Skip to main content

Forfeiture of earnest money

In a recent judgement, the Hon'ble Orissa High Court in the matter of CHANDANESWAR ENTERPRISES LTD. VERSUS INDUSTRIAL PROMOTION & INVESTMENT CORPORATION OF ORISSA LTD., addressed the issue of forfeiture of earnest money.

The fact was that the Corporation had auctioned some properties for which the petitioner appeared as the highest bidder and as per agreement deposited an EMD of Rs. 1 lacs. However, the Corporation as well as the petitioner laid down certain conditions which were not acceptable to either party. Under the circumstances, the sale did not go through and the Corporation forfeited the EMD and came out with further advertisements for sale/auction of the properties. On each occasion the petitioner remained the highest bidder. Finally, the Corporation decided to accept the petitioner as the highest bidder but refused to adjust the forfeited EMD with the new offer.

On petitioner appealing before the hon'ble court, the court opined that:-

5. The sole point that arises for our consideration is as to whether the opposite party was justified in forfeiting the E.M.D. of Rs.1.00 lakh of the petitioner.

6. Section 7 of the Indian Contract Act, 1872 provides that in order to convert a proposal into a promise, the acceptance must be absolute, unqualified and without conditions. The offer and acceptance must correspond. The acceptance must match with the terms of the offer. When there is a variation between the offer and acceptance even in respect of any material term, acceptance cannot be said to be absolute. It does not result in the formation of a contract. An acceptance does not convert a proposal into a promise, if it is qualified by conditions.

7. Bearing in mind the aforesaid principles of law, we have given our anxious consideration to the issue involved. The sale notice, vide Annexure-1, stipulates that "if the offer is accepted by the Corporation and the offerer (s) does not come forward to accept the same, the amount deposited with the offer shall be forfeited. The amount deposited with the offer will be refunded without any interest in case the offer is not accepted by the Corporation."

8. We find that final offer made by the petitioner, vide Annexure-4, was not accepted in toto. The balance down amount of Rs.75.00 lakhs, which was offered by the petitioner to be paid in five annual installments, was accepted by the opposite party with a condition that the deferred sale consideration of Rs.75.00 lakhs shall be treated as term loan and carry interest at the rate of 14% per annum (computed at quarterly rest) with a rebate of at the rate of 3% for timely payment. In the letter dated 7.5.2005, vide Annexure-6, the petitioner had categorically stated to modify and confirm the same, but then it was rejected by the opposite party, vide Annexure-7. The acceptance did not match with the terms of the offer. Thus the offer made by the petitioner was not accepted by the opposite party. Since the offer was not accepted by the opposite party, the question of forfeiture of E.M.D does not arise at all.

9. In the wake of the aforesaid, the letter dated 24/25.1.2006, vide Annexure-11, forfeiting the E.M.D. of the petitioner is quashed. The opposite party is directed to refund the said amount within a period of thirty days to the petitioner. The writ petition is allowed.

Comments

Post a Comment

Most viewed this month

Partition proceedings are vitiated even if single co-sharer is not made party or is not served in accordance with law

Cause Title :  Bhagwant Singh vs  Financial Commissioner (Appeals) Punjab, Chandigarh,  CWP-2132-2018 (O&M), High Court Of Punjab & Haryana At Chandigarh Date of Judgment/Order : 31.08.2022 Corum : Hon’ble Mr. Justice Sudhir Mittal Background A large parcel of land was owned by the Nagar Panchayat. Thereafter, some of the co-sharers sold their shares to third parties including the petitioners herein. On 22.11.1995, respondents No.3 to 5 filed an application for partition of the land. The petitioners were not impleaded as parties.  On completion of proceedings, sanad was issued on 28.08.1996. Vide two separate sale deeds dated 28.05.2008 respondents No.3 and 5 sold some portion in favour of respondent No.6 and 7. These respondents sought implementation of the sanad resulting in issuance of warrants of possession dated 05.06.2008. Allegedly, it was then that the petitioners realized that joint land had been partitioned and that proceedings h...
Post a Comment
Read more

Power of Attorney holder can also file cheque bounce cases: Supreme Court

The Supreme Court has held that a criminal complaint in a cheque bounce case can be filed and pursued by a person who holds a power of attorney (PoA) on behalf of the complainant. A three-judge bench headed by Chief Justice P Sathasivam gave the "authoritative" pronouncement on the issue, referred to it by a division bench in view of conflicting judgements of some high courts and the apex court. "We are of the view that the power of attorney holder may be allowed to file, appear and depose for the purpose of issue of process for the offence punishable under Section 138 of the Negotiable Instruments Act (which deals with cheque bounce cases)," the bench, also comprising justices Ranjana Prakash Desai and Ranjan Gogoi, said. The bench, in its judgement, said, "...we clarify the position and answer the questions in the following manner: "Filing of complaint petition under Section 138 of Negotiable Instruments Act through PoA holder is perfectly legal...
1 comment
Read more

Christian who reconverts as Hindu SC will get quota benefits

Amid the controversy over “ghar wapsi”, the Supreme Court on Thursday ruled that a person who “reconverts” from Christianity to Hinduism shall be entitled to reservation benefits if his forefathers belonged to a Scheduled Caste and the community accepts him after “reconversion”. Citing articles by B R Ambedkar and James Massey, and reports by Mandal Commission and Chinappa Commission, the court said: “There has been detailed study to indicate the Scheduled Caste persons belonging to Hindu religion, who had embraced Christianity with some kind of hope or aspiration, have remained socially, educationally and economically backward.” The bench of Justices Dipak Misra and V Gopala Gowda held that a person shall not be deprived of reservation benefits if he decides to “reconvert” to Hinduism and adopts the caste that his forefathers originally belonged to just because he was born to Christian parents or has a Christian spouse. Expanding the scope of a previous Constitution benc...
1 comment
Read more