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IN THE HIGH COURT OF DELHI AT NEW DELHI
S. RAVINDRA BHAT, S.P. GARG, JJ.
India Trade Promotion Organisation - Appellant
Versus
India International Textile Machinery Exhibitions Society - Respondent
RFA (OS) 10/2007
Decided On : 04.01.2013
Contract - Exhibition Space Licensing - Limitation Act 1908, Article 24, Article 113
Fact of the Case:
The plaintiff, a registered society, approached the defendant, ITPO, for licensing space to host an exhibition. Despite initial payments, the parties could not agree on mutual terms, and the plaintiff sought a refund of the amount paid. The defendant refused, claiming it was earnest money for space booking.
Finding of the Court:
The court found that no concluded contract existed between the parties as the terms of the license were not finalized. The defendant had no right to retain the amount as forfeited. The suit was decreed, and the defendant was directed to pay interest.
Issues: 1. Suit limitation 2. Validity of the plaintiff's claim 3. Existence of a concluded contract 4. Defendant's right to forfeit the amount 5. Defendant's liability to pay interest
Ratio Decidendi: The court applied the provisions of the Limitation Act 1908, specifically Article 24 and Article 113, to determine the suit's limitation and the defendant's liability to refund the amount. It held that the money received by the defendant was not for the plaintiff's use but was a deposit in anticipation of a contract, thus Article 24 did not apply, and the governing provision was Article 113.
Final Decision: The court dismissed the appeal, upholding the findings and conclusions of the learned Single Judge.
S.RAVINDRA BHAT
The present appeal by the unsuccessful defendant (hereafter “ITPO”) is directed against the judgment and decree of a learned Single judge of this Court, dated 11-10-2006 in CS (OS) 1861/1994.
2. The plaintiff, a registered society (hereafter referred to variously as “the Society” and “the plaintiff”) used to promote the interests of the textile business. ITPO is a Central Government agency and custodian of a piece of land in New Delhi which houses trade fairs, i.e. the Pragati Maidan.
3. The Society wanted to host an exhibition and approached ITPO for licensing space. The society’s query was responded to by ITPO on 18.07.1990 by a telegram stating that in principle it agreed to provide an area of approximately 13,000 sq. meters. Rs. 25 lakhs as advance license fee was sought from the society. It was told that thereafter ITPO would confirm the space to be licensed as well as the duration of the license. Parties subsequently exchanged letters about the details of the space, the hall, license fee particulars such as what was to be charged per square meter, rebate, etc. At that time, during August, October and November 1990, three payments in the sum of Rs. 5 lakhs each were made by the Society to ITPO. On 26.11.1990, ITPO wrote a letter to the Society requesting that it wanted to know “the exact space requirement” of the Plaintiff Association for the exhibition; it also provided replies to queries made by the plaintiff. On 22.12.1990, (after the three payments were made) ITPO furnished the relevant guidelines to the plaintiff under which it used to license space to third parties Clause 1(iv) stipulated that a formal agreement would have to be signed between the parties. Despite continued correspondence, the parties could not agree on mutual terms. On 11.3.1991, ITPO sent a telex message to the plaintiff informing that it could offer the latter (i.e. the plaintiff) “space from 27th Nov 92 till 26th Dec 92 with dates of exhibition to be 12th Dec to 20th Dec 92.” ITPO also requested confirmation. However, no confirmation or acceptance was given by the plaintiff.
4. On 31.7.1991, the Society wrote a letter to ITPO that it was not interested in holding an exhibition in New Delhi and that its members wanted it to hold an exhibition in Bombay. It requested refund of the sum of Rs. 15 lacs paid by it. This was replied to by the defendant, on 19.8.1991, stating that:
“….We regret to inform you that it will not be possible for us to refund Rs. 15 lacs in view of the guidelines and terms and conditions already communicated to you for organising fairs in Pragati Maidan, New Delhi.”
On 30.9.1991, ITPO wrote another letter to the plaintiff in reply to its (plaintiff's) telex dated 20-8-1991 stating that it (ITPO) had “no objection, in principle, to the holding of ITME'92 at Bombay during the period from 27.11.92 to 6.12.92 subject to the final clearance from the Ministries of External Affairs, Home Affairs, Industry of Commerce.” The ITPO spelt out the conditions for holding the exhibition in Bombay, in its letter dated 14.10.1991. Apparently, the plaintiff was not interested, and held the exhibition at Bombay. It wrote several letters to ITPO to refund the sum of Rs. 15 lakhs. ITPO did not refund the amount. The plaintiff instituted a suit before this Court on 17.8.1994 claiming Rs. 15 lakhs (paid to the defendant ITPO) together with interest @ 21% per annum from the date of the payment with pendent lite interest. The suit was premised on the claim that since there was no concluded contract between the parties, and the sum of Rs. 15 lakhs paid was to be adjusted towards license fee if a contract concluded, the amount had to be refunded by the ITPO.
5. The defendant-ITPO’s position in the written statement was that a contract was concluded between the parties. It stated that the sum of Rs. 15 lakhs was earnest money for space booking. ITPO denied that executing a formal agreement was a condition precedent for conclusion
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