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2009 (12) TMI 995 - SUPREME COURT

2009 (12) TMI 995 - SUPREME COURT - TMI - Civil Appeal No. 829 of 2003 - Dated:- 15-12-2009 - J.M. PANCHAL AND SURINDER SINGH NIJJAR JJ. JUDGMENT SURINDER SINGH NIJJAR, J. 1. This appeal is directed against the Judgment and Order dated 26.11.2001 in C.W.P.5725/2001 of the High Court of Punjab and Haryana at Chandigarh. 2. The respondent had approached the High Court with a prayer that the order dated September 30, 1998 by which the Haryana Financial Corporation (hereinafter referred to as the ap .....

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ereinafter referred to as the defaulting unit), Old Hansi Road, Jind. On 28.1.1998 respondent initially made an offer of ₹ 25,00,000/-, which was subsequently during negotiations enhanced to ₹ 50,00,000/-. On that very day the respondent deposited an amount of ₹ 2.5 lakhs by way of earnest money. On 29.1.1998 the respondent wrote a letter to the Managing Director of the appellants/Corporation as follows: "RAJESH GUPTA 578, AUTO MOBILE MARKET HISAR Phone: 28221 - 3 Lines Fa .....

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iced that the premises do not have an independent appropriate passage from the road. On further inquiry from the concerned Branch office, the copy of site plan/ building plans were not available and we were told that the same are available at Head office only. Therefore you are requested to kindly apprise us in this matter so that we do not face any problems, if we acquire the unit as per your offer. We hope to hear soon in this regard. Thanking you, Yours faithfully Sd/- Rajesh Gupta" No r .....

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digarh. Sub: Offer to purchase unit of Unique Oxygen Private Limited Jind Dear Sir, With reference to the negotiation held on 6.3.98 at your Head Office for the sale of assets of said concern. We are the highest bidder and understand that our bid will be accepted. However, the matter regarding approved/authorised passage for smooth functioning of the factory was discussed in the meeting and the unit holder, who was also present in the meeting confirmed that such passage exist, at the factory. In .....

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ithfully Sd/- Rajesh Gupta" 5. It would appear that by letter dated 3.4.1998, the Branch manager brought the objection of the respondent to the notice of the head office of the appellants/Corporation. In response to this communication the Branch Manager was informed by the head office of the appellants/Corporation, by letter dated 7.4.1998 that clear cut passage/rasta has been provided to the unit as per documents submitted by the defaulting unit at the time of availing loan. Reference in t .....

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apers particularly shown in the sale deed is not connected directly with the unit and to connect the Rasta with the Rasta of the revenue record party purchased some land where the movement of the vehicles is not possible at all." 6. In fact the letter further pointed out as follows: "It is further stated that the area mentioned in the map approved by the M.C. is 1130 sq. yd. whereas the total area in the sale deed and is mortgaged to the Corporation is 1210 sq. yd. It is also not out o .....

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date of issue of the letter failing which the amount of the earnest money deposited would be forfeited without further notice. The respondent, however, again raised the issue regarding the passage at the open house held by the appellants/Corporation at Hissar on 12.6.1998. According to the appellants/ Corporation, as per the revenue record and the demarcation report of the revenue officials dated 27.6.1998, therein 16.5 ft. rasta is provided in the west of the Unit. However, not satisfied, the .....

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30.9.1998 by which the earnest money had been forfeited has been quashed and set aside. A further direction has been issued to the appellants/Corporation to refund the amount along with interest at the rate of 12 per cent per annum w.e.f. 1.2.1998 to the date of payment. The High Court also imposed costs on the appellants/Corporation assessed as ₹ 5,000/-. Further directions were issued to release the amount to the respondent within two months from the receipt of a copy of the order of th .....

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d that it was for the respondent to make necessary enquiry with regard to the existence of the 3 Karams rasta, with the Revenue and other authorities. According to the learned counsel the entire documentation which had been provided at the time when the loan was sanctioned clearly indicated that there is a 3 Karams rasta leading from the road to the Unit. Learned counsel further pointed out that the respondent had visited the site on 21.1.1998. Therefore he would have known the exact situation o .....

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e appellants/Corporation by placing reliance on Section 29 of The State Financial Corporation Act, 1951. 12. On the other hand, Mr. Vimal Chandra S. Dave, learned counsel for the respondent, submits that the judgment of the High Court is self-speaking and is not open to challenge on any of the grounds pleaded by the appellants. He submitted that the appellants cannot be permitted to take advantage of their own wrong. They have misled the respondent into making a huge deposit for a plot of land w .....

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erms informed the appellants/Corporation about the non-existence of the independent passage. No denial could possibly be made in the face of the letter dated 29.1.1998 which makes a reference to the visit of the respondent to the factory premises on 21.1.1998. There is a categorical assertion that premises do not have an independent appropriate passage from the road. When enquiries were made from the branch office, the respondent, was simply informed that copy of the site plan and building plan .....

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n the light of above you are requested to kindly apprise us in this matter and supply us the copy of approved building plan, site plan for the building mortgaged by H.F.C. so that we may not face any problem in future in running the unit." 15. It appears that the aforesaid request of the respondent was also never specifically answered by the appellants/ Corporation. In view of the protests of the respondent, the issue was raised by the Branch Manager of the appellants /Corporation through l .....

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provided to the concern as per documents submitted by the concern at the time of availing loan. Enclosed herewith please find photocopy of the Sale Deed No.1494 dated 8.9.94 and photocopy of the Mutation No.5172, another Mutation No.9896 and Search Report and Sale Deed, Rasta, wherein it is clear cut mentioned that there is an approach road the factory site. So, you may please satisfy the Auction Purchaser with these documents and inform us the latest position of the case. It is also added here .....

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cessary independent approach road. The letter however does not indicate, that any independent inquiries were made by the appellants/ Corporation to verify the authenticity of the statements made by the management of the defaulting unit which had availed of the loan, by mortgaging the assets of the unit. The entire issue seems to be concluded against the appellants/ Corporation by letter dated 30.4.1998, the relevant parts of which have already been reproduced in the earlier part of this judgment .....

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r also clearly states that by exclusion of the aforesaid land the size of the plot would be reduced from 1210 sq. yards to 1130 sq. yards. That would mean that the main gate of the factory would be out side the land offered for sale. Taking into consideration the aforesaid facts the Division Bench concluded as follows: "Taking the totality of circumstances into consideration, we are satisfied that the petitioner was not at fault. He was entitled to withhold the money as the respondents had .....

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cluding that in law the appellants/Corporation undoubtedly has the power to forfeit the earnest money provided there was a failure on the part of the respondent to make the deposit. The Division Bench, however, observed that the respondent was dealing with an instrumentality of state. He was entitled to legitimately proceed on the assumption that the appellants, a Statutory Corporation, an instrumentality of the State, shall act fairly. The respondent could not have suspected that he would be ca .....

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nd any substance in the submission made by the learned counsel for the appellants/Corporation. 18. In our opinion, the appellants cannot be given the benefit of Clause 5 of the advertisement. The appellants /Corporation cannot be permitted to take advantage of their own wrong. Clause 5 undoubtedly permits the forfeiture of the earnest money deposited. But this can only be, if the auction purchaser fails to comply with the conditions of sale. In our opinion the respondent has not failed to comply .....

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the appellants/ Corporation clearly acted in breach of Section 55 (1) (a) and (b) of The Transfer of Property Act, 1882. The aforesaid Section provides as under: (1) The seller is bound- (a) to disclose to the buyer any material defect in the property [or in the seller's title thereto] of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover; (b) to produce to the buyer on his request for examination all documents of title relating to th .....

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ion as required by Section 51 (1) (b) of the aforesaid Section. We are therefore satisfied that the appellants/Corporation cannot seek to rely on the aforesaid provision of The Transfer of Property Act, 1882. 21. In our opinion, the reliance on Section 29 of the State Financial Corporations Act, 1951 is wholly misplaced. The aforesaid Section pertains to action which the Corporation can take against the Unit which had defaulted in payment of loan. In such circumstances the Corporation has the po .....

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ny in liquidation by the official liquidator under the orders of the Court. Therefore it is observed that the official liquidator cannot and does not hold any guarantee or warranty in respect of the property sold. That is because the official liquidator proceeds on the basis of what the records of the company in liquidation show. Therefore it is for the intending purchaser to satisfy himself in all respects as to the title and encumbrances and so forth of the immovable property that he proposes .....

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