Mehta Vs. Custodian Appointed under the Special Court & Ors  Insc 6 (4
Sinha & Markandey Katju with Civil Appeal No. 4513 of 2006 S.B. Sinha, J :
of terms and conditions of sale of properties in terms of the provisions of the
Special Court (Trial of Offences Relating to Transactions in Securities) Act,
1992 (for short, 'the Act') is in question in these appeals which arise out of
the judgments and orders dated 22.06.2006, 31.07.2006 and 23.06.2006 passed by
the Special Court (Trial of Offences Relating to Transactions in Securities) at
Bombay in Intervention Application No.131 of 2006 filed in Misc. Petition No. 4
of 2001, Report No. 12 of 2006 in Misc. Application No.131 of 2006; and Misc.
1999 respectively. Before adverting to the questions as also the fact involved
in each of these matters, we may at the outset notice that one Harshad Mehta
was a person notified under the Act. The private respondents herein being his
relatives were also notified (hereinafter referred to as 'the notified
from late Harshad S. Mehta, the Custodian had notified 29 entities in terms of
Section 3 of the said Act, inter alia, comprising three of his younger
brothers, his wife, wives of two of his younger brothers.
proceedings initiated before the Special Court various applications were filed. Properties belonging to
the said late Harshad S.
or other notified entities were put on auction. The auctioned properties
comprised of commercial as also the residential ones. The residential
properties, inter alia, were situate at Madhuli.
of this Court :
parties questioned the validity and/or legality of the said auction sales. They
ultimately came to this Court. Whereas auction sales in respect of the
commercial properties were allowed to be completed by orders passed by this
Court from time to time, the auction sale in respect of the residential
properties was the subject-matter of the judgment of this Court in Ashwin S.
Mehta and Another v. Custodian and Others [(2006) 2 SCC 385] wherein, inter alia,
it was directed :
Judge, Special Court shall allow the parties to make
brief oral submissions which pointed reference to their written submissions.
Such hearing in the peculiar facts and circumstances of this case should
continue from day to day.
Judge, Special Court while hearing the matter in terms of this order shall also
consider as to whether the auction sale should be confirmed or not. It will
also be open to the learned Judge, Special Court to pass an interim order or orders, as it may think fit and
proper, in the event any occasion arises therefor.
however, request the learned Special Judge, Special Court to complete the hearings of the matter, keeping in view of
the fact that auction sale in respect of the residential premises is being
considered, as expeditiously as possible and not later than twelve weeks from
the date of the receipt of the copy of this order. Save and except for
sufficient or cogent reasons, the learned Judge shall not grant any adjournment
to either of the parties.
Judge, Special Court shall take up the matter relating
to confirmation of the auction sale in respect of the commercial properties
immediately and pass an appropriate order thereupon within four weeks from the
date of receipt of copy of this order. If in the meanwhile, the orders of
assessment are passed by the Income Tax Authorities, the Custodian shall be at
liberty to bring the same to the notice of the learned Special Court which shall also be taken into
consideration by the learned Judge, Special Court." Order of the Special Court :
to or in furtherance of the said directions, the question as to whether the
auction sale should be confirmed or not came up for consideration before the
learned Judge, Special
Court. By reason of
the impugned order dated 22.06.2006 passed in Intervention Application No.
2006 in Misc. Petition No. 4 of 2001, it was held that the as the auction purchaser
had not deposited the balance amount within the period stipulated under the
terms and conditions of the auction, the earnest money deposited by the bidder
was to be forfeited. By reason of the impugned order dated 23.06.2006 passed in
Misc. Petition No. 41 of 1999, with the consent of the Custodian and the
notified parties, a fresh auction sale was directed to be held.
and Conditions of Sales :
aforementioned backdrop of events, we may notice the relevant terms and
conditions of sale :
should be submitted in a sealed envelope superscribed with the words "Bid
for sale in respect of Residential Flats/Office Premises (mention the name of
shall be only one consolidated bid in respect of each of the following
properties a) Maduli; b) Khar; c) Guru Krupa. In respect of other properties,
single bid for a particular flat / property or combined bid for more than one
flat / property is permitted; however, in such cases, the earnest money for
consolidated bid would be 2% of the bid amount otherwise, the earnest money to
be deposited for each property shall be as mentioned against respective
property in the schedule.
tender form and Agreement will have to be submitted for each bid property.
should reach at the office of the Custodian at 10th floor, Nariman Bhawan, 227 Vinay
K. Shah Marg, Nariman Point, Mumbai-400 021 by 2.00 p.m. on the dates specified
for each property described in the schedule written hereunder along with Demand
Draft / Banker's cheque / Pay Order of a Public Sector Bank in favour of the
Custodian, the Special Court payable at Mumbai towards earnest money for
participating in the said auction for purchase of Residential Flats / Office
Premises as indicated in the schedule written hereunder. This amount of earnest
money will not carry any interest whatsoever.
If any dispute
arises as to the last or highest bidding, the said property shall be again put
up for sale at the last undisputed bidding and be resold at the discretion of
the Custodian subject to the confirmation by the Special Court.
The sale is
subject to sanction of the Hon'ble Special Court at Mumbai in the above case. The Court reserves the right to accept or
reject any or all offers without assigning any reasons. The Court shall not be
responsible in any way for not accepting any or all the offers received by the
Within 60 days
from the Hon'ble
granting sanction to the sale, the Purchaser shall pay the balance of the
purchase price and he/she will have to take possession/delivery of the said
property from the Custodian at his/her own costs and risks.
If the purchaser does not pay the
balance amount of the purchase price in the manner and within the time provided
herein or the time specified by the Custodian or in any other respect fails to
perform these conditions or any of these, the Custodian shall be at liberty to
forfeit initial deposit made as per para 4 above and shall then proceed to
resell the said property by public auction at such time subject to such
conditions and in such manner as the Custodian shall deem fit and proper
without previously giving any notice to the purchaser and the deficiency in
price if any, occasioned by such resale together with all costs charges and
expenses pertaining to the resale shall be made good by the defaulting
purchaser and be recovered by the Custodian with interest on the amount of
deficiency at the rate of 18% per annum from the expiration of the date of the
aforesaid sanction of sale till payment and in the event of non payment of the
whole or any part or any part thereof such sum, the same shall be recoverable
by the Custodian from the defaulting Purchaser as and by way of liquidated
damages while any excess on such resale shall not be available to such defaulting
Purchaser as and by way of liquidated damages while any excess on such resale
shall not be available to such defaulting purchaser. This condition shall be
without prejudice to Custodian's right and remedies, which the Custodian shall
otherwise have in law and/or under these conditions.
The Purchaser shall not be liable to
pay outgoings if any, in respect of the said property for the period prior to
the date of confirmation of sale and all such outgoings shall be paid by the
Custodian till such confirmation.
Upon payment of the purchase price in
full and all costs, charges and expenses mentioned above, Custodian's authorized
representative shall sign such papers and documents as may be necessary for
transfer of the said property in the name of the Purchaser. Such documents of
transfer shall be prepared and executed by and at the cost, charges and expenses
of the Purchaser.
In case of sale of the said
property is not sanctioned by the Special Court in favour of the highest bidder
or is set aside, the initial deposit made in terms of para 4 above shall be
refunded to such bidder without interest, other costs, charges and expenses
expended by him/her for the property. Except as herein above provided, the said
initial deposit made in terms of para 4 above shall in no event be refunded.
The time hereunder fixed for the
observance and performance by the Purchaser of any of the obligations to be
observed and performed by him/her under these conditions is and shall be deemed
to be of the essence of the contract and any forbearance by the Custodian of
strict observance and performance on the part of the Purchaser thereof shall not
be construed as a waiver or relinquishment on the part of the Custodian who
shall have the right at his option thereof to exercise his right and remedies as
are available to him under these conditions and under law or in equity as
arising from non-observance and non-performance thereof including the right to
Civil Appeal No. 4512 of 2006 The bids were invited on 19.11.2004. The last
date for receipt of the bids was 06.01.2004. Appeals were filed by the notified
parties against the order dated 17.10.2003 whereby and whereunder the Custodian
was directed to take all steps to sell the properties mentioned therein, which
is the subject- matter of the present appeals. This Court directed that the
bids may be received; but the same may not be opened till 05.01.2004. On
05.01.2004, the bids were directed to be opened, but the results were to be
placed before this Court. Pursuant thereto, the bids were opened and the
appellant was found to be the highest bidder in respect of Flat Nos. 61A and
61B, Gulmohar, S.V. Road, Khar, Mumbai. The valuation of the flat had been
fixed at Rs. 60,00,000/- (Rupees sixty lakhs), but his bid was of
Rs.85,00,000/- (Rupees eighty five lakhs). By an order dated 22.01.2004, the
learned Judge, Special
Court while accepting
the bid, inter alia, directed :
the bid submitted by Mr. Madhu Suri and Shiv Kumar Suri of Rs. 16,00,000 (Rupees
sixteen lakhs) is provisionally accepted, subject to final order to be passed
by the Hon'ble Supreme Court. The highest bidder whose bid has been accepted
shall comply with the terms and conditions on which the bid is submitted.
Highest bidder shall be at liberty to appear before the Hon'ble Supreme Court
on the appointed date.
initial deposit made by all the unsuccessful bidders shall be refunded to the
bidders." [Emphasis supplied] This Court thereafter by an order dated
30.01.2004 directed :
learned counsel for the Custodian brings on record the result of the bids and
the order of the Special
17.12.2003 and 20.1.2004. The learned counsel for the Appellants proposes to
offer his comments on the bids and the two orders of the Special Court. Let it be done within two weeks.
process of finalizing the bids according to law may be proceeded ahead by the Special Court. However, the finalization shall be
subject to the result of these appeals." It is, however, stated that the learned
Judge, Special Court did not take any further step to
finalize the bids pursuant thereto or in furtherance thereof. As indicated
hereinbefore, there being no serious dispute in regard to auction sale of the
commercial properties, this Court by an order dated 05.05.2004 directed that
the interim order dated 31.01.2004 would not apply to the sale of commercial
properties. Pursuant to the directions and/or observations made by the learned
Judge, Special Court, an application was filed for impleadment
by the appellant. An application was also filed for deposit of the amount in an
interest bearing account of a Nationalized Bank.
said applications were allowed. The appeals were finally disposed of in the
manner, as indicated hereinbefore, by an order dated 03.01.2006.
to the appellant, although he had filed an application for intervention and
addressed several letters to the Custodian, as to when payments in terms of the
auction sales were required to be made, it did not receive any response thereto.
reason of the impugned judgment the learned Judge, Special Court, however, directed the Custodian to
consider as to whether the earnest money deposited by the appellant was to be
forfeited, stating :
in my opinion, this basic premise itself does not exist. The right in relation
to residential properties of the Harshad Mehta group would have been created in
favour of the Applicant, had the applicant complied with the Order passed by
this Court accepting his bid. Essential condition of that Order was that the
Applicant complies with all the terms and conditions of the bid. One of the
most essential condition of the bid was that within 60 days of the acceptance
of the bid, he deposits the balance amount of consideration. Failure of the
Applicant to deposit the balance amount of consideration resulted in rejection
of his bid and therefore, the Applicant lost all his rights in relation to the
property which could have been created in his favour by the Order passed by
this Court. The submission of the learned Counsel appearing for the Applicant
that because the Supreme Court had prevented the custodian from handing over of
possession, the Applicant was not obliged to deposit the balance amount of
consideration, in my opinion, has no substance. For getting possession, the
Applicant will have to create an entitlement in him to get possession.
creating that entitlement, he has to deposit full amount of consideration. The
learned Counsel for the Applicant then submitted that the Supreme Court has
observed that the question of confirmation of the bid should be considered by
the Court after deciding the main application. In my opinion, that question
will arise only in relation to those bidders who have complied with the Order
accepting their bids and not in case like the Applicant, who has lost the
rights that may have been created in his favour because of his default in
complying with the terms of the bid. The Applicant, therefore, has no right in
relation to the property which is the subject matter of the main application
filed by the custodian.
the Applicant has no right to intervene. As I find that the Applicant was
liable to deposit the balance amount of consideration as per the terms of the
bid, the custodian is directed to consider whether the amount of earnest money
deposited by the Applicant is to be forfeited or not and submit a report to the
Court seeking appropriate orders. Application disposed of." Pursuant to
the said order, the Custodian submitted its report on 21.07.2006, recommending
forfeiture of earnest money deposited by the appellant, whereupon the learned
Judge, Special Court by reason of the impugned order
dated 31.07.2006 directed :
made on behalf of the bidder Yogesh Mehta have no substance. So far as bidders
in relation to commercial properties are concerned, though they did not deposit
the amount immediately because there was stay order from the Supreme Court
operating, they deposited the amount immediately after the Supreme Court
vacated the stay on sale of commercial properties.
it was open to the bidder Mr. Yogesh Mehta to deposit the amount at least
immediately after the Supreme Court decided the appeals by its judgment dated
03.01.2006. That there was a stay of all sale of the residential properties of Harshad
Mehta, does not appear to be correct, because the Supreme Court in clear term
has said in its judgment dated 03.01.2006 that the Supreme Court is concerned
with those appeals only which relate to sale of eight residential flats in a building
known as Madhuli. The flat in relation to which the said Yogesh Mehta had
submitted the bid admittedly is not in the building called Madhuli.
circumstances, therefore, in my opinion, the earnest money deposited by the
bidder has to be forfeited. In this view of the matter, the report is disposed
of with a direction to the Custodian to forfeit the earnest money deposited by
Mr. Yogesh Mehta Report disposed of.
Custodian is, directed to issue a fresh advertisement for sale of the properties
in accordance withlaw." Re Civil Appeal No. 4513 of 2006 :
herein are tenants of various flats in the building known as 'Gurukrupa'. They
were also put on public auction. The said properties also stood attached in
terms of Section 3(3) of the Act. In response to the bids invited for sale of
the said flats, an offer was made by the appellants. By an order dated
28.01.2004, the learned Judge, Special Court considered it appropriate to
tentatively accept the highest bid, subject to the final order passed by this
Court, stating :
both the bidders increased their bids.
highest bid is of Rs.170,00,000/- (Rupees One crore seventy lakhs) from the
occupants of the building.
learned counsel for occupants is present and she states that occupants are not
in a position to increase the bid. The other bidder namely West Cost Exim Pvt.
perused the valuation report dated 24.1.2004. As per the valuation report,
value of the property is about Rs.1,60,00,000/-. Considering that the bid
offered by the highest bidder is above the valuation given in the valuation
report, as also considering that the bidders are the occupants of that building
itself, in my opinion, it would be appropriate to accept the highest bid. The
highest bid of the occupants as per the report is therefore tentatively
Counsel for the highest bidder states that the bid was given on behalf of the
occupants, and therefore, Conveyance should be executed in favour of the
Nominees nominated by the joint occupants/highest bidders. The custodian is
accordingly so directed.
Order dated 5.1.2004 passed in Civil Application No. D. No.255575/03, D.
and D. No.25815/03, the Supreme Court has directed this Court to open the bid
and place the result thereof before the Hon'ble Supreme Court.
the highest bid given by the highest bidder is tentatively accepted subject to
final order to be passed by the Hon'ble Supreme Court in the above said
proceedings." [Emphasis supplied] Appellants herein in that case also
filed applications for intervention before the Court.
impugned order was passed ex parte. Appellants were not given any notice. The
fact that the building had already been put on sale by way of auction and the
bids had tentatively been accepted by the learned Judge, Special Court by an order dated 28.01.2004 was
not brought to its notice.
short question which, therefore, arises for consideration is as to what would
be the interpretation of the said terms and conditions of sale.
auction was to be held at two stages :
the bid; and
sanction to the sale by the Special Court.
word 'sanction' has been used in clause 9 as also in clause 20.
the terms and conditions set out hereinbefore did not contemplate a situation
of this nature. When the bid was accepted, it was for the Special Court to confirm the sale. It was only
when the sale is confirmed, which was to be done by way of grant of sanction thereto,
the purchaser was to pay the balance of the purchase price. Only on payment of
such purchase price, the auction purchaser would have been entitled to take
delivery of possession.
confirmation of sale and sanction of auction connote two different things was
not in issue. Parties also construed the terms of the auction in the same
manner. As noticed hereinbefore, acceptance of auction by the Special Court was a provisional one. It was
subject to the order of this Court. It may be true that whereas in a case where
the sanctioning authority is the court itself and confirmation of sale would
not be subject to approval from some other authority; acceptance of the sale
itself would amount to sanction thereof. But situation became completely
different in view of the orders passed by this Court. We would deal with the
matter a little later, but we may at this juncture notice some decisions
operating in the field at this juncture.
Paul v. Mothu Ram [AIR 1965 SC 1994], this Court laid down the law in the
following terms :
which we have earlier reproduced show that the auction is held on a date fixed
and is subject to a reserve price which is confidential. The officer conducting
the sale declares at the fall of hammer who is the highest bidder. The highest
bid is subject to the approval of the Settlement Commissioner or an officer
appointed by him. A period of seven days must elapse before the bid is approved
and there is also a limitation of seven days from the acceptance of the bid for
making an application to set aside the sale. If the bid is approved and if no
application meanwhile for setting aside the sale is made, the highest bidder is
recognised as the auction purchaser and he is required to produce a treasury challan
in respect of the balance of the purchase money within a period of fifteen days
(which period may be extended without limit of time) before the Settlement
Commissioner or the officer appointed by him. When the full purchase price is
paid a certificate issues in Form No.
and is sent to the Sub-Registrar for registration. If the balance of the price
is not paid, the amount of advance in deposit is forfeited and the auction
purchaser has no claim to the property.
The passing of
title thus presupposes the payment of price in full and the question is at what
stage this takes place. Obviously, there are several distinct stages in the
sale of property. These are:
the fall of the
hammer and the declaration of the highest bid;
the approval of
the highest bid by the Settlement Commissioner or officer appointed by him;
payment of the
full price after approval of the highest bid;
the certificate." Yet again in State of Uttar Pradesh v. Kishori Lal Minocha [(1980) 3 SCC 8], this Court held :
question that remains to be answered is, even if there was no statutory
provisions, whether there was a concluded contract between the appellant and
the respondent under which the respondent was liable to pay 20,100 which
represents the difference between the highest bid at the first sale and the
price fetched at the resale. The sale proclamation containing the conditions of
sale has not been produced. Assuming that the different clauses of Rule 357
barring the last part of the fifth clause embody the conditions of sale, it is
clear from the second clause that in the absence of the final sanction of the
Excise Commissioner, the bid cannot be said to have been finally accepted. It
is not claimed by the appellant that the bid offered by the respondent was
sanctioned by the Excise Commissioner. There was thus no concluded contract
between the parties to make the respondent liable for the alleged loss"
Mr. Arvind Kumar Nigam, the learned counsel appearing on behalf of the notified
parties has, however, placed strong reliance upon a decision of this Court in
Union of India and Others v. Messrs. Bhim Sen Walaiti Ram [(1969) 3 SCC 146]
wherein a distinction had been made between a situation where auction sale is
conducted by an officer lower than the authority competent to approve the same
and the acceptance of a bid by the officer presiding at the auction and holding
that in the event the transaction is complete, failure on the part of the
auction purchaser to deposit the prescribed amount, the Collector would be
entitled to resell the licence, stating :
is not disputed that the Chief Commissioner has disapproved the bid offered by
the respondent. If the Chief commissioner had granted sanction under Clause 33
of Ex. D-23 the auction sale in favour of the respondent would have been a
completed transaction and he would have been liable for any shortfall on the
essential pre-requisites of a completed sale are missing in this case there is
no liability imposed on the respondent for payment of the deficiency in the
price." When a sale would be held to be completed would, thus, depend upon
the fact of each case. Indisputably, it will primarily depend upon the terms
and conditions of the contract. But herein there was another supervening circumstance
i.e. the interim orders passed by this Court. The core question in this case
would, thus, be whether having regard to the interim orders passed by this
Court, the learned Judge, Special Court
could confirm the sale. The answer thereto must be rendered in the negative. It
is true that the learned Judge, Special Court, in its order dated 22.01.2004
directed the highest bidder to comply with the conditions, but what escaped the
notice of the learned Judge was that sanction could not have been granted on a
provisional basis. If there could be only one order of sanction, the same would
mean the final one and not the provisional one. That is how the parties
including the Custodian understood the same. It his report the Custodian stated
Supreme Court has further directed at page 50 that "the learned Special Court shall proceed to pass appropriate
orders as regard confirmation of the auction sales in respect of commercial
properties". The Custodian states that commercial properties are reflected
at Serial Nos. 1 to 13 of Exhibit 'A'. In respect of these properties, where
sale had been sanctioned by this Hon'ble Court subject to the orders of the Hon'ble Supreme Court, full
payments have been received and possession of the properties has also been handed
over to the purchasers.
Custodian therefore prays that this Hon'ble Court may be pleased to confirm the sale of commercial properties
as listed at Sl. Nos.1 to 13 in the table annexed hereto as Exhibit 'A'.
Custodian also states that this Hon'ble Court had also confirmed sale of the properties at Serial Nos.
17 which were not described as commercial properties, subject to orders of the Hon'ble
Supreme Court. However, in these cases only earnest money was received from the
successful purchasers and possession could not be handed over in view of orders
of the Hon'ble Supreme Court. No bids were, however, received in respect of
properties at Serial Nos. 18 to 25 (various flats at Madhuli), Separate
proceedings in respect of properties at S. No. 26 are being adopted."
Before us a chart has been submitted, from a perusal whereof it appears that
even the purchasers of commercial properties made final payments within the
period 14.07.2004 and 05.01.2005. No payment, therefore, was said to have been
made within a period of sixty days from the date of auction i.e. 05.04.2005.
there had been a stay in regard to acceptance of the bid, it could not have
been sanctioned. It could be sanctioned subject to the final order of this
Court. Moreover, when this Court issued direction in regard to confirmation of
sale, the matter ought to have been considered afresh.
peculiar facts and circumstances of this case, it is difficult to accept the
submission of the learned counsel for the respondents that the bid was accepted
finally, but only possession was to be taken by the purchasers at their own
reliance has been placed by Mr. Nigam upon a decision of this Court in State of
Maharashtra and Others v. A.P. Paper Mills Ltd. [(2006) 4 SCC 209], wherein
this Court in a case where the bidder had withdrawn its offer before the expiry
of the period itself during which the bid was to remain operative, held :
of the learned Counsel for the respondent that another request was made after
the expiry of the 45 days period does not change the situation. Clause 5(v)
clearly spells that once a tender is tendered the offer shall be considered
valid for a period of 45 days from the date of tender sale in case of tenders
which are under consideration. If this clause is read with Clause 5(iv) the
position is clear that once a tender is tendered no changes can be made and no
tender can be withdrawn. We are not concerned with a case of consequences after
acceptance of the tender by the successful bidder. In such a situation loss
sustained in the re-sale and the amount realized less, shall be recovered from
the bidder while adjusting the amount paid by him towards earnest money
deposit. In this case the acceptance of the tender was after the validity of
the period. Therefore, this is not a case which could authorize the Government
to recover the loss from the respondent. But it is a case of withdrawal of
tender and the effect of it is to be considered. Since the tender is valid for
a period of 45 days and withdrawal is before expiry of the period the earnest
money is to be forfeited.
stand of the respondent that because of delay in declaration of the final sale
results there was no bar on withdrawal of the tender is clearly untenable. Once
the tender is withdrawn the result is that the tenderer who withdraws the
tender cannot take the stand that since the final sale result has not been
declared there is no bar on the withdrawal." The said decision cannot be
said to have any application whatsoever to the fact of the present case. The
acceptance of the bid herein was subject to order of this Court which, in our
opinion, thus, by reason of the order of the Special Court or otherwise did not result in a concluded contract. The
deposit was to be made within sixty days from the date of grant of sanction
which would mean final acceptance of the bid, which was to depend upon the
ultimate order which was to be passed by this Court.
therefore, are of the opinion that the impugned order cannot be sustained.
Misc. Petition No. 41 of 1999, evidently a consent order had been passed behind
the back of the appellants. The said order, therefore, cannot also be
is another aspect of the matter which also cannot be lost sight of. Forfeiture
of the earnest money, in our opinion, in the aforementioned situation, could
not have been directed.
Chairman of the Bankura Municipality, Bankura v. Lalji Raja & Sons [(1953 SC 248 at 250],
this Court noticed the definition of the word 'forfeiture' in the following terms
word 'forfeiture' is defined in Murray's Oxford Dictionary The fact of losing
or becoming liable to deprivation of goods in consequence of a crime, offence,
or breach of engagement".."the penalty of the transgression" or
a "punishment for an offence".
directing forfeiture of the 'earnest money' the provisions of the Indian
Contract Act, 1872 are to be kept in mind. Forfeiture is permissible only when
a concluded contract has come into being and not prior thereto.
Bux v. Union of India [AIR 1970 SC 1955 : (1969) 2 SCC 554 & Saurabh Prakash
v. DLF Universal Ltd. 2006 (12) SCALE 531] .
learned counsel appearing for the Custodian submitted that the time was of the
essence of contract. It may or may not be so. This question is required to be
considered having regard to the fact situation obtaining in each case. If the
deposit was to be made from the date of final sanction of the offer, question
of applicability of the said proposition of law could not arise.
may, however, notice that in Mcdermott International Inc. v. Burn Standard Co.
Ltd. & Ors. [2006 (6) SCALE 220], this Court observed that in a case of
this nature, time was not of the essence and, therefore, Section 55 of the
Contract Act was not attracted, noticing :
Court in Hind Construction v. State of Maharashtra [(1979) 2 SCC 70] stated:
whether or not time was of the essence of the contract would essentially be a
question of the intention of the parties to be gathered from the terms of the
contract. [See Halsbury's Laws of England, 4th ed., Vol.4, para 1179]."
"8. Even where the parties have expressly proided that time is of the
essence of the contract such a stipulation will have to be read along with
other provisions of the contract and such other provisions may, on construction
of the contract, exclude the inference that the completion of the work by a
particular date was intended to be fundamental. [See Lamprell v. Billericay Union (19849) 3 Exch 283, 308; Webbv. Hughes (1870) LR 10 Eq
281; Charles Rickards Ltd. v.
(1950) 1 KB 616]."" Conclusion :
the reasons aforementioned, the impugned judgments cannot be sustained. They
are set aside accordingly and the matter is remitted to the learned Judge, Special Court for consideration of the matter
afresh in the light of the observations made hereinbefore. The appeals are
allowed. We may, however, hasten to add that it will be open to the learned
Judge, Special Court, to pass an appropriate order in
accordance with law. We must also observe that we have not gone into the
question in regard to the validity or otherwise of the auction sale. In the
facts and circumstances of the case, there shall be no order as to costs.