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No party should suffer due to the act of Court – SC


The bench encompassing Justice R. BANUMATHI, Justice A.S. BOPANNA and Justice HRISHIKESH ROY pronounced the judgment on the maxim actus curiae neminem gravabit, namely, no party should suffer due to the act of Court.

The appellants filed 13 appeals including the present one and all the previous appeals were clubbed and heard since it related to the same subject matter. The appellant OFDC Ltd. issued an e­tender notification dated 22.11.2016 for advance sale of phal Kendu leaf. The private respondent being the successful bidder was required to execute an agreement and deposit the provisional security deposit of Rs.5,00,000/­ and additional security deposit covering 25% (here, Rs.27,14,765/­less) of the purchase price of the lot was to be deposited before 31.05.2017 as per the agreement. The respondent solicited extension of time and it was declined by the appellant. Since the respondent did not act according to the agreement, the appellant cancelled the same at the ‘cost and risk’ of the private respondent, the lot was to be put to re­tender. Aggrieved by this, the respondent filed the writ petition in W.P.(C) No.11498/2017, the same was withdrawn and another petition was filed assailing the conduct of the appellant. The High Court allowed the appellant to proceed and it succeeded with vacating an interim order. Thereafter, the respondents gave up the writ petition and the Court ordered for refund of deposit by the appellants. Aggrieved by this, the appellants filed the present appeal.

Mr. S.K. Padhi, learned senior advocate and Ms. Anindita Pujari, learned advocate argued on behalf of the appellants and Mr. Aditya Kumar Choudhary, learned advocate argued on behalf of the respondents. The appellants argued that the High court was not justified in ordering the refund and 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. They further submitted that when the writ petition was not pressed, the termination of the agreement would remain valid. The respondents argued that they offered  a price at higher rate when the panchayat had fixed a lower price for the Kendu leaf. He stressed on Clause 9 (iv).  He contended, “in that circumstance when the High Court has directed refund the order does not call for interference.”

The Court looked into the provision relating to Security Deposit and Termination of Purchaser’s Agreement. It further noticed that the appellants, besides issuing the notice for additional security deposit, it intimidated that on agreement being terminated, the provisional security was  forfeited and that the stock contained in ‘lot’ No. 42 would be resold at the ‘cost and risk’ of the private respondent. In that backdrop, the Court held, “when it is noticed that the termination of the agreement itself was for non­deposit of the additional security, the deposit ordered by the High Court cannot be classified as additional deposit.” The issue here was “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?”  Here, the Court opined that in terms of the agreement, the right of the appellant to recover the loss suffered cannot be ignored.  The Court also observed the decision in M/s. Atma Ram Properties (P) Ltd. vs. M/s. Federal Motors Pvt. Ltd.  It stressed on “no party should suffer due to the act of Court.”

Thereby, the Hon’ble Supreme Court pronounced the following judgment:

“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….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 to protect the interests of the appellant…However, such recovery is to be made by following due process of law. 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. Accordingly, all the appeals are allowed in part with no order as to costs. Pending applications, if any, shall stand disposed of.”

Jumanah Kader



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