Jagdamba Galla Bhandar v. Food Corporation of India
1997-03-05
AFTAB ALAM
body1997
DigiLaw.ai
Order 1. All these cases arise from similar facts and circumstances and the petitioners in all these cases seek similar reliefs. These applications have, therefore, been heard together and are being disposed of by a common order. 2. The petitioners in these four writ 'petitions made applications for allotment of wheat for the month of September, 1996 under the Open Market Sale Scheme. Along with their applications as required, they also deposited earnest money @ 10% of the price of wheat applied for. The petitioners have now come to this Court seeking direction(s) restraining the authorities of the Food Corporation of India (respondent no. 1) from taking steps for the forfeiture of the earnest money deposited by them for their failure to lift the quotas of wheat allotted to them. 3. The material facts which are necessary for disposing of these applications can be briefly stated thus. The sale of wheat for the month of September, 1996 under the Open Market Sale Scheme was governed by the terms and conditions as contained in a Fax message bearing no. J/1 /(1 )96/PY/S. III dated 28.8.1996 (Annexure 1 to the writ petition and Annexure 'A' to the counter affidavit). The terms and conditions enumerated in this Fax message admittedly do not contain any provision for the forfeiture of earnest money in case of default in lifting the allotted quota. It is also an admitted position that the petitioners were not allotted any quotas of wheat which they might have lifted from any of the Corporation's godowns in this State; but as per the terms and conditions of the Scheme (Annexure 1/Annexure 'A') they were directed to lift their respective quotas from the Corporation's different godowns in the Punjab. The necessary directions in this regard are contained in a communication dated 21.9.1996 (Annexure 8' to the counter affidavit) from the Deputy Manager (S & C), Food Corporation of India, Patna to the Senior Regional Manager, Food Corporation of India, Punjab Region. The respondent Corporation relies upon certain portion of this communication to justify its decision to forfeit the earnest money deposited by the petitioners. It will be, therefore, useful to reproduce here para 2 of the letter which is relied upon by the Corporation: "You are, therefore, requested to deliver the wheat stock to the parties concerned on realisation of full costs, taxes, fees etc.
It will be, therefore, useful to reproduce here para 2 of the letter which is relied upon by the Corporation: "You are, therefore, requested to deliver the wheat stock to the parties concerned on realisation of full costs, taxes, fees etc. as may be applicable in Punjab and after verification of licence/registration documents. The EMD amount of the parties have been kept with this Region which will be released to the parties concerned on receipt of lifting certificate issued by the District Manager concerned of Punjab Region." (emphasis added) 4. It is further pointed out on behalf of the Corporation that the concerned parties, including the petitioners, put their signatures at the back of this communication. According to the Corporation, the parties by putting their signatures at the back of the letter made their commitment and gave an undertaking to lift their respective quotas from Punjab. It is also stated on behalf of the Corporation that though initially the final date for lifting the quota for September, 1996 was 30.9.1996, in view of some unavoidable delay in the Corporation's office, the last date was extended upto 31.10.1996. It is further stated on behalf of the Corporation that the petitioners did not lift their quotas from the different god owns in Punjab as per the allotments made in their favour and hence they made their earnest money liable to be forfeited. 5. On behalf of the petitioners, it is stated that following the instructions contained in the letter dated 21.9.1996, they went to the Corporation's regional office in Punjab on. 23.9.1996. They, however, faced some difficulties there and faxed a message to the Regional Office at Patna on 25.9.1996 intimating that they were not being able to lift their respective quotas from the different god owns in Punjab. 6. Be that as it may, the admitted position is that petitioners were allotted their quotas of wheat to be lifted from different god owns of the Corporation in Punjab which they did not lift till 31.10.1996, that being the last date for lifting the wheat quota for the month of September, 1996. 7. Mr.
6. Be that as it may, the admitted position is that petitioners were allotted their quotas of wheat to be lifted from different god owns of the Corporation in Punjab which they did not lift till 31.10.1996, that being the last date for lifting the wheat quota for the month of September, 1996. 7. Mr. Prabhakar Tekriwal, learned counsel appearing on behalf of the Corporation submitted that para 2 of the communication dated 21.9.1995 (the underlined portion in the re-production above) contained an implied condition that failure to lift the allotted quotas from the Punjab would lead to the forfeiture of the earnest money deposited by the parties. He further submitted that the parties, including the petitioners, by putting their signatures at the back of this communication had committed themselves to lift the quotas and had also accepted the implied condition of forfeiture of their earnest money on their failure to do so. According to Mr. Tekriwal, therefore, the Corporation was quite justified in its decision to initiate proceeding for the forfeiture of the earnest money deposited by the petitioners. He further submitted that the Corporation proposed to issue individual show cause notices and it would be open to each of the petitioners to file show cause giving reasons for his failure to lift the allotted quota from the Punjab and in an appropriate case the Corporation may take the decision not to forfeit the earnest money deposited by any of the petitioners. 8. I find myself unable to accept the submissions advanced by Mr. Takriwal. The forfeiture of earnest money clearly amounts to an imposition of penalty or at least realisation of compensation for damages sustained by the Corporation. In any case the impugned forfeiture must find support either from some specific statutory provision or from some definite and explicit term or condition in the contract. I think that in the absence of any definite, specific and explicit term(s) in the contract, the forfeiture cannot be justified by simply taking the plea that the allotment letter contained such an implied condition. In this regard, as noted above, Mr. Tekriwal relies upon a passage in the communication addressed to the Senior Regional Manager, Food Corporation of India, Punjab Region and according to him that letter contained the implied condition for forfeiture of the earnest money.
In this regard, as noted above, Mr. Tekriwal relies upon a passage in the communication addressed to the Senior Regional Manager, Food Corporation of India, Punjab Region and according to him that letter contained the implied condition for forfeiture of the earnest money. I am unable to read that passage to find there any condition of forfeiture of earnest money and in my opinion it would be unreasonable to hold on that basis that the parties were aware that their failure to lift their respective quotas from the Punjab godowns would visit them with the penal consequences of forfeiture of their earnest money. Similarly the mere fact that the parties put their signatures on the back of this communication cannot be construed to mean that they made commitment or gave an undertaking to lift their quotas from the Punjab. On allotment of quota which was to be lifted from the Punjab a party might have changed its mind in view of the difficulties of transportation etc. and might have decided not to pursue the contract. In that event it was not made clear to him the consequences of giving up the contract in the middle and not pursuing it any further. I am, therefore, of the opinion that in the absence of any clear terms and conditions either in Annexure 1 or in the allotment letter, the Corporation has no right to initiate a proceeding for forfeiture of the earnest money. 9. These applications are accordingly allowed and the Corporation is directed to refund the earnest money deposited by each of the petitioners within a fortnight from today. 10. In the result, these applications are allowed. In the facts and circumstances, there shall be no order as to costs.