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4. Another High Powered Committee was also set up by the DDA in order to find out whether further time should be given to the appellant and persons similarly situate to the appellant.

5. The second High Powered Committee recommended that the time for payment be extended and specifically mentioned the appellant's name as a person who should be given more time to pay the balance amount. Despite the fact that on 14.5.1984 the DDA accepted the recommendations of the second High Powered Committee, nothing happened till 1.12.1987. Several letters had been written by the appellant to DDA from 1984 to 1987 but no answer was forthcoming by the DDA.

12. DDA appealed against the Single Judge's judgment to a Division Bench of the Delhi High Court. The Division Bench set aside the judgment of the Single Judge holding that the forfeiture of the earnest money by the DDA was in order.

13. Shri Paras Kuhad, learned Senior Advocate appearing on behalf of the appellant, urged that time may have been of the essence under the original terms and conditions of the auction. However, time had been extended on several occasions and, therefore, ceased to be of the essence. In answer to the letter dated 1.12.1987, the appellant promptly replied and said it would be willing to pay the entire 75% with 18% interest and, therefore, there was no breach of contract on the part of the appellant. Further, since the DDA sold the plot for 11.78 Crores (Rupees Eleven Crores Seventy Eight Lakhs), there was no loss caused to the DDA and, hence forfeiture of earnest money would not be in accordance with the agreement or in accordance with law.

16. The other noticeable feature of this case on facts is that DDA specifically requested the appellant to give their consent to make the balance payable along with 18% interest charges on belated payment. This was on the footing that the Nazul Rules of 1981 would be relaxed by the Central Government. The reason why the letter is marked "without prejudice" and the DDA made it clear that the letter does not carry any commitment, is obviously because the Central Government may not relax the provision of the Nazul Rules, in which case nothing further could be done by the DDA. If, however, the Central Government was willing to condone the delay, DDA would be willing to take 75% of the outstanding amount along with 18% interest.

17. Mr. Sharan argued that since the Central Government ultimately found that this was not a Nazul land, the letter was obviously based on a mistake of fact and would be void under Section 20 of the Contract Act. We are afraid we are not able to accept this plea. Long after the Central Government informed DDA (on 1.3.1990) that the property involved in the present case is not Nazul land, the DDA by its letter of 6.10.1993 cancelled the allotment of the plot because the appellant had failed to deposit the balance 75%. DDA's understanding, therefore, was that what was important was payment of the balance 75% which was insisted upon by the letter dated 1.12.1987 and which was acceded to by the respondent immediately on the same date. Further, Mr. Sharan's argument that since the letter was "without prejudice" and since no commitment had been made, they were not bound by the terms of the letter also fails to impress us. The letter was without prejudice and no commitment could have been given by the DDA because the Central Government may well not relax the Nazul Rules. On the other hand, if the Central Government had, later on, relaxed the Nazul Rules, DDA could not be heard to say that despite this having been done, DDA would yet cancel the allotment of the plot. That this could not have been done is clear because of the aforesaid construction of the letter dated 1.12.1987 and also because DDA is a public authority bound by Article 14 and cannot behave arbitrarily.