In a writ petition challenging the termination of a lease agreement and forfeiture of earnest money deposit in a revival of a sugar factory, the High Court of Karnataka held that the matter involved disputed questions of fact unsuited for writ jurisdiction.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
NC: 2023:KHC-D:14484 WP No. 105880 of 2023
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 11TH DAY OF DECEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE M.I.ARUN
WRIT PETITION NO. 105880 OF 2023 (GM-TEN)
BETWEEN:
M/S. GIRIJARAMANA IMPEX PRIVATE LIMITED, REPRESENTED BY SRI. K.R. BALASUBRAMANYAN, AGE: 65 YEARS, OCC: MANAGING DIRECTOR AND AUTHORISED SIGNATORY, NO. 233, GIRIJARAMANA CHAMBERS, 2ND FLOOR, 2ND MAIN ROAD, 15TH CROSS, SAMPIGE ROAD, MALLESHWARAM, BENGALURU-560003.
…PETITIONER
(BY SRI. H.M. DHARIGOND, SMT. S.F. KALLIMANI & SRI GANESH RAIBAGI, ADVOCATES)
AND:
ROHAN HADIMANI T Digitally signed by ROHAN HADIMANI T
RANNA NAGAR, TIMMAPUR, TALUK: MUDHOL, DISTRICT: BAGALKOT-587122.
…RESPONDENTS
(BY SRI. GANGADHAR J.M., AAG FOR SRI. PRAVEEN K. UPPAR, AGA FOR R1 & R2; SRI. PRAMOD KATAVI, SENIOR COUNSEL FOR SRI. S.S. MUDHOL, & SRI. ANAND D. BAGEWADI, ADVOCATES FOR R3 & R4;)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE WRIT IN THE NATURE OF CERTIORARI TO QUASH THE IMPUGNED ORDER DATED 25.08.2023 BEARING NO.CI214 COF 2020 BENGALURU, PASSED BY RESPONDENT NO.1 VIDE ANNEXURE-T; ISSUE WRIT IN THE NATURE OF MANDAMUS DIRECTING THE RESPONDENTS TO LEASE THE RYATAR SAHAKARI SAKKARE KARKHANE NIYAMIT RANNANAGAR TIMMAPUR TALUK MUDHOL AND DISTRICT BAGALKOT AS PER APPROVAL ORDER DATED 27-12-2021 PASSED BY THE 1ST RESPONDENT VIDE ANNEXURE-F, BY CONSIDERING THE REQUEST MADE BY THE PETITIONER DATED 13.05.2022 VIDE ANNEXURE-L IN THE ENDS OF JUSTICE.
THIS PETITION, COMING ON FOR ORDERS, THIS DAY,
THE COURT MADE THE FOLLOWING:
ORDER
Respondent No.3 is a Co-operative Society/ Sugar Factory. It fell sick. The State took a decision to revive the same. It floated a tender calling for bids from the interested parties who would lease, rehabilitate, operate and transfer (LROT) the 3rd respondent/Sugar Factor. The petitioner was the successful bidder and the bid of the petitioner was accepted by respondent No.1. The petitioner also paid a sum of Rs.1 crore as earnest money deposit to show its earnestness to complete the project as required. However, the petitioner failed to execute the contract as required and also did not make further payments and fulfill other terms of the contract. Hence, the agreement was terminated, the earnest money deposit was forfeited and the petitioner was blacklisted. Aggrieved by the same, the petitioner preferred Writ Petition No.103000/2022, wherein the order passed by respondent No.1 was set aside and respondent No.1 was directed to hear the petitioner and then take further action. The said
order was challenged in Writ Appeal No.100431/2023, wherein, the order passed in the writ petition was reiterated by reducing the time frame fixed in the writ petition to hear the petitioner and pass orders. Thereafter, the petitioner has been heard by respondent No.1 and the impugned order has been passed, wherein the petitioner is no more blacklisted, but the contract is terminated and his earnest money deposit has been forfeited. Aggrieved by the same, the present writ petition is filed.
relationship between the petitioner and the respondents which has resulted in forfeiture of earnest money deposit deposited by the petitioner with respondent No.1 on the ground that the transaction failed due to fault of the successful bidder (petitioner) because of which the earnest money deposit has to be forfeited. The present case involves disputed question of facts which cannot be gone into by this Court in exercising its powers under Article 226 of the Constitution of India. Earnest money deposit is
deposited by a bidder to show its earnestness to fulfill the contract. If the contract fails due to the fault of the bidder, then in that event, earnest money deposit is liable to be forfeited. It does not require an express provision to that effect in the contract. Whether the contract failed between
the parties due to the fault of the petitioner or respondents involves disputed question of facts, for which, the petitioner is required to approach the Civil Court or arbitration if the agreement has an arbitration clause. The same cannot be decided by this Court in exercising its powers under Article 226 of the Constitution of India.
RH
List No.: 1 Sl No.: 5
Sd/JUDGE
2 issues framed by the court
Whether this Court can exercise its powers under Article 226 of the Constitution of India to decide a disputed question of facts regarding the forfeiture of earnest money deposit.
Whether the contract failed due to the fault of the bidder, requiring recourse to Civil Court or arbitration.
M/s. Girijaramana Impex Private Limited
The State of Karnataka
The Commissioner, Sugar Cane Development
The Managing Director, Raithar Sahakari Sakakare Karkane Niyamita
M.I. Arun
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
