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TMI Blog2009 (12) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... on forfeited the sum of ₹ 2.5 lakhs which had been deposited by the respondent as earnest money. HELD THAT:- We see no reason to take any different view. We are also of the opinion that the Division Bench was justified in further concluding that in law the appellants/Corporation undoubtedly has the power to forfeit the earnest money provided there was a failure on the part of the respondent to make the deposit. The Division Bench, however, observed that the respondent was dealing with an instrumentality of state. He was entitled to legitimately proceed on the assumption that the appellants, a Statutory Corporation, an instrumentality of the State, shall act fairly. The respondent could not have suspected that he would be called upon to pay the amount of ₹ 50 lakhs without being given even a proper passage to the Unit that he was buying. We are of considered opinion that the respondent had deposited the sum of ₹ 2.5 lakhs on the clear understanding that there would be an independent approach road to the Unit. This is understandable. Without any independent passage the plot of land would be not more than an agricultural plot, not suitable for development as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State Financial Corporations Act, 1951 is wholly misplaced. The aforesaid Section pertains to action which the Corporation can take against the Unit which had defaulted in payment of loan. In such circumstances the Corporation has the power to sell the property that has been hypothecated or mortgaged with the Corporation. Respondent herein is an auction purchaser and therefore cannot be confused with the defaulting unit. It appears that the judgment of the High Court had been stayed by this Court on 2.9.2002. In view of the dismissal of the appeal, we direct that the forfeited amount be refunded to the respondent with 12 per cent interest w.e.f. 1.2.1998 till payment. The amount be paid to the respondent within a period of two months of producing the certificate copy of this order. We also direct that in the event the aforesaid amount is not paid within the stipulated period the respondent shall be entitled to interest at the rate of 18 per cent per annum till payment. We also direct the respondent shall be entitled to costs which are assessed as ₹ 50,000/-. - J.M. PANCHAL AND SURINDER SINGH NIJJAR JJ. JUDGMENT SURINDER SINGH NIJJAR, J. 1. This appeal is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the respondent. However by letter dated 19.2.1998 the appellants/Corporation called the respondent for negotiations. These negotiations resulted in enhancement of the bid from ₹ 25 lakhs to ₹ 50 lakhs. Again in the letter dated 7.3.1998, the respondent stated as follows: FAX NO.1072-70266 578, AUTO MOBILE MARKET HISAR Phone: 28221 (3 Lines) Fax No.01662 - 31084 07-03-1998 The Managing Director Haryana Financial Corporation Chandigarh. Sub: Offer to purchase unit of Unique Oxygen Private Limited Jind Dear Sir, With reference to the negotiation held on 6.3.98 at your Head Office for the sale of assets of said concern. We are the highest bidder and understand that our bid will be accepted. However, the matter regarding approved/authorised passage for smooth functioning of the factory was discussed in the meeting and the unit holder, who was also present in the meeting confirmed that such passage exist, at the factory. In this regard, it is submitted that we have come to know that there is no approved/authorised passage to factory sufficient to pass a truck through it. The gate/passage presently being used is unauthorized. In the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. The respondent, however, again raised the issue regarding the passage at the open house held by the appellants/Corporation at Hissar on 12.6.1998. According to the appellants/ Corporation, as per the revenue record and the demarcation report of the revenue officials dated 27.6.1998, therein 16.5 ft. rasta is provided in the west of the Unit. However, not satisfied, the respondent did not pay the balance amount. Therefore the appellants/Corporation invited fresh tenders for sale of land. On 30.9.1998 the appellants/Corporation forfeited the sum of ₹ 2.5 lakhs which had been deposited by the respondent as earnest money. 8. It was this action of the appellants/Corporation that was challenged by the respondent by way of a Writ Petition in the Punjab and Haryana High Court. 9. The aforesaid writ petition has been allowed by the Division Bench. The order dated 30.9.1998 by which the earnest money had been forfeited has been quashed and set aside. A further direction has been issued to the appellants/Corporation to refund the amount along with interest at the rate of 12 per cent per annum w.e.f. 1.2.1998 to the date of payment. The High Court also imposed costs on the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the independent approach road. 13. We have considered the submissions made by the learned counsel. We have also perused the judgment of the Division Bench of the High Court. 14. Factually the appellants have accepted that on 28.1.1998 the respondent had in no uncertain terms informed the appellants/Corporation about the non-existence of the independent passage. No denial could possibly be made in the face of the letter dated 29.1.1998 which makes a reference to the visit of the respondent to the factory premises on 21.1.1998. There is a categorical assertion that premises do not have an independent appropriate passage from the road. When enquiries were made from the branch office, the respondent, was simply informed that copy of the site plan and building plan were not available, and would be available at the Head Office only. Thereafter, there is a studious silence from the appellants/Corporation with regard to the aforesaid grievance made by the respondent. Again, on 7.3.1998 the respondent informed the appellants/Corporation as follows: In this regard, it is submitted that we have come to know that there is no approved/authorised passage to factory sufficient to pass a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seems to be concluded against the appellants/ Corporation by letter dated 30.4.1998, the relevant parts of which have already been reproduced in the earlier part of this judgment. A perusal of the extracts, reproduced earlier, would clearly show that the Branch Manager has informed the head office in unequivocal language that the independent passage shown in the sale deed is not connected directly with the defaulting unit. It also indicates that the defaulting unit had merely purchased some land to connect the rasta with the revenue record on which movement of the vehicle is not possible at all. This land was not even mortgaged with the appellants/Corporation. The letter also clearly states that by exclusion of the aforesaid land the size of the plot would be reduced from 1210 sq. yards to 1130 sq. yards. That would mean that the main gate of the factory would be out side the land offered for sale. Taking into consideration the aforesaid facts the Division Bench concluded as follows: Taking the totality of circumstances into consideration, we are satisfied that the petitioner was not at fault. He was entitled to withhold the money as the respondents had failed to provide a prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-existence of the independent 3 `Karam' passage to the property. Therefore, the appellants/ Corporation clearly acted in breach of Section 55 (1) (a) and (b) of The Transfer of Property Act, 1882. The aforesaid Section provides as under: (1) The seller is bound- (a) to disclose to the buyer any material defect in the property [or in the seller's title thereto] of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover; (b) to produce to the buyer on his request for examination all documents of title relating to the property which are in the seller's possession or power; 20. A mere perusal of the aforesaid provision will show that it was incumbent upon the appellants/Corporation to disclose to the respondent about the non-existence of the independent passage to the Unit. It was also the duty of the appellants/Corporation to inform the respondent that the passage mentioned in the revenue record was not fit for movement of vehicles. The appellant also failed to produce to the buyer the entire documentation as required by Section 51 (1) (b) of the aforesaid Section. We are therefore satisfied that the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or sale. Learned counsel had also relied on another judgment in the case of U.T. Chandigarh Administration and Anr. vs. Amarjeet Singh and Ors. (2009) 4 SCC 660. In our opinion, the aforesaid judgment is wholly inapplicable to the facts and circumstances of this case as it relates to the duties of a developer who carries on activities of development of land and invites application for allotment of sites in a developed layout. In our opinion the aforesaid judgment is not applicable to the facts of this case. We see no merit in any of the submissions, or the grounds of appeal. The appeal is accordingly dismissed. 24. It appears that the judgment of the High Court had been stayed by this Court on 2.9.2002. In view of the dismissal of the appeal, we direct that the forfeited amount be refunded to the respondent with 12 per cent interest w.e.f. 1.2.1998 till payment. The amount be paid to the respondent within a period of two months of producing the certificate copy of this order. We also direct that in the event the aforesaid amount is not paid within the stipulated period the respondent shall be entitled to interest at the rate of 18 per cent per annum till payment. We also direct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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