Case Law regarding Section 73 and 74 Indian contract act : Kailashnath Associates vs. Delhi Development Authorities

KAILASH NATH ASSOCIATES VS. DELHI DEVELOPMENT AUTHORITIES AND ANRS.

Civil Appeal No 193/2015

 


In this case, Delhi development authorities organized a public auction for selling a property and during the time of auction plaintiff Kailash nath associates chosen as a highest bidder among the other participants.On 18.2.1982, the DDA acknowledged the receipt of Rs.78, 00,000/- (Rupees Seventy Eight Lakhs), accepted the appellant’s bid and directed the appellant to deposit the remaining 75% by 17.5.1982 but the plaintiff requested to the DDA for extension of the stipulated time for remaining payment.


DDA setup a high power committee to look into this matter. The High Powered Committee on 21.7.1982 recommended granting the extension of time to bidders for depositing the remaining amount of 75%. Based on the High Powered Committee’s report, by a letter dated 11.8.1982, the DDA extended time for payment up to 28.10.1982 with varying rates of interest starting from 18% and going up to 36%. The second High Powered Committee was set up and recommended that the time for payment be extended and specifically mentioned the appellant’s name as a person who should be given more time to pay the balance amount. Despite the fact that on 14.5.1984 the DDA accepted the recommendations of the second High Powered Committee, nothing happened till 1.12.1987. Several letters had been written by the appellant to DDA from 1984 to 1987 but no answer was forthcoming by the DDA and the plot was re-auctioned at an amount of Rs. 11.78 Crores.


The appellant approached Delhi High Court to seek refund of the earnest amount along with specific performance, to which an order was passed by the High Court for the reimbursement of the earnest amount and rejected the demand for specific performance. But the appeal to the Division Bench of the High Court reversed the decision of the Single Bench, and rejected the plea to refund the earnest amount. Ultimately, the Supreme Court stated that there was no breach of contract from the part of the appellant for which no penalty can be imposed in the form of forfeiture of the earnest amount under section 74 of the Indian Contracts Act, 1872. 



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