2013 Supreme(Raj) 1280
RAJASTHAN HIGH COURT
Alok Sharma, J.
M/s. Sahayog Silk Mills Pvt. Ltd. and anothor - Appellant
Versus
Rajasthan State Industrial Development And Investment Corporation, Jaipur - Respondent
S.B. Civil Writ Petition No. 10129 of 2009.
Decided On : 14-05-2013
Advocates:
For the Petitioners:R.D. Rastogi, Advocate.
For the Respondent:Anurag Sharma, Advocate.
A party to a contract cannot suppress material facts or base its petition on misleading facts, and if it does, the court may dismiss the petition with costs.
Headnote:
SALE OF ASSETS - STANDARD TERMS AND CONDITIONS - SUPPRESSIO VERI AND SUGGESTIO FALSI - FORFEITURE OF EARNEST MONEY - WRIT PETITION DISMISSED WITH COSTS.
Fact of the Case:
The petitioner, M/s. Sahayog Silk Mills Pvt. Ltd., participated in a bid for the sale of assets of M/s. Texcon Ltd. by RIICO and offered Rs. 58 lakhs for the purchase of the assets. RIICO accepted the offer and issued a letter of acceptance incorporating condition No.6, which held the petitioner liable to pay the outstanding dues of the Central Government Departments including the Central Excise Department. The petitioner objected to the condition and failed to deposit the remainder of the bid amount. RIICO cancelled the sale and forfeited the earnest money of Rs. 2 lakhs.
Finding of the Court:
The court found that the petitioner had suppressed material facts and based its petition on misleading facts. It also found that the petitioner's plea based on Section 51 of the Indian Contract Act, 1872 was untenable. The court held that RIICO was entitled to forfeit the earnest money in view of the petitioner's default.
Issues: 1. Whether the petitioner had suppressed material facts and based its petition on misleading facts? 2. Whether the petitioner's plea based on Section 51 of the Indian Contract Act, 1872 was untenable? 3. Whether RIICO was entitled to forfeit the earnest money?
Ratio Decidendi: 1. The court held that the petitioner had suppressed material facts and based its petition on misleading facts because the petitioner had not disclosed the standard terms and conditions of the bid, which clearly stated that the bidder would be responsible for payment of dues of Central Government Departments/ Agencies, separately. 2. The court held that the petitioner's plea based on Section 51 of the Indian Contract Act, 1872 was untenable because there was no reciprocal promise made by RIICO which had to be performed before the petitioner's obligation to deposit the remainder of the bid amount and comply with condition 11 of the standard terms and conditions of the NIT as incorporated as condition No.6 in the letter dated 06.12.2007. 3. The court held that RIICO was entitled to forfeit the earnest money in view of the petitioner's default on its obligation to execute the agreement for the purchase of the assets of M/s. Texcon Ltd. on payment of remainder bid amount of Rs. 56 lakhs following the acceptance of its highest bid of Rs. 58 lakhs by RIICO under Its letter of acceptance dated 06.12.2007.
Final Decision: The writ petition was dismissed with costs of Rs. 50,000/- to be paid to RIICO within a period of eight weeks from the date of the order.
JUDGMENT
1. - This petition has been filed by two companies one M/s. Sahayog Silk Mills Pvt. Ltd., petitioner No.1 (hereinafter 'M/s. Silk Ltd.') and another apparently its sister concern M/s. Sahayog processors Pvt. Ltd., petitioner No.2, (hereinafter 'M/s. process Ltd.') with the prayer that the letter dated 17.09.2008, whereby the Rajasthan State Industrial Development and Investment Corporation (hereinafter 'RIICO') informed the petitioner No.1-M/s. Sahayog Silk Mills Pvt. Ltd.- that the sale letter dated 06.12.2007 for the assets of M/s R.K. Texcon (India) Ltd., Chittorgarh Road, Village Guwardi, Bhilwara (hereinafter 'M/s. Texcon Ltd.') had been cancelled and the earnest money of Rs. 2 lakhs deposited forfeited, be quashed and set aside. It has also been prayed that the subsequent advertisement dated 05.08.2009 issued by the RIICO inter alia for sale of assets of M/s. Texcon Ltd. also be quashed and set aside and RIICO be directed to handover the possession of the assets (land, building, plant and machinery) of M/s. Texcon Ltd. to the petitioner after accepting the balance amount of Rs. 56 lakhs.
2. The facts of the case are that RIICO invited bids for the sale of the assets of M/s. Texcon (India) Ltd. in its possession under Section X29 of the State Financial Corporation Act, 1951 vide advertisement published in various newspapers including Dainik Bhaskar, Jaipur Edition, on 14.06.2007. The said advertisement inter alia provided that the purchaser/s of the assets of M/s. Texcon Ltd. would not be required to pay separately any outstanding dues to the State Government towards Electricity dues (including that of the electricity distribution companies), Commercial Tax, State Excise, PHED, Transport, Land & Building Tax, Industries etc. except IPI dues of the Corporation regarding land. The advertisement however provided that the more detailed terms and conditions for the sale of the assets of M/s. Texcon Ltd. could be obtained either from the concerned Regional Manger / Senior Regional Manager or from RIICO's website or from the Sr. Deputy General Manger (F&R), RIICO. A condition precedent for the participation in the bid was a deposit of Rs. 2 lakhs in favour of RIICO payable at Jaipur as earnest money. The sale was to be on "as is where is basis".
3. The petitioner No.1, M/s. Silk Ltd., Interested in the purchase of the assets of M/s. Texcon Ltd., approached RIICO for purchasing the fixed assets (Land, Building and Plants) of M/s. Texcon Ltd. by a sealed bid offered Rs. 35.51 lakhs after having deposited the requisite earnest money of Rs. 2 lakhs on 16.07.2007. The sealed bid of M/s. Silk Ltd. and other eligible bidders was opened. There is no dispute that RIICO thereafter proceeded to negotiate raising the bid price amongst the eligible bidders who had made their bids. M/s. Silk Ltd. thereupon made an enhanced offer of Rs. 58 lakhs for the purchase of the assets of M/s. Texcon Ltd. to be paid on cash down basis on the standard terms and conditions of RIICO. The case of the petitioner, M/s. Silk Ltd., is that it was specifically put to RIICO at the time of finalisation of petitioner's highest offer of Rs. 58 lakhs for the purchase of assets of M/s. Texcon Ltd. as to whether it would be required to pay the dues of other Departments. It was submitted that however "nothing was revealed" to the company but it was assured that RIICO would revert at the earliest on the issue of "other dues".
4. Further the case of the petitioner is that after 16.07.2007, it time and again contacted RIICO requiring it to execute the sale letter for the assets In issue, but without avail. It was submitted that finally on 06.12.2007, RIICO issued a letter of acceptance bearing No.F&R/R-545 stating that the offer of the petitioner for the purchase of entire fixed assets of M/s. Texcon Ltd. on cash down basis had been accepted. According to the petitioner-Company No.1, the letter of acceptance dated 06.12.2007 was however improperly drafted in seeking
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