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Madhya Pradesh High Court · body

2017 DIGILAW 71 (MP)

Sharmanlal v. State of M. P.

2017-01-12

NANDITA DUBEY

body2017
ORDER : With the consent of the parties, heard finally. In this petition under Article 226 of the Constitution of India, validity and propriety of orders dated 29-12-2014 (Annexure P/11) and 14-8-2016 (Annexure P/16) are under challenge. 2. It is contended on behalf of the petitioner that after being declared the successful bidder for shop No. 3, he deposited 25% of the offer amount i.e. 4.5 lakhs on the same day. As he could not deposit the balance 75% of the amount, his allotment was cancelled vide Annexure P/11 and the 25% amount deposited by him as 1st installment was forfeited. Appeal filed against this order was also dismissed vide Annexure P/16. It is urged that the respondents could not have forfeited the first installment of bid amount. At the most, the security deposit could have forfeited, while cancelling the allotment of shop. 3. No reply has been filed by respondent No. 3. Shri Ashok Lalwani, learned counsel on behalf of respondent No. 3 has supported the impugned order. It is argued that, for allotment of shops No. 3 and 30 reserved for ex-servicemen, it was mandatory to show the original certificate/document of service before the authority and to deposit 25% of the offer amount immediately and rest of the amount within a period of 30 days from the notice. On the basis of some complaints regarding identity of the petitioner and to observe fairness in the auction process, petitioner was asked to appear in person with original documents of his service record. He was further asked to deposit the balance amount within 15 days. As the petitioner did not show the original certificate despite being asked nor deposited rest of the 75% of the bid amount, the amount so deposited by him was forfeited as per Rule 6(I) and (iv) of the Transfer of Immovable Property, Rules, 1996. It is next urged by the learned counsel that determination of amount of security deposit is the prerogative of the council and in the present case, the Council had determined the security deposit as 25% of the offer price. In view of the failure to deposit rest of the 75% of the offer price within 30 days of the date of acceptance of his offer, the amount deposited by the petitioner was forfeited as per Clause (iv) of Rule 6 of the (Transfer of Immovable Property), Rules 1996. In view of the failure to deposit rest of the 75% of the offer price within 30 days of the date of acceptance of his offer, the amount deposited by the petitioner was forfeited as per Clause (iv) of Rule 6 of the (Transfer of Immovable Property), Rules 1996. It is further urged that retention/forfeiture of the said amount was also on account of loss suffered by the respondent corporation as the shop was kept vacant for 25 months. 4. No other ground has been raised by the parties. 5. Rule 6 of the (Transfer of Immovable Property) Rules 1996, envisages: “Rule 6. The auction or the offers, as the case may be, in addition to other conditions which the Council may think fit to impose shall be subject to the following conditions, namely:— (i) An amount of security deposit, as determined by the Council subject to the condition that such amount shall not be less than ten percent of the estimated auction/offer price in cash or though Demand Draft, shall necessarily be deposited by bidders or the offerers as the case may be, before participating in the auction or giving sealed offers, otherwise no person shall be entitled to take part in the auction. Similarly, the offers without the said Security Deposit shall not be entertained. (ii) The highest bid/offer shall be subject to sanction by the authorities as referred to in section 109 of the Act. (iii) The authorities as referred to in condition (ii) above shall not be bound to sanction the highest bid/offer. (iv) The highest bidder or the highest offerer as the case may be, shall deposit 100% of the auction/offer price, within 30 days from the date of receipt of the notice of intimation that his bid/offer has been accepted by the authority as referred to in the condition number (ii) above. However, the amount of security deposit shall be adjusted in the said auction/offer price. If he fails to pay such amount, within the said period, the security deposit shall be forfeited. (v) Leaving the security deposit of first two highest bidders/offerers, the security deposit of all the remaining bidders/offerers shall be refunded immediately after the auction is over or the offers are opened, as the case may be. (vi) As soon as the full auction/offer price is received, the Security Deposit of the remaining one bidder/offerer shall also be refunded. (v) Leaving the security deposit of first two highest bidders/offerers, the security deposit of all the remaining bidders/offerers shall be refunded immediately after the auction is over or the offers are opened, as the case may be. (vi) As soon as the full auction/offer price is received, the Security Deposit of the remaining one bidder/offerer shall also be refunded. (vii) In case, bidder/offerer, whose bid/offer has been accepted, does not deposit the auction/offer price within the time prescribed as above, the authority as referred to in condition (ii), may accept the second highest bid/offer, and on intimation, such bidder/offerer also does not deposit the auction/offer price within the prescribed time, the security deposit of such bidder/offerer shall also be forfeited. (viii) If the authority as referred in condition (ii), is of the opinion that instead of accepting the second highest bid/offer, re-auction or re-inviting the offers is necessary, then the Security Deposit of such second bidder/offerer shall be refunded and auction to re-auction or re-inviting the sealed offers shall be taken.” 6. A fair reading of Clause (i) of Rule 6 provides that the security deposit as determined by the Council shall not be less than 10% of the estimated auction and the same has to be deposited before participating in the auction or giving sealed offers, else the offers without the security deposit shall not be entertained. Clause (iv) of Rule 6 provides that on failure to deposit 100% of the auction price within 30 days from the date of receipt of the notice of intimation that the bid/offer has been accepted by the authority, the security deposit shall be forfeited. 7. Annexure P/2, dated 22-3-2013 issued by the respondent No. 3 for allotment of shops situated at old bus stand premises shows that out of the said shops, shop No. 3 and 13 were reserved for the ex-army persons. The conditions prescribed therein for taking part in the auction proceeding were: (i) To deposit copy of the identity card and certificate of the competent authority for reserved shops. (ii) Pre-deposit of security amount prior to date of auction. (iii) Security deposit for reserved shops would be accepted only on producing the original certificate and filing the true copy of the same along with an application. (ii) Pre-deposit of security amount prior to date of auction. (iii) Security deposit for reserved shops would be accepted only on producing the original certificate and filing the true copy of the same along with an application. (iv) first successful bidder to deposit 25% of the bid/offer immediately and 75% within 30 days of the notice else the same shall stand cancelled. 8. It is not in dispute that petitioner was permitted to participate in the auction and Rs. 20,000/- was accepted as the security deposit from him. He was declared the first successful bidder on 9-4-2013 with an offer of Rs. 18 lakhs and as per the terms/conditions, deposited Rs. 4.5 lakhs on the same day as 25% of his offer/bid, vide Receipt No. 50 dated 6-4-2013 (Annexure P/3). Annexure P/10 dated 27-12-2014 by the Chief Municipal Officer further makes it clear that Rs. 20,000/- was accepted as the prescribed security deposit from the petitioner. 18 lakhs and as per the terms/conditions, deposited Rs. 4.5 lakhs on the same day as 25% of his offer/bid, vide Receipt No. 50 dated 6-4-2013 (Annexure P/3). Annexure P/10 dated 27-12-2014 by the Chief Municipal Officer further makes it clear that Rs. 20,000/- was accepted as the prescribed security deposit from the petitioner. Annexure P/10 is reproduced as under:- Áfr] ifj;kstuk vf/kdkjh ftyk 'kgjh fodkl vfHkdj.k mefj;k ftyk & mefj;k ¼eŒÁŒ½ fo"k; %& iqjkuk cl LVS.M fLFkr nqdku uaŒ 3 dh [kqyh cksyh esa tek jkf'k dks voS/k :i ls okil djk, tkus ds fo:} dk;Zokgh fd, tkus gsrqA lanHkZ %& vkidk i= Øekad 528 ftŒ'kŒ@2014 mefj;k fnukad 24-12-2014A mijksDr fo"k;karxZr ys[k gS fd uxj ikfydk mefj;k ds iqjkus cl LVS.M ds fufeZr nqdku ØŒ 3 tks HkwriwoZ lSfud ds fy;s vkjf{kr Fkh esa fu/kkZfjr vekur jkf'k :i;s 20]000@& tek dj Jh ljeuyky firk eksrhyky feJk] fuoklh xzke /kehj] rglhy@ftyk&NRrjiqj ¼eŒÁŒ½ ds }kjk Lo;a mifLFkr gksdj lkoZtfud uhykeh esa :i;s 18]00]000@& ¼vBkjg yk[k½ mPpre cksyh yxkdj nqdku yh xbZ FkhA nqdku uhykeh 'krksZ ds vuqlkj mPpre cksyh dh 25 Áfr'kr :i;s 4]50]000@& jlhn Øekad 54@14 fnukad 9-7-2013 ds }kjk tek dh xbZ gSA ¼Nk;kÁfr layXu gS½ dk;kZy;hu i= ØŒ 1192 fnukad 1-7-2014 ds }kjk lacaf/kr nqdkunkj ls HkwriwoZ lSfud gksus ds vko';d ewy vfHkys[k ds lkFk nqdku dh cdk;k jkf'k tek djkus gsrq i= rkehy djk;k x;kA rc lacaf/kr }kjk dksbZ ewy vfHkys[k HkwriwoZ lSfud gksus dk ,oa uhykeh dh cdk;k jkf'k :i;s 13]50]000@& vkt fnukad rd tek u djus o vuqca/k u djus ds dkj.k eŒÁŒ vpy laifRr varj.k fu;e 1996 ds rgr cuk;s x;s fu;e 'krksZ ds v/khu mDr vkjf{kr nqdku ØŒ dh uhykeh fujLr dj tek jkf'k jktlkr dj yh xbZ gSA ¼Nk;kÁfr layXu gS½ dh xbZ f'kdk;r vlR; ,oa fujk/kkj gSA vr% pkgh xbZ tkudkjh Áfrosnu lfgr lEÁsf"kr gSA eq[; uxj ikfydk vf/kdkjh uxj ikfydk ifj"kn mefj;k ftyk & mefj;k ¼eŒÁŒ½ 9. A conjoint reading of Annexure P/2 and Rule 6 of the Rule 1996, makes it evident, that the condition in Annexure P/2 and Rule 6(i) provide for forfeiture of the security deposit, deposited prior to participating in the auction. Though Rule 6(i) provides that amount of security deposit determined by the Council shall not be less than 10% of the estimated auction/offer price. Though Rule 6(i) provides that amount of security deposit determined by the Council shall not be less than 10% of the estimated auction/offer price. But in absence of any document showing what was the amount determined by the Council under the provision of Rule 6(i) as security deposit, Rs. 20,000/- received from the petitioner as the prescribed amount could only be forfeited by the Corporation. It is also evident from letter dated 27-12-2014 afore produced that not only Rs. 20,000/- was accepted as ‘prescribed security deposit’ prior to date of auction but his offer was entertained and petitioner was declared successful bidder. There is no term in Annexure P/2 or Rules 1996 permitting forfeiture of the 25% of the offer amount deposited by petitioner. The only amount that could be forfeited was the security deposit, deposited prior to the auction. Respondent-corporation could not unilaterally restore to forfeiture of 4.5 lakhs deposited by the petitioner after auction, when there is no such condition in the Rules or Annexure P/2. 10. The Supreme Court in Fateh Chand v. Balkrishna Das, AIR 1963 SC 1405 , held that “the measure of damages in the case of breach of a stipulation by way of penalty is by reasonable compensation not exceeding the penalty stipulated for. In assessing damages the court has, subject to the limit of the penalty stipulated, jurisdiction to award such compensation as it deems reasonable having regard to all the circumstances of the case. Jurisdiction of the Court to award compensation in case of breach of contract is unqualified except as to the maximum stipulated; but compensation has to be reasonable, and that imposes upon the court duty to award compensation according to settled principles.” 11. Para 3.09 of the impugned order (Annexure P/16) reflects that respondent-corporation has assessed its damages for 25 months as Rs. 25,000/-. This being so, the respondent-corporation is only entitled to forfeit security deposit of Rs. 20,000/- and Rs. 25,000/- as damages. The impugned order is found not sustainable. The same is hereby set aside. The respondents are directed to refund the outstanding amount to the petitioner. Parties to bear their own costs.