Delhi Development Authority Vs. Grihsthapana
Co-Operative Group Housing Society Ltd. [1995] INSC 137 (20 February 1995)
Hansaria
B.L. (J) Hansaria B.L. (J) Agrawal, S.C.
(J) Manohar Sujata V. (J)
CITATION:
1995 AIR 1176 1995 SCC Supl. (1) 751 JT 1995 (2) 530 1995 SCALE (1)807
ACT:
HEAD NOTE:
1. The
short point which needs to be decidedin these appeals is whether the High Court
of Delhi was justified indirecting the appellant to refund the. earnest money
deposited by the respondents following allotments of land to them at the cost
of Rs.975/- per sq. mtr., which cost subsequently came to be enhanced to Rs.
1650.65, because of which the respondents refused to finally accept the
allotment.
2. The
aforesaid question arises on these facts. The appellant proposed to allot land
to about 260 Co-operative Group Housing Societies in Dwaraka Phase -1, so also
to about 60 such Societies in Narela. When the proposal was first, made on
1.10.90, the cost was fixed at Rs.975/- per sq.mtr. for Dwaraka land and
Rs.950/- for Narela land. The Societies interested in the allotment land were
require& to deposit Rs.5 lakhs as earnest money and to formarally apply for
allotment On the interested Societies accepting the offer, formal allotment was
made by communication of the appellant dated25.1.1991. Before possession of the
land came to be delivered, the appellant by its communication dated 3- 11-92 stated that the premium of the land shall be payable
as Rs.1650.65/- per sq.mtr. which was the value determined by the Government of
India, vide its notification dated 21/ 23.10.92. Some of the Societies
approached the Delhi High Court being aggrieved at the enhancement of the
premium. The High Court ultimately upheld the enhancement, which decision has
since been reported in 26the Delhi Reported Judgments 156. On thus Court being
approached against the judgment of the High Court by way of special leave
petition, the same came to be disposed pf by extending the time of paying the
first instalments up to 31st
May 1993 which date
had been fixed by the High Court as 30th April, 1993. This Court made it clear in its
order that the facility to pay first instalment with interest will be available
only upto 31st July
1993; and no extension
of time beyond this date would be granted.
3. On
the respondents herein not paying the amount as ordered by this Court, the
appellant forfeited a sum of money equivalent to 10% of what had become payable
@1650.65, taking the same as earnest money due as per clause 411 of the
allotment order 3.11. 1992. This action of the appellant was challenged before
the Delhi High Court, who by impugned order has directed the appellant not to
make any deduction and to make any deduction and to refund the entire amount
deposited by the respondents. The validity of this direction has been
challenged in these appeals.
4. Shri
Jaitley, appearing for the 532 appellant, has confined has submission to that
part of the direction of the High Court which is relatable to the refund of
earnest money. Learned counsel contends that the respondents having had
accepted the allotment on the conditions mentioned in the communications dated
25.1.91 which had visualised enhancement of the rate, and the enhancement
having been regarded as reasonable by the High Court, the direction to refund the
earnest money is not in accordance with the law for two reasons. First, the
very conception of earnest money is that in case the contract goes off, the
same can be forfeited. Secondly, the Delhi Development Authority (Disposal) of
Developed Nazul Land) Amendment Rules, 1981, which were notified on 11. 11. 91,
having provided for forfeiture of earnest money in case of non-deposit of
premium as mentioned in amended Rule, 24(2), action of the appellant in
forfeiting the earnest money was in accordance with the law.
5.In
support of the first legal proposition, Shri Jaitley referred us principaly to
a three-judges Bench decision of this Court in Shree Hanuman Colton Mills v. Tata
Aircraft Ltd., 1970 (3) SCR 127, in which there is a detail discussion of what
is meant by earnest money and what is the consequences of deposit of such money
and when can the same be forfeited. The Bench after reviewing various decisions
noted in the judgment which includes that of the Privy Council rendered in Chiranjit
Singh v Har Swarup, AIR 1926 PCI, culled out the following principles regarding
the earnest" at page 139 (1) It must be given at the moment at which the
contract is concluded.
(2) It
represents a guarantee that the contract will be fulfilled or, in other words,
'earnest' is given to bind the contract.
(3) It
is part of the purchase price when the transaction is carried out.
(4) It
is forfeited when the transaction falls through by of the default or failure of
the purchaser.
(5)
Unless there is anything to the contrary in the terms of the contract, in
default committed by the buyer, the seller is entitled to forfeit the earnest.
6. In
view of the aforesaid legal position, the contention advanced by Shri Bishwajit
Bhattacharya for the respondents is that there was no acceptance of the offer
given on 3.11.92 in which mention was made about the rate of premium being Rs.
1650.65. The appellant is, therefore, not entitled, according to to the learned
counsel, to forfeit the earnest money, as, no such money had been deposited
after this date in token of acceptance of the proposal.
7. Shri
Jaitley counters this statement by urging that the proposal to allot land as
contained in the communication of 3.11.92 cannot be read dehors what had been
mentioned in the allotment after dated 25.1.91 or for that matter the offer
contained in the communication dated 1. 10. 90. This is brought home by drawing
our attention to what has been stated in para 3 of the offer dated 3.11.92 in
which, while calculating the entire amount payable to the offer of 1.
10.90 was
adjusted. Further, in sub-para II of para 4 of the later communication, the
fact of deposit earnest money earlier has been taken note of We also find from
the Application Form dated 24.12.'1992 submitted by the respondent in C.A.No.931/85
that the earnest money deposited on 22.10.90 as well as part of the 533 premium
deposited on 25.1.91, have been mentioned under item 8 dealing with the "Challan
Number and date whereby 25% of the total premium and 10% of earnest money has
been deposited.
8.The
aforesaid facts leave no manner of doubt in our mind that what was stated in
the communication of 3.11.92 was in continuation of the earlier offer dated
1.10.90/25.1.91. We, therefore, hold that the respondents had accepted the
offer contained in die communication of 3.11.92 and, as such, they were bound
to pay premium at the enhanced rate of Rs.1650.65, held as reasonable by the
High Court. As they did not comply with the condition mentioned in this Court's
aforesaid order dated 10.5.93, the respondents had made themselves liable to
forfeiture of the earnest money. As, however, the earnest money which was
deposited was not 10% of the premium as required by the amended Nazul Rules,
but was a fixed sum of Rs.5 lakhs in C.A. No.931/35 mentioned in the offer of
1. 10. 90, the earnest money which had become liable to be forfeited was a sum
of Rs. 5 lakhs, and not 10% of the total premium calculated at the rate of
Rs.1650.65.
9. The
appeals, therefore, stand allowed by modifying the High Court's order by
stating that the amount to be refunded to the respondents would not include
earnest money which had been deposited by them. The remaining amount would be
refunded by the appellant within a period of 4 weeks from today, failing which
the respondents would be entitled for interest @ 18% per annum from today till
payment In the facts and circumstances of the cases, we make no order as to
costs.
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