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2024 DIGILAW 398 (AP)

S. Prameela v. Tirumala Tirupati Devasthanam

2024-03-27

VENUTHURUMALLI GOPALA KRISHNA RAO

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JUDGMENT V. Gopala Krishna Rao, J. - This Appeal, under Section 96 of the Code of Civil Procedure [for short 'the C.P.C.'], is filed by the Appellants/plaintiffs challenging the Decree and Judgment, dated 13.12.2004, in O.S. No.18 of 2002 passed by the learned III Additional District Judge, Tirupati [for short 'the trial Court']. The Respondent herein is the defendant in the said Suit. 2. The Plaintiffs filed the above said suit against the defendant for recovery of Rs.10,80,000/- with interest and for costs. 3. Both the parties in the Appeal will be referred to as they are arrayed before the trial Court. 4. The brief averments of the plaint, in O.S. No.18 of 2002, are as under: The plaintiffs 1 and 2 are wife and husband. Plaintiff No.2 is looking after the business activities of the first plaintiff and representing the first plaintiff for all practical purpose. The defendant invited tenders for the grant of licence to run Tirumala Tirupati Devasthanam Canteen at Sapthagiri Guest House, Tirumala vide publication in Eenadu daily dated 26.11.2001, pursuant to the said notification, plaintiffs submitted tender in the name of first plaintiff and the same was opened on 11.12.2001. The said tender was accepted and the same was communicated to the first plaintiff vide letter dated 27.02.2002. As per the tender conditions, the said tender is valid for 3 months from the date of opening of tender. Contrary to the tender conditions, the defendant has forfeited the Earnest Money Deposit of Rs.10,00,000/- vindictively and arbitrarily on baseless grounds as there is no mention that the said tender was confirmed and accepted by the competent authority. 5. The defendant filed a written statement by denying the averments mentioned in the plaint and further contended as under: - The tender of the first plaintiff was accepted and the same was communicated to her in the letter Roc.No.Rev1/265/AEO(Rev) Tml/2001, dated 30.12.2001 by registered post with acknowledgment due and the same was accepted by her on 07.01.2002. The first plaintiff deliberately suppressed the said fact. Again the defendant in Roc.No.Rev1/265/AEO(Rev)/Tml/2001, dated 27.02.2002 called upon the first plaintiff to comply with the requirements therein within 7 days from the date of said letter, failing which the Tirumala Tirupati Devasthanam would cancel the tender confirmation by forfeiting the Earnest Money Deposit. The first plaintiff did not comply with the required conditions inspite of letter dated 08.03.2002. Again the defendant in Roc.No.Rev1/265/AEO(Rev)/Tml/2001, dated 27.02.2002 called upon the first plaintiff to comply with the requirements therein within 7 days from the date of said letter, failing which the Tirumala Tirupati Devasthanam would cancel the tender confirmation by forfeiting the Earnest Money Deposit. The first plaintiff did not comply with the required conditions inspite of letter dated 08.03.2002. The first plaintiff in her representation dated 16.03.2002 offered to accept the above tender. The offer falsifies her earlier contention that there is no confirmation or acceptance of tender by competent authority. The forfeiture of the Earnest Money Deposit by the authorities is perfectly legal and plaintiffs cannot question the same. The plaintiffs are not entitled to any relief much less the relief as prayed for in the plaint and prayed the Court to dismiss the suit. 6. Based on the above pleadings, the trial Court framed the following issues: (i) Whether the defendant has illegally forfeited the E.M.D. amount of Rs.10,00,000/- (Rupees ten lakhs only) deposited by the plaintiff? (ii) Whether the plaintiff is entitled to recover E.M.D. amount of Rs.10,00,000/- from defendant with interest and if so at what rate? (iii) To what relief? 7. During the course of trial in the trial Court, on behalf of the Plaintiffs, PW1 was examined and Ex.A1 to Ex.A12 were marked. None were examined on behalf of the Defendant, however, Ex.B1 to Ex.B4 were marked. 8. After completion of the trial and on hearing the arguments of both sides, the trial Court dismissed the suit with costs vide its judgment, dated 13.12.2004, against which the present appeal is preferred by the appellants/plaintiffs in the Suit questioning the Decree and Judgment passed by the trial Court. 9. Heard Sri V.Eswaraiah Chowdary, learned counsel, representing Sri M.P. Chandramouli, learned counsel for appellants and Smt Y.Dyumani, learned standing counsel for respondent. 10. The learned counsel for appellants would contend that the trial Court wrongly came to conclusion that the plaintiffs failed to prove that the respondent has illegally forfeited the Earnest Money Deposit (EMD). He would further contend that the Ex.B1 letter dated 30.12.2001 is only formal communication by the respondent and there was no demand in Ex.B1 for complying the terms and conditions. He would further contend that the Ex.B1 letter dated 30.12.2001 is only formal communication by the respondent and there was no demand in Ex.B1 for complying the terms and conditions. He would further contend that the decree and judgment passed by the trial Court is contrary to law and the same is liable to be set aside and the appeal may be allowed. 11. Per contra, the learned counsel for the respondent would contend that on appreciation of entire evidence on record, the trial Court rightly dismissed the suit and there is no need to interfere with the finding given by the Trial Court. 12. Having regard to the pleadings in the Suit and the findings recorded by the trial Court and in the light of rival contentions and submissions made on either side before this court, the following points would arise for determination: I. Whether the appellants/ plaintiffs are entitled to recover the Earnest Money Deposit (EMD) amount of Rs. 10,00,000/- with interest as prayed in the plaint? II. Whether the decree and judgment passed by the trial court needs any interference, if so, to what extent? 13. Point No.1: Whether the appellants/ plaintiffs are entitled to recover the Earnest Money Deposit (EMD) amount of Rs. 10,00,000/- with interest as prayed in the plaint? The undisputed facts are the first plaintiff is the wife, second plaintiff is her husband. The defendant invited tenders for grant of license to run T.T.D canteen at S.G.G.House, Tirumala vide publication in Eenadu Daily dated 26.11.2001, pursuant to the said notification, the first plaintiff submitted a tender and the same was opened on 11.12.2001 and the tender of the first plaintiff is accepted by the T.T.D. 14. The contention of the appellants/plaintiffs is that the acceptance of tender of the first plaintiff by the defendant was communicated vide letter dated 27.02.2002. The defendant denied the same. The defendant specifically pleaded that acceptance of tender of first plaintiff was communicated vide letter dated 30.12.2001 through registered post with acknowledgment due and the same was received by her on 07.01.2002 and the first plaintiff deliberately suppressed the said fact. The fact remains Ex.B1 is marked through PW1. Further more, the letter addressed to defendant by first plaintiff, i.e., reference of Ex.B1, is also there in Ex.A5 notice. The fact remains Ex.B1 is marked through PW1. Further more, the letter addressed to defendant by first plaintiff, i.e., reference of Ex.B1, is also there in Ex.A5 notice. The learned counsel for appellants would further contend that Ex.B1, dated 30.12.2001 is only formal communication by the respondent and there was no demand in Ex.B1 for complying the terms and conditions. Ex.B2 is the acknowledgment signed by the first plaintiff. I have perused the Ex.B1 dated 30.12.2001, in Ex.B1 it was clearly mentioned that the tender of the first plaintiff is accepted by the defendant. In Ex.B1 the defendant specifically demanded the first plaintiff that the first plaintiff has to furnish the following: (1) A Bank Guarantee for a sum of Rs. 25,00,000/- in favour of the Executive Officer, TTDs for a period of 3 years from the date of occupation of the premises. (2) Pay Security Deposit of Rs. 24,00,348/- (Rupees twenty four lakhs three hundred and forty eight only) which is equivalent to 3 months licence fee i.e., Rs.8,00,116/- x 3 months. (3) Letters of permission/ registration/ authorization required to run the said trade as per law in force i.e., APGST Act/ Income tax Act etc., (4) D & O Trade licence from the Health Officer, TTDs, Tirumala. (5) In addition to the above, you have to furnish a deed of agreement of license on Non-Judicial stamped paper worth Rs.100/-, further intimation will be sent to you in due course. In Ex.B1, further it was specifically mentioned that the above particulars 1 to 5, as stated supra, have to submit within 7 days from the date of receipt of Ex.B1 notice. Therefore, it cannot be said that the Ex.B1 is a formal communication, more over Ex.B1 is marked through PW1 himself. Receipt of Ex.B1 is not at all disputed by the plaintiffs. Ex.B2 clearly goes to show that on 07.01.2002 the first plaintiff received the said Ex.B1 letter, infact Ex.B1 and Ex.B2 are marked through PW1. 15. The second plaintiff is examined as PW1. First plaintiff did not enter into the witness box. The first plaintiff submitted a tender and the same was accepted by the defendant. It is not the case of the plaintiffs that the second plaintiff is the Power of Attorney Holder of first plaintiff. As stated supra, the first plaintiff submitted a tender, the second plaintiff is no way concerned with the suit transaction. The first plaintiff submitted a tender and the same was accepted by the defendant. It is not the case of the plaintiffs that the second plaintiff is the Power of Attorney Holder of first plaintiff. As stated supra, the first plaintiff submitted a tender, the second plaintiff is no way concerned with the suit transaction. Furthermore, both wife and husband filed the suit, husband of the first plaintiff examined as PW1. Second plaintiff reiterated the contents of the plaint in his evidence affidavit as PW1. Ex.A1 to Ex.A12 are got marked through PW1. Ex.A1 is the Xerox copy of publication tender by defendant, Ex.A2 is the tender conditions, Ex.A3 is the letter dated 27.02.2002 addressed by the defendant to the plaintiff, Ex.A4 is the letter dated 08.03.2002 addressed by A.E.O. to the plaintiff, Ex.A5 is the copy of notice dated 16.03.2002 issued by the plaintiff to the defendant, Ex.A6 to Ex.A8 are the acknowledgments, Ex.A9 is the proceedings dated 09.04.2002 issued by the office of E.O, T.T.D., Tirupati to the plaintiff, Ex.A10 is the office copy of legal notice dated 18.06.2002 issued by the first plaintiff to E.O., T.T.D., Tirupati, Ex.A11 is the acknowledgment and Ex.A12 is the notarized proceedings in Roc.No.P04/309/AEO (Rev) TML/90. The receipt of Ex.B1 letter is suppressed by the plaintiffs in the plaint itself for the reasons best known to the plaintiffs. There is no whisper in the plaint about the receipt of Ex.B1 letter on 07.01.2002 by the first plaintiff. As per tender conditions in Ex.A2, as per condition No.17, the first plaintiff shall be liable to submit the following with 7 days from the date of confirmation of tender for grant of licence. (a) A bank guarantee for a sum of Rs. 25,00,000/-. (b) Pay an amount equivalent to 3 months licence fee towards advance deposit. (c) Letters of permission/ registration/ authorization required to run the said trade as per laws in force as per APGST Act/ Income Tax Act. (d) D & O trade licence from the Health Officer, TTDs, Tirumala. As per the condition No.18 in EX.A2, if the successful tenderer fails to comply the condition No.17 of tender conditions as stated supra, the licence will be cancelled duly forfeiting the E.M.D. The tender conditions are marked through PW1 as Ex.A2. (d) D & O trade licence from the Health Officer, TTDs, Tirumala. As per the condition No.18 in EX.A2, if the successful tenderer fails to comply the condition No.17 of tender conditions as stated supra, the licence will be cancelled duly forfeiting the E.M.D. The tender conditions are marked through PW1 as Ex.A2. Ex.A3 reveals due to the failure of conditions in Ex.A2 another remainder letter was also issued to first plaintiff under Ex.A3 dated 27.02.2002. Ex.B3 telegram notice was also marked through PW1. Ex.B3 clearly goes to show that after issuance of Ex.B1 letter, defendant sent a telegram notice to the first plaintiff on 08.03.2002. On 16.03.2002 the first plaintiff addressed a letter to the defendant stating that she has not received any acceptance of tender or rejection till that day. 16. The material on record reveals that Ex.A3 letter was addressed to the first plaintiff on 27.02.2002. It was clearly mentioned in Ex.A3 letter about the receipt of Ex.B1 letter from the defendant. Ex.A4 letter was received by the plaintiff. Ex.A6 also reveals the same. In Ex.A4 it was clearly mentioned though 2 letters were addressed dated 30.12.2001 and so also 27.02.2002 to the first plaintiff, till now they have not heard anything from the plaintiffs. It was further mentioned in Ex.A4 that if the plaintiffs failed to comply with the requisite conditions, as stated supra, in Ex.B1 and in Ex.A3 on or before 10.03.2002 i.e., the date of expiry of 3 months from the date of tender, the tender confirmation will be treated as cancel and E.M.D. paid by the plaintiff No.1 will be forfeited. The proceedings issued by the Tirumala Tirupati Devastanam, dated 09.04.2002 is marked as Ex.A9 by the plaintiffs. In Ex.A9 it was recited by the defendant that the tender of the first plaintiff was accepted and the tender accepted in favour of the first plaintiff was cancelled as she failed to furnish the documents as requested under Ex.B1. In Ex.A9 it was specifically mentioned that the T.T.D. cancelled the tender submitted by the first plaintiff, since, the first plaintiff failed to comply the tender conditions under condition No.17, thereby by invoking tender condition No.18, the tender of first plaintiff is cancelled. 17. A reliance has been placed by the appellants in Union of India vs. Rampur Distillery and Chemical Company Limited, 1973 AIR(SC) 1098. 17. A reliance has been placed by the appellants in Union of India vs. Rampur Distillery and Chemical Company Limited, 1973 AIR(SC) 1098. In that case, the Apex court held as follows: It was held by this court that forfeiture of earnest money under a contract for sale of properly does not fall within S. 70 (74 ?) of the Contract Act, if the amount is reasonable, because the forfeiture of a reasonable sum paid as earnest money does not amount to the imposition of a penalty. But, "Where under the terms of the contract the party in breach has undertaken to pay a sum of money or to forfeit a sum of money which he has already paid to the party complaining of a breach of contract, the undertaking is of the nature of a penalty." It was further held that the amount deposited by way of security for guaranteeing the due performance of the contract cannot be regarded as earnest money. It is important that the breach of contract caused no loss to the appellants. The stipulated quantity of rum was subsequently supplied to the appellants by the respondents themselves at the same rate. The appellants, in fact, made no attempt to establish that they had suffered any loss or damage on account of the breach committed by the respondents. 18. In Civil Appeal No.7588 of 2012, in Satish Batra vs. Sudhir Rawal, MANU/SC/0887/2012, by relying on a decision of Full Bench of Apex Court, the Apex Court held as follows: In Shree Hanuman Cotton Mills and Ors. v. Tata Air Craft Limited MANU/SC/0086/1969: 1969 (3) SCC 522 , this Court elaborately discussed the principles which emerged from the expression "earnest money". That was a case where the Appellant therein entered into a contract with the Respondent for purchase of aero scrap. According to the contract, the buyer had to deposit with the company 25% of the total amount and that deposit was to remain with the company as the earnest money to be adjusted in the final bills. Buyer was bound to pay the full value less the deposit before taking delivery of the stores. In case of default by the buyer, the company was entitled to forfeit unconditionally the earnest money paid by the buyer and cancel the contract. The Appellant advanced a sum of Rs. Buyer was bound to pay the full value less the deposit before taking delivery of the stores. In case of default by the buyer, the company was entitled to forfeit unconditionally the earnest money paid by the buyer and cancel the contract. The Appellant advanced a sum of Rs. 25,000/- (being 25% of the total amount) agreeing to pay the balance in two installments. On Appellant's failure to pay any further amount, Respondent forfeited the sum of Rs. 25,000/-, which according to it, was earnest money and cancelled the contract. Appellant filed a suit for recovery of the said amount. The trial Court held that the sum was paid by way of deposit or earnest money which was primarily a security for the performance of the contract and that the Respondent was entitled to forfeit the deposit amount when the Appellant committed a breach of the contract and dismissed the suit. The High Court confirmed the decision taken by the trial Court. This Court, considering the scope of the term "earnest", laid down certain principles, which are as follows: 21. From a review of the decisions cited above, the following principles emerge regarding "earnest" (1) It must be given at the moment at which the contract is concluded. (2) It represents a guarantee that the contract will be fulfilled or, in other words, "earnest" is given to bind the contract. (3) It is part of the purchase price when the transaction is carried out. (4) It is forfeited when the transaction falls through by reason of the default or failure of the purchaser. (5) Unless there is anything to the contrary in the terms of the contract, on default committed by the buyer, the seller is entitled to forfeit the earnest. In the case on hand the tenders were called for by T.T.D. to grant licence to run S.G.G.House at Tirumala and the same was opened on 11.12.2001 as admitted by the first plaintiff. The tender of the first plaintiff was accepted as she was the highest bidder and the same was communicated to her in the letter ROC No.REV 1/265/AEO (Rev) TML/2001, dated 30.12.2001 through registered post with acknowledgment due and the same was received by her on 07.01.2002 and the first plaintiff deliberately suppressed the said fact. The tender of the first plaintiff was accepted as she was the highest bidder and the same was communicated to her in the letter ROC No.REV 1/265/AEO (Rev) TML/2001, dated 30.12.2001 through registered post with acknowledgment due and the same was received by her on 07.01.2002 and the first plaintiff deliberately suppressed the said fact. PW1 admits in his cross examination itself that the first plaintiff submitted application to T.T.D. authorities for grant of licnece to run the canteen at Sapthagiri Guest House, Tirumala and the T.T.D. on the application, accepted the tender and issued proceedings dated 30.12.2001 under Ex.B1. He further admits Ex.B2 is acknowledgment token receipt of Ex.B1. He further admits the T.T.D. authorities in its letter dated 27.02.2002 confirmed the earlier letter dated 30.12.2001 under Ex.A3. He further admits that they have not complied the conditions stipulated under Ex.A3. He further admits a telegram notice was sent by T.T.D. authorities under original of Ex.B3. The above admissions of PW1 clearly supports the case of the defendant to show that though the defendant addressed several letters to the first plaintiff, the first plaintiff has not complied the requisite conditions which were mentioned in the tender notification. The plaintiffs suppressed the Ex.B1 letter. The T.T.D. authorities also addressed another 2 letters under Ex.A3 and Ex.A4 to comply the tender conditions, but the first plaintiff addressed a letter dated 18.06.2002 under Ex.A10 to the defendant to refund the E.M.D. paid by her, however, by the date of Ex.A10 the tender of first plaintiff was already cancelled by T.T.D. under Ex.A9 dated 09.04.2002 and it was specifically mentioned in Ex.A9 that the 'tender was opened on 11.12.2001 and its acceptance was communicated to the tenderer on 30.12.2001 and it was also acknowledged by the tenderer on 07.01.2002 through registered post with acknowledgment due'. But the first plaintiff failed to furnish the requisite documents as required under tender condition No.17, thereby by invoking tender condition No.18, the tender of first plaintiff is cancelled and the E.M.D. is forfeited by respondent by invoking condition No.18 in Ex.A2. Therefore, in view of the above reasons, the forfeiture of Earnest Money Deposit by the defendant temple authorities is perfectly legal and sustainable under law. Accordingly, point No.1 is answered. 19. Point No.2: Whether the decree and judgment passed by the trial court needs any interference, if so, to what extent? Therefore, in view of the above reasons, the forfeiture of Earnest Money Deposit by the defendant temple authorities is perfectly legal and sustainable under law. Accordingly, point No.1 is answered. 19. Point No.2: Whether the decree and judgment passed by the trial court needs any interference, if so, to what extent? In view of my findings on point No.1, I do not find any illegality in the decree and judgment passed by the trial Court and the decree and judgment passed by the trail Court is perfectly sustainable under law and it requires no interference and the plaintiffs are not at all entitled the suit claim as prayed in the plaint. 20. In the result, the Appeal Suit is dismissed confirming the decree and Judgment dated 13.12.2004, in O.S.No.18 of 2002 passed by the learned III Additional District Judge, Tirupati. No order as to costs. As a sequel, miscellaneous petitions, if any, pending in the Appeal shall stand closed.