The court upheld the legality of forfeiting auction deposits due to non-payment, affirming that the auction terms did not require a hearing prior to cancellation.

JUDGMENT :

Heard Sri Prashant Chandra, learned Senior Advocate assisted by Ms. Richa Mishra, appearing for petitioner and Sri Ratnesh Chandra, learned counsel for respondents.

2. This petition is filed seeking quashing of the order dated 13.04.2007 passed by Vice Chairman, Lucknow Development Authority whereby allotment of the plot in favour of the petitioner is cancelled and the token money deposited by the petitioner for the said allotment has been forfeited.

3. Brief facts of the case are that the Lucknow Development Authority (for brevity hereinafter referred to as 'LDA') published a notice dated 14.06.2005 for auction of certain plots in Gomti Nagar area for housing and commercial projects. Only builders/firms with prior real estate experience were qualified to participate in the bidding. The auction was held on 17.11.2006, petitioner's bid of Rs. 10860/- per sqm. for Group Housing plot No. 1/26, Gomti Nagar measuring 6307 sqm. was declared successful. Petitioner deposited Rs. 27,24,000/- towards the earnest/token money. The aforesaid auction was confirmed by the Vice Chairman, LDA on 22.11.2006 and the same day a demand for Rs. 1,42,94,190/- towards the remaining dues of the instalment was raised against the petitioner. Meanwhile a Public Interest Litigation bearing PIL No. 7438 of 2006 was filed before this Court challenging the said auction on the grounds that LDA favoured politically connected persons and sold plots to persons unqualified to participate in the bid at throwaway prices. Citing pendency of the PIL, petitioner refused to deposit rest of the instalments. On 13.04.2007 vide the impugned order petitioner's allotment was cancelled. It is an admitted fact that no interim order was ever granted in the PIL No. 7438 of 2006 and it was dismissed on 15.05.2007 as the LDA had cancelled the whole auction.

4. Sri Prashant Chandra, learned senior advocate appearing for the petitioner challenges the impugned order on the ground that his allotment is cancelled without providing him any opportunity of hearing in violation of the principles of natural justice. He further submits that since by the impugned order, amount already deposited by the petitioner was forfeited, therefore, it was required of the LDA to afford petitioner an opportunity before passing the impugned order. In support of his submission, counsel for the petitioner places reliance upon the judgment of the Supreme Court in the case of Ramchandra Narayan Nayak v. Karnataka Neeravari Nigam Limited and Others (2013) 15 SCC 140. Furthermore, PIL No. 7438 of 2006 was already pending before this Court and if it would have been allowed, the allotment would have been cancelled therefore the petitioner was exercising caution and at the time it was a right move on behalf of the petitioner to wait for the outcome of the PIL before paying any further instalments. Learned Senior Advocate further questions the validity of the impugned order on the ground that the terms of the auction did not contain any clause providing for forfeiture of deposited amount and therefore forfeiture of his deposit is in violation of the terms of auction contract between petitioner and the LDA. Impugned order dated 13.04.2007 refers to clause 11 of the terms and conditions of the auction but it does not provide for forfeiting the token money but only provides for cancellation of the auction by the Vice Chairman. He further submits that unless there is a specific condition laid down in the terms and conditions of the auction, the earnest money/deposits cannot be forfeited. In support of his submissions learned Senior Advocate relies upon the following judgments of the Supreme Court in the cases of: Suresh Kumar Wadhwa v. State of Madhya Pradesh and Others (2017) 16 SCC 757 and Union of India v. Vertex Broadcasting Company Private Limited and others (2015) 16 SCC 198.

5. Sri Ratnesh Chandra, learned counsel for the LDA opposes the contentions of the counsel for the petitioner and supports the impugn