Key Holdings and Principles

• Unilateral Extension of Time by Promisee: A promisee (e.g., DDA) may unilaterally extend the time for performance of the contract under Section 63 of the Contract Act, particularly when the extension benefits the promisor (bidder). (!) (!) (!) (!) (!) [1000562090024][1000562090025]

• Forfeiture of Earnest Money Requires Breach and Loss: Earnest money deposited as part of a concluded contract cannot be forfeited unless there is a breach by the bidder and actual loss or damage caused to the other party. Mere non-payment without prior notice or insistence on original timeline does not constitute breach where time has been extended multiple times. (!) (!) [1000562090014][1000562090020][1000562090041][1000562090043]

• No Breach Where Time Waived by Conduct: Repeated extensions of payment deadline by High Powered Committees, acceptance of recommendations, and correspondence seeking consent for payment with interest (even marked "without prejudice") waive the original three-month timeline, making time no longer of the essence. Cancellation without notice to pay within a fixed period is invalid. (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!)

• Article 14 Applies to State Actions in Contracts: State entities like DDA must act fairly and non-arbitrarily in contractual matters post-agreement. Cancellation and forfeiture without breach or loss, especially after extensions and while profiting from re-auction (e.g., higher bid amount received), violates equality under Article 14. (!) [1000562090026][1000562090027][1000562090028]

• Section 74 Limits Forfeiture to Reasonable Compensation: Post-contract, forfeiture of earnest money is governed by Section 74, requiring proof of loss from breach. No loss (e.g., re-auction at higher price) means no forfeiture; earnest money must be refunded. Applies only after contract formation, not pre-acceptance in auctions. (!) [1000562090030][1000562090031][1000562090032][1000562090033][1000562090042]

• Interest on Refund: Where no breach or loss, refund of earnest money carries interest at 9% p.a. (not reduced rate), given prolonged litigation by state entity despite clear entitlement. (!) (!) [1000562090045]

Factual Context Supporting Holdings

• Auction bid accepted; 25% earnest paid; multiple extensions granted up to 1984; 1987 letter seeks consent for 75% payment +18% interest; prompt consent given; no notice before 1993 cancellation; plot re-auctioned at ~3.5x original bid with no loss to DDA. [1000562090001][1000562090002][1000562090003][1000562090004][1000562090005][1000562090006][1000562090007][1000562090008][1000562090009][1000562090010]

Outcome

Appeal allowed; Single Judge's order restored: refund earnest money +9% interest; no specific performance or damages as plot re-allotted. (!) [1000562090046]