Full Judgment Text
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PETITIONER:
DELHI DEVELOPMENT AUTHORITY
Vs.
RESPONDENT:
GRIHSTHAPANA CO-OPERATIVE GROUP HOUSING SOCIETY LTD.
DATE OF JUDGMENT20/02/1995
BENCH:
HANSARIA B.L. (J)
BENCH:
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:
HEADNOTE:
JUDGMENT:
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
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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
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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
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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.
534