SC and HC Judgments Online at MyNation

Judgments of Supreme Court of India and High Courts

Odisha Forest Development Corporation Ltd. Vs. M/s. Anupam Traders [28/11/19]

Section

Odisha Forest Development Corporation Ltd. Vs. M/s. Anupam Traders Anr.

[Civil Appeal No. 9083 of 2019 arising out of SLP (Civil) No. 17627 of 2019]

[C.A.No. 9084/2019 @ SLP (C) No.18726/2019]

[C.A.No. 9088/2019 @ SLP (C) No. 18575/2019]

[C.A.No. 9089/2019 @ SLP (C) No. 18846/2019]

[C.A.No. 9091/2019 @ SLP (C) No. 18664/2019]

[C.A.No. 9092/2019 @ SlP (C) No. 18876/2019]

[C.A.No. 9093/2019 @ SlP (C) No. 18916/2019]

[C.A.No. 9094/2019 @ SLP (C) No. 18939/2019]

[C.A.No. 9095/2019 @ SLP (C) No. 18890/2019]

[C.A.No. 9096/2019 @ SLP (C) No. 18800/2019]

[C.A.No. 9097/2019 @ SLP (C) No. 18945/2019]

[C.A.No. 9098/2019 @ SLP (C) No. 24167/2019]

[C.A.No. 9099/2019 @ SLP (C) No. 24166/2019]

A.S. Bopanna,J.

1.Leave granted.

2. The
appellants in eleven of these appeals are the Odisha Forest Development
Corporation Ltd. (“OFDC Ltd.” for short) and the State of Odisha is the
appellant in two other appeals. The appeals filed by the State of Odisha relate
to the same orders in respect of the same private respondents who were the writ
petitioners regarding whom the Odisha Forest Development Corporation Ltd. has
also filed the appeal. Further, though separate orders passed by the High Court
in different writ petitions relating to various petitioners are assailed in all
these appeals, the issue involved is the same. Hence all these appeals were
clubbed, heard together and are accordingly disposed of by this common judgment.
For the purpose of narration of facts, the case as in Civil Appeal arising out
of SLP(C) No.17627/2019, titled Odisha Forest Development Corporation Ltd. vs. M/s
Anupam Traders Anr. is taken note, which reads as hereunder.

3. The
appellant OFDC Ltd. issued an etender notification dated 22.11.2016 inviting
offers online from intending purchasers for advance sale of phal Kendu leaf (KL)
of 2017 crop as per the lots indicated in the notification. The private
respondent had responded to the notification and made its offer. The bid was
opened on 07.12.2016. The private respondent being the successful bidder was
required to execute an agreement and deposit the provisional security deposit
of Rs.5,00,000/ (Rupees Five Lakh). The private
respondent herein executed an agreement dated 20.01.2017.
In terms of the agreement, on the actual quantity of leaves collected, the
additional security deposit covering 25% of the purchase price of the lot was to
be deposited before 31.05.2017. The private respondent in the instant case was
therefore required to deposit the differential security amount of Rs.27,14,765/less, the
security amount of Rs.5,00,000/(Rupees Five Lakh) already paid.

4. In view
of the requirement to pay the same before 31.05.2017, the private respondent
addressed a letter dated 02.06.2017 seeking extension of time to pay the said
security amount. The extension sought was declined by the appellant through the
communication dated 06.06.2017. Since the amount required to be deposited was
not made, the appellant cancelled the agreement dated 20.01.2017 by issuing the
notice dated 21.08.2017. Since such cancellation would be at the cost and risk
of the private respondent, the lot was to be put to retender. The appellant
accordingly proceeded to issue a fresh etender notification on 22.08.2017 for
sale of the same lots of the phal Kendu leaves.

5. At that
stage the private respondent aggrieved by extension of time not being granted,
filed the writ petition in W.P.(C) No.11498/2017, the same was withdrawn and a
writ petition bearing W.P.(C) No.18718/2017 was filed wherein the
order dated 21.08.2017 passed by the appellant cancelling the agreement dated
20.01.2017 as also the subsequent Auction Notice dated 22.08.2017, were
assailed. In the said writ petition, interim order against the subsequent
auction through notice dated 22.08.2017 was sought.

While
considering the same, the High Court while allowing the appellant to proceed
with the subsequent tender process, had stayed the finalization of the sale
subject to the private respondent herein depositing an amount of Rs.20,00,000/(Rupees
Twenty Lakhs only) within one week with the appellant herein. The said order
was passed on 08.09.2017 wherein it was further directed that the said amount would
be kept in a separate deposit by the appellant.

The
application filed by the appellant herein seeking vacation of the interim order
was considered and at that stage since the vacation of the stay was not opposed
by the private respondent herein, it was vacated on 28.03.2018 due to which the
subsequent sale was completed on 24.04.2018. The private respondent herein thereafter
sought leave to withdraw the writ petition in W.P.(C) No.18718/2017 thereby
giving up the challenge to the cancellation of the auction process wherein the private
respondent had taken part and also the challenge to the subsequent auction
which had been conducted by the appellant.

The High
Court while disposing of the writ petition as withdrawn, despite objection put
forth by the appellant herein directed refund of the deposit which was made
pursuant to its interim order dated 08.09.2017. The appellant herein is,
therefore, aggrieved by the order dated 30.04.2019 only to the extent whereby
the High Court has directed refund of the amount available with the appellant.

6. The
facts in the connected appeals is to the same effect except the variation in
the lot number, quantity of Kendu
leaves which was purchased by each of the private respondents therein and the
number of the writ petition filed
before the High Court. The names of the different tenderers in the individual
writ petitions that were filed and the quantum of amount ordered to be
deposited by the High Court will be detailed in later part of this judgment.
However, in all the cases the writ petitions have been withdrawn and the refund
of the deposit ordered is directed to be refunded. In that view, the basic contention
which is common, on consideration would answer all the appeals herein.

7. In that
backdrop we have heard Mr. S.K. Padhi, learned senior advocate for the
appellants OFDC Ltd, Ms.
Anindita Pujari, learned advocate for the appellant State of Odisha and Mr.
Aditya Kumar Choudhary, learned advocate for the private respondents in all the
appeals and perused the materials on record in the appeals.

8. As
noticed, though the private respondents herein had filed the writ petition at
the stage when the earlier agreement
entered into pursuant to the tender process in their favour had been cancelled
and a subsequent auction was
notified, keeping in view the fact that all the private respondents herein had
chosen to withdraw the writ
petitions, which was permitted by the High Court through the order dated
30.4.2019, the consideration of that aspect
is not required to be made. The only question for consideration herein is with
regard to the correctness or
otherwise of direction issued by the High court to the appellant herein to
refund the amount which was a deposit
made by the private respondents with the appellant pursuant to the interim
order dated 08.09.2017.

9. The
learned senior advocate for the appellant while contending that the High court
was not justified in ordering the refund has taken us through the tender notification
dated 22.11.2016, as also the purchase agreement dated 20.1.2017. In that
light, it is pointed out that apart from the Earnest Money Deposit (“EMD” for short)
to enable a tenderer to participate in the tender process, the successful
purchaser was required to initially pay the provisional security deposit of Rs.5,00,000/(Rupees
Five Lakhs only) and after final collection of the leaves the differential
amount to the extent of 25% of the purchase price was to be paid within 31.05.2017.
It is contended that if the said amount was not paid, the security amount
already paid was to be forfeited and if any further recoveries are to be made,
the appellant had the liberty to do so.

10. In that
light, it is contended that in the instant facts only the initial deposit of
Rs.5,00,000/(Rupees Five Lakhs only) was made, apart from the EMD. The default
was committed relating to payment of 25% of the additional security amount
which was to be made within the time frame. Since, the extension of time as
requested was rejected and the amount was not deposited, the appellant was left
with no other alternative but to terminate the agreement and forfeit the
security deposit.

It is the
contention of the learned senior advocate that though the High Court has not
specifically indicated deposit to be made as the additional security deposit,
the extent of deposit ordered in each of the cases makes it clear that it is
relatable to the extent of the additional security amount which was to be
deposited. In that light, he contends that when the writ petition was not
pressed, the termination of the agreement would remain valid and in such
circumstance since the clause contained in the agreement permits the forfeiture
of the preliminary security deposit, the direction to refund the same was not justified.
On the
other hand, the High Court ought to have allowed retention of the said amount
and the liberty to recover additional amount, if any, should have been left
open. Hence, he contends that the direction issued by the High Court to refund
the amount is not justified.

11. The
learned advocate for the respondent would also refer to the very same clauses
as contained in the agreement. He contends that the private respondents herein
were before the High Court seeking to exercise their right
by assailing the order of termination so as to complete the transaction. With
reference to the objection statement,
the learned advocate would contend that there were circumstances which
indicated that the price offered by the private respondent was at higher rate
when the panchayat had fixed a lower price for the Kendu leaf. It is his
contention that, in any event, the forfeiture can only be to the extent of the
amount that had already been deposited,
namely, the EMD and the initial deposit regarding which the private respondents
have not made a grievance.

On
referring to the tender conditions as also the clauses contained in the
agreement, he contends that as per
Clause 9 (iv) even if the additional security is not deposited or if any loss
is suffered, the provision made therein is
to recover the amount by way of initiating legal proceedings or through the
Orissa Public Demand Recovery Act which option has been left open to the appellant
by the High Court and as such the appellant cannot make out any grievance.

It is his
contention that the very fact that the High Court while granting the interim
order, though had directed deposit of the amount had further directed the
appellant to keep it in a separate fixed deposit, will indicate that the said
amount had no reference whatsoever to the additional security deposit but it
was only to establish the bonafide of the private respondent who was the writ
petitioner. Hence, in that circumstance when the High Court has directed refund
the order does not call for interference.

12. In the
light of the above, what is required to be noticed at the outset is the
provision relating to the security deposit contained in Clause 9 of the tender notification
on which reliance was placed by both sides, which reads as hereunder:

“Security Deposit

(i) The successful purchaser
shall have to pay provisional Security Deposit @ Rs.5.00 lakhs (Rupees Five
Lakh) per lot(s) within 21 [Twentyone] days of issue of
ratification order. If the provisional security deposit is not paid at Corporate
Office within 21 days from the date of issue of ratification order, the sale of
the lot(s) will be cancelled and the EMD/part S.D. will be forfeited to OFDC.
However in exceptional circumstances, the period of 21 days may be extended for
a further period of 7 (seven) days by the Director (C)/Managing Director of
OFDC Ltd. by depositing of nonrefundable fees of Rs.2000/(Rupees two
thousand only) by the purchaser.

(ii) After final collection
of leaves, the purchaser has to pay the differential amount up to the extent of
25% of Purchase price of the lot towards final Security deposit within
31.5.2017, failing which it will be considered as violation of purchasers
agreement and the provisional security deposit will be forfeited.

(iii) The Security Deposit
can be adjusted either wholly or in part, as the case may be, by the Director (C)/Managing
Director, OFDC Ltd. towards any amount recoverable from the
purchaser, including the purchase price under provisions of the Acts, Rules
Notification of Govt., Purchasers agreement and the terms and
conditions of the sale notice and all such deductions shall have to be made
good by the purchaser by depositing an equal amount within 15 days
of issue of the notice to that effect.

(iv) If the dues to be
recovered from the purchaser exceed the amount of security deposit, the amount in
excess shall unless made good to the Corporation within 15 days
from the date of issue of the notice to that effect, be recoverable by way of initiating
legal proceedings or through Orissa Public Demand Recovery Act
1962 (Orissa ActI of 1963).”

13.
Similarly, the agreement entered into between the parties, apart from
containing a similar clause for security deposit as at Clause No.11, also
contains Clause 13 relating to the termination of the agreement. The said clause
reads as under:

13. Termination of
Purchasers Agreement

(i) If the purchaser fails
to pay the first instalment before the due date of 2nd instalment or 2nd instalment before due date
of the 3rd instalment
or third instalment within 15 days after its due date or any other amount due
or to comply with any of the provisions of the agreement, the Director
(C)/Managing Director of OFDC Ltd. may at his discretion and without prejudice
to any other right and remedies that may be available to him, terminate this
agreement after giving 15 days notice and an opportunity of hearing to the
purchaser and blacklist the purchaser for a period up to 3 years.

(ii) The order of
termination of the agreement shall be delivered in person to the purchaser or
sent by Registered/Speed Post. The termination shall be effective from the date
of order terminating the agreement.

(iii) On termination of the
agreement the Corporation shall be entitled to:

a.Forfeit the provisional as
well as final security deposit in full.

b.Forfeit the undelivered
stocks of Kenduleaves in storage in favour of the Corporation for which payment
has been made.

c.Cancel the customer
registration with OFDC along with forfeiture of registration fees.

d.(i) Sell the Kenduleaves in
the godown for which amount due has not been paid and undelivered stock of
Kenduleaves in storage which has been forfeited in favour of the
Corporation under condition 13 (iii) (b) and recover the loss. The same shall
also be recoverable by encashment of the Bank guarantee, if any such guarantee
has been furnished by the purchaser under clause7, as also from sale of such
leaves which has been forfeited in favour of the Corporation under condition
13(iii)(b).

Provided if the lot is not
resold in the first sale after issue of order of termination of agreement, loss
will be recovered from the purchaser treating the value of the lot as zero. However,
if the lot is sold in subsequent sale, the amount of sale price recovered as
such shall be adjustable against balance amount of loss or be refunded to the
purchaser as the case may be. However no interest will be payable to the purchaser
on such amount. In the event of cancellation of purchasers agreement the loss
to be recovered from 1st purchaser
will be computed as follows: Total expected receipts including all taxes in concerned
sale (+) expenditure on storage, supervision etc. up to disposal () receipts including taxes from
subsequent sale.

(ii) Recover any amount of
loss still remaining due through Legal proceedings.

(iii) Retain the full
amount, if on such resale, higher amount is received than is due in respect of the
lot and the purchaser shall have not right or claim there to.

e. Recover all cost and
expenses incurred for recovering loss.

f. Recover all penalties
imposed and compensation assessed not yet paid.”

In addition
to the same, it is noticed that in the communication dated 02.08.2017 (Annexure
P/8) while issuing the notice calling upon to pay the additional security
deposit, the appellant has indicated that if the same is not paid the
provisional security deposit will be forfeited and the lot will be sold in
the ensuing sale. That apart, in the order dated 21.08.2017 whereby the agreement
was terminated, it was intimated that the provisional security is forfeited and
that the stock contained in lot No. 42 would be resold at the cost and risk
of the private respondent herein.

14. In the
above background, a perusal of the interim order dated 08.09.2017 passed in
writ petition would indicate that the High Court on considering the facts and circumstances
of the case has directed that the private respondents herein deposit the amount
as indicated in the order, which is shown against their respective names here below
in tabular format for easy reference:

S.No.

SLP (C)No.

Name
of the
Firm

Amt.depositedas per InterimOrders (In Rs.)

1.

17627

ANUPAM TRADERS

20,00,000

2.

18726

NABILA ENTERPRISE

15,00,000

3

18575

RAFIK FURNITURE MART

50,00,000

4.

18846

SAIYED SULTAN

20,00,000

5

18664

VIJAY ENTERPRISE

20,00,000

6.

18876

JAI BABABHOLANATH ENTERPRISE

10,00,000

7

18916

T. PRASAD RAO

50,00,000

8.

18939

ANANYA ENTERPRISE

35,00,000

9.

18890

YASEEN KHAN

35,00,000

10.

18800

KARIM KHAN

5,00,000

11.

18945

SHEIKH ZAKIR

15,00,000

The High
Court does not specifically indicate that the amount is
relatable to the additional security that was required to
be deposited by the writ petitioners.

15. In a
circumstance of the present nature, when it is noticed that the termination of
the agreement itself was for
nondeposit of the additional security amount to the extent of 25% of the value,
the deposit ordered by the High Court
cannot be classified as additional deposit in terms of the contract, at that
stage. If ultimately the writ petition
was taken to its logical conclusion and the private respondents had succeeded
in such proceedings, only in
such event the said amount could have been considered as a belated payment
towards additional security
deposit and in any event, the consideration in that regard would be in terms of
the directions that would have been issued by the High Court.

Though that
be the position and presently since the writ petition was withdrawn
unconditionally, the question is as to whether the respondents were entitled to
refund of the amount as a matter of
right when all future action for disposal of the subject Kendu leaves was at
the. cost and risk of the private
respondents as per Clause 13 of the agreement which is extracted supra. Hence
even if the said amount is not considered as the additional security amount in
its true spirit as per the agreement and the right of
forfeiture at this stage is not accepted in its technical sense in favour of
the appellant, the right of the appellant
to recover the loss suffered in terms of the agreement cannot be ignored.

16. In the
above backdrop, before we proceed any further, the intent of such conditional
interim orders passed by the Courts will have to be gathered. In order to aid
the same it will be apposite to take note of the observations contained in the
decision of this Court in the case of M/s. Atma Ram Properties
(P) Ltd. vs. M/s. Federal Motors Pvt. Ltd. (2005) 1
SCC 705 which is as hereunder,

“The power to grant stay is
discretionary and flows from the jurisdiction conferred on an appellate Court
which is equitable in nature. To secure an order of stay merely by preferring
an appeal is not the statutory right conferred on the appellant. So also, an
appellate Court is not ordained to grant an order of stay merely because an
appeal has been preferred and an application for an order of stay has been
made. Therefore, an applicant for order of stay must do equity for seeking
equity. Depending on the facts and circumstances of a given case an appellate
Court, while passing an order of stay, may put the parties on such terms the
enforcement whereof would satisfy the demand for justice of the party found
successful at the end of the appeal.

In South Eastern Coalfields
Ltd. Vs. State of M.P. Ors., (2003) 8 SCC 648, this Court while dealing
with interim orders granted in favour of any party to litigation for the
purpose of extending protection to it, effective during the pendency of the
proceedings, has held that such interim orders, passed at an interim stage,
stand reversed in the event of the final decision going against the party
successful in securing interim orders in its favour; and the successful party
at the end would be justified in demanding compensation and being placed in the
same situation in which it would have been if the interim order would not have
been passed against it.

The successful party can
demand (a) the delivery to it of benefit earned by the opposite party under the
interim order of the High Court, or (b) compensation for what it has lost, and
to grant such relief is the inherent jurisdiction of the Court. In our opinion,
while granting an order of stay under Order 41 Rule 5 of the CPC, the appellate
court does have jurisdiction to put the party seeking stay order on such terms
as would reasonably compensate the party successful at the end of the appeal in
so far as those proceedings are concerned.”Though the
said observation was made in the context of interim order being considered
under Order 41 Rule 5 CPC, it
would be more appropriate in a writ proceedings in as much as, not only the
interim prayer but the very

writ petition
will be entertained in the discretionary jurisdiction unlike the statutory
appeal under Section 96 read with Order 41 of CPC. In such circumstance, though
it is not necessary that a condition is to be imposed in every case for grant
of interim order, if the Court in a given case imposes the condition, the same
is to be treated as being with a purpose and not as an empty formality.

17. In that
regard, it is to be noticed that in the instant case in a circumstance where
the private respondent had filed the
writ petition, even though the High court had permitted the process of retender
to progress, the finalization thereof had been stayed. If that be the position,
the appellant herein was not in a position to immediately bring the Kendu leaves
for reauction by receiving the amount from the subsequent purchaser and the
same is likely to have dissuaded purchasers to offer the best price due to
uncertainty looming large.

Whether all
these and any other factor has caused the loss to the appellant and the public
exchequer is a matter to be determined based on materials and evidence but the
fact remains that such resultant delay was at the instance of the private
respondent. As noticed from the terms of the agreement, any loss caused was permissible
to be recovered from the respondent after adjusting the security deposit
available.

Therefore,
even if the amount of deposit made pursuant to the order passed by the High Court
is not considered as an additional security deposit, the right of the appellant
to proceed in accordance with law to assess the damage suffered and to recover
the same from the private respondents, would still remain intact. As such the
deposit ordered will have to be considered as a conditional deposit to protect
the interest of the appellant as well.

18. In such
event, the issue for consideration is as to whether in view of the clause
contained in 9(iv) of the tender notification the appellant should be driven to
initiate the legal proceedings or for public demand recovery after refunding
the amount which is deposited, as contended by the learned Advocate for the
private respondents despite taking note of the intent of such deposit. It is no
doubt true, dehors the writ proceedings initiated by the private respondents
and in the absence of such deposit, option in any event was open to the appellant
to make the recovery through such proceedings.

It is
noticed that apart from the right available to recover the amount by forfeiting
the additional security deposit, the appellant had also clearly indicated that
the subsequent sale would be made at the cost and risk of the private
respondents herein which would mean that the difference of the cost between the
first and second auction and the resultant loss to the appellant if
attributable to the private respondents, is recoverable from the private
respondents. However, it is no doubt true that such recovery is to be made
after quantifying the same by following due process of law.

19. Presently,
though the learned senior advocate for the appellant had furnished a chart
showing the original price as
against the resale price, thereby projecting the net loss suffered by the
appellant, the correctness of the same cannot
be adjudicated in a proceeding of the present nature arising out of a writ
proceeding. The matter being contractual and also requiring factual determination,
the same can only be done in an appropriate proceeding.

Therefore,
though at this stage the said amount of deposit as ordered by the High Court cannot
be considered as additional security deposit nor the actual determination of
the loss suffered, when in a circumstance the action of the appellant to
retender was caused to be deferred, through a proceedings initiated at the
instance of the private respondent, the condition to deposit the amount should
have been considered by the High Court in the background of its intent to
protect the interest of appellant. In that circumstance, when the contention of
loss being caused was put forth the amount ought to have been allowed to be
retained till the procedure as contemplated in law is followed and a decision
is taken though not directly as forfeiture.

20. As
noticed above, the appellant in any event would have the right to determine the
loss suffered and recover the same in
accordance with law as the process to retender, was at the cost and risk
of the private respondent as stated in the notice of termination. In that circumstance,
when it is primafacie indicated that due to the delay caused at the instance of
the private respondents the value of the Kendu leaves had reduced, thereby
causing loss, in view of legal proceedings initiated by the private
respondents, the Court will have to bear in mind the maxim actus
curiae neminem gravabit, namely, no party should suffer due to the act
of Court. In such event, since the interim order was at the instance of the respondent
the appellant should in our opinion be permitted to retain the amount and
complete the process by providing opportunity to the private respondents.

21. In the
above circumstance, the direction to refund the amount unconditionally is not
found justified and is accordingly
set aside. The appellant shall issue appropriate notice(s) to the private
respondents indicating details about the manner in which they computed the loss
after conducting the second auction at the cost and risk of the private
respondent. On receiving response to the same, a detailed consideration be made
and a speaking order be passed in that regard.

The respondents
are at liberty to challenge the speaking order to be passed by the appellant
and the process being pursuant to a contractual matter the private respondent if
aggrieved are entitled to avail their legal remedy before the appropriate
forum, in accordance with law and the entitlement of the amount will be decided
therein. As per the speaking order passed by the appellant, if it is found that
the loss suffered is within the amount available in deposit,
appropriate adjustment should be made and the balance if any, be refunded.

On the
other hand, if the loss caused is found to be more than the amount in deposit,
the amount available shall be adjusted and the appellant would have the liberty
of initiating action for the recovery of the additional amount, if any, in accordance
with law. Such procedure shall be completed within the outer limit of two
months from the date on which a copy of this order is available. Until such
time, the amount available in fixed deposit as ordered by the High Court shall
be retained in the same position and shall not be appropriated for the benefit
of the appellant. The
adjustment of the amount by the appellant if made after passing the speaking
order, the same shall be without prejudice to the contention of both parties
and the same shall be subject to the outcome of the proceedings in the matters
where the respondents may challenge the speaking order in accordance with law.

22.
Accordingly, all the appeals are allowed in part with no order as to costs.
Pending applications, if any, shall stand disposed of.

………………………..J.
(R. BANUMATHI)

………………………..J.
(A.S. BOPANNA)

………………………….J.
(HRISHIKESH ROY)

New
Delhi,

November
28, 2019

Section SectionBack

Leave a Reply

Your email address will not be published. Required fields are marked *

Copyright © 2021 SC and HC Judgments Online at MyNation
×

Free Legal Help, Just WhatsApp Away

MyNation HELP line

We are Not Lawyers, but No Lawyer will give you Advice like We do

Please read Group Rules – CLICK HERE, If You agree then Please Register CLICK HERE and after registration  JOIN WELCOME GROUP HERE

We handle Women Centric biased laws like False Sectioin 498A IPC, Domestic Violence(DV ACT), Divorce, Maintenance, Alimony, Child Custody, HMA 24, 125 CrPc, 307, 312, 313, 323, 354, 376, 377, 406, 420, 497, 506, 509; TEP, RTI and many more…

MyNation FoundationMyNation FoundationMyNation Foundation