( 1 ) THE controversy in this appeal is whether rejection of highest bid of the appellant after about one year four months and then again not returning the earnest money of the appellant for about four months after rejection of his bid by Delhi Development Authority, can be construed to be an act done or purported to have been done in pursuance to the provisions of Delhi Development Act, 1957 or any rule or regulation made there under so as to attract Section 53-B (2) of the Delhi Development Act.

( 2 ) THE relevant facts for determination of this controversy are that the respondent held an open auction on 25th July, 1974 for sale of a cinema plot no. 70, Nehru Place, Kalkaji, New Delhi for grant of perpetual lease hold rights. The highest bidder had to pay 25% of the bid amount towards earnest money in cash or in the form of bank draft at the fall of hammer. The balance amount had to be paid within 120 days from the date of issue of communication for the acceptance of the bid.

( 3 ) THE appellant was the highest bidder at the auction held by respondent and he deposited a sum of Rs. 3. 75 lakh being 25% of the bid amount as earnest money. One of the conditions of the bid was that highest bid could be rejected without assigning any reason. The said term is as under:

" 5. The bid shall not be revocable by the bidder. The highest bid shall be subject to the acceptance of DDA or such officer who has been authorised to do so. The highest bid can be rejected without assigning any reason. If the bid is not accepted, the earnest money will be refunded to the intending purchaser without any interest. "

( 4 ) THE appellant had deposited an amount of Rs. 3. 75 lakh as earnest money after offering the highest bid for a sum of Rs. 14. 80 lakh. The respondent had issued a receipt dated 31st July, 1974 for the payment of Rs. 3. 75 lakh. The appellant in accordance with the conditions of auction was required to deposit the balance amount of Rs. 11. 05 lakhs within 120 days from the date of issue of the communication to the appellant of acceptance of the bid by the respondent. The intimation of acceptance of bid was, however, not received by the appellant for a fairly long time. Consequently the appellant sent a reminder by letter dated 19th March, 1975. The appellant did not receive any communication in reply to his letter dated 19th March 1975. He, therefore, presumed that his bid has been accepted and he sent the balance bid amount of Rs. 11. 05 lakhs by cheque vide letter dated 27th June, 1975. The cheque of Rs. 11. 05 lakhs was, however, sent back by respondent on 22nd August, 1975 contending that the balance amount could be accepted only after issue of demand letter. The appellant by his letter dated 18th September, 1975, communicated to the respondent that there was no reason for returning the cheque for the balance bid amount of Rs. 11. 05 lakhs and asked the respondent to issue necessary bid acceptance and demand letter on an early date.

( 5 ) THE respondent after a period of about one year and four months informed the appellant by its letter dated 13/14th November, 1975 that the highest bid of the appellant for purchase of cinema plot in the auction held on 25th July, 1974 has not been accepted. No reason for not accepting the bid was given. The appellant was further intimated that action for refund of earnest money shall be taken shortly. No reason or explanation for not refunding the earnest money with the letter refusing bid was given. The respondent continued to retain the earnest money of Rs. 3. 75 lakhs till 19th February, 1976 when a cheque for the said amount was sent to the appellant.

( 6 ) THE appellant contended that he had made the deposite of Rs. 3. 75 lakhs by borrowing it from M/s. Om Appartments Pvt. Limited to whom appellant paid interest at the rate of 17% per annum. The appellant, therefore, contended that he is entitled for interest by way of compensation on sum of Rs. 3. 75 lakhs at the rate of 17% p