2015 (3) TMI 195 - HC - Indian Laws

Refund of the amount - Failed to deliver the possession of the auctioned assets - Sale in on AS IS WHERE IS BASIS AND WHATEVER THERE IS BASIS - Held that - In my view, the stand of IFCI is patently erroneous and Clause 2.6 has to be read in conjunction with Clause 2.4 of the said terms and conditions which provided for inspection of the assets to the interested parties. In another words, IFCI had made it clear that parties would physically inspect the assets at site and submit their bids. Clause 2.6 only absolved IFCI from any variance between description of the goods and those offered at site. This would certainly not absolve IFCI from delivering the assets as were inspected by the petitioner. In the given circumstances, the writ petition is allowed to the extent that the petitioner is directed to be refunded the amount paid by the petitioner for the said assets and the sale certificate issued by IFCI is cancelled. As IFCI has deposited the entire consideration paid by the petitioner with the Registry of this Court, the Registry is directed to release the said sum alongwith accrued interest, if any, to the petitioner within two weeks from date. - Decided in favour of appellant.

Issues Involved:
1. Whether the petitioner is entitled to a refund of the bid amount along with interest due to the seller's failure to deliver possession of the auctioned assets.
2. Whether the reduction in value of the auctioned assets due to theft absolves the seller from refunding the bid amount.
3. The interpretation of the "as is where is" clause in the auction terms and its impact on the seller's obligations.

Detailed Analysis:

Issue 1: Entitlement to Refund of Bid Amount
The petitioner sought a refund of Rs. 3,31,00,000/- along with interest at 18% per annum, claiming the seller failed to deliver possession of the auctioned assets. The court noted that the petitioner had paid the entire bid amount and had requested possession and a sale certificate. Despite issuing a sale certificate, the seller did not hand over possession, rendering the sale incomplete. The court concluded that the petitioner was entitled to a refund as the seller failed to fulfill their obligation of delivering possession.

Issue 2: Impact of Reduction in Value Due to Theft
The petitioner discovered that valuable components of the auctioned assets were missing when they arrived to take possession. The seller argued that the assets were sold on an "as is where is" basis, and any reduction in value should be borne by the petitioner. The court found that the theft occurred after the petitioner's inspection but before possession was handed over, and since the seller remained in possession, the seller was responsible for the loss. Therefore, the reduction in value did not absolve the seller from refunding the bid amount.

Issue 3: Interpretation of "As Is Where Is" Clause
The seller contended that Clause 2.6 of the auction terms, which stated the assets were sold on an "as is where is" basis, absolved them of responsibility for any deficiencies. The court interpreted this clause in conjunction with Clause 2.4, which allowed bidders to inspect the assets before bidding. The court held that Clause 2.6 only protected the seller from discrepancies between the described and actual condition of the assets at the time of inspection, not from delivering the inspected assets. Since the assets were not delivered as inspected, the seller could not rely on this clause to avoid refunding the bid amount.

Judgment:
The court allowed the writ petition, directing the seller to refund the bid amount paid by the petitioner and canceling the sale certificate. The court ordered the Registry to release the deposited amount along with accrued interest to the petitioner within two weeks. The petition was disposed of with no order as to costs.

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