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2010 Supreme(Pat) 1307
PATNA HIGH COURT
Ajay Kumar Tripathi, J.
M/s Nikhil Engicon Works Through Its Proprietor Ravi Kant Dubey S/o Hans Lochan Dubey
Versus
Bihar State Financial Corporation Through Its Managing Director
CWJC No. 6016 of 2008
Decided On : MAY 19, 2010
The main legal point established in the judgment is that a contract is based on a concluded offer and acceptance, and the petitioner had the right to withdraw from the offer due to the lack of unconditional acceptance by the respondent Corporation.
Headnote:
Contract - Sale of Property - Bihar State Financial Corporation Act, Section 5 - The court discussed the principle of offer and acceptance in contract law, emphasizing that a contract is based on a concluded offer and acceptance. The court highlighted that the petitioner had the right to withdraw from the offer as there was no corresponding unconditional acceptance by the respondent Corporation. The court quashed the decision to forfeit the earnest money and directed the Corporation to refund the security money to the petitioner.
Fact of the Case:
The petitioner offered to purchase a property from Bihar State Financial Corporation, but the Corporation informed him that the offer was conditionally accepted and they would re-advertise the property for a higher price. The petitioner withdrew the offer, leading to a dispute over the forfeiture of earnest money.
Finding of the Court:
The court found that the Corporation's conditional acceptance did not bind the petitioner, and the Corporation erred in forfeiting the earnest money. The court quashed the decision and directed the Corporation to refund the security money to the petitioner.
Issues: The issues revolved around the validity of the conditional acceptance, the petitioner's right to withdraw the offer, and the forfeiture of earnest money.
Ratio Decidendi: The court emphasized the principle of offer and acceptance in contract law, highlighting that a contract is based on a concluded offer and acceptance. The court ruled that the petitioner had the right to withdraw from the offer as there was no corresponding unconditional acceptance by the respondent Corporation.
Final Decision: The writ application was allowed, and the court directed Bihar State Financial Corporation to refund the security money of the petitioner within four weeks.
1. The long story which emerges out from this writ application has to be cut short in view of the limited dispute which has been raised by the petitioner. The property known as M/s Caydee Engineers Private Limited located at Industrial Area, Patliputra, Patna was put on sale. The unit in question was advertised under continuous sale policy of the Corporation on 25.6.1995. There was no suitable buyer for many a years but only some time in the year 2007 petitioner approached Bihar State Financial Corporation with an offer to purchase the said property for a sum of Rs. 43 lakhs. Petitioner had also deposited a sum of Rs. One lakh as earnest money to participate in the tender.
2. On 15.5.2007 a negotiation was held and the terms and conditions for the sale was discussed. It is the contention of the petitioner that they were taken by surprise when he was informed by the Managing Director of BSFC that the offer made by him is a conditional acceptance because the Corporation is going to re-advertise the unit looking for a higher price. They wanted to have yet another go to the market for getting better return on the sale. The advertisement was issued which is dated 9.6.2007 and is Annexure-3 to the writ application. The same did not get a better price for the Corporation therefore they decided to issue sale order with certain terms and conditions to the petitioner, which would be evident from Annexure-5 dated 26.7.2007. The petitioner was informed by that letter that he will have to deposit money in accordance with the terms and condition of the sale order. There was failure on the part of the petitioner to deposit 25% of the total consideration price i.e. Rs. 10.75 lakhs which led to issuance of Annexure-1 dated 28.9.2007 to the writ application. By virtue of this decision petitioners earnest money of Rs. One lakh has been forfeited. The petitioner therefore decided to challenge this order in the present writ application.
3. Learned counsel for the petitioner submits that Annexure-1 smacks of arbitrariness and the respondents have unfairly treated the petitioner by forfeiting the earnest money when the default lies at their door step. The respondents cannot be permitted to gain at the cost of the petitioner when the petitioner on the very first occasion communicated his decision to opt out of the race or the bid for the property vide letter dated 30.5.2007.
4. Letter dated 30.5.2007 categorically informed the Managing Director of BSFC that he was taken by surprise when the Corporation informed him that they are going for re-advertisement for re-sale and only when they will fail to get better price they will consider the offered of the petitioner. This aspect was not reflected either in the advertisement of the year 1995 or the tender document. Petitioner therefore decided to withdraw his offer because he did not want to deal with the respondents with a sense of uncertainty in the background that the respondents wanted to go for re-advertisement. There is nothing on record to show that the respondents Managing Director took cognizance of the communication dated 30.5.2007. The Corporation had gone ahead with their plan and advertised the unit and only when no suitable buyer turned up they decided to issue the sale order contained in Annexure-5 dated 25.7.2007.
5. Learned counsel for the petitioner further submits that before sale order could be issued there were at least two to three communications which have been made with the Corporation reiterating their earlier stand that in view of the decision of the respondents to go for re-advertisement they have already expressed their desire to withdraw and they demanded refund of the earnest money but the request of the petitioner was not acted upon. The respondent authority went ahead with various communications and tried to bring liability upon the petitioner which he was not willing to honour in light of past communications.
6. In the counter affidavit the respondents have tried
