1. Auction-purchaser's offer validity period — Delay in acceptance — Withdrawal from bid. (Para 2 , 3 )
Back
Next 
2001 Supreme(SC) 125
SUPREME COURT OF INDIA
B.N.Kirpal : Ruma Pal
Riya Travel And Tours India Pvt Limited
Versus
C.V.Chengappa
Case No. : 783 of 2001
Date of Decision : 1/22/01
An auction bid specifying a validity period is a qualified offer. If the offer is not accepted within the stipulated or extended time frame, it expires, and the bidder is entitled to withdraw and seek a refund of the earnest money.
Headnote:(A) Contract Law - Auction Sale - Validity of bid - When an auction-purchaser makes a qualified offer specifying a time limit for acceptance, such offer is not open for acceptance for an indefinite period - If the offer is not accepted within the stipulated period or its subsequent extension, the bidder is at liberty to withdraw the bid and seek refund of earnest money. (Para 6)
Facts of the case:
A Receiver was appointed in a suit for recovery of money to invite offers for the sale of a judgment-debtor's property. An auction-purchaser submitted an offer specifying a validity period of three months. This period was subsequently extended by a further three months. Despite the bidder submitting the highest offer, no confirmation or acceptance of the sale was conveyed by the expiry of the extended period. The bidder then applied for permission to withdraw from the bid, which was declined by the High Court on the grounds that the offer was liable to be accepted notwithstanding the delay in acceptance.
Findings of Court:
The offer made by the auction-purchaser was clearly a qualified one and was not open for acceptance for an indefinite period. Since there was an admitted delay in the acceptance of the bid beyond the extended deadline, the appellant was entitled to withdraw from the bid and seek a refund of the earnest money deposited.
Issues: Whether an offer made by an auction-purchaser, which specifies a fixed validity period, remains valid indefinitely or expires upon the lapse of said period.
Ratio Decidendi: A bid that is qualified by a specific time limit for acceptance cannot be treated as an open offer for an indefinite period. Once the stipulated time limit, including any subsequent extensions, expires without a formal acceptance or confirmation, the bidder is at liberty to resile from the bid and request a refund of the earnest money. (Para 6)
Result: Appeal allowed.
Legal Category Hierarchy
Table of Contents
2. Whether offer valid indefinitely — Purchaser could withdraw after expiry of validity period. (Para 4 , 5 , 6 )
3. Offer was qualified with a fixed validity period — Delay allowed purchaser to withdraw. (Para 6 )
4. A qualified bid with a fixed validity period is not open for acceptance indefinitely. (Para 6 )
5. Appeal allowed — Order set aside — Earnest money with interest to be refunded within eight weeks. (Para 1 , 7 )
6. Can an auction-purchaser withdraw a bid after the validity period expires?
Yes, a qualified bid with a fixed validity period ceases to be open for acceptance after expiry, permitting withdrawal. (Para 6 )
B.N.KIRPAL, J.
(1) SPECIAL leave granted.
(2) THE limited question involved in this appeal is whether the offer which was made by the appellant who was an auction-purchaser would be valid indefinitely or not.
(3) A suit was filed by Respondent 2 for recovery of money against Respondent 3 and a Receiver was appointed. After the decree was passed and even during the pendency of the appeal, under orders of the court the Receiver invited offers for the sale of the property of the judgment-debtor. The appellant made an offer for the purchase of the property. The offer of the appellant was that it would be valid for a period of three months from 13-2-1999. If the offer was not accepted the earnest money was to be returned and if the offer was accepted but the sale was not confirmed within three months, interest at the rate of 18 per cent of earnest money deposit of Rs.15 lakhs was payable from 13-5-1999.
(4) IT appears that the matter got delayed and the offer of the appellant, which was the highest offer, was not accepted within the said period. During the pendency of the matter, on 9-4-1999, an order of the High Court recorded that the appellant herein had agreed to keep the offer firm for a further period of three months. This meant that the offer expired on 9-7-1999 and till that day there was no confirmation or acceptance of sale in favour of the appellant.
(5) THE appellant then applied for permission to withdraw from the bid. The High Court by the impugned order dated 6-3-2000 declined to grant this permission and it came to the conclusion that the appellants offer was liable to be accepted notwithstanding the delay in the acceptance and the appellant could not be permitted to resile from the bid. One months time was granted to the appellant to pay the balance amount.
(6) FROM the facts enumerated hereinabove, it is evidently clear that the offer of the appellant was a qualified one. The bid was not open for acceptance for an indefinite period. In the offer made by the appellant, it was clearly stated that the acceptance should be conveyed within three months which was subsequently extended up to July 1999. When, admittedly, there was delay in the acceptance of the bid, the appellant was at liberty to ask for the refund of money already paid and to withdraw from the bid at least after 9-7-1999.
(7) WE, accordingly, allow this appeal and set aside the order of the High Court insofar as it has accepted the bid of the appellant and has directed it to make the payment. The Official Receiver will refund to the appellant the earnest money deposited along with such interest as may have accrued thereon. The refund should be made within eight weeks from today.
