Back
1999 Supreme(Del) 341
High Court Of Delhi
DELHI DEVELOPMENT AUTHORITY - Appellant
Versus
RAMA ASSOCIATES PRIVATE LIMITED - Respondent
REGULAR FIRST APPEAL 112 of 1998
Decided On : 05/01/1999
K.S.Sidhu, MALDIP SIDHU, P.N.LEKHI, R.K.VAISHNEY, S.C.MITTAL, S.P.R.Rao
A court is required to record findings on all the issues framed in a suit, and failure to do so renders the judgment and decree liable to be set aside.
Headnote:
AUCTION - FORFEITURE OF EARNEST MONEY - VALIDITY - ESTOPPEL - WAIVER - ACQUIESCENCE - NECESSITY OF RECORDING FINDINGS ON ALL ISSUES - CIVIL PROCEDURE CODE, 1908 - ORDER 20, RULE 5.
Fact of the Case:
Plaintiff participated in an auction held by DDA for a plot and gave the highest bid. He deposited 25% of the bid amount as earnest money. However, the architectural control drawings were not supplied to him despite requests, which delayed his negotiations with prospective purchasers and affected his ability to pay the balance amount. DDA forfeited the earnest money, and the plaintiff filed a suit for refund.
Finding of the Court:
The court held that the action of DDA in forfeiting the entire earnest money was not justified. However, the court failed to record findings on all the issues framed in the suit, including the issues of estoppel, waiver, and acquiescence raised by DDA.
Issues: 1. Whether the supply and exhibition of architectural control drawings to bidders prior to auction is an integral part of the sale by auction. 2. Whether the architectural control drawings were not exhibited or furnished as per the terms and conditions of auction? 3. Whether the architectural control drawings were not in accordance with the Municipal Bye-laws, the Master or the Zonal Plan as alleged? If so, its effect? 4. Whether the said plot falls under the Slums Areas (Improvement and Clearance) Act, 1965? If so, its effect? 5. Whether the said plot which was shown in the. ,master Plan as a main street/tot lot, could no be auctioned by the defendant for commercial and official buildings without changing the land use from residential to commercial, as per Master Plan? 6. Whether the said plot could not be auctioned with a declaration that permissible Floor Area Radio (FAR) is 400? 7. Whether the defendants had no right to confiscate/forfeit of earnest money of over Rs. 46. 50 lakhs when there was an injunction against the plaintiff and the defendants for maintaining status quo in Suit No. 89/82 filed before the Sub-Judge? 8. Whether there is any practice of making payment of balance auction money dependent on plaintiff s negotiations with prospective purchasers and are the defendants bound by it? 9. Whether the plaintiff waived their right to sue, acquiesce in the terms and conditions of auction and arc estopped from challenging the validity of auction as per preliminary objections in the written statement? If so, its effect? 10. Whether the defendants are liable to refund the earnest money as claimed? 11. Whether the plaintiffs arc entitled to interest as claimed? If so, at what rate? 12. Relief.
Ratio Decidendi: 1. The court relied on the decision of the Supreme Court in Fateh Chand v. Balkishan Dass, AIR 1963 SC 1405, which held that if a reasonable amount is fixed as earnest money and there is a breach on the part of the person who deposited the earnest money, it could be subject to forfeiture by the other party. 2. The court held that it was not necessary to deal with each of the cases cited at the bar separately, except to refer to the decision of the Constitution Bench of the Supreme Court of India in Fateh Chand v. Balkishan Dass, A. I. R. 1963 S. C. 1405 that if a reasonable amount is fixed as an earnest money and there is breach on the part of the person, who had deposited the earnest money that could be subject matter of forfeiture by the other party.
Final Decision: The court allowed the appeal, set aside the judgment and decree passed by the learned Single Judge, and remanded the suit for a fresh decision in accordance with law on the evidence already on record.
( 1 ) THIS first appeal is against the judgment and decree passed on 24. 7. . 1998 by learned Single Judge of this Court. Suit of the plaintiff/ respondent has been decreed directing the Delhi Development Authority (for short "d. D. A. ") to pay a sum of Rs-27. 90 lakhs to the plaintiff/respondent while retaining a sum of Rs.-18. 60 lakhs. The claim of the plaintiff/respondent for interest has been negatived. The plaintiff/respondent has also filed cross objections (C. M. 75/99 ).
( 2 ) THE plaintiff/respondent on 26. 11. 1993 filed a suit claiming a decree for Rs. 60,79,875. 00 against the D. D. A. Future interest at the rate of 18% p. a. was also claimed on the suit amount from the date of suit till realisation. The Director (Slums), D. D. A. was also impleaded as defendant No. 2. It was alleged that the plaintiff participated in an auction held on 12. 3. 1982 and gave a bid for plot No. 9, measuring 351 sq. Mtrs. on Asaf Ali Road, New Delhi. Being the highest bidder for Rs. 1. 86 crores, the plaintiff s bid was accepted on 30. 3. 1982. A deposit of Rs. 46. 50 lakhs was made with the defendant, being 25% of the total bid amount. No architectural control drawings were exhibited or shown at the time of bid, as required under the terms and conditions of auction. Despite requests the same were not supplied but were supplied only on 15. 10. 1982, after 7 months of auction. Delay in supplying had greatly prejudiced and jeopardised the interest of the plaintiff as they could not negotiate with the prospective purchasers of the proposed commercial flats in order to finance the payment of the balance instalments to the defendant in accordance with the terms and conditions of the auction. Delay in supply of drawings resulted in heavy losses to the plaintiff. Even the drawings, which were supplied belatedly, were not in consonance with the building bye-laws framed by the Municipal Corporation of Delhi and Master Plan for Delhi. Dtespite requests on the grievances and on the prayer to extend the period for making the balance payment, no action was taken by the defendant. Instead on 20. 8. 1982, Director (Slums) issued notice to the plaintiff that in case the balance amount is not paid by 29. 8. 1982 alongwith interest, the earnest money would stand forfeited. The said act of the defendant was challenged being illegal besides the subsequent act of re-auctioning the plot. The plaintiff thus claimed against the defendants a decree for refund of the earnest money of Rs. 46. 50 lakhs along with interest at the rate of 18% p. a. totalling Rs. 60,79,875. 00 and future interest on this amount till the date of payment.
( 3 ) THE suit was opposed by the defendant/d. D-A. on number of grounds, inter alia, alleging that the plaintiff failed to make payment of the balance bid amount. He was duly informed through letter dated 20. 8. 1982 that no further extension for payment would be permitted. Due to non-payment of the balance bid money, amount of earnest money stood forfeited in terms of the conditions of the auction governing the auction. The plaintiff were also estopped by its conduct. It was not open for the plaintiff to challenge the validity of the auction, which was held in accordance with the Rules and Regulations. Parties rights are duly governed by the terms and conditions thereof. The defendant denied that any request had been made for supply of architectural control drawings etc. Right of the plaintiff for return of earnest money or interest was denied. On the pleadings of the parties, the following issues were framed:
"1. Whether the plaintiff is a Limited Company and M/s-Essels Properties and Industries is its unit and Shri Lakshminarayan is its Director competent to sign, verify the plaint and to file the suit? 2. Whether the supply and exhibition of architectural control drawings to bidders prior to auction is an integral part of the sale by auction. If so, has the defendant violated it or the terms and conditio
