Security deposit in forest produce auction, delayed lifting after third-party court stay-State barred from deductions; full refund ordered.

The dominant issue was whether the State could deduct amounts from the successful bidder's security/earnest money for failure to lift perishable forest produce when performance was prevented by a court stay obtained in third-party litigation without impleading the bidder. Applying actus curiae neminem gravabit and lex non cogit ad impossibilia, the SC held that a party cannot be penalised for non-performance rendered impossible by an act of court, particularly where the bidder derived no benefit and the State suffered no deprivation attributable to him; "equities" could not justify overriding the HC Single Judge's reasons for refund. The SC set aside the HC Division Bench order and directed refund of the entire earnest money to the bidder.

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Issues involved:
1. Whether a person can be penalized for no fault of his due to an equity clause in favor of the StateRs.
2. Can a person be directed to forfeit security amount due to a pending writ petition without being impleaded as a partyRs.

Summary:
The case involved a dispute regarding the disposal of Tendu leaves for 1995 session. The respondent's tender was initially accepted but later canceled due to complaints and manipulations. The appellant subsequently became the highest bidder. A writ petition by another party led to a stay order on executing the fresh agreement, affecting the appellant who had deposited a security amount. The appellant sought a refund after the writ petition was disposed of, but faced challenges from the authorities.

In the writ petition filed by the appellant, the Single Judge held that the contract had frustrated, and the appellant was not obligated to purchase the Tendu leaves. The Division Bench found that the appellant did not breach any conditions and ordered a deduction from the security amount based on equities, which was challenged.

The Supreme Court held that the appellant should not be penalized for circumstances beyond his control, citing legal maxims like "actus curiae neminem gravabit" and "lex non cogit ad impossibilia." The Division Bench's decision to deduct a sum from the security amount was overturned, and the appellant was deemed entitled to a full refund of the earnest money deposited.

In conclusion, the Court ruled in favor of the appellant, emphasizing the importance of fairness and justice in such matters, and directed the refund of the entire security amount without any deductions.

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