This Court dismissed a writ petition challenging the forfeiture of earnest money by RIICO. The Court held that a valid contract was formed via the auction terms, accepting that the petitioner's delay and lack of intent to pay the balance consideration justified the forfeiture. The cited precedent was distinguished.
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.
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HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR
S.B. Civil Writ Petition No. 14585/2015
Ashok Kumar Agarwal Son Of Sh. Jagdish Prasad, 10-A, Shanti Niketan Colony, Barkat Nagar, Jaipur, Rajasthan.
----Petitioner
Versus
----Respondents
| For Petitioner(s) | : Dr. P.C. Jain with Ms. Mamta & Mr. |
|---|---|
| Ashok Kumar Gupta, Adv. | |
| For Respondent(s) | : Mr. S.N. Kumawat, Adv. |
HON'BLE MR. JUSTICE SAMEER JAIN
Order
Reserved On: 05/04/2023 Pronounced On: 11/05/2023
“That by way an appropriate writ, order or direction, the impugned order dated 02.12.2014 may kindly be declared as illegal and be quashed and set aside. Consequently, the respondents may kindly be directed to release the amount of earnest money amounting to Rs. 6,60,000/- (Six lakh sixty thousand rupees) along with interest @ 18% per annum from the date of 03.09.2014.”
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it was submitted that in the present case, the respondent-RIICO dispatched the letter of acceptance qua the petitioner’s bid dated 11.11.2014, only on 19.11.2014, thereby intimating the petitioner of his successful bid and its acceptance by the corporation along with a direction to the latter to deposit the 25% amount of sale consideration within a period of 15 days. However, it was submitted by the learned counsel for the petitioner, that much to the dismay of the petitioner, he received the said letter only on 22.11.2014 and as a result, even before the expiration of the 15 days provided for effectuating the payment of 25% of the total amount of sale consideration, the respondent-RIICO vide impugned order dated 02.12.2014, forfeited the earnest money deposited by the petitioner, totaling Rs. 6,60,000/-.
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regarding the fair and just allotment of the plot in question, the petitioner submitted an application before the corporation whereby it was categorically stated that despite quoting the highest bid, the petitioner was not interested in purchasing the said plot. Consequently, before the petitioners bid could be approved/accepted i.e. 11.11.2014, the petitioner prayed for the cancellation of his bid by way a retraction letter dated 10.09.2014. Hence, as the cancellation/retraction letter qua the bid so submitted was deposited before the bid was actually accepted by the respondent-RIICO, the impugned order dated 02.12.2014 itself becomes premature and therefore, is liable to be quashed and set aside. In order to strength their case, learned counsel for the petitioner relied upon a judgment of the Delhi High Court titled Vishal Builders (P) Ltd. vs. Delhi Development Authority reported in ILR 1977 Delhi 724 .
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is not maintainable. It was further elaborated that the petitioner had entered into a contract with the respondent-RIICO of their own free will, after having considered the relevant documents and stipulations such as the terms and conditions provided in the advertisement, the reserve price proposed for the plot in question and deposition of earnest money as a security to the tune of Rs. 6,60,000/- amongst the other stipulations, which categorically did not provide for retraction of the bid so put forth by the bidders (herein, petitioner).
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bid of the petitioner and to forfeit the earnest money as per the terms and conditions of the bid.
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for the respondent-RIICO for the dismissal of the instant writ petition.
(i) That on 15.08.2014, the respondent-RIICO issued an advertisement for the auction of commercial plots situated in various areas of Jaipur, including the plot in question located at Bassi in District Jaipur.
(ii) That in the said advertisement, the relevant stipulations for a successful allotment; such as the reserve price for the plot, terms and conditions of the auction proceedings including those pertaining to the offer and its acceptance, the requirement of the earnest money to be deposited as well as the terms and conditions of payments i.e. deposition of 25% of the sale consideration within the prescribed period of 15 days from the date of intimation etc, were all duly and categorically incorporated.
(iii) That the petitioner duly satisfied the terms and conditions of the auction proceedings insofar as he submitted his bid/application alongside a Demand Draft for the earnest money as required to be
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submitted. In this regard, it would be prudent to note that the crux of the present dispute arose only after the petitioner was declared as the single and highest bidder, pursuant to which he was intimated of the acceptance of his bid. However, despite the same, he categorically and admittedly did not submit the due amount, as per the agreed upon terms and conditions, which required the petitioner to deposit 25% of the sale consideration within a period of 15 days from the date of intimation of their bid by the respondent-RIICO.
(iv) That as per the terms and conditions of the advertisement issued on 15.08.2014, the respondent-RIICO was well within their rights to forfeit the earnest money deposited by the petitioner, in an event, where the latter failed to comply with the requirement to submit one quarter of the total sale consideration within the aforesaid period of 15 days.
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relation to its terms and conditions, implied deemed acceptance of the said terms and conditions, in totality. Hence, by virtue of the said acceptance sealed by the deposition of the petitioner’s bid and its corresponding acceptance, the petitioner was duly bound by the terms and conditions incorporated in the advertisement issued by the respondent-RIICO. Furthermore, in categoric compliance of those very same conditions imposed by the respondents, the petitioner also deposited the earnest money to the tune of Rs. 6,60,000/-. Hence, it was only after the petitioner failed to comply, in totality with the terms and conditions, as imposed by the respondents, that he raised a challenge to the very same stipulations of the advertisement, by urging the latter for the return of the earnest money as deposited by him along with his bid/application. In this regard, it is of interest to note that it was only upon the petitioner’s admitted failure to deposit the 25% amount of sale consideration, that he prayed for the retraction of his bid, vide retraction letter dated 10.09.2014, after the same had duly been accepted by the respondent-RIICO.
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clear that the said stipulations did not permit retraction of bids or any incidental action thereto, by the bidders participating in the auction proceedings. Therefore, upon a cumulative consideration of the fact that the petitioner had participated in the auction proceedings with open eyes and had duly deposited his bid along with the earnest money and that his bid was correspondingly declared as successful and thereby accepted; a valid contract was entered into between the parties. Thus, looking to the breach of the terms and conditions of the contract so entered into, the respondent-RIICO was well within their contracted rights to forfeit the earnest money submitted by the petitioner.
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dated 11.11.2014 was only dispatched by the respondent-RIICO on 19.11.2014. Thereafter, the said letter was received by the petitioner on 22.11.2014. Hence, without actually providing the stipulated period of 15 days from the date of intimation of the said acceptance, the respondent-RIICO vide impugned order dated 02.12.2014, forfeited the earnest money deposited by the petitioner. In essence, the petitioner summarized their argument on delay and laches by pointing out the reduced period of time made available to the petitioner to deposit the quarter of sale consideration as opposed to the stipulated period of 15 days, thereby, praying for the forfeiture of earnest money to be declared premature and contrary to the terms of the contract.
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was there any communication/representation on behalf of the petitioner seeking extension of the time period so lapsed on account of the delay. Furthermore, the petitioner never contested the said delay accrued in receiving the letter dated 11.11.2014, which in consonance with other factors, such as the nondeposition of the sale consideration, at any stage, even after the same having come to the petitioner’s knowledge, solely reflects that it was never the intention of the petitioner to deposit the said 25% amount of the sale consideration. Therefore, considering the fact that no application/representation for condoning the delay in deposition of the part of the sale consideration was filed by the petitioner, at any stage, even after the fact of acceptance came into his knowledge, reflects poorly on the conduct of the petitioner, thereby, cementing his intent of not honouring the terms and conditions of the auction proceedings, which were categorically consented upon by the petitioner in the bid document dated 03.09.2014.
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and circumstances of the present matter, this court deems it fit to excuse itself from entertaining the argument raised by the petitioner qua the delay in dispatch and receival of the acceptance letter as a ground for setting aside the order of forfeiture passed by the respondent-RIICO. Furthermore, the judgement relied upon by learned counsel for the petitioner in the case of Vishal Builders ( Supra ) is distinguishable on the ground that the said judgment is based on inimitable factual considerations pertaining to the amount to be deposited in terms of their quantum and at the stage, on which, the same were to be deposited before the Delhi Development Authority. Moreover, in the said judgment, the Hon’ble Court adjudged upon the requirement of deposition of 25% of the amount to not be treated as earnest money by categorically holding that the bid amount to be deposited by a party participating in the auction proceedings cannot be treated as earnest money. The court also went on to differentiate the amount submitted in pursuance of a bid by juxtaposing the same with the earnest money deposited while participating in the auction proceedings. Therefore, the said judgment cannot be treated at par to resolve the controversy involved in the present matter and hence, is accordingly distinguished.
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depositing the said amount, to furnish their bonafides and their earnest effort in honouring their commitment so bid for or sought after. Thus, in legal parlance, earnest money is referred to as a form of security payment/deposit made in a transaction sought be entered into and/or completed to demonstrate that the payer is serious and willing to demonstrate their earnest of good faith about wanting to enter into the said transaction. Therefore, in the facts and circumstances of the present case and upon consideration of the intent behind the deposition of earnest money altogether coupled with the fact of forfeiture of the same upon non-deposition of the stipulated amount by the petitioner, supports the claim of the respondents qua the lack of intent to honour the said contract between the parties, on part of the petitioner, which is further supported by way of the retraction letter drafted by the petitioner dated 10.09.2014, suggesting the attempt on part of the petitioner to frustrate the bid proceedings in their entirety.
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contract came to be in existence between the parties and any breach of the conditions thereof, empowered the respondentRIICO to forfeit the amount of earnest money, as provided in the terms and conditions of the advertisement so issued by them; that the defense of delay, as raised by the petitioner, on part of the respondent in dispatching the acceptance letter at a belated stage, thereby preventing the due compliance of the terms and conditions of the contract is not tenable in terms of the established intent of the petitioner in not participating in the said proceedings by way of his lethargic and unreasonable conduct and thereby, frustrating the auction proceedings in their entirety; that no sincere attempt/effort was made by the petitioner in depositing the required 25% amount of the total sale consideration, either by way of any representation or application for the condition of delay in submission of the said amount; that the instant petition was preferred with a delay of over one year from the date as on when the cause of action arose; that the very intent behind the deposition of earnest money is to demonstrate a party’s earnest of good faith in wanting to enter into a transaction and further considering the fact that the judgment relied upon by the petitioner in the case of Vishal Builders (Supra) is distinguishable from the facts and circumstances of the present matter, this Court is inclined to dismiss the present writ petition. 19. Accordingly, in light of the observations made herein-above, the present writ petition is dismissed. Pending applications, if any, also stand disposed of.
(SAMEER JAIN),J
ANIL SHARMA /81
3 issues framed by the court
Whether the High Court can exercise writ jurisdiction to set aside the forfeiture of earnest money by the respondent when the petitioner breached the auction terms after forming a valid contract.
Whether the petitioner's delay in filing the petition and failure to deposit the remaining sale consideration constitutes a valid defense against the forfeiture.
Whether the judgment cited by the petitioner is distinguishable on the facts of quantum and timing of the deposit requirement.
Colour shows how this judgement treated each authority
Vishal Builders (P) Ltd. vs. Delhi Development AuthorityDistinguished¶80
ILR 1977 Delhi 724 · Who else cites this
Ashok Kumar Agarwal
Rajasthan State Industrial Development And Investments Corporation Limited
Senior Regional Manager, Rajasthan State Industrial Development And Investments Corporation Limited
Sameer Jain
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
