bid amount on the same working day by Demand Draft/cash in favor of Commissioner, MCD and the balance amount within a period of 15 days from the date of issue of letter communicating the acceptance of the bid

3. The Deptt. can withdraw any shop from the auction without assigning any reason.

4. Detailed particulars of the site, including actual measurements of the shops and the terms and conditions of auction can be had on payment of Rs. 100/- from the office of the A.O(RP Cell), from 11.00 am to 4.00 pm. on all working days w.e.f. 01.08.2001

5. The petitioner bid in the auction held on 17.8.2001 and made the highest offer of 24.16 lacs against minimum price of Rs. 21.60 lacs. The area of the shop in the advertisement was mentioned as 21.6 sq. mts. The petitioner paid a sum of Rs. 6,04,000/- as 25% of the bid amount at the fall of the hammer. The petitioner made various efforts to request the respondent to complete the necessary formalities for payment of balance 75% of the amount. Finally the petitioner received a letter dated 4.1.2002 to the following effect stating that the auction programme has been cancelled:-

"Auction of shops situated at Shopping Complex, Asaf Ali Road was held on 17.8.2001 at Pearey Lal Bhawan, ITO. In it you were the highest bidder for shop No. 15. 25% of the bid amount was deposited by you on the same date on 17.8.2001.

Due to some reason the auction programme has been cancelled by the Higher Competent Authorities. Therefore in case you desire you may apply for the refund of the requisite amount after enclosing original G-8 Receipts, otherwise this amount of yours shall be adjusted whenever the auction will be held again."

6. The petitioner has thus impugned the said decision of cancellation of the shop.

7. In the counter affidavit it is stated that the aforesaid decision was taken in view of the fact that area of the shop in question is mentioned as 21.6 sq. mts by mistake whereas in fact the area of the said shop was 28.6 sq. mts. It is because of this reason that the competent authority has ordered for cancellation of the auction of the said shop and directed a fresh auction of the shop showing the correct area and reserved price.

8. Learned counsel for the petitioner contends that the contract stood concluded on the fall of the hammer and on payment of 25% of the bid amount and the only formality of the payment of balance 75% amount was to be completed for which the petitioner was always ready and willing. Learned counsel for the petitioner relied on the Division Bench judgment of Allahabad High Court in Zila Parishad, Muzaffarnagar and Anr. v. Udai Veer Singh to contend that in an auction sale the fall of hammer is an indication that the auction is closed at the highest bid and signifies an intention to finalise the contract on the last bid and cancellation of result of auction without giving opportunity to highest bidder is unfair and illegal.

9. Learned counsel for the petitioner further referred to the Division Bench judgment of the Madras High Court in Maddala Thathiah v. Union of India to contend that a clause which purported to confer and absolute and arbitrary power on one of the parties to cancel the contract cannot be legal and valid and such contract would be void an unenforceable.

10. Learned counsel for the respondent, on the other hand, submits that a decision to cancel the auction itself was taken in view of the mistake which had occurred at the respondents end. Learned counsel further contends that the terms of auction itself provide that a letter of acceptance had to be issued and in fact the petitioner kept on requesting for the said letter but the same was no issued and ultimately letter dated 4.1.2002 was issued cancelling the auction.

11. I have considered the submissions of learned counsel for the parties.

12. The terms and conditions of the auction itself show that in terms of Clause 2, 25% of the bid amount was to be deposited on the fall of the hammer and the balance amount within a period of 15 days from the date of communication of acceptance of the bid from the respondent. Thus something more was required to be done than just fall of the hammer. It is thus apparent that there had to be an acceptance of the bid and the said acceptance had to be communicated to the petitioner pursuant thereto the petitioner had to deposit the balance 75% of the bid amount within a period of 15 days. The acceptance was never communicated.

13. It is apparent that the reason for cancellation of the bid is a mistake which occurred in specifying the area of the shop as 21.6 sq. mts instead of 28.68 sq. mts. Thus infact there was no auction of a shop of 28.68 sq. mts.

14. In my considered view the judgment referred to by the learned counsel for the petitioner would not apply to the facts and circumstances of the present case since the contract was no to conclude on the fall of the hammer but something more was to be done. This was the requirement of acceptance of the bid.

15. There is, however, no doubt that the petitioner is not at fault and undoubtedly the mistake had occurred on behalf of the respondents. The petitioner has paid the initial 25% of the bid amount and the money was lying with the respondent for quite some time. The shop of 28.6 sq. mts cannot be sold at the price for which a shop of 21.6 sq. mts was proposed to be sold and thus learned counsel for the petitioner at this stage submits that the petitioner is willing to pay proportionate extra amount for the additional area.

16. In view of the fact that the petitioner is willing to pay for extra area I direct the respondents to give an opportunity to the petitioner to be heard and to consider the offer made by the petitioner. In case even on reconsideration respondent is not willing to accept the request of the petitioner based on the payment of the extra amount, the petitioner is certainly entitled to interest on the amount deposited with the respondent since the auction had to be cancelled because of the mistake/fault of the respondent. The respondents will pay interest in such eventuality @ 15% per annum from 17.8.2001 (the date of the auction when 25% of the bid amount was deposited) to 30.5.2002 when the counter affidavit was filed by the respondent. This is so as the respondent did not refund the 25% of bid amount of its own and did not disclose the reason to the petitioner as to why the auction had been cancelled. In fact a reading of the letter dated 4.1.2002 shows that the respondent was even considering adjustment of the amount deposited by the petitioner in future auctions. The necessary decision on the request of the petitioner, as directed aforesaid, be taken by the respondents within a period of 4 weeks after due opportunity to the petitioner as stated aforesaid. Petitioner to appear before the Additional Deputy Commissioner (RP Cell) of the respondent on 20.8.2002 at 3.00 P.M.

Writ petition stands disposed of in the aforesaid terms.