2008 (2) TMI 625 - HC - Companies Law

Court rejects interest payment on earnest money in sale process, citing waiver principle

The court dismissed both applications seeking direction for payment of interest on earnest money deposited during a sale process. The applicants' earnest ... Winding up – refund of money with interest - Held that:- The properties having been sold, the interest in the property has already passed on to the successful bidder. There is no property with the official liquidator which can be subjected to the charge of interest.The applicants are not entitled to any interest in the given circumstances. Issues:- Direction for payment of interest on earnest money- Interpretation of sale notice stipulations- Comparison with relevant legal precedents- Claim for interest on earnest money- Waiver or abandonment of interest claim- Dismissal of applications for interest paymentAnalysis:The judgment dealt with two applications seeking direction for payment of interest on earnest money deposited with the official liquidator during a sale process. The applicants deposited earnest money for the sale of assets of a company in liquidation. The highest bids were accepted from other bidders, and the earnest money of the applicants was refunded without any interest. The official liquidator opposed the payment of interest, citing stipulations in the sale notice that clearly stated no interest would be payable on earnest money if the bid was not accepted. The court noted that the highest bids were accepted, and there was no direction for interest payment in the refund orders.The applicants relied on legal precedents where the Supreme Court directed the refund of money with interest. However, the court distinguished those cases as they did not have stipulations like the present sale/auction notice. The court emphasized that the applicants participated in the bid with full knowledge of the conditions regarding interest on earnest money. It was highlighted that at no point did the applicants claim interest when their earnest money was refunded, indicating a waiver or abandonment of the interest claim.The court concluded that the applicants' claims for interest were an afterthought. It was emphasized that the properties had been sold, and the interest had passed to the successful bidders. As there was no property left with the official liquidator to charge interest, the applicants were not entitled to any interest. The court dismissed both applications, finding no merit in the claim for interest on earnest money. The judgment highlighted the importance of adhering to stipulations and conditions set forth in sale notices and emphasized the principle of waiver in legal claims.Overall, the judgment provided a detailed analysis of the issues related to the payment of interest on earnest money, interpreting sale notice stipulations, comparing relevant legal precedents, addressing the claim for interest, discussing waiver or abandonment of the interest claim, and ultimately dismissing the applications for interest payment.