Summary
A successful bidder withdrew after the State’s acceptance letter introduced previously undisclosed lease-rent conditions. The Court held that he could reject those unilateral additions and recover his security. The auction notice also contained no forfeiture power. It ordered refund ofRs3lakh with9per cent interest from1February1996 and costs.
Issues
- Whether the State could forfeit security absent an auction term conferring that power.
- Whether the bidder breached the auction conditions by refusing new lease terms and stopping cheque payment.
Provisions considered
- Section74, Indian Contract Act,1872A penal forfeiture right requires contractual stipulation; the auction terms contained no such provision or triggering contingencies. (¶ 21–29)
Held
- A security-deposit requirement alone did not empower forfeiture. The public notice needed a forfeiture stipulation and its contingencies. Precedents with express forfeiture clauses did not validate forfeiture where the power was absent. (¶¶ 23–29, 36–37)
- Material lease-rent terms had to be disclosed with the invitation. Neither the additional conditions nor incorporation of the Revenue Book Circular appeared in the notice. The State could not add conditions unilaterally upon acceptance and compel compliance. (¶ 26–35)
- The bidder tendered the required cheque, which the State accepted. Stopping payment after receipt of unacceptable additional terms was a permissible withdrawal in these circumstances, not a breach. The later resale at a higher price also showed no monetary loss. (¶ 38–41)
- The forfeiture letter was declared illegal and the suit decreed forRs3lakh with9per cent annual interest from1February1996 until realisation. Costs throughout were allowed, with appeal costs fixed atRs10,000. (¶ 45–47)
Result
Appeal allowed with costs; judgments below set aside and forfeiture declared illegal. Refund ofRs3lakh ordered with9per cent annual interest from1February1996 until realisation; appeal costsRs10,000.