TaxTMI 
TaxTMI 
2009 (12) TMI 995
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....d (hereinafter referred to as the defaulting unit), Old Hansi Road, Jind. On 28.1.1998 respondent initially made an offer of Rs. 25,00,000/-, which was subsequently during negotiations enhanced to Rs. 50,00,000/-. On that very day the respondent deposited an amount of Rs. 2.5 lakhs by way of earnest money. On 29.1.1998 the respondent wrote a letter to the Managing Director of the appellants/Corporation as follows: "RAJESH GUPTA 578, AUTO MOBILE MARKET HISAR Phone: 28221 - 3 Lines Fax No.01662 - 31084 January 29, 1998 The Managing Director Haryana Financial Corporation 17, 18, 19 Sector 17-A Chandigarh 160017 Kind Attention: Sh.Raj Kumar Ji, M.D. Sub: Offer to purchase assets of Unique Oxygen Private Limited Jind. Dear Sir, With reference to your advertisement in `ECONOMIC TIMES' dated 08.01.98, we are inclined to submit our bid for purchase of assets of the above mentioned company. With this purpose we visited the factory premises on 21.01.1998. On our visit, it was noticed that the premises do not have an independent appropriate passage from the road. On further inquiry fro....
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....d to the unit as per documents submitted by the defaulting unit at the time of availing loan. Reference in this letter was also made to the Sale Deed, dated 8.9.1994, Mutation No.5172, Mutation No.9896, Search Report and sale deed, Rasta, wherein it is mentioned that there is an approach road to the factory site. The Branch Manager was directed to satisfy the respondent with the aforesaid documents. On 13.4.1998, the Branch Manager addressed a letter to the head office of the appellants/Corporation clearly informing as follows: "However, the actual Rasta which is of 3 Karams and appeared in the papers particularly shown in the sale deed is not connected directly with the unit and to connect the Rasta with the Rasta of the revenue record party purchased some land where the movement of the vehicles is not possible at all." 6. In fact the letter further pointed out as follows: "It is further stated that the area mentioned in the map approved by the M.C. is 1130 sq. yd. whereas the total area in the sale deed and is mortgaged to the Corporation is 1210 sq. yd. It is also not out of place to mention that the land on which the office building is constructed is also n....
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....bmitted that it was for the respondent to make necessary enquiry with regard to the existence of the 3 Karams rasta, with the Revenue and other authorities. According to the learned counsel the entire documentation which had been provided at the time when the loan was sanctioned clearly indicated that there is a 3 Karams rasta leading from the road to the Unit. Learned counsel further pointed out that the respondent had visited the site on 21.1.1998. Therefore he would have known the exact situation of the "rasta". The respondent was aware of the exact nature of the land being purchased by him. In support of his submission learned counsel relies on Section 55 of The Transfer of Property Act, 1882. Learned counsel further submitted that the appellants /Corporation are entitled to forfeit the security amount in view of Clause 5 of the terms and conditions for the sale of property as contained in the advertisement dated 8.1.1998. Learned counsel also sought to justify the action of the appellants/Corporation by placing reliance on Section 29 of The State Financial Corporation Act, 1951. 12. On the other hand, Mr. Vimal Chandra S. Dave, learned counsel for the respondent, submits th....
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....y the Head Office, through letter dated 7.4.1998 that as per the documents submitted by the defaulting unit at the time of availing loan, clear cut passage/rasta has been provided to the concerned Unit. The letter dated 7.4.1998 reads as follows: "Please refer to your letter No. HFC\BO\JD\98\7 dated 3.4.98 on the subject cited above. In this connection, you are advised that clear cut Passage / Rasta has been provided to the concern as per documents submitted by the concern at the time of availing loan. Enclosed herewith please find photocopy of the Sale Deed No.1494 dated 8.9.94 and photocopy of the Mutation No.5172, another Mutation No.9896 and Search Report and Sale Deed, Rasta, wherein it is clear cut mentioned that there is an approach road the factory site. So, you may please satisfy the Auction Purchaser with these documents and inform us the latest position of the case. It is also added here that you may make clear to the auction purchaser that the unit has been sold by the Corporation as and where basis." 16. A perusal of the aforesaid letter makes it apparent that the appellants/Corporation were merely relying on the documents submitted by M/s....
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....o make the deposit. The Division Bench, however, observed that the respondent was dealing with an instrumentality of state. He was entitled to legitimately proceed on the assumption that the appellants, a Statutory Corporation, an instrumentality of the State, shall act fairly. The respondent could not have suspected that he would be called upon to pay the amount of Rs. 50 lakhs without being given even a proper passage to the Unit that he was buying. We are of considered opinion that the respondent had deposited the sum of Rs. 2.5 lakhs on the clear understanding that there would be an independent approach road to the Unit. This is understandable. Without any independent passage the plot of land would be not more than an agricultural plot, not suitable for development as a manufacturing unit. We therefore don't find any substance in the submission made by the learned counsel for the appellants/Corporation. 18. In our opinion, the appellants cannot be given the benefit of Clause 5 of the advertisement. The appellants /Corporation cannot be permitted to take advantage of their own wrong. Clause 5 undoubtedly permits the forfeiture of the earnest money deposited. But this can ....
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.... the reliance placed on the judgment of this Court by the counsel for the appellants in the case of Union Bank of India vs. Official Liquidator and Ors. (1994) 1 SCC 575 is wholly misconceived. The aforesaid judgment relates to sale of the property and assets of a company in liquidation by the official liquidator under the orders of the Court. Therefore it is observed that the official liquidator cannot and does not hold any guarantee or warranty in respect of the property sold. That is because the official liquidator proceeds on the basis of what the records of the company in liquidation show. Therefore it is for the intending purchaser to satisfy himself in all respects as to the title and encumbrances and so forth of the immovable property that he proposes to purchase. In those circumstances it is held that the purchaser cannot after having purchased the property on such terms then claim diminution in the price on the ground of defect in the title or description of the property. The judgment clearly goes on to further hold as follows: "The case of the Official Liquidator selling the property of a company in liquidation under the orders of the Court is altogether differe....