Bombay High Court
Umang Sugars Private Limited vs The State Of Maharashtra on 10 December, 2013
Author: Ravindra V. Ghuge
Bench: B.P.Dharmadhikari, Ravindra V.Ghuge
WP/6331/2013
1
IN THE HIGH COURT OF JUDICATURE OF BOMBAY
BENCH AT AURANGABAD
WRIT PETITION NO.6331 OF 2013
Umang Sugars Private Limited,
10, Siddhi, Keshavnagari,
Shanoorwadi, Aurangabad
Through its Director,
Satish Jagannath Ghatge Patil,
Age-40 years, Occupation : Business,
R/o.10, Siddhi, Keshavnagari,
Shanoorwadi, Aurangabad ..PETITIONER
VERSUS
1. The State of Maharashtra,
Through it's Secretary
Department of Co-operation,
Mantralaya, Mumbai-32.
2. The Maharashtra State Co-operative
Bank Limited,
Head Office at Mumbai,
Regional Office at Aurangabad,
Through its Authorized Officer
Plot No.10, Town Centre, Cidco,
Aurangabad. ..RESPONDENTS
...
Mr. V.D.Sapkal h/f Mr. Y.V.Kakade, Advocates for petitioner,
Mr. P.P.More, A.G.P. for respondent No.1, and
Mr. S.B.Gorade Patil, Advocate for respondent No.2.
...
CORAM: B.P.DHARMADHIKARI &
RAVINDRA V.GHUGE, JJ.
RESERVED ON : 19/10/2013
PRONOUNCED ON :10/12/2013
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WP/6331/2013
2
JUDGMENT :(Per Ravindra V. Ghuge, J.):-
1. Rule.
2. Rule made returnable forthwith by consent of the parties and heard the respective advocates.
3.
The petitioner is a Private Limited Company registered under the Companies Act. Respondent No.1 is the Department of Co-operation, State of Maharashtra. Respondent No.2 is the Co-
operative Bank & a Secured Creditor which has taken possession of the assets of borrower the Ghrushneshwar Sahakari Sakhar Karkhana Ltd., under the provisions of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as SARFAESI Act). It then issued the tender for the sale of movable and immovable assets of the said Karkhana.
4. The contention of the petitioner is that respondent No.2 has its Regional Office at Aurangabad. The said Bank had given loan to the Ghrushneshwar Sahakari Sakhar Karkhana Ltd.
::: Downloaded on - 23/12/2013 20:34:02 :::WP/6331/2013 3 Khatnapur, Tal.Khultabad, Dist.Aurangabad. (Hereinafter referred to as the G.S.S.K.L.). G.S.S.K.L. went into liquidation and accordingly respondent No.2 took over movable and immovable assets against the loan sanctioned by it and other consortium members of the said Bank.
5. Certain dates and events germane to the controversy before us need to be recorded. With the assistance of Mr.V.D.Sapkal and Mr.S.B.Gorde, learned advocates representing the petitioner and respondent No.2 respectively, we have compiled the dates and events in chronological order, which are as follows :
08/01/2013 Proclamation about the tender/bid for sale of movable and immovable properties of G.S.S.K.L. was published in "Dainik Sakal" and "Economic Times", newspapers having wide circulation. 14/01/2013 The time frame for purchase of tender/bid forms. to 31/01/2013 07/02/2013 The last date up to 5.00 p.m. for submission of tenders at the Head Office of respondent No.2 at Mumbai.
07/02/2013 The petitioner submitted its tender/bid form within time.
11/02/2013 Opening of the tender/bid forms. It is found that the ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 4 petitioner was the highest bidder.
08/02/2013 S.A. filed alongwith Misc.Appl.(Delay) No.11/2013 and interim application No.96/2013 in the Debt Recovery Tribunal (D.R.T.) by One Uttam Engineering Ltd. - Not a party to the instant proceeding.
12/02/2013 The petitioner's bid is accepted. Respondent No.2 has directed the petitioner to pay the remainder portion from the initial 25% amount to be deposited within a period of 7 days and the rest of the amount to be deposited within a period of 30 days as per tender terms.
18/02/2013 The petitioner deposited the balance of the 25% of the amount with respondent No.2.
20/02/2013 The petitioner communicated to respondent No.2 seeking some documents so as to enable the petitioner to approach financial institutions for aid in order to generate funds and deposit rest of the 75% amount.
25/02/2013 The Debt Recovery Tribunal passed an order on the interim application No.96/2013 filed by M/s Uttam Engineering Ltd. The appearance of respondent No. 2 is shown recorded as respondent No.2 appeared in the matter on oral instructions. Notice is issued to respondent No.2/Bank on 25/02/2013 and made returnable on 06/03/2013.
27/02/2013 The notice of Debt Recovery Tribunal is formally served on respondent No.2/Bank.
06/03/2013 Respondent No.2 formally filed its appearance on ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 5 its behalf and sought copies of the interim application no.96/2013 and M.A.No.11/2013 to enable it to file reply.
11/03/2013 The petitioner once again communicated to respondent No.2 seeking draft copies of the certificate of sale, sale/purchase agreement/deed. 16/03/2013 Petitioner again communicated to respondent No. 2/Bank vide its letter dated 16/03/2013 once again seeking copies of the documents.
16/03/2013 Legal opinion dated 16/03/2013 (Page 58 of the petition paper book) is forwarded by the Advocate for respondent No.2 Mr.S.B.Gorde intimating respondent No.2/Bank that in view of the interim order passed by the Debt Recovery Tribunal on the application made by Uttam Industries Limited. Not a party to the instant proceeding, the petitioner should make a request for extension of time to deposit 75% amount since it is permissible to get such extension by an agreement in writing and the decision thereon can be taken in light of Rule 9(4) of The Security Interest (Enforcement) Rules 2002 (Hereafter referred to as Rules of 2002).
01/04/2013 Respondent No.2 suo-motu granted extension of time for depositing the remainder amount mentioned in its letter, in view of the status-quo order issued by the Debt Recovery Tribunal.
Extension of time by one month @ 8% interest was ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 6 granted. It is further informed that in case it is further felt appropriate, extension would be granted for a period of 3 months @ 12% interest and any further extension thereafter would be charged @ 18% interest.
04/04/2013 The petitioner communicated to respondent No.2 that it had never sought an extension for depositing the remaining 75% amount and that the time has been extended by respondent No.2 on its own volition. Grievance is therefore made by the petitioner that a demand of 8% interest followed by 12% and thereafter by 18% is un-reasonable and un-sustainable.
24/04/2013 Misc.Appl.(Delay) No.11/2013 is heard by the Debt Recovery Tribunal and fixed for orders on 10/05/2013.
10/05/2013 Since the Presiding Officer of Debt Recovery Tribunal is on leave, date for orders is extended to 11/06/2013.
11/05/2013 The petitioner submitted one letter to respondent No.2 stating therein that 25% of the amount was already deposited on 18/02/2013 and despite demands, necessary documents are not supplied to the petitioner. Further activity like taking possession of the movable and immovable property, repairs of the machinery, civil work, new machinery to be installed etc. would be required to be done in ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 7 5-6 months and therefore respondent No.2 was called upon to act diligently and supply necessary documents to the petitioner.
11/06/13 The Debt Recovery Tribunal passed an order rejecting the Misc.Appl. (Delay) No.11/2013.
Interim application No. 96/2013 is therefore disposed of.
12/06/13 The applicant before the Debt Recovery Tribunal moved an application for continuation of the interim order. Order of status-quo continued till 25/06/2013 for enabling the said applicant to approach the Debt Recovery Appellate Tribunal at Mumbai. (DRAT) 13/06/2013 The petitioner submitted its letter dated 13/06/2013 to respondent No.2 setting out reasons which compelled the petitioner to withdraw from the tender proceedings. It is pointed out that the pending litigation has created obstacles and the dis-concern shown by respondent No.2 in supplying the documents to the petitioner, have contributed to the petitioner taking decision of withdrawing from the said tender. 25% amount deposited as a security deposit is sought to be returned.
However, it is clarified by the petitioner that if the said tender proceedings are cleared from the litigation under the SARFAESI Act, the petitioner would be willing to deposit the entire 100% amount ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 8 and take the property under auction.
24/06/2013 The petitioner, once again, submitted its letter dated 24/06/2013, re-iterating the contents of the earlier letter and requesting for the return of the deposited amount with interest.
26/06/2013 The applicant before the Debt Recovery Tribunal i.e. M/s. Uttam Industrial Engineering Ltd., (Hereinafter referred to as M/s.Uttam for short) submitted an application for extension of the status-quo till 01/07/2013 before the Debt Recovery Tribunal.
05/07/13 Appeal No.177/2013 filed by M/s. Uttam before the Debt Recovery Appellate Tribunal is allowed. Delay in approaching the Debt Recovery Tribunal is condoned and the application is directed to be registered.
18/07/2013 M/s.Uttam filed an application for continuation of status-quo order. Respondent No.2 opposed the said application on the ground that the Debt Recovery Appellate Tribunal had not continued the status-quo order and the applicant M/s. Uttam did not seek such orders from the Debt Recovery Appellate Tribunal . However, the Debt Recovery Tribunal granted status-quo and directed respondent No.2/ Bank to maintain the position as on date.
14/08/2013 The S.A. was listed before the Registrar, Debt ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 9 Recovery Tribunal for compliance and for respondent No.2 to file its affidavit in reply. Time is extended up to 29/08/2013.
31/07/2013 Refund of EMD is rejected by the Respondent No.2.
6. From the dates and events listed out hereinabove, the factual and un-disputed position between the parties becomes clear. The entire controversy now boils down to as to whether the petitioner should be allowed to withdraw from the tender proceedings, quash and set aside the impugned communication dated 31/07/2013 issued by respondent No.2, rejecting the claim of refund and direct respondent No.2 to refund 25% Earnest Money Deposit (Hereinafter referred to as E.M.D.)
7. The petitioner contends that respondent No.2 ought to have halted the tender proceedings from the very moment M/s.
Uttam lodged its proceedings i.e. Misc. Application (Delay) No. 11/2013 with interim application no.96/2013 before the Debt Recovery Tribunal. Submission is that, knowledge of the said proceedings should have invited an appropriate interception by respondent No.2 by staying the tender proceedings in order to ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 10 avoid further complications. The amount of the tender was to the tune of Rs.35,62,71,000/- and the 25% amount deposited by the petitioner was to the tune of Rs.8,90,67,750/-. Further contention is that the petitioner was allowed to participate in the tender proceedings and move ahead with the same, despite issuance of notice by the Debt Recovery Tribunal on the proceedings filed by M/s. Uttam.
8. The petitioner has further contended that on the one hand, respondent No.2 is guilty of suppression of the proceedings before the Debt Recovery Tribunal and on the other hand is equally guilty of suo-motu extending the period of depositing the remainder amount of 75% along with 8% interest, which was sought to be enhanced to 12% gradually and thereafter to 18%. Sum and substance of the petitioner's contention is that the conduct of respondent No.2 is unpardonable and unsustainable. The above submissions of the petitioner are on the premises that respondent No.2 was aware of the proceedings initiated by M/s. Uttam.
9. The grounds for consideration raised by the petitioner are ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 11 as follows :
a) The act of respondent No.2 is contrary to the provisions of Law and the terms and conditions of the tender/bid.
b) The terms and conditions of the tender/bid mandated the completion of the entire transaction within a period of 30 days from the opening of the bid and in view of the same, not happening, the tender process was vitiated.
c) Condition No.15 in the tender/bid mandated that the time fixed for observance and performance by the bidder of any of the obligations to be observed, was deemed to be the essence of the tender/bid and since the said time frame having not been complied with, renders the tender process vitiated.
d) Several communications made by the petitioner time and again to respondent No.2 seeking documents from respondent No.2 and showing its readiness to deposit the remainder 75% shows the bonafides of the petitioner and this could not be achieved owing to the failure on the part of respondent No.2.
e) Delay caused can not be attributed to the petitioner due to the technical faults on the part of respondent No.2 and it cannot justify awarding of more interest on the remainder 75% amount against the petitioner.
f) Failure in completing the tender/bid and passage of 5-6 months thereafter resulting in the petitioner missing the crushing season of 2013-14 by actually commencing operations, can not be attributed to the petitioner and the blame lies on respondent No.2.
g) The proceedings initiated by M/s.Uttam and orders passed ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 12 thereon were not disclosed by respondent No.2 to the petitioner, which renders the tender/bid bad in the eyes of law.
h) The circumstances beyond the control of the petitioner and conduct of respondent No.2 can not be used against the petitioner and therefore the petitioner is justified in withdrawing from the tender/bid process.
i) Losses caused to the petitioner owing to several factors which have not been contributed to by the petitioner, entitles it to seek refund of the 25% amount of E.M.D.
j) Condition No.30 of the terms and conditions of the tender/bid mandates that the sale in favour of the bidder should be confirmed by the A.O. And if the same does not occur, the E.M.D. or purchase money, as the case may be, without interest, should be returned to the bidder.
k) Contract is rendered impossible of performance.
For clarity, clauses no.21 and 30 of the terms and conditions are reproduced hereinbelow:-
21. Payment of Sale Price:
The successful bidder would be informed in writing about the acceptance of his/her/their bid/offer by the AO. The successful Bidder shall deposit 25% of the amount of sale price, after adjusting for EMD already paid, within (7) seven days of the acceptance of offer by the AO in respect of the sale failing which the EMD shall be forfeited. The balance 75% of the sale price is payable on or before 30 days of confirmation/ ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 13 acceptance of the sale by the AO. In case of failure to deposit this balance amount within the prescribed period, the amount deposited shall be forfeited. Balance payments other than EMD shall be made by way of crossed A/c Payee Demand Draft/Pay Order drawn in favour of "The Maharashtra State Co-operative Bank Ltd., Mumbai" issued by any Nationalised/ Schedule Bank or through RTGS (RTGS/NEFT : IFSC : MSCI 0082002) of The Maharashtra State Co-operative Bank Agro Department, Mumbai having its Account No.116459.
30. In the event of the said sale in favour of the Bidder not being confirmed by AO, otherwise than on account of the wilful default of the bidder or if the sale is set aside by an order of the Court/Tribunal, then in that event the sale shall be void and the bidder shall, in that event be entitled only to receive back his/her/their Earnest Money Deposit (EMD) or purchase money as the case may be, but without interest and the bidder shall not be entitled to be paid his/her/ their costs, charges and expenses of and incidental to the said sale and investigation of title or any other costs incurred by him/ her/themselves.
l) Respondent No.2 had knowledge of the claim of M/s. Uttam and non disclosure of the same is contrary to the Law.
m) Respondent No.2 has committed breach of Rule 8(6)(f) of the Rules of 2002.
n) Rejection of the claim for return of the E.M.D. by respondent No.2 on 31/07/2013 is contrary to the provisions of Law.
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10. The contesting respondent in this proceeding is respondent No.2 which has filed its affidavit in reply. The affidavit is sworn by the Assistant Manager of the M.S.C. Bank Limited. It is not disputed that 25% of the amount was deposited by the petitioner as E.M.D. It is contended that the petitioner failed to deposit the remainder 75% amount within 30 days from 12/02/2013, which is the date of acceptance of the offer. It is specifically contended in para no.7 as follows.
"In reply to para no.9, I say that the fact of depositing 25% amount with the bank is not disputed but the contention that the petitioner had taken necessary steps for depositing balance 75% amount is not accepted.
In fact as per agreed terms of contract and the terms and conditions therein it was obligatory on the part of petitioner to deposit 75% balance amount within 30 days from the date of acceptance of offer i.e. 12/02/2013.
There is non compliance of the said condition by the petitioner/ purchaser. Merely communicating the secured creditor showing willingness to deposit 75% amount would not amount to compliance of the mandatory condition of the tender document. As the petitioner had after agreeing to the terms of sale had participated in the sale process cannot know back out from the sale process."::: Downloaded on - 23/12/2013 20:34:02 :::
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11. Respondent No.2 has further submitted that pendency of the proceedings before the Debt Recovery Tribunal and the various interim orders passed thereunder prevented respondent No.2 to handover the possession of the secured assets to the petitioner. It is stated that respondent No.2 was not aware of the transaction between the borrower Karkhana and M/s. Uttam at the time of putting the secured assets for sale. They were not aware of any charge of any unsecured creditor on the property extract. There is no fault on the part of respondent No.2 Bank in not completing the sale process. The communications made by the petitioner regarding showing willingness to pay the balance 75% amount were an eye wash, aimed at coming out of the provisions of Rule 9(4) of The Rules of 2002. It is further submitted that the sale certificate can be issued by A.O. only after the due compliance of Rule 9(6) of the Rules of 2002.
12. Respondent No.2 has further alleged that the petitioner was never ready to deposit the 75% amount and there was no positive arrangement made by it in furtherance to it's intentions to pay the 75% amount. It was not the outlook of respondent No. ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 16 2/Bank as to the manner in which the petitioner was to generate funds. The petitioner could have been entitled for refund of E.M.D. or purchase money only if the sale had not been confirmed by the A.O. or set aside by the orders of any Court or Tribunal.
Since the A.O. has not yet passed any order in view of the sale having not been completed under Rule 9(4) of the Rules of 2002, the petitioner is not entitled to refund of the E.M.D. and the respondent No.2/bank is justified in forfeiting the 25% amount.
13. Respondent No.2 has also contended that the pendency of the proceedings in any Court, can not be a ground for the petitioner to back out from the sale process. It is further stated that the application for extension should have been made by the petitioner itself for depositing the remainder 75% amount. If the petitioner wants to withdraw from the sale process, the only option with the Bank is to cancel the sale forfeiting the E.M.D. and issue a fresh sale notice as per Rule 9(5) of the Rules of 2002.
14. Respondent No.2 further states that the E.M.D. was deposited by the petitioner on 18/02/2013 and the petitioner ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 17 should have made an application for the refund of E.M.D. Prior to the acceptance of its offer by the respondent No.2/Bank.
15. Respondent No.2 thereafter has made a specific statement in para no.13, which is as under:
"In reply to para no.16-C and 16-D, I say that the contention of petitioner that the bank was having knowledge of the claim of Uttam Industry is not accepted.
It was for the first time by letter dtd. 25/08/2012 the bank got knowledge of the said alleged claim. The Borrower has availed consortium finance from 9 Bankers therefore their claim was within the knowledge of MSC Bank, being a lead bank, but the claim of Uttam Industry is a unsecured claim. The Bank is having first charge over the assets of Borrower Karkhana and to that security documents are executed by the Borrower in favour of the Bank. Though there is claim of Uttam Industry that would not preclude the lead bank in initiating recovery proceedings under SARFAESI Act, 2002. At the most, the claim of Uttam Industry can be termed as unsecured creditor and claim of such unsecured creditor can be satisfied only after full recovery of first charge holders and if something remains then the unsecured creditor can be satisfied only after full recovery of first charge holders and if something remains then the ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 18 unsecured creditor can enforce their right."
16. By the said statement, respondent No.2 has attempted to establish that it did not have any knowledge about the proceedings initiated by M/s. Uttam till 25/08/2012. However in the chronological dates, supplied in writing by respondent No.2 through its learned Advocate dated 19/08/2013, Item No.2 with reference to date 25/02/2013 indicates that the respondent No. 2/Bank had appeared on oral instructions before the Debt Recovery Tribunal on 25/02/2013, had received notice from the Debt Recovery Tribunal on 27/02/2013 and had formally filed its appearance on behalf of respondent No.2/Bank on 06/03/2013.
Nevertheless, the tender/bid of the petitioner which was opened on 11/02/2013, was accepted on 12/02/2013 and the petitioner deposited E.M.D. on 18/02/2013.
17. Respondent No.2 has also raised an objection that the petition is not maintainable in view of the remedy available to the petitioner to ventilate its grievance before the Debt Recovery Tribunal u/s. 17 of the SARFAESI Act and also that the issue pertains to contractual obligations between the parties.
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18. The petitioner, in support of its contentions, has relied upon following judgments :
a) AIR 2000 SC 1806 (Mohd Gazi Vs. State of Madhya Pradesh and others).
b) An un-reported order of the Division Bench of the Madras High Court in W.P.No.27079/2009 (Jai Logistics Vs. The Authorized Officer, Syndicate Bank).
c) AIR 2008, Gauhati 38 (M/s.Rose Valley Real Estate and construction Limited Vs. United Commercial Bank and another) -
Single Judge.
d) 2006(5) Bom.C.R. 207 (Bholenath Trading Co. Vs. State Bank of India) - Division Bench.
e) 2011(1) Bankers' Journal 315 (Chemstar Chemicals and Intermediates (P.) Ltd., Vs. Commercial Tax Officer, Purasawalkam Assessment Circle and others) - Single Judge, Madras High Court.
f) AIR 2010 SC 338 (Haryana Financial Corporation and another Vs. Rajesh Gupta).
19. Respondent No.2 has placed reliance upon the following judgments :
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a) 2010 STPL (Web) 546 SC, (United Bank of India Vs.Satyawati Tondon and others),
b) Un-reported judgment of the Bombay High Court in W.P. 6039/2010 - Division Bench,
c) 2011(1) Bankers' Journal 588 SC (Kanaiyalal Lalchand Sachdev and Others Vs. State of Maharashtra and others),
d) 2010(2) Banker's Journal 277 - Bombay High Court -
Division Bench (Anand Jayant More Vs. Bank of India and others),
e) 2009 AIR SCW 4949 (Authorized Officer, Indian Overseas Bank and another Vs.M/s. Ashok Saw Mill),
f) Un-reported Division Bench judgment of the Bombay High Court dated 19.7.2013 at principal seat in W.P.No.3243/2013 (Aaditya Kumar Clearing Agency and Transport Vs. Union of India and others),
g) 2000 AIR SC 2573 (Kerla State Electricity Board Vs.Kurien E.Kalathil),
h) 1989 AIR SC 1076 (Bareilly Development Authority Vs.Ajay Pal Singh),
i) 1993(1) Mh.L.J. Page No.1 - Bombay High Court - Full ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 21 Bench-(Shamrao Vitthal Co-operative Bank Ltd., Vs. Padubidri Pattabhiram Bhat and another,
j) 1954 AIR SC 44 (Satyabrata Bhose Vs.Mugneeram Bangur and Company),
k) 2003 AIR SC 3823 (National Highway Authority of India Vs. Ganga Enterprises) and
l) AIR 1955 Madras 606 - Single Judge (V.R.Lakshmanan Chettiar and another Vs.S.K. Kamarajendara Kadirveluswami Pandian and another).
20. We have gone through the judgments cited by the petitioner as well as respondent No.2.
Somewhat similar questions have been raised before the Honourable Apex Court and various High Courts. We do not propose to refer to all the judgments cited before us. We prefer to advert to a few of the leading judgments looking to the facts set out therein and the law as applicable.
21. We find it appropriate to first deal with the objections raised by respondent No.2 that the petitioner has an alternate ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 22 remedy in light of Section 17 of The SARFAESI Act.
22. Section 17 comes into operation when any person is aggrieved by any of the measures referred to in Section 13(4), taken by the secured creditor or his authorized officer under the chart.
Section 13(4) of the SARFAESI Act reads as under :-
"In case the borrower fails to discharge his liability in full within the period specified in sub-
section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely :-
(a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured asset;
(b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured asset:
Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower is held as security for the debt:
Provided further that where the management of whole of the business or part of the business is ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 23 severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt.
(c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor;
(d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt."
23. Similar to the view expressed by the Apex Court in Mohd.
Gazi's case (supra), the Madras High Court in Jai Logistic's case (supra) has observed in para no.5 as under :
"We have considered the submissions. Of course, in the aforesaid judgment, the Supreme Court, while considering a sale by the Official Liquidator, has held that it is the duty of the intending purchaser to satisfy himself as to the encumbrance before participating in the bid. Having participated in the bid, the intending purchaser cannot later on turn around and question the Official Liquidator on the ground that the encumbrance was not notified. In that ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 24 case, the provisions of the Rules as applicable in the present case are not applicable to the Official Liquidator. But in the case on hand, once possession is taken over under section 13(4) or under Section 14 of the SARFAESI Act, whenever the secured creditor contemplates a sale of immovable property, they will have to follow Rule 8 of the Rules of 2002. Rule 8(6)(f) mandates the secured creditors to set out in the terms of sale notice any other thing which the authorized officer considers it material for a purchaser to know in order to judge the nature and value of the property. A reading of the said rule, in our opinion, would also include the encumbrance relating to the property. We are inclined to read the rule in that way keeping in mind the interest of the intending purchaser to be put on notice as to the encumbrance, as otherwise he/she will be purchasing the property and simultaneously buying the litigation as well and an intending purchaser may not bid in the event he/she came to know of any encumbrance over the property. That is why the rule specifically contemplates a provision for the authorized officer, while notifying the sale, to specifically state as to the encumbrance. It will be a different issue in the event the auction notice indicated that it is the duty of the intending purchaser to verify not only the encumbrance by way of alienation of the property, but also the other statutory liabilities and in ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 25 that case, the intending purchaser cannot later on turn around and seek for either the refund of the earnest money deposited or insist the bank to clear the encumbrance. In the absence of such indication in the sale notice, in our considered view, the respondent-
bank would not be justified in compelling a purchaser to go ahead with the sale by depositing the balance sale consideration together with the encumbrance."
Madras High Court, therefore, allowed the writ petition and set aside the impugned order of forfeiture. Respondent was thus directed to return the E.M.D.
24. In order to consider the objections raised by respondent No.2, with due circumspection, it is necessary to consider the phraseology used in Section 13(4) of the SARFAESI Act. It begins with a clarification pertaining to the failure on the part of the borrower to discharge his liability in full within a specified period which gives rise to a right and remedy to the secured creditor to initiate measures to recover the secured debt as per sub clauses (a) to (d). In our view, the petitioner in the instant case has raised a limited issue to the extent of recovering the E.M.D. and to withdraw from the tender proceedings. The petitioner is a bidder ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 26 and is naturally neither a borrower nor a secured creditor.
25. Section 17 of the SARFAESI Act gives a right to appeal to any person including the borrower aggrieved by any of the measures referred to in sub section 4 of Section 13 taken by the secured creditor or his authorized officer under the said chapter.
Needless to state, section 17 is a remedy to a person who is aggrieved by any measures taken by the secured creditor u/s.
13(4).
26.M/s. Uttam claims to posses needed locus and has therefore already moved an application M.A.No.11/2013 along with an interim application No.96/2013. The said proceedings are presently sub-judice before the Debt Recovery Appellate Tribunal and we are not required to make any observations as regards the merits of the said proceedings. No doubt, interim orders passed by the Debt Recovery Tribunal and subsequently by the Debt Recovery Appellate Tribunal have applied brakes on the tender proceedings.
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27. We find from the admitted facts before us that neither respondent No.2/Bank nor the secured creditor has resorted to any measures u/s. 13(4) of The SARFAESI Act.
28. Respondent No.2/Bank has placed reliance on the United Bank of India's case (supra) to drive home the point that the petitioner has precluded from prosecuting this petition in view of the alternate remedy u/s 17 of The SARFAESI Act. We have gone through the facts of the said judgment and find that the same are quite different than those before us.
29. Nevertheless, para no.18 of the said judgment deals with the powers conferred upon the High Court under Article 226 and self imposed restraints. Paragraph No.18 reads as follows:
"While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders of writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 28 power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by filing application, appeal, revision etc. and the particular legislation contains a detailed mechanism for redressal of his grievance. It must be remembered that stay of an action initiated by the State and/or its agencies/instrumentalities for recovery of taxes, cess, fees, etc. seriously impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligations towards the citizens.
In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which ultimately prove detrimental to the economy of the nation.
Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. Of course, if the petitioner is able to show that its case falls within any of the exceptions carved out ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 29 in Baburam Prakash Chandra Maheshwari V.Antarim Zila Parishad AIR 1969 SC 556, Whirlpool Corporation V. Registrar of Trade Marks, Mumbai (1998) 8 SCC 1 and Harbanslal Sahnia and another V. Indian Oil Corporation Ltd., and others (2003) 2 SCC 107 and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass appropriate interim order."
30. It is thus concluded that the rule of exhausting of an alternate remedy is a rule of discretion and not one of compulsion.
31. Respondent no.2 has also relied upon an unreported judgment delivered by the Division Bench of this Court in the case of Ramchandra D. Pere (supra). Having gone through the said judgment, we find that the petitions were filed by such persons who either were shareholders of the Co-operative Society or were non secured creditors of the said society for setting aside the auction and not by the successful auction purchaser.
32. In the case before us, respondent No.2 has specifically averred in para no.8 of its affidavit in reply on page no.69 and 70 of ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 30 the petition that M/s. Uttam is one of the unsecured creditor who is aggrieved by the measures taken by the Bank under the SARFAESI Act. It is further stated that respondent No.2 Bank was unaware about the transactions between borrower Karkhana and M/s. Uttam, in as much as, there is a charge of the said unsecured creditor on property extracts.
33. In para no.13 of the said affidavit in reply, on page no.72 of the petition, respondent No.2/Bank has further averred that the claim of M/s. Uttam is an unsecured claim whereas the bank has the first charge over the assets of the borrower Karkhana. It is also averred that the claim of M/s. Uttam can be termed as unsecured creditor and claim of such unsecured creditor can be satisfied only after full recovery of first charge holders and further if something remains, then the secured creditor can enforce their right.
34. We have given a close look to the phraseology of Section 13(4) of the SARFAESI Act. Section 13(4) clearly appears to be a provision meant only for the secured creditor to take recourse to one or more of the measures mentioned in sub clauses (a) to (d).
::: Downloaded on - 23/12/2013 20:34:02 :::WP/6331/2013 31 As such, we are of the view that measures initiated u/s. 13(4) by M/s. Uttam can not be termed to be the measures initiated by a secured creditor. As such, though for the purposes u/s. 17 (Right to appeal) of the SARFAESI Act, the petitioner is presumed to fall within the meaning of 'any person', it can not be held to be aggrieved by the appeal filed by M/s. Uttam. Our view is fortified by the phraseology of Section 17 as well in light of the words 'any of the measures referred to in s/s 4 of Section 13 taken by the secured creditor'. As such, in our considered view, the petitioner would not have an alternate remedy of right to appeal u/s. 17.
35. Gauhati High Court has dealt with a somewhat similar situation in the case of M/s. Rose Valley Real Estate Case (supra).
In para no.11, the Court has concluded that a bidder in auction sale is not a person aggrieved and has no reason to file an appeal in respect of forfeiture of 25% deposited bid amount. Based on such conclusion, the contention of the Bank in that case was rejected in paragraph no.12.
36. Observations of the Gauhati High Court in para no.11 ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 32 and 12 are as under :
"11. A careful reading of Section 13(4) shows that Section 13(4) embodies various modes of recovery of the secured debts of the secured creditor. If anyone, including a borrower, feels aggrieved by the mode of recovery, which a secured creditor may adopt, he has a right to prefer an appeal in terms of Section 17. The writ petitioner, in the present case, is, admittedly, not a borrower nor is the writ petitioner a person aggrieved by the mode of recovery adopted by the respondent bank as secured creditor. Thus, the controversy is not covered by the provisions contained under Section 13(4) of the Act.
Since Section 13(4) has no application to the transaction at hand, the question of Section 17 being applicable to the present case does not arise at all. Hence, the present petitioner has no right of appeal under Section 17 of the Act in respect of the forfeiture of the amount in question or as regards the writ petitioner's demand for refund of the said deposited sum of Rs.60.75 lac.
12. In view of the fact that the respondent bank's contention has no substance, as indicated hereinabove, an examination of Section 31 is not really necessary."
37. For the reasons set out hereinabove, we hold with respect ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 33 that the judgment of the Hon'ble Apex Court in the case of United Bank of India's case (supra), Kanaiyalal Lalchand Sachdev's case (supra), Division Bench view of the Bombay High Court in the case of Ramchandra Deorao Pere (supra), Anand Jayant More (supra), Adityakumar Clearing Agency & Transport (supra), Madras High Court's view taken in the case of Authorized Officer, Indian Overseas Bank (supra) are not applicable to the case before us.
Reliance placed on all these judgments by respondent No.2 Bank is mis-conceived. Obvious reason is if an auction purchaser is permitted to challenge the action or measures resorted to under S. 13(4), he cuts his own legs & indirectly, will be assisting the cause of borrower also. It will thus be prejudicial not only to his own interests but to the interests of Respondent 2 as well.
38. Hence we are unable to accept the contention of the advocate for respondent No.2 that Section 17, in the face of M/s.
Uttam, having already invoked Section 17, is an alternate remedy to the petitioner in relation to his prayers made in the petition as regards refunding of the E.M.D. and withdrawing from the tender proceedings.
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39. Respondent No.2/Bank has attempted to canvass the limitations of this Court dealing with cases falling in the realm of the Law of Contract. It is contended that though the petitioner may be aggrieved by the impugned order of forfeiture passed by the respondent No.2/Bank, the said issue being covered by the Indian Contract Act, would render the petition untenable before this Court. He further contended that the petitioner should be relegated to an alternate remedy in the nature of initiating civil proceedings for alleged violation of contract before the competent Civil Court and that this Court should not exercise its writ jurisdiction in adjudicating this petition.
40. Per contra, the petitioner contended that an alternate remedy need not purely be an alternative available, but should amount to it (such a remedy) being efficacious and expeditious in order to redress the grievance of the petitioner. Respondent No.2, in para no.17 of its affidavit in reply at page no.73 has canvassed this objection by stating that the petition is not maintainable since "the issue pertains to contractual obligations between the parties".
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41. In the Shamrao Vitthal's case (supra), Full Bench of this Court has concluded that the Co-operative Society registered under the provisions of the Maharashtra Co-operative Societies Act, 1960 and under the Multi State Co-operative Societies Act, 1984, which carries on business of banking and is therefore governed by the Banking Regulation Act, 1949 and does not fall within the expression "State" under Article 12 of The Constitution of India.
42. The petitioner has relied upon Madras High Court judgment in the case of Chemstar Chemical (supra). The view taken by the High Court in the said judgment is that writ jurisdiction can be exercised by the High Court despite availability of an alternate remedy whenever there is a contravention or violation of principles of natural justice. Extra-ordinary power under Article 226 of the Constitution of India can be invoked even in such situation. In paragraph 18 of the United Bank of India case (supra), the Apex Court has thus concluded that an effective alternative remedy must be available. As such, merely because some alternate remedy could be available, is not enough to relegate a litigant to avail of such remedy.
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43. In the instant case, the State of Maharashtra through its Secretary, Department of Co-operation has been impleaded as respondent No.1. The said Department has overall control over the respondent in respect of the tender of G.S.S.K.L. which was the borrower Karkhana. Respondent No.2 is the Co-operative Bank which has seized the said borrower's movable and immovable property under the provisions of the SARFAESI Act. In these circumstances, we find that the contention of respondent No.2 that the petition is not maintainable and that this Court should refrain itself from entertaining a dispute falling within the realm of the Indian Contract Act, is a feeble and unsustainable objection. In Aaditya Kumar Clearing Agency and Transport Vs. Union of India and others, supra, the Division Bench of this Court, in paragraph 9 appreciated the law laid down by the Hon'ble Apex Court in Harbanslal Sahnia and another V. Indian Oil Corporation Ltd., and others, supra & noted the situations in which the High Court may exercise writ jurisdiction. When there is violation of principles of natural justice or when the proceedings are without jurisdiction, the High Court may pass suitable orders in exercise of writ jurisdiction. In present facts, time of 30 days to deposit 75% ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 37 amount was to expire on 14.3.2013 & direction rendering its deposit impossible was issued by the DRT on 25.2.2013. The respondent no. 2 Bank did not disclose the legal notice sent by M/s Uttam Industries in its tender invitation though it was aware of that claim or encumbrance. Just as speedy recovery of loan is must for respondent no. 2 Bank, for auction purchaser like petitioner, the certainty also assumes great significance. It is not expected to wait indefinitely & in the process, suffer & loose on all fronts. Time has to be of essence for the secured creditor like respondent no. 2 & also for auction purchaser like present petitioner. If loan recovery through the auction process has to be an expeditious process, spirit of SARFAESI Act also warrants that an auction purchaser can not be made to wait indefinitely or watch helplessly with the huge money blocked. The secured creditors must act in such matters by taking the auction purchaser in confidence & with his consent, or then return back the EMD or other deposits if they wish to succeed. They can not jeopardize the very existence of the auction purchaser by withholding such deposits. The conduct of secured creditors must be conducive to encourage more & more persons to participate in its auctions. In ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 38 present facts, we do not find any force in contentions & objections being raised by the respondent 2 and we hereby turn down the same.
44. Having held that the petition is maintainable before this Court, we are required to deal with the issue as to whether the petitioner deserves to be refunded the E.M.D. and as to whether the impugned order dated 31/07/2013 deserves to be quashed and set aside.
45. It is an admitted position that the tender was opened on 11/02/2013 and was accepted on 12/02/2013. E.M.D. has been deposited on 18/02/2013. Sum and substance of the contention of the petitioner is that it could not proceed with the tender in view of the pending litigation which it was not aware of. It is also the case of the petitioner that it had consistently requested respondent No.2/Bank to supply necessary documents so as to enable the petitioner to seek financial assistance from financial institutions on the strength of the said documents which eventually were not supplied to the petitioner despite adequate persuasion. It is also ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 39 the case of the petitioner that it had not sought extension of time to pay the remaining 75% amount and that it was through correspondence at the behest of respondent No.2 that it had requested the petitioner to defer the payment of the remaining amount in view of interim orders passed by the Debt Recovery Tribunal and later by the Debt Recovery Appellate Tribunal.
46. We have already adverted to these facts in the earlier part of our judgment. To add to the woes of the petitioner, respondent No.2 extended time to deposit the remaining amount and at the same time, informed the petitioner that 8% interest would be levied for a period of one month on the remaining amount and that would be followed by 12% interest for a period of 3 months and thereafter @ 18% interest. According to the petitioner, this has been an atrocious approach adopted by respondent No.2 which has resulted in penalizing the petitioner for no fault on its part.
47. We find from the dates and events which we have already adverted to in the earlier part of this judgment a word against word between the petitioner and respondent No.2 as the petitioner ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 40 contends that respondent No.2 was aware of the Debt Recovery Tribunal proceedings initiated by M/s. Uttam on 12/02/2013. Per contra, respondent No.2 contends that it got the knowledge of the pending proceedings on 25/02/2013 and appearance on behalf of respondent No.2 was under oral instructions. The stand of Petitioner that on 25.2.2013 DRT passed an order which mentions a notice dated 25.8.2012 sent by Uttam Engineering Ltd warning Respondent 2 Bank that sale of property of G.S.S.K,L. would be subject to its encumbrance, is not demonstrated to be incorrect.
Respondent no. 2 has invited the tender on 8.1.2013 ie long after getting the knowledge of said claim & did not point it out to petitioner. The fact remains that the Debt Recovery Tribunal proceedings were initiated by M/s. Uttam on 08/02/2013.
48. Notwithstanding the fact that there appears to be a blame game between the petitioner and respondent No.2, which neither bothers us nor deters us from arriving at a conclusion. From the facts narrated hereinabove, we find that on account of no fault on the part of the petitioner and no laches being attributable to the conduct of the petitioner, it has suffered & therefore said blame ::: Downloaded on - 23/12/2013 20:34:02 ::: WP/6331/2013 41 game is not relevant. On the one hand, it is constrained to withdraw from the tender/bid and on the other hand it has suffered the impugned order dated 31/07/2013 issued by respondent No.2 to the extent of rejecting the claim of refund of 25% E.M.D. In short, respondent No.2 has forfeited the amount.
49. In the Mohd. Gazi's Case (Supra), the issue was whether a person can be penalized for no fault of his, merely by resorting to an equity clause in favour of the respondent-State particularly when such person is found to have not been benefited or the State deprived of the benefits on account of the stay order issued by the Court. Another related question requiring determination is as to whether on account of the pendency of the writ petition filed by another party without impleading the affected person as a party in which the stay order granted by the Court, such person can be directed to forfeit a part of the security amount deposited by him particularly when the Court itself found that even the equities were equally balanced between the State and such person.
50. In the above case before the Hon'ble Apex Court, the facts ::: Downloaded on - 23/12/2013 20:34:03 ::: WP/6331/2013 42 are somewhat similar to those in the case before us except that the highest bid of respondent No.4 was not accepted and the tender was cancelled in that case. Fresh notices for tenders were issued and the appellant was declared the highest bidder. In the meanwhile, said respondent No.4 challenged the order of cancellation of tender and the re-tender notice. The High Court, vide its interim order, restrained the respondent's officials from proceeding with the fresh tender. It was in these circumstances that the E.M.D. was sought to be refunded by the appellant.
51. The Court in that case has considered that the appellant was at no fault since he had offered the bid and was prepared to accept the Tendu leaves which he could not lift on account of the stay order. The Court observed in para no.7 as follows:
"In the facts and circumstances of the case, the maxim of equity, namely, actus curiae neminem gravabit an act of the Court shall prejudice no man, shall be applicable. This maxim is founded upon justice and good sense which serves a safe and certain guide for the administration of law. The other maxim is, lex non cogit ad impossibilia - the law does not compel a ::: Downloaded on - 23/12/2013 20:34:03 ::: WP/6331/2013 43 man to do which he cannot possibly perform. The law itself and its administration is understood to disclaim as it does in its general aphorisms, all intention of compelling impossibilities and the administration of law must adopt that general exception in the consideration of particular cases. The applicability of the aforesaid maxims has been approved by this Court in Raj Kumar Dev Vs. Tarapada Dev, (1987)4 SCC 398 : (AIR 1987 SC 2195) and Gursharan Singh Vs.NDMC, (1996) 2 SCC 459 : (1996 AIR SCW 749 : AIR 1996 SC 1175). "
The appeal was thus allowed and the appellant was held entitled to refund of the whole amount of E.M.D.
52. The Division Bench of the Bombay High Court in Bholenath Trading Co.'s case (supra) observed that the bidder, who had withdrawn the bid and sought return of the E.M.D. prior to the acceptance of its bid by the bank, would not entitle the respondent/bank in forfeiting the security deposit. The facts of the case at hand are different since the bid was accepted by respondent No.2/Bank and refund of the E.M.D. is made much later. The view of the Bombay High Court in the said case is therefore not applicable to the present case.
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53. In the Haryana Financial Case (Supra), considering the totality of circumstances, the Apex Court concluded that the action of the respondent in forfeiting the E.M.D. was wholly arbitrary and unfair. While upholding the power to forfeit the E.M.D., the Court concurred that the view of the Division Bench that there must be failure on the part of the bidder to go ahead with the contract in normal circumstances. The Court concluded that in its opinion, the respondent authority had failed to comply with the conditions of sale and had acted unfairly. This led to the conclusion that the totality of the circumstances are required to be considered while coming to a conclusion as to whether the E.M.D. needs to be returned or should be forfeited.
54. The Apex Court in the case of Haryana Financial Corporation and Another (supra) has concluded that the totality of the circumstances need to be taken into consideration in order to conclude that the petitioner was not at fault and that the respondent is not entitled to forfeit the amount. Similarly, in the Mohd. Gazi's case (supra), the Apex Court has held that when the appellant was prevented from taking benefit of acceptance of his ::: Downloaded on - 23/12/2013 20:34:03 ::: WP/6331/2013 45 bid by stay orders in proceedings to which the appellant was not a party, penalty of cut in security amount can not be imposed on the appellant who was in no way at fault. In any case, the doctrine of equity will apply in such situations. The maxim of equity namely actus-curiae neminem gravabit, an act of the Court shall prejudice no man, needs to be invoked and make applicable in this case. As has been held by the Honourable Apex Court in the Mohd. Gazi's case (supra), this maxim is founded upon justice and good sense which serves a safe and certain guide for the administration of Law.
55. In the Jai Logistic's case, the Division Bench of Madras High Court, considering the comparative hardships faced by the rival parties concluded that the respondent Bank in that case, was not justified in compelling a purchaser to go ahead with the sale by depositing the balance sale consideration together with the encumbrance.
56. In the instant case, on the one hand, respondent No. 2/Bank desired that the petitioner should proceed with the tender ::: Downloaded on - 23/12/2013 20:34:03 ::: WP/6331/2013 46 proceedings and complete the sale and on the other hand issued letters to the petitioner to defer depositing of the balance amount in view of the interim orders passed by the Debt Recovery Tribunal and Debt Recovery Appellate Tribunal. 25% amount i.e. Rs.
8,90,67,750/- is already deposited by the petitioner & to enable it to deposit the balance 75% amount of Rs. 26,72,03,250/-, respondent no.2 unilaterally extended time & further imposed interest at penal rate for such extended period. Vacation of restraining orders by the DRT is an uncertain event & time it may take is not known even today. This extension, not being bilateral, can not revive or continue the contract after expiry of time to deposit balance amount.
57. Learned Single Judge of the Gauhati High Court in the case of M/s. Rose Valley Real Estate and Construction Ltd., (supra) also arrived at a similar conclusion that a successor bidder can not be penalized and the deposit of 25% of bid amount can not be forfeited. The doctrine of frustration of contract was held to be applicable in the said situation. Para No.9 of the said judgment is as follows :
::: Downloaded on - 23/12/2013 20:34:03 :::WP/6331/2013 47 "19. In the present case, the writ petitioner was completely unwilling t6o enter into any extension of time. At the same time, the respondent Bank has also not expressed willingness to extend the period of deposit. Thus, the balance amount having not been deposited within 27-2-2007, the amount deposited by the writ petitioner would either stand forfeited in terms of sub-rule (5) of Rule 9 or the same would have to be refunded. In the present case, the interim directions, issued in WP(C) 41/2007, were admittedly, in operation restraining the respondent bank from proceeding with the notification dated 30/12/2006 aforementioned.
Since the present writ petitioner was also one of the respondents in WP(C) No.41/2007, it logically follows that neither the respondent Bank could have accepted the balance amount from the present writ petitioner not could have the present writ petitioner deposited the balance amount with the respondent bank so long as the interim directions passed by the Court on 15/02/2007 and further extended on 21/02/2007, were not interfered with or modified. Thus, by operation of Law, the respondent bank was prevented from accepting the balance amount from the present petitioner on or before 27/02/2007. In the face of such embargo imposed by the Court, omission to deposit the balance amount within 27/02/2007, by the writ petitioner cannot be treated as a default on the part of ::: Downloaded on - 23/12/2013 20:34:03 ::: WP/6331/2013 48 the writ petitioner in making the requisite deposit. When the writ petitioner has not defaulted, it cannot obviously be penalized and the amount of Rs.60.75 lac, deposited by it cannot be forfeited by taking recourse to sub-rule (5) of Rule 9."
58. In the case on hand, we find that the petitioner had not purposefully or for any oblique motive rescinded from the tender proceedings or refrained from depositing the remainder 75% of the bid amount. While dealing with the said case, the Apex Court has considered the doctrine of fairness to mean that it is the duty to act fairly and reasonably and that the said doctrine is evolved to ensure a fair action. Nevertheless, the appeal was dismissed by the Apex Court, but on other grounds.
59. In the light of the above, we hereby allow this writ petition with the following directions:-
(a) The impugned order dated 31/07/2013 is quashed and set aside.
(b) We direct respondent No.2 to refund the 25% amount of EMD along with simple interest @ 6% p.a. ::: Downloaded on - 23/12/2013 20:34:03 ::: WP/6331/2013 49
(c) The said amount along with interest shall be refunded within a period of 3 months from today, failing which the petitioner will be at liberty to recover the said amount by executing this judgment as decree of civil court as per law.
60. Rule is made absolute in the above terms with no order as to costs.
(RAVINDRA V. GHUGE, J.) (B.P.DHARMADHIKARI, J.) ...
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