LexHARYANA FINANCIAL CORPORATION & ANR. versus RAJESH GUPTA
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
[2009) 16 (ADDL.) S.C.R. 456 " A HARYANA FINANCIAL CORPORATION & ANR. v. RAJESH GUPTA (Civil Appeal No. 829 of 2003) B DECEMBER 15, 2009 [J.M. PANCHAL AND SURINDER SINGH NIJJAR, JJ.J Contract: c Auction sale - Forfeiture of earnest money - Highest bidder depositing earnest money for auctioned industrial plot of defaulting unit - Later it transpired that the premises did • not have an independent passage - Issue of independent passage having not been resolved bidder did not pay the D further amount - Earnest money forfeited by State Financial Corporation - HELD: The bidder has not failed to comply with • conditions of sale - It is the Corporation which, though being the instrumentality of State, acted unfairly - It was incumbent upon the Corporation to disclose to the buyer about non- E existence of independent passage to the premises - Corporation acted in breach of ss.55(1)(a) and (b) of the Transfer of Property Act - Buyer being an auction purchaser, s.29 of State Financial Corporation Act has no application cc; the case - High Court rightly concluded that action of F Corporation in forfeiting the earnest money of the buyer was . ~ wholly arbitrary and unfair - Forfeited amount would be refunded to buyer with 12% interest - Tran sf er of Property Act, 1882- ss. 55(1}(a) and (b) - State Financial Corporation Ar:t, 1951 - s.29 - Constitution of India, 1950 - Article 12 G The respondent, pursuant to an advortisement issued by the appellant- Haryana Fimmcial Corporation, for sale of land of a defaulting company, made an offer and he being the highest bidder deposited Rs. 2.5 lakhs by way of earnest money. After a visit having been made H 456 HARYANA FINANCIAL CORPORATION & ANR. v. 457 RAJESH GUPTA ' by the respondent to the factory premises, he wrote to A the appellant-Corporation that the land in question did not have an independent passage and requested for supply of copy of the approved building plan of the premises, but his request remained unanswered. lnspite of this, the Corporation issued a letter dated 18.5.1998 to B the respondent asking him to deposit balance amount of 25 per cent of the bid amount within fifteen days, failing which the earnest money deposited by him would be forfeited. Since the issue of independent passage was not resolved, the respondent did not pay the balance c amount and the Corporation by its order dated 30.9.1998 forfeited the earnest money deposited by him. The respondent approached the High Court, which quashed. the order dated 30.9.1998 and directed the Corporation to refund the amount along with 12 % interest. Aggrieved, 0 the Corporation filed the appeal. Dismissing the appeal, the Court HELD: 1. Factually the appellants have accepted that on 28.1.1998 the respondent had in no uncertain terms E informed the appellants/Corporation about the non- existence of the independent passage. There is a categorical asse,rtion that premises do not have an independent appropriate passage from the road. The ~ • appellants were merely relying on the documents F submitted by the defaulting unit. No independent inquiries were made by the appellants to verify the authenticity of the statements made by the management of the defaulting unit which had availed of the loan, by mortgaging the assets of the unit. The entire issue seems G to be concluded against the appellants/Corproation by letter dated 30.4.1998 whereby its Branch Manager has ' informed the head office in unequivocal language that the independent passage shown in the sale deed is not H 458 SUPREME COURT REPORTS [2009) 16 (ADDL.) S.C.R. A connected directly with the defaulting unit. [Para 14 and 16) (466-C-D; 467-G-H; 468-A-B] 1.2. Taking into consideration the facts, the Division Bench of the High Court rightly concluded that the action B of the Corporation in forfeiting the amount deposited by the respondent was wholly arbitrary and unfair. The High Court was justified in further concluding that In law the Corporation undoubtedly has the power to forfeit the earnest money provided there was a failure on the part c of the respondent to make the deposit. The Division Bench, however, observed that the respondent was dealing with an instrumentality of State, which would act fairly. He deposited the sum of Rs.2.5 lakhs on the clear understanding that there would be an independent D approach road to the Unit. Without any Independent passag
Excerpt shown. Read the full judgment & AI analysis in Lexace.