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2017 (10) TMI 1553 - SC - Indian LawsRejection of refund of security amount deposited with the Respondents - Appellant's suit for declaration also rejected - public auction - Section 74 of the Indian Contract Act, 1872 - whether the Appellant (plaintiff) committed any breach of the terms and conditions of the public auction notice dated 07.01.1996? - whether the State was justified in forfeiting the security money deposited by the Appellant for the alleged breach said to have been committed by the Appellant of any terms and conditions of public notice dated 07.01.1996 - whether the State had power to forfeit the security money in the facts of this case? HELD THAT:- Reading of Section 74 would go to show that in order to forfeit the sum deposited by the contracting party as "earnest money" or "security" for the due performance of the contract, it is necessary that the contract must contain a stipulation of forfeiture. In other words, a right to forfeit being a contractual right and penal in nature, the parties to a contract must agree to stipulate a term in the contract in that behalf. A fortiori, if there is no stipulation in the contract of forfeiture, there is no such right available to the party to forfeit the sum - Equally well settled principle of law relating to contract is that a party to the contract can insist for performance of only those terms/conditions, which are part of the contract. Likewise, a party to the contract has no right to unilaterally "alter" the terms and conditions of the contract and nor they have a right to "add" any additional terms/conditions in the contract unless both the parties agree to add/alter any such terms/conditions in the contract. Similarly, it is also a settled law that if any party adds any additional terms/conditions in the contract without the consent of the other contracting party then such addition is not binding on the other party. Similarly, a party, who adds any such term/condition, has no right to insist on the other party to comply with such additional terms/conditions and nor such party has a right to cancel the contract on the ground that the other party has failed to comply such additional terms/conditions. The public notice (advertisement), only stipulated a term for deposit of the security amount of ₹ 3 lakhs by the bidder (Appellant) but it did not publish any stipulation that the security amount deposited by the bidder (Appellant herein) is liable for forfeiture by the State and, if so, in what contingencies - a stipulation for deposit of security amount ought to have been qualified by a specific stipulation providing therein a right of forfeiture to the State. Similarly, it should have also provided the contingencies in which such right of forfeiture could be exercised by the State against the bidder. It is only then the State would have got a right to forfeit. It was, however, not so in this case. It was mandatory on the part of the Respondents(State) to have published the four special conditions at the time of inviting the bids itself because how much money/rent the bidder would be required to pay to the State on allotment of plot to him was a material term and, therefore, the bidders were entitled to know these material terms at the time of submitting the bid itself. It was, however, not done in this case - the object behind publishing all material term(s) is/are three fold. First, such term(s) is/are made known to the contracting parties/bidders; second, parties/bidders become aware of their rights, obligations, liabilities qua each other and also of the consequences in the event of their non-compliances; and third, it empowers the State to enforce any such term against the bidder in the event of any breach committed by the bidder and lastly, when there are express terms in the contract/public notice then parties are bound by the terms and their rights are, accordingly, determined in the light of such terms in accordance with law. In the first place, the Appellant ensured compliance of the term because he deposited 1/4th amount of ₹ 10,45,000/- on the same day, i.e., 11.01.1996 by cheque. Secondly, the Respondents also accepted the cheque from the Appellant because deposit of money by cheque was one of the modes of payment. Had it not been so, the Respondents would not have accepted the cheque from the Appellant. Thirdly, the stop payment was done when the Appellant received the acceptance letter containing four additional conditions to which he was not agreeable. He had, therefore, every right to wriggle out of the auction proceedings and stop further payment towards the transaction. Such action on the part of the Appellant (bidder) did not amount to a breach of Clause 4 so as to give right to the State to forfeit the security deposit. Thus, the Appellant did not commit any breach of the term(s) and condition(s) of the notice inviting bids and on the other hand, it was the Respondents who committed breaches. In these circumstances, the State had no right to forfeit the security amount and instead it should have been returned when demanded by the Appellant - In this case, it was expected from the State officials to have acted as an honest person while dealing with the case of an individual citizen and in all fairness should have returned the security amount to the Appellant without compelling him to take recourse to the legal proceedings for recovery of his legitimate amount which took almost 21 years to recover. The Courts below were not justified in their respective reasoning and the conclusion in dismissing the Appellant's suit. The Appellant's suit should have been decreed against the Respondents - Appeal allowed.
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