IMPORTANT POINT
The absence of an express forfeiture clause in an auction advertisement prevents the forfeiture of earnest money deposits by the auctioning authority.

JUDGMENT :

ANIL KUMAR CHOUDHARY, J.

1. Heard the parties.

2. This Writ Petition has been filed under Article 226 of the Constitution of India with a prayer for issuance of appropriate writ/direction to the respondent to return/refund the earnest money deposit of Rs.92,300/- paid by the petitioner on 09.03.2016 vide demand draft no. 904278664 with interest at the rate of 12% per annum.

3. The brief fact of the case is that an advertisement was issued on 04.02.2016 by the respondent for auction of one immovable property situated in the District of Bokaro. The petitioner applied for participating in the same and paid earnest money deposit by way of demand draft dated 09.03.2016 for Rs.92,300/-. The petitioner later on decided not to participate in the auction process and prayed for returning the demand draft submitted by him vide his letter dated 16.03.2016 but the respondent refused to refund the earnest money deposit due to non-participation of the petitioner in the auction process.

4. It is submitted by the learned counsel for the petitioner that even though there is no clause in the advertisement issued by the respondent for auction, that in case, any person decides not to participate in the auction, his earnest money deposit will be forfeited; still the respondents have illegally forfeited the said earnest money deposited by the petitioner. Hence, it is submitted that the action of the respondent is arbitrary, illegal and is not in accordance with law. It is therefore lastly submitted that the prayer as made by the writ petitioner be allowed.

5. It is submitted by the learned counsel for the respondent that the respondent admits that the petitioner in terms of the auction deposited earnest money deposit to the tune of Rs.92,300/- but the respondent pleaded that as the petitioner failed to participate in the auction process in terms of auction sale, the amount deposited by the petitioner is liable to be forfeited and it has rightly been forfeited. It is further submitted by the learned counsel for the respondent that the only clause for refund of the earnest money deposit (EMD) in the said advertisement was, in case the bid of the person participating in the auction is not successful. So it implies that in no other case, the Earnest Money Deposit (EMD) can be refunded and as the Earnest Money Deposit (EMD) is not refundable, the respondent is entitled to forfeit the same. Hence, it is submitted that the writ petition being without any merit be dismissed.

6. Having heard the submissions made at the Bar and after going through the materials in the record, it is pertinent to mention here that the undisputed fact remains that there is no clause in the advertisement that in case a person does not participate in the auction, his earnest money deposit is to be forfeited. There is no express provision for forfeiture of the earnest money deposit. In the absence of any express clause for forfeiture of the earnest money deposit in the advertisement that being the sole basis upon which, the respondent claims the right of forfeiture, this Court is of the considered view that there is no force in the contention of the respondent that merely because there is no clause for refunding the earnest money deposit except when the bid is not successful, it automatically confers a right of forfeiture upon the respondent. Such a plea of the respondent is not sustainable because, acceptance of such a plea will lead to a situation where even if for some reason the auction could not have taken place or cancelled, still the respondent would be entitled to retain the earnest money deposited by the bidders, by way of forfeiture of the same, which proposition would be an absurd one; being not sustainable in law. Thus, if at all, the respondent had any intention to retain the earnest money of the bidders merely for the reason that they did not participate in the auction, they ought to have mentioned so specifically in the advertisement for the auction in so many wo