2009 Supreme(SC) 1841

2009(8) Supreme 209
SUPREME COURT OF INDIA
J.M. Panchal and Surinder Singh Nijjar, JJ.
Haryana Financial Corporation & Anr. — Appellants
versus
Rajesh Gupta — Respondent
Civil Appeal No. 829 of 2003
Decided on : 15-12-2009

Headnote:The Transfer of Property Act, 1882 – Section 55 – Writ petition filed by respondent with a prayer that order by which appellants Haryana Financial Corporation, had forfeited, amount of Rs.2.5 lakhs, deposited by the respondent by way of earnest money, be quashed – Said writ petition was allowed by Division Bench – The order by which earnest money had been forfeited was quashed and set aside – Appeal – Division Bench was justified in holding that in law the appellants/Corporation undoubtedly had the power to forfeit the earnest money provided there was a failure on the part of the respondent to make the deposit – Division Bench, however, observed that respondent was dealing with an instrumentality of state-He was entitled to legitimately proceed on the assumption that appellants, a Statutory Corporation, an instrumentality of the State, shall act fairly – The respondent could not have suspected that he would be called upon to pay the amount of Rs.50 lakhs without being given even a proper passage to Unit that he was buying – Respondent had deposited the sum of Rs.2.5 lakhs on clear understanding that there would be an independent approach road to the Unit – This was understandable – Without any independent passage the plot of land would be not more than an agricultural plot, not suitable for development as a manufacturing unit – No substance found in submission made by appellants/Corporation – Appellants could not be given benefit of Clause 5 of the advertisement – The appellants /Corporation could not be permitted to take advantage of their own wrong – Clause 5 undoubtedly permitted the forfeiture of the earnest money deposited – But this could only be, if the auction purchaser failed to comply with the conditions of sale- Respondent had not failed to comply with conditions of sale – Rather, it was the appellants/Corporation which had acted unfairly, and was trying to take advantage of its own wrong – Appellants/Corporation failed to disclose to respondent material defect about the non –existence of the independent 3 ‘Karam’ passage to the property – Therefore, appellants/Corporation clearly acted in breach of Section 55 (1) (a) and (b) of Act, 1882 – Appeal dismissed. (Paras 17 to 24)

       Facts of the Case :

        Writ petition was filed by respondent herein in the instant case with a prayer that order by which appellants Haryana Financial Corporation, had forfeited, amount of Rs.2.5 lakhs, deposited by the respondent by way of earnest money, be quashed.Said writ petition was allowed by Division Bench. The order by which earnest money had been forfeited was quashed and set aside.

        2. Present appeal has been filed against said order of High Court.

       Findings of the Court :

        Division Bench was justified in holding that in law the appellants/Corporation undoubtedly had the power to forfeit the earnest money provided there was a failure on the part of the respondent to make the deposit. Division Bench, however, observed that respondent was dealing with an instrumentality of state-He was entitled to legitimately proceed on the assumption that appellants, a Statutory Corporation, an instrumentality of the State, shall act fairly. The respondent could not have suspected that he would be called upon to pay the amount of Rs.50 lakhs without being given even a proper passage to Unit that he was buying-Respondent had deposited the sum of Rs.2.5 lakhs on clear understanding that there would be an independent approach road to the Unit. This was understandable. Without any independent passage the plot of land would be not more than an agricultural plot, not suitable for development as a manufacturing unit. No substance found in submission made by appellants/Corporation. Appellants could not be given benefit of Clause 5 of the advertisement. The appellants /Corporation could not be permitted to take advantage of their own wrong.Clause 5 undoubtedly permitted the forfeiture of earnest money deposited. But this could only be, if the auction purchaser failed to comply with the conditions of sale. Respondent had not failed to comply with conditions of sale. Rather, it was the appellants/Corporation which had acted unfairly, and was trying to take advantage of its own wrong. Appellants/Corporation failed to disclose to respondent material defect about the non-existence of the independent 3 ‘Karam’ passage to the property. Therefore, appellants/Corporation clearly acted in breach of Section 55 (1) (a) and (b) of Act, 1882.Appeal dismissed.