JUDGMENT :

Dr. A.K. Rath, J.

By this writ petition under Article 226 of the Constitution of India, the petitioner calls in question the legality and propriety of the letter dated 24/25.1.2006 issued by the opposite party, vide Annexure-11, whereby and whereunder the Earnest Money Deposit (hereinafter referred to as “the E.M.D”) amounting to Rs.1.00 lakh was forfeited. An ancillary prayer has also been made to refund the said E.M.D.

2. Bereft of unnecessary details, the short facts of the case of the petitioner is that the opposite party issued a sale notice in the month of January, 2005 in the local daily “the Samaj” inviting offers from the intending parties for sale of the assets including the land, building and machineries of the defaulting unit M/s. Eastland Impex Ltd., Barbaria in the district of Balasore in exercise of its power under Section 29 of the State Financial Corporation Act, 1951 (in short, “the Act”). The last date of the offer was fixed to 28.1.2005 at 5 P.M. The petitioner submitted its offer along with E.M.D of Rs.1.00 lakh on 22.1.2005. The price offered by the petitioner was Rs.100.00 lakhs. The petitioner being the highest bidder was called upon for negotiation by the Default Advisory and Disposal Committee (hereinafter referred to as “the DADC”) of opposite party on 29.1.2005. After discussion, the petitioner submitted the modified offer on 29.1.2005, vide Annexure-3. On 22.2.2005, the petitioner sent a letter to get the modified offer approved by the Board of the opposite party. The opposite party in its letter dated 15.4.2005, vide Annexure-5, agreed to accept the modified offer, but imposed certain terms and conditions for such acceptance. Thereafter, the petitioner sent a letter dated 7.5.2005 to the opposite party to waive certain conditions, vide Annexure 6. But then, by letter dated 6.7.2005, vide Annexure-7, the opposite party intimated the petitioner that since the offer made by the petitioner was not acceptable, the offer of the opposite party to sell the fixed assets of the said unit was cancelled. Aggrieved by the cancellation of the offer, the petitioner filed a writ petition being WP(C) No.10423 of 2005. While the matter stood thus, the opposite party issued a public sale notice for sale of the fixed assets of the defaulting unit in August, 2005. The petitioner again participated and made the offer. Though the petitioner was the highest bidder, but then his tender was cancelled. Again the opposite party issued a public sale notice in December, 2005 for sale of the said defaulting unit. Pursuant to the said notice, the petitioner made his offer on 26.12.2005. The offer made by the petitioner was highest amongst all. When the petitioner came to know that the opposite party decided to settle the sale in favour of other persons, the petitioner again filed a writ petition, which was registered as WP(C) No.206 of 2006. During pendency of the said writ petition, the petitioner along with other bidders were invited by the opposite party for attending the D.A.D.C meeting held on 16.1.2006. Finally, the petitioner offered the amount of Rs.1.20 crores subject to certain terms and conditions. The same being the highest was accepted by the opposite party. Thereafter, WP(C) No.206 of 2006 was not pressed. While the matter stood thus, the opposite party vide letter no.6259 dated 24/25.01.2006, vide Annexure-11, intimated the petitioner that the E.M.D. amounting to Rs.1.00 lakh deposited for the first sale notice stood forfeited. The petitioner made a representation for reconsideration of the matter, but the same was of no avail.

3. Pursuant to issue of notice, a counter affidavit has been filed by the opposite party. The case of the opposite party is that it along with the Orissa State Financial Corporation (hereinafter referred to as “the OSFC”) and the State Bank of India had extended term loan to M/s.Orissa Leather Industries Ltd., a subsidiary company of Leather Corporation of Orissa, for setting up