AMBIKA VARNISH Vs. STATE OF UTTARAKHAND

JUDGEMENT

(1.) DIVISIONAL Forest Officer, Nainital Forest Division, Bhowali, by his letter dated 17th October, 2007, informed the appellant that earnest money deposited by him, amounting to Rs. 42,550/-, stands forfeited and in addition thereto, a sum of Rs. 1,63,450/- is recoverable from him. Appellant was asked to pay the said sum of Rs. 1,63,450/- within 15 days. Appellant thus filed a writ petition, challenging the said order and seeking refund of the earnest money. Facts of the case, to which there appears to be no dispute, are that appellant participated at an auction held on 10th February, 2006, where he was declared the highest bidder for purchase of 100 quintals of Resin at Rs. 4,255/- per quintal. The bid of the appellant, having been accepted, an allotment order was issued in his favour, which required him to pay 10% of the bid amount as earnest and the balance amount within 30 days. The allotment stipulated that the appellant would be required to pay late fee, in the event payment is not made within 30 days. Allotment order further stipulated that in the event appellant fail to pay the bid amount and lift the goods within 90 days, the lot shall be re- sold and, if the re-sale price is less, then the difference would be recovered from the appellant. Appellant accepted the allotment by paying the earnest money of Rs. 42,550/- and thereby, agreed unconditionally with the terms and conditions of the allotment. Admittedly, appellant failed to pay the bid amount. The lot in question was re-auctioned on 10th May, 2006. It was claimed and contended in the letter, impugned in the writ petition, that the said re-sale resulted in a loss of Rs. 1,63,450/- after adjustment of earnest, being the difference of the amount of the bid received on re-auction and the bid amount to be given by the appellant.

(2.) THE case of the appellant before the writ Court was that he could not lift the allotted Resin within time in view of financial difficulty and, accordingly, made representation for extension of time, which was not granted to him. It is not the contention of the appellant that the agreement, pertaining to the allotment, provided extension of time as was sought for. In law, earnest can be appropriated when for the fault on the part of the giver the contract fails, though forfeiture of earnest cannot be by way of penalty.

(3.) THIS disposes of the appeal.