Mohammed
Gazi Vs. State of M.P. & Ors [2000] INSC 171 (31 March 2000)
S. Saghir
Ahmad & R.P. Sethi.SETHI,J.
Leave
granted.
L.I.T.J
Whether a person can be penalised for no fault of his merely by resorting to
equity clause in favour of the respondent-State particularly
when such person is found to have not been benefitted or the
State deprived of the benefits on account of the stay order issued by the
Court? is the question of law to be decided in this appeal.
Another
related question requiring determination is as to whether on account of the pendency
of the writ petition filed by another party without impleading the affected
person as a party in which the stay order granted by the Court, such person can
be directed to forfeit a part of the security amount deposited by him
particularly when the court itself found that even the equities were equally
balanced between the State and such person.
The
facts of the case giving rise to the determination of the questions of law
formulated hereinabove are that a tender notice inviting tenders for disposal
of Tendu leaves for 1995 session was issued by the respondent-State on 20th November, 1995. Respondent No.4 offered his tender
in respect of different lots including Lot No.597 and was declared the highest
bidder for the said lot on 20th December, 1995. On account of some complaints made by other bidders and on account of
alleged manipulations on the part of the official-respondents the highest bid
of the respondent No.4 was not accepted and his tender cancelled by order dated
27th January, 1996. Fresh notice for tenders for the
aforesaid lot were issued on 20th May, 1996
in which the appellant herein was declared the highest bidder. In the meantime,
the respondent No.4 filed writ petition No.2147/96 in the High Court
challenging the order of cancellation of tender dated 27th January, 1996 and re-tender notice dated 23rd May, 1996. He also prayed for interim relief
to the extent that pursuant to the fresh tender notice dated 20th May, 1996 the
official-respondents be restrained from executing any fresh agreement. The High
Court vide order dated 18.6.1996 issued an interim direction restraining the official-respondents
from taking any step pursuant to the fresh tender notice. It is pertinent to
note that the appellant herein was not impleaded as a party-respondent in the
aforesaid writ petition. He received a letter from official-respondents 1 to 3
calling upon him to execute purchase agreement as per Clause 7(2) of the tender
notice with the Conservative of Forests after depositing the balance security
as shown in the letter dated 1.9.1996. Consequently, the appellant deposited a
sum of Rs.2,68,217.72 as security amount. The appellant also filed an
application for intervention in the writ petition filed by respondent No.4
which was rejected on 1.4.1997. The writ petition filed by the respondent No.4
was disposed of by a learned Single Judge of the High Court by quashing order
dated 27.1.1996 to the extent by which the earnest money deposited by
respondent No.4 had been directed to be forfeited and a direction was issued to
refund the earnest money to respondent No.4. After disposal of the aforesaid
writ petition the appellant requested the respondents 2 and 3 to refund his
security amount of Rs.2,68,217.72 vide his letter dated 24.4.1997. He pleaded
that since Tendu leaves, which was a perishable item, had already perished and
rotten with the result that its value had become useless by lapse of time. He
also prayed for 18% interest on the security amount which was alleged to have
illegally been detained by official-respondents for no fault of the appellant.
It is contended by the appellant that after his letter dated 24.4.1997 the
respondent No.2 sent an ante dated letter dated 10.4.1997 directing the
appellant to execute the agreement by 10.5.1997 and deposit the remaining
tender price in four instalments as detailed therein. Apprehending that the
authorities might proceed to forfeit his earnest money and blacklist him, the
appellant was constrained to file writ petition No.1934/97 in the High Court
praying for quashing of order dated 1.4.1997 and refund of earnest money along
with an amount of Rs.10 lakhs claimed as damages. He further prayed that he
should not be compelled to enter into an agreement in pursuance to letter dated
19.6.1996. The writ petition was allowed by a learned Single Judge of the High
Court on 10.12.1997 with a direction to the respondents 1 to 3 to refund the
security amount to the appellant forthwith. Not satisfied with the order of the
learned Single Judge, the respondents 1 to 3 filed a Letters Patent Appeal
before the Division Bench of the High Court which was partly allowed vide the
order impugned in this appeal.
It is
not disputed that on account of litigation initiated by respondent No.4 without
impleading the appellants as party in his litigation, he was prevented from
taking the benefit of the acceptance of his tender notice by the
official-respondents. It also cannot be denied that Tendu leaves are a
perishable item. For no fault of his the appellant was prevented from
collecting the Tendu leaves for which he had deposited his security amount. It
is worth noticing that when the writ petition filed by respondent No.4 was
partly allowed by a learned Single Judge of the High Court, the
official-respondents had not filed a Letters Patent Appeal.
In the
writ petition No.1934/97 filed by the appellant, the learned Single Judge of
the High Court held on facts:
"In
view of these circumstances, this Court has no hesitation in holding that the
contract between the parties has frustrated. The respondents are not entitled
to compel the petitioner to purchase or lift the Tendu leaves at the price
quoted by him. The respondents are duty bound to return the money received from
the petitioner at the time of submission of the tender. If the respondents
suffer any losses because of the acts of the respondent No.4 they are free to
take proper legal proceedings before the competent court of law for recovery of
damages if the laws permit them. The petition is allowed. No costs." The
Division Bench, while disposing of the LPA, also found that the appellant could
not be held responsible for not lifting the Tendu leaves and thereby had not
committed breach of any condition of the tender. Finding that the State was
also not responsible for any breach, the Division Bench decided to pass the
order impugned on the basis of equities. The arguments advanced on behalf of
the appellant before the Division Bench that there was no fault on his part
because he had offered bid and was prepared to accept the Tendu leaves which he
could not lift on account of stay order were found by the Division Bench to be
not erroneous.
The
Division Bench held that "the submisson of the learned counsel does not
appear to be erroneous". As the State also could not be held responsible
for the fault, the Division Bench directed that a sum of Rs.30,000/- be
deducted from the earnest money of the appellant. Such a direction of the High
Court cannot be sustained in view of the findings on fact returned in favour of
the appellant. In the facts and circumstances of the case, the maxim of equity,
namely, actus curiae neminem gravabit - an act of the Court shall prejudice no
man, shall be applicable. This maxim is founded upon justice and good sense
which serves a safe and certain guide for the administration of law. The other
maxim is, lex non cogit ad impossibilia - the law does not compel a man to do
which he cannot possibly perform. The law itself and its administration is
understood to disclaim as it does in its general aphorisms, all intention of
compelling impossibilities, and the administration of law must adopt that
general exception in the consideration of particular cases. The applicability
of the aforesaid maxims has been approved by this Court in Raj Kumar Dey & Ors.vs.
Tarapada
Dey & Ors.[1987 (4) SCC 398] and Gursharan Singh & Ors vs. NDMC &
Ors. [1996 (2) SCC 459]. Keeping in view the facts and circumstances of the
case we are of the opinion that the Division Bench of the High Court was not
justified in directing the deduction of the sum of Rs.30,000/- from the
security amount deposited by the appellant. We find that the learned Single Judge
had assigned cogent reasons for return of the earnest money to the appellant
and those findings could not be disturbed by the Division Bench allegedly on
the ground of equities. The appeal is allowed by setting aside the impugned
order dated 1.12.1998 passed by the Division Bench of the High Court of M.P. in
LPA No.270/98. The order of the learned Single Judge is restored and the
appellant held entitled to refund of the whole amount of the earnest money
deposited by him.
No
costs.
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