Krishan Kumar BhasIn and anr. Vs. D.D.A. - Court Judgment

Excerpt:
a) it was held that the petitioner could withdraw his tender bid for the property, before he could receive communication of acceptance of his offer, within the provisions of rule 30 and 31 of the delhi development authority (disposal of developed nazul land) rules, 1981b) the case dealt with a writ petition filed under article 226 and 299 of the constitution of india, against forfeiture of earnest money deposited by the petitioner for the auction of land - the delhi development authority had forfeited the earnest money due to cancellation of the bid - it was held that the respondent had not raised any objection for the petitioner's eligibility to bid and the equitable and legal consideration was weighing in favor of the petitioner - thus the order of forfeiture of the earnest money could not be sustained under rule 30 and 31 of the delhi development authority (disposal of developed nazul land) rules, 1981, and the petition was allowed with cost - - ga-11. the respondents failed to note that there was no bid/offer much less any acceptance by the husband of petitioner no. 1 was well within his right to withdraw the bid before its acceptance in respect of plot no.orderc.k. mahajan, j.1.rule. 2. the petitioners have laid challenge to the two letters issued by the respondent/dda, both dated 28.4.1986, requiring petitioner no.1 to pay rs. 5,07,610/- towards the balance payment of plot no. ga-6, shivaji enclave, new delhi and cancelling the bid of petitioner no. 2 and forfeiting the earnest money in respect of plot no. ga-11, shivaji enclave, new delhi. 3. briefly stated the facts are that the petitioner no.1 responded to the auction notice for sale of residential plot in ga block, shivaji enclave. the petitioner no.1 was the highest bidder in the sum of rs. 6,56,000/- in respect of plot ga-6 measuring 364.10 sq. mets. in the auction dated 18.11.1985. the petitioner no.1 gave a pay order of rs. 1,50,000/- . but since the earnest money required to be paid was 25% at the drop of the hammer which amounts to rs. 1,64,000/- the said petitioner was told to make the payment of the balance sum of money within two hours. the petitioner no.1 was informed that the auction would be taken as confirmed only after the same was approved by the lt. governor or by such officer authorised by him. 4. instead of depositing rs. 14,000/- being balance amount to be paid at the drop of the hammer the petitioner no.1 changed his mind and decided to revoke the offer vide letter of the same date for the reasons that he was interested in another plot ga-11 measuring 335.50 sq. mtrs. in the same area. the said letter was received by the respondents on 19th november, 1985. the petitioner no. 2 bid for the plot no. ga-11 on the auction held on 20.11.1985 and her bid of rs. 6,21,000/- was the highest. she deposited a sum of rs. 1,55,250/- as earnest money i.e. 25% of the bid money. the petitioners thereafter did not hear from the respondents till they received two letters (annexures e and f), both dated 28th april, 1986. by the first letter (annexure e) petitioner no.1 was required to deposit the amount of rs. 5,07,610/- towards the balance sale price of plot no. ga-6. it was also stated in the letter that in case the amount was not paid within time it would be treated as a breach of the terms and conditions of auction and the earnest money will be forfeited under condition no.ii(4) of the conditions of auction. this letter also gives reference to the letter dated 18.11.1985 written by petitioner no.1. 5. by the second letter dated 28th april, 1985 (annexure f) petitioner no.2 was informed that the bid in respect of plot no. ga-11 had been cancelled and the amount of rs. 1,55,250/- deposited towards earnest money forfeited under the order of the vice chairman of the dda. it was stated that since her husband had already purchased a plot no. ga-6 in the same scheme on 18.11.1985 the petitioner no. 2 was not entitled to offer bid in respect of plot no. ga-11, shivaji enclave. 6. the petitioner no.1 had requested the respondent/dda on 31st january, 1986 that he may be permitted to retain plot no.ga-11 in the name of his wife, petitioner no.2, and the amount deposited as earnest money for plot no. ga- 6 be refunded or adjusted towards the balance payment of plot no. ga-11. all the facts leading up to the second bid of plot no. ga-11 were set out in the said letter. 7. the auction in respect of two plots took place as far back as on 18.11.1985 and 20.11.1985 but the respondents did not convey the acceptance or rejection of the plots. however, vide letter dated 28th april, 1986 the respondents cancelled the bid in respect of plot no. ga-11 and directed the petitioner no.1 to pay balance amount in respect of plot no. ga-6. the petitioner no.1 protested against the said letters and wrote to the vice chairman dda on 1st may, 1986 challenging to right of the respondents to cancel the bid in respect of plot no. g-11 and to forfeit the amount towards earnest money. 8. it is in these circumstances this writ petition had been filed in this court. 9. the short question for consideration is as to whether the respondents were justified in cancelling the bid of petitioner no. 2 on the ground that the bid of petitioner no.1 had been accepted and petitioner no. 2 thus become ineligible for making bid in respect of plot no. ga-11, shivaji enclave, nazafgarh, delhi. 10. i have heard counsel for the parties at length. 11. it is contended on behalf of petitioner no. 2 that the respondents went wrong in rejecting her bid solely on the ground that her husband, petitioner no.1, had already purchased plot no. ga-6 in the same scheme on 18th november, 1985 and under the terms and conditions of the auction petitioner no.1 was not entitled to revoke the bid nor was he entitled to surrender the plot and thus petitioner no. 2 was ineligible to bid for plot no. ga-11. the respondents failed to note that there was no bid/offer much less any acceptance by the husband of petitioner no. 2 on the 20th november, 1985 when petitioner no. 2 offered to bid for the plot no. ga-11. the offer having been revoked and conveyed to the respondents on the 18th november, 1985 the contract was not complete and there was no violation of the terms and conditions of the auction. 12. the learned counsel for the respondents made the following submissions: 1. the petitioner no.1 had participated in the bid and signed the bid form and was thus bound by it. the action of the petitioner no.1 in participating in the bid and signing of the form resulted in a concluded contract. 2. the petitioner no.1's bid having been accepted by the officer conducting the auction the same could not be permitted to be withdrawn. reliance was placed on section 30 and 31 of the delhi development authority (disposal of developed nazul land) rules, 1981. rules 30 and 31 reads as under: 30. rejection of bid.- the officer conducting the auction may, for reasons to be recorded in writing and submitted to the vice-chairman, reject any bid including the highest bid. 31. withdrawal not permitted.- no person whose bid has been accepted by the officer conducting the auction shall be entitled to withdraw his bid. 13. rule 30 and 31 of the act do not apply to the facts of the present case. the aforesaid arguments are not tenable. 14. there is merit in the contention of petitioner no. 2. 15. the respondents issued an invitation to tender in respect of plot no. ga-6. the petitioner no.1 was the highest bidder. it was open to the respondents to accept or reject the offer. unless the same was accepted in accordance with law, no binding contract resulted and until the offer is accepted and the contract is concluded it is open to a party under section 5 of the contract act to revoke its offer. the petitioner no.1 had thus a legal right to withdraw his offer before it was accepted. this is what the petitioner no.1 did in the present case. it is only two days later that the petitioner no.2 tendered a bid in respect of the plot ga-11 in response to the invitation to tender issued by the respondents: the said bid was accepted and the petitioner no.2 deposited the earnest money. 16. acceptance of a bid at a public auction and deposit of 25% of the bid amount do not constitute concluded contract. the respondent concedes that the offer of petitioner no.1 was neither accepted nor rejected by the vicechairman, dda or his nominee before its revocation by petitioner no.1. the acceptance was not complete at any point of time. having regard to the contentions of the respondentsthat the bid had been accepted nothing has been produced on record to show that there was acceptance of the bid. manifestly there is no absolute acceptance when the highest bid is reached and the auction is closed. the auction sale is finalised only by issuing an order of confirmation. before the confirmation of the sale there was no obligation on the part of the plaintiff to make deposit of the entire bid amount. there was no concluded contract between the petitioner no.1 and the respondents. the acceptance must be communicated to petitioner no.1 in some perceptible forms. there is no evidence on record to signify the acceptance of the bid. 17. it has been held in a plethora of decisions of this court and supreme court that an offer can be revoked or withdrawn at any time before the communication of the acceptance. it was open to the respondents to accept or reject the offer until the same is accepted in accordance with law. no binding contract can be resulted until the offer is accepted and it is open to the bidder under section 5 of the contract act to revoke its offer. the petitioner had, thereforee a legal right to withdraw his offer before it was accepted. 18. mutuality is very essence of the contract and if it is found that one party is bound while the other is not it cannot be said that the parties are ad idem or any contract has been concluded between them. section 5 reads: 'a proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. an acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterward.' 19. in mulla's commentary on indian contract act, 9th edn. pages 74 and 75, the rule of law is thus stated: 'revocation of offers: it is implied in section 5 that the pro-poser of a contract cannot bind himself (unless by a distinct contract made by a distinct consideration) to keep his offer open for any definite time, and that any words of promise to that effect can operate only for the benefit of the proposer and as a warning that an acceptance after the specified time will be too late (sec. 6 sub. sec.2). such is undoubtedly the rule of the common law. the reason is that an undertaking to keep the offer open for a certain time is a promise open for a certain time is a promise without consideration, and such a promise is unenforce able. a gives an undertaking to b to guarantee, for twelve months the due payment of m's bills, which may be discounted by a to a's request. this is not a binding promise, but a standing proposal which becomes a promise or series of promises as and when b discount bills on the faith of it. a may revoke it at any time, subject to his obligations as to any bills already discounted....'20. it was observed in bhagwandas vs . girdharlal & co. 0065/1965 : [1966]1scr656 : 'a contract unlike a tort is not unilateral. if there be no 'meeting of minds' no contract may result. there should, thereforee, be an offer by one party, express or implied, and acceptance of that offer by the other in the same sense in which it was made by the other. but an agreement does not result from a mere state of mind; intent to accept an offer or even a mental resolve to accept an offer does not give rise to contract. there must be intent to accept and some external manifestations of the intent by speech, writing or other act and acceptance must be communicated to the offerer, unless he has waived such intimation or the course of negotiations implies an agreement to the contrary.'21. one of the terms and conditions for sale by auction provide that when a bid is accepted on behalf the administrator/lt. governor the intending purchase shall be informed of the acceptance in writing and the intending purchaser shall within 60 days of the date of the issue of the letter of approval of the bid, pay the balance amount. if the bid is not accepted the earnest money will be refunded to the intending purchaser. forfeiture is only permissible in case of default, breach or non compliance of the terms and conditions of the auction or misrepresentation or non payment of the balance premium. in such circumstances the bid shall be liable to be cancelled and the earnest money liable to be forfeited. none of these conditions apply to the facts of the present case. the bid being an offer along, and the same not having been confirmed by the administrator/lt. governor could not thus result in an enforceable contract. only a concluded contract can bind both the parties and for such a contract to come into existence the offer and the acceptance must be absolute. a person who makes an offer has a right of withdrawing it before acceptance, in the absence of a condition to the contrary. the petitioner no.1 withdraw the offer before the same was accepted. 22. reliance was placed by the learned counsel for the petitioner on anil kumar chanana v. u.o.i. 1977 rlr 26; t. linga gowder v. state of madras air 1971 mad 28; haridwar singh vs . bagun sumbrui & others : [1972]3scr629 and delhi development authority v. ravindra mohan aggarwal & anr. 1999 ii a.d. (s.c.) 496. 23. the respondents have not made out any plausible defense in support of their action in cancelling the bid and forfeiting the earnest money. the petitioner no.1 was well within his right to withdraw the bid before its acceptance in respect of plot no. ga-6. there was no valid after for purchase of plot no. ga-6 as the said offer had lapsed with the withdrawal of the bid by petitioner no.1 on 19th november, 1985. 24. the earnest money deposited by petitioner no. 2 in respect of plot no. ga-11 was duly accepted by the respondents. there was no objection raised by the respondents with regard to the petitioner no. 2's eligibility for bidding at the auction. equitable and legal considerations weigh in favor of the petitioner no. 2. 25. in the circumstances the action of the respondents in cancelling the bid of the petitioner no. 2 and forfeiting the earnest money has to be struck down. petitioner no.2 was successful bidder in the auction dated 20th november, 1985 in respect of plot no. ga-11, shivaji enclave, nazafgarh, delhi. against the sale price of rs. 6,21,000/-. in the circumstances the letters dated 28th april, 1986 (annexures e and f) are quashed. the respondents are directed to accept the balance amount of the bid for plot no. ga 11 from petitioner no. 2 and upon payment of the bid amount and completion of formalities give possession of the plot to petitioner no. 2. 26. the writ petition is allowed with costs.

Judgment:
ORDER

C.K. Mahajan, J.

1.Rule.

2. The petitioners have laid challenge to the two letters issued by the respondent/DDA, both dated 28.4.1986, requiring petitioner No.1 to pay Rs. 5,07,610/- towards the balance payment of plot No. GA-6, Shivaji Enclave, New Delhi and cancelling the bid of petitioner No. 2 and forfeiting the earnest money in respect of plot No. GA-11, Shivaji Enclave, New Delhi.

3. Briefly stated the facts are that the petitioner No.1 responded to the auction notice for sale of residential plot in GA Block, Shivaji Enclave. The petitioner No.1 was the highest bidder in the sum of Rs. 6,56,000/- in respect of plot Ga-6 measuring 364.10 sq. mets. in the auction dated 18.11.1985. The petitioner No.1 gave a pay order of Rs. 1,50,000/- . But since the earnest money required to be paid was 25% at the drop of the hammer which amounts to Rs. 1,64,000/- the said petitioner was told to make the payment of the balance sum of money within two hours. The petitioner No.1 was informed that the auction would be taken as confirmed only after the same was approved by the Lt. Governor or by such officer authorised by him.

4. Instead of depositing Rs. 14,000/- being balance amount to be paid at the drop of the hammer the petitioner No.1 changed his mind and decided to revoke the offer vide letter of the same date for the reasons that he was interested in another plot GA-11 measuring 335.50 sq. mtrs. in the same area. The said letter was received by the respondents on 19th November, 1985. The petitioner No. 2 bid for the plot No. GA-11 on the auction held on 20.11.1985 and her bid of Rs. 6,21,000/- was the highest. She deposited a sum of Rs. 1,55,250/- as earnest money i.e. 25% of the bid money. The petitioners thereafter did not hear from the respondents till they received two letters (Annexures E and F), both dated 28th April, 1986. By the first letter (Annexure E) petitioner No.1 was required to deposit the amount of Rs. 5,07,610/- towards the balance sale price of plot No. GA-6. It was also stated in the letter that in case the amount was not paid within time it would be treated as a breach of the terms and conditions of auction and the earnest money will be forfeited under condition No.II(4) of the Conditions of Auction. This letter also gives reference to the letter dated 18.11.1985 written by petitioner No.1.

5. By the second letter dated 28th April, 1985 (Annexure F) petitioner No.2 was informed that the bid in respect of plot No. GA-11 had been cancelled and the amount of Rs. 1,55,250/- deposited towards earnest money forfeited under the order of the Vice Chairman of the DDA. It was stated that since her husband had already purchased a plot No. GA-6 in the same scheme on 18.11.1985 the petitioner No. 2 was not entitled to offer bid in respect of plot No. GA-11, Shivaji Enclave.

6. The petitioner No.1 had requested the respondent/DDA on 31st January, 1986 that he may be permitted to retain plot No.GA-11 in the name of his wife, petitioner No.2, and the amount deposited as earnest money for Plot No. GA- 6 be refunded or adjusted towards the balance payment of plot No. GA-11. All the facts leading up to the second bid of plot No. GA-11 were set out in the said letter.

7. The auction in respect of two plots took place as far back as on 18.11.1985 and 20.11.1985 but the respondents did not convey the acceptance or rejection of the plots. However, vide letter dated 28th April, 1986 the respondents cancelled the bid in respect of plot No. GA-11 and directed the petitioner No.1 to pay balance amount in respect of plot No. GA-6. The petitioner No.1 protested against the said letters and wrote to the Vice Chairman DDA on 1st May, 1986 challenging to right of the respondents to cancel the bid in respect of plot No. G-11 and to forfeit the amount towards earnest money.

8. It is in these circumstances this writ petition had been filed in this court.

9. The short question for consideration is as to whether the respondents were justified in cancelling the bid of petitioner No. 2 on the ground that the bid of petitioner No.1 had been accepted and petitioner No. 2 thus become ineligible for making bid in respect of plot No. GA-11, Shivaji Enclave, Nazafgarh, Delhi.

10. I have heard counsel for the parties at length.

11. It is contended on behalf of petitioner No. 2 that the respondents went wrong in rejecting her bid solely on the ground that her husband, petitioner No.1, had already purchased plot No. GA-6 in the same scheme on 18th November, 1985 and under the terms and conditions of the auction petitioner No.1 was not entitled to revoke the bid nor was he entitled to surrender the plot and thus petitioner No. 2 was ineligible to bid for plot No. GA-11. The respondents failed to note that there was no bid/offer much less any acceptance by the husband of petitioner No. 2 on the 20th November, 1985 when petitioner No. 2 offered to bid for the plot No. GA-11. The offer having been revoked and conveyed to the respondents on the 18th November, 1985 the contract was not complete and there was no violation of the terms and conditions of the auction.

12. The learned counsel for the respondents made the following submissions:

1. The petitioner No.1 had participated in the bid and signed the bid form and was thus bound by it. The action of the petitioner No.1 in participating in the bid and signing of the form resulted in a concluded contract.

2. The petitioner No.1's bid having been accepted by the officer conducting the auction the same could not be permitted to be withdrawn. Reliance was placed on Section 30 and 31 of the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1981. Rules 30 and 31 reads as under:

30. Rejection of bid.- The officer conducting the auction may, for reasons to be recorded in writing and submitted to the Vice-Chairman, reject any bid including the highest bid.

31. Withdrawal not permitted.- No person whose bid has been accepted by the officer conducting the auction shall be entitled to withdraw his bid.

13. Rule 30 and 31 of the Act do not apply to the facts of the present case. The aforesaid arguments are not tenable.

14. There is merit in the contention of petitioner No. 2.

15. The respondents issued an invitation to tender in respect of plot No. GA-6. The petitioner No.1 was the highest bidder. It was open to the respondents to accept or reject the offer. Unless the same was accepted in accordance with law, no binding contract resulted and until the offer is accepted and the contract is concluded it is open to a party under Section 5 of the Contract Act to revoke its offer. The petitioner No.1 had thus a legal right to withdraw his offer before it was accepted. This is what the petitioner No.1 did in the present case. It is only two days later that the petitioner No.2 tendered a bid in respect of the plot GA-11 in response to the invitation to tender issued by the respondents: The said bid was accepted and the petitioner No.2 deposited the earnest money.

16. Acceptance of a bid at a public auction and deposit of 25% of the bid amount do not constitute concluded contract. The respondent concedes that the offer of petitioner No.1 was neither accepted nor rejected by the ViceChairman, DDA or his nominee before its revocation by petitioner No.1. The acceptance was not complete at any point of time. Having regard to the contentions of the respondentsthat the bid had been accepted nothing has been produced on record to show that there was acceptance of the bid. Manifestly there is no absolute acceptance when the highest bid is reached and the auction is closed. The auction sale is finalised only by issuing an order of confirmation. Before the confirmation of the sale there was no obligation on the part of the plaintiff to make deposit of the entire bid amount. There was no concluded contract between the petitioner No.1 and the respondents. The acceptance must be communicated to petitioner No.1 in some perceptible forms. There is no evidence on record to signify the acceptance of the bid.

17. It has been held in a plethora of decisions of this court and Supreme Court that an offer can be revoked or withdrawn at any time before the communication of the acceptance. It was open to the respondents to accept or reject the offer until the same is accepted in accordance with law. No binding contract can be resulted until the offer is accepted and it is open to the bidder under Section 5 of the Contract Act to revoke its offer. The petitioner had, thereforee a legal right to withdraw his offer before it was accepted.

18. Mutuality is very essence of the contract and if it is found that one party is bound while the other is not it cannot be said that the parties are ad idem or any contract has been concluded between them. Section 5 reads:

'A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.

An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterward.'

19. In Mulla's commentary on Indian Contract Act, 9th Edn. pages 74 and 75, the rule of law is thus stated:

'Revocation of Offers: It is implied in Section 5 that the pro-poser of a contract cannot bind himself (unless by a distinct contract made by a distinct consideration) to keep his offer open for any definite time, and that any words of promise to that effect can operate only for the benefit of the proposer and as a warning that an acceptance after the specified time will be too late (sec. 6 sub. sec.2). Such is undoubtedly the rule of the Common Law. The reason is that an undertaking to keep the offer open for a certain time is a promise open for a certain time is a promise without consideration, and such a promise is unenforce able. A gives an undertaking to B to guarantee, for twelve months the due payment of M's bills, which may be discounted by A to A's request. This is not a binding promise, but a standing proposal which becomes a promise or series of promises as and when B discount bills on the faith of it. A may revoke it at any time, subject to his obligations as to any bills already discounted....'

20. It was observed in Bhagwandas Vs . Girdharlal & Co. 0065/1965 : [1966]1SCR656 :

'A contract unlike a tort is not unilateral. If there be no 'meeting of minds' no contract may result. There should, thereforee, be an offer by one party, express or implied, and acceptance of that offer by the other in the same sense in which it was made by the other. But an agreement does not result from a mere state of mind; intent to accept an offer or even a mental resolve to accept an offer does not give rise to contract. There must be intent to accept and some external manifestations of the intent by speech, writing or other act and acceptance must be communicated to the offerer, unless he has waived such intimation or the course of negotiations implies an agreement to the contrary.'

21. One of the terms and conditions for sale by auction provide that when a bid is accepted on behalf the Administrator/Lt. Governor the intending purchase shall be informed of the acceptance in writing and the intending purchaser shall within 60 days of the date of the issue of the letter of approval of the bid, pay the balance amount. If the bid is not accepted the earnest money will be refunded to the intending purchaser. Forfeiture is only permissible in case of default, breach or non compliance of the terms and conditions of the auction or misrepresentation or non payment of the balance premium. In such circumstances the bid shall be liable to be cancelled and the earnest money liable to be forfeited. None of these conditions apply to the facts of the present case. The bid being an offer along, and the same not having been confirmed by the Administrator/Lt. Governor could not thus result in an enforceable contract. Only a concluded contract can bind both the parties and for such a contract to come into existence the offer and the acceptance must be absolute. A person who makes an offer has a right of withdrawing it before acceptance, in the absence of a condition to the contrary. The petitioner No.1 withdraw the offer before the same was accepted.

22. Reliance was placed by the learned counsel for the petitioner on Anil Kumar Chanana v. U.O.I. 1977 RLR 26; T. Linga Gowder v. State of Madras AIR 1971 Mad 28; Haridwar Singh Vs . Bagun Sumbrui & Others : [1972]3SCR629 and Delhi Development Authority v. Ravindra Mohan Aggarwal & Anr. 1999 II A.D. (S.C.) 496.

23. The respondents have not made out any plausible defense in support of their action in cancelling the bid and forfeiting the earnest money. The petitioner No.1 was well within his right to withdraw the bid before its acceptance in respect of Plot No. GA-6. There was no valid after for purchase of plot No. GA-6 as the said offer had lapsed with the withdrawal of the bid by petitioner No.1 on 19th November, 1985.

24. The earnest money deposited by petitioner No. 2 in respect of plot No. GA-11 was duly accepted by the respondents. There was no objection raised by the respondents with regard to the petitioner No. 2's eligibility for bidding at the auction. Equitable and legal considerations weigh in favor of the petitioner No. 2.

25. In the circumstances the action of the respondents in cancelling the bid of the petitioner No. 2 and forfeiting the earnest money has to be struck down. Petitioner No.2 was successful bidder in the auction dated 20th November, 1985 in respect of Plot No. GA-11, Shivaji Enclave, Nazafgarh, Delhi. against the sale price of Rs. 6,21,000/-. In the circumstances the letters dated 28th April, 1986 (Annexures E and F) are quashed. The respondents are directed to accept the balance amount of the bid for Plot No. GA 11 from petitioner No. 2 and upon payment of the bid amount and completion of formalities give possession of the plot to petitioner No. 2.

26. The writ petition is allowed with costs.