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Issues involved:
The issues involved in this case are the forfeiture of earnest money deposit (EMD) by the Andhra Pradesh Housing Board (APHB) and the legality of the auction conducted on 5-8-2005. Forfeiture of EMD: The petitioners contended that APHB did not disclose defects in title, leading to a breach of contract u/s 55 of the Transfer of Property Act, 1882. They argued that the forfeiture of EMD was illegal and sought a writ of Certiorari to quash the impugned order and declare the auction null and void. Legal Relationship and TCAN: The legal relationship between the tenderer and the authority inviting tenders is governed by the Terms and Conditions of Auction Notification (TCAN). The TCAN, being binding administrative instructions, must be strictly complied with by both parties. The relevant TCAN conditions in this case were (1), (2), (4), and (11), which outlined the deposit requirements, auction procedures, and responsibilities of the purchaser. Enforceability of TCAN: The court held that the highest bidder's rights only arise upon confirmation of the auction by the Vice Chairman (VC), as per TCAN. Before this confirmation, the TCAN, including provisions on forfeiture of EMD, govern the transaction. The court emphasized that the principles of contract and the Transfer of Property Act do not apply at the pre-contract stage regulated by TCAN. Caveat Emptor Clause: The court highlighted the "caveat emptor" clause in TCAN, which places the responsibility on the buyer to satisfy themselves about the property before bidding. The petitioners, having participated in the auction and submitted the highest bid, could not later claim defects in the title as grounds for non-payment. Prevention of Withdrawal and Forfeiture: The court noted that the petitioners had the opportunity to seek clarification from APHB before submitting their bid. By participating in the auction with full knowledge of TCAN, the petitioners could not later withdraw from the bid without consequences, including forfeiture of EMD and bid amount as per TCAN. Precedents and Legal Interpretation: The court cited precedents where the right of forfeiture was upheld when tender conditions were not complied with. It emphasized the importance of earnest money/security in government contracts to ensure genuine bids and prevent non-serious bidders from benefiting from their own conduct. Conclusion: Based on the legal interpretation and precedents, the court held that the impugned order of forfeiting the EMD was not illegal. The writ petition was dismissed, and no costs were awarded.
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