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RAJESH AND COMPANY. versus HARYANA FINANCIAL CORPORATION AND ANOTHE

High Court of Punjab and Haryana, Chandigarh

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Rajesh and Company. v. Haryana Financial Corporation and anothe - CR-606-2005 [2006] RD-P&H 5140 (2 August 2006)

Civil Revision No.606 of 2005.

In the High Court of Punjab & Haryana at Chandigarh.

Civil Revision No.606 of 2005.

Date of decision:August 21,2006.

Rajesh and Company.

...Petitioner.

Versus

Haryana Financial Corporation and another.

...Respondent.

...

Coram: Hon'ble Mr. Justice S. N. Aggarwal.

...

Present: Mr.Gaurav Mohunta Advocate for the petitioner.

Mr.Puneet Gupta Advocate for the respondents.

...

Judgment.

S. N. Aggarwal, J.

Civil Revision No.606 of 2005 titled Rajesh and Company Versus Haryana Financial Corporation and another and Civil Revision No.1742 of 2003 titled Haryana Financial Corporation Versus Rajesh & Company and another are being disposed of by this common judgment as the parties are the same and these revision petitions are directed against the orders passed in the same case. For the sake of convenience, facts are taken from Civil Civil Revision No.606 of 2005.

Revision No.606 of 2005 (Rajesh and Company Versus Haryana Financial Corporation and another).

Rajesh and Company shall be referred to as the petitioner while Haryana Financial Corporation shall be referred to as the respondent.

The version of the respondent is that respondent No.2, Haryana Credit and Leasing Limited, Hisar was the debtor of respondent. Collateral security furnished by respondent No.2 i.e. SCO No.196, Red Square Market, Hisar was sought to be sold by the respondent in public auction. For that purpose, advertisements were given in various newspapers on 27.12.2000 inviting tenders on or before 17.1.2001. The highest bid received from respondent No.2 was for Rs.27.60 lacs. Respondent No.2 was requested to find out a better buyer and the said respondent vide his letter dated 15.3.2001 brought the petitioner for negotiations. The petitioner offered the bid for a little higher amount i.e. Rs.27.75 lacs. This was not accepted by the respondent who issued further notices in the newspapers for calling bidders for negotiations to be held on 18.4.2001.

On this, the petitioner filed a civil suit against the respondent on 4.4.2001 with the prayer that the respondent be restrained from calling the bidders for negotiations on 18.4.2001 and to accept the bid made by the petitioner for a sum of Rs.27.75 lacs. An application for interim stay was also filed for confirming the sale in Civil Revision No.606 of 2005.

favour of the petitioner. The application for interim stay was, however, dismissed by the learned trial Court vide order dated 17.4.2001.

Since there was no stay order, further negotiations were held by the respondent on 18.4.2001. and the highest bid for Rs.30.10 lacs was received from the petitioner. This bid was accepted by the respondent and sale confirmation letter dated 1.5.2001 was issued in favour of the petitioner with the following condition with regard to lockers inside the property:-

"2. In this connection, it is informed that the highest offer of Rs.30.10 lacs given by you at the time of negotiations held on 18.4.2001 for purchase of the assets of the captioned unit on 'As is where is basis' has been confirmed.

The balance 15% of the bid amount is payable within 30 days from the date of this letter and 75% in 3 years in quarterly instalments with prevailing rate of interest.

Further, it was also clarified to you at the time of negotiations that the locker room will be kept sealed and will not be handed over till any further orders from the court in this regard. In case of any breach, you will be held responsible and Corporation is at liberty to take legal remedies including lodging FIR."

Regarding the payment of Rs.30.10 lacs,10% were already paid. 15% were payable within 30 days from the issuance of letter Civil Revision No.606 of 2005.

dated 1.5.2001 and the remaining 75% were payable within three years in quarterly instalments with the prevailing rate of interest. 15% of the bid money was deposited by the petitioner on 30.5.2001 i.e. within the stipulated period.

However, the petitioner failed to pay the remaining amount.

He was requested by the respondent to get the agreement of sale executed in his favour but to no effect. On 4.1.2002, the respondent- Corporation informed the petitioner to get the agreement of sale executed within 15 days failing which earnest money already deposited by the petitioner would be forfeited. On this, the petitioner filed an application under Order 39 Rules 1 and 2 read with Section 151 CPC (in the same old suit filed against the order vide which the bidders were invited for negotiations on 18.4.2001 and which had virtually become infructuous after the petitioner himself had participated in the negotiations and had offered the bid which was accepted vide letter dated 1.5.2001) seeking to restrain the respondent from forfeiting the earnest money and from implementing letter dated 4.1.2002 and also for asking the respondent to execute agreement of sale and to deliver possession of the complete unit after removal of articles of the old firm.

This application was, however, dismissed by the learned trial Court vide order dated 2.4.2002. Thereafter, the respondent issued letter dated 16.4.2002 to the petitioner by which the earnest money deposited by the petitioner was forfeited. The petitioner filed an appeal against the Civil Revision No.606 of 2005.

order dated 2.4.2002 which was accepted by the learned Additional District Judge by order dated 10.12.2002 against which the respondent filed Civil Revision No.1742 of 2003.

After filing this revision petition, an agreement of sale dated 13.11.2003 was executed between the parties in which again a clause was inserted regarding the Locker Room as under:- "3. The purchaser acknowledge having taken over the deemed possession of the said property consisting of as mentioned in the schedule hereto land together with building constructed thereon. However, in the basement of the property agreed to be sold, there is a Strong Room where the lockers cabinet are embedded. The keys of the Strong Room and that of making the locker system operative are not with the Corporation as they were not handed over to the Corporation at the time of taking over the possession of the property. The possession of the locker is symbolically delivered to the purchaser who will keep it sealed till orders of the Courts are passed in respect thereof.

The purchaser will take care and precautions for safety and security of the Locker Room. The purchaser shall provide and allow free passage for operation of Lockers. In case of any breach, the purchaser will be held responsible and the seller shall be at liberty to take legal remedies including Civil Revision No.606 of 2005.

lodging of FIR."

It was also agreed that the remaining amount of Rs.22,57,500/- shall be payable in 12 quarterly instalments. The first 11 instalments were to be of Rs.1,89,000/- and the last instalment was for a sum of Rs.1,78,500/-. The instalments were to start from 1.2.2004. Penal clause was also added in the agreement of sale.

It is therefore, clear from the narration of facts given above that after the filing of revision petition No.1742 of 2003 by the respondent, the parties had entered into a new agreement dated 13.11.2003. Therefore, the order of forfeiture of the earnest money dated 16.4.2002 stood withdrawn and the parties proceeded on the assumption that 25% of the bid money was already deposited with the respondent by the petitioner and the remaining amount of 75% was payable by the petitioner by the schedule laid down in the agreement dated 13.11.2003. It may be recapitulated that the order dated 16.4.2002 was issued as the petitioner had failed to pay instalments in time in accordance with the letter of sale confirmation dated 1.5.2001.

Since the new dates were stipulated for payment in the agreement dated 13.11.2003, therefore, the earlier ground of non-payment ceased to exist and the order dated 16.4.2002lost its sanction. Therefore, civil revision petition No. 1742 of 2003 has been rendered infructuous and is, accordingly, disposed of.

However, even after the execution of agreement dated Civil Revision No.606 of 2005.

13.11.2003 between the parties, no amount was paid by the petitioner although the respondent had written letters to that effect. Three consecutive instalments were not paid by the petitioner. The respondent issued notice dated 25.8.2004 calling upon the petitioner to pay the entire outstanding dues failing which it would be constrained to take possession of the property on 17.9.2004 in exercise of the powers vested under Section 29 of the Haryana Financial Corporation Act,1951. It was also stated in the said letter that in case of non- payment,the amount already deposited by the petitioner would stand forfeited. Still no payment was made by the petitioner.

The petitioner filed another application under Order 39 Rules 1 and 2 CPC in the same old civil suit which as stated above had become infructuous, seeking stay of the operation of the letter dated 25.8.2004 and from taking possession of the property from the petitioner. This application was dismissed by the learned trial Court vide order dated 16.9.2004. After dismissal thereof, an advertisement was given by the respondent in the newspaper on 17.12.2004. The highest bid of Rs.42 lacs was received from M/s S.K.Dealer Care of Sunil Kumar Taxak, Hisar and Rs.4.20 lacs were deposited as earnest money being 10% of the bid money.

The petitioner filed an appeal against the order dated 16.9.2004. The said appeal was also dismissed by the learned Additional District Judge, Hisar vide order dated 15.1.2005 against Civil Revision No.606 of 2005.

which Civil Revision No.606 of 2005 was filed by the petitioner.

This Court vide order dated 14.2.2005 passed in Civil Revision No.606 of 2005 restrained the respondent from confirming the bid till the next date. On the same day, the petitioner handed over three bank drafts dated 12.2.2005 for the total amount of Rs. Five lacs in favour of the respondent. This payment was, however, subject to the final order to be passed in this case. The order of stay was extended further from time to time.

The submission of learned counsel for the petitioner was that the petitioner is still ready and willing to deposit the remaining amount under the agreement of sale dated 13.11.2004 but the respondent has incorporated an un-equitable condition in the sale agreement dated 13.11.2004. The said condition was contained in para No.3 of the agreement of sale by which the petitioner was required to take care and precautions for safety and security of the Locker Room.

He was also required to provide free passage for operation of the lockers and in case of any breach, the petitioner was to be held responsible and the respondent was given liberty to take legal remedies including lodging of the FIR against the petitioner. It was submitted that these conditions were highly onerous which clearly indicated that full possession of the property sold to the petitioner was not handed over to him. Reliance was placed on the judgment of the Hon'ble Supreme Court reported as L.I.C.of India and another v.Consumer Civil Revision No.606 of 2005.

Education and Research Centre and others, AIR 1995 Supreme Court 1811. It was, therefore, submitted that this condition be taken out of agreement of sale dated 13.11.2003 and the petitioner would make the payment as and when directed by the Court to do so.

On the other hand, the submission of learned counsel for the respondent was that this condition was made clear to the petitioner at the time of negotiations when he offered bid of 30.10 lacs for the sale of this property. Thereafter, the sale confirmation letter was issued in favour of the petitioner on 1.5.2001. In the said sale confirmation letter also there was a condition about the lockers and it was also mentioned that the petitioner would be liable to provide free access to the locker holders and if any default was committed by him, he was exposed to action at the hands of the respondent including registration of a case against him. This condition was accepted by him and in pursuance of the said letter dated 1.5.2001, the petitioner had deposited 15% of the bid amount on 30.5.2001 as required in the letter dated 1.5.2001.

Thereafter again an agreement of sale dated 13.11.2003 was executed between the parties in which also the same condition was incorporated that the petitioner shall provide free access to the locker holders and any breach committed by the petitioner would expose him to legal action at the hands of the respondents. Under this agreement also,the petitioner agreed to pay the remaining instalments. Thereafter Civil Revision No.606 of 2005.

he again failed to pay any instalment out of outstanding amount of Rs.22,57,500/-. The first instalment of Rs.1,89,000/- was payable on 1.2.2004. The second instalment of same amount was payable on 1.5.2004 and the third instalment of the same amount was payable on 1.8.2004. The petitioner failed to pay these instalments, as a result of which the respondent issued letter dated 25.8.2004 by which the petitioner was required to clear the outstanding amount failing which the respondent would take possession of the property on 17.9.2004 in exercise of the powers vested under Section 29 of the Haryana Financial Corporation Act and to forfeit the earnest money already deposited by the petitioner. In spite of this notice, the petitioner failed to pay the instalments on which the respondent took possession of the said property and put it to re-auction by giving advertisements in the newspapers.

The conduct of the petitioner in not complying with the terms and conditions of the agreement of sale dated 13.11.2003 clearly reveals negligence on his part which invited order dated 25.8.2004. The application for interim stay filed by the petitioner was dismissed by the learned trial Court vide order dated 16.9.2004 and the appeal filed by him was also dismissed by the learned Lower Appellate Court vide order dated 15.1.2005 against which the petitioner filed Civil Revision No.606 of 2005.

After considering the rival submissions advanced before Civil Revision No.606 of 2005.

me, it is clearly made out that the petitioner is taking false excuses in order to avoid payment of quarterly instalments which he was legally obliged to pay in accordance with the agreement of sale dated 13.11.2003. This condition was already known to the petitioner and he had accepted this condition by participating in the negotiation, by accepting the terms and conditions of letter dated 1.5.2001 i.e. by depositing the remaining amount of 15% of the bid money on 30.5.2001 and by entering into an agreement of sale dated 13.11.2003.

If this condition was not acceptable to the petitioner, he would not have accepted the sale confirmation letter dated 1.5.2001 and would not have executed the agreement dated 13.11.2003 which incorporates the same condition. If this condition was acceptable to him at that time, the petitioner cannot now turn back and complain of the condition of the agreement dated 13.11.2003. Therefore, the failure of the petitioner to deposit quarterly instalments compelled the respondent to issue notice dated 25.8.2004.

There is nothing wrong with the order dated 25.8.2004.

Consequently, there is nothing illegal in the orders passed by the Courts below dismissing the application for interim stay against the said order. The petitioner himself was responsible to create a situation in which the respondent had to invoke penalty clause. The conduct of the respondent in not making payment of any instalment cannot be justified from any angle and,therefore, the only course open to the Civil Revision No.606 of 2005.

respondent was to take possession of the property and further to re- auction the same and also to forfeit the earnest money.

Accordingly, there is no merit in the present petition and the same is dismissed. However, the amount of Rs.five lacs which was deposited by the petitioner with the respondent during the pendency of this writ petition be returned to him by the respondent within one month after the receipt of the copy of this order.

To sum up, Civil Revision No.606 of 2005 stands dismissed while Civil Revision No.1742 of 2003 is disposed of as infructuous.

August 21 ,2006. ( S. N. Aggarwal)

Jaggi Judge


Copyright

Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

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