Holding

Fifty percent of the earnest‑money component of the actual total deposit may be forfeited.

Summary

The Delhi Development Authority (DDA) allotted land to several cooperative housing societies, but after the premium was escalated the societies refused to accept the allotment, leading to its cancellation. The societies had deposited earnest money, and the question before the Supreme Court was the extent to which this money could be forfeited. The High Court, relying on DDA v. Grihsthapana, limited forfeiture to Rs. 5 lakh. The Supreme Court held that the facts differed because the societies had made further deposits after the 10 May 1993 order, indicating acceptance of the DDA’s offer, so the earlier ratio was inapplicable. While the Authority could have forfeited the entire earnest money, the Court, to avoid undue hardship, ordered that only 50% of the earnest‑money component of the actual total deposit be forfeited, with the balance to be refunded within six weeks and interest payable if delayed. The appeals were allowed.

Issues considered

What portion of the earnest money deposited by the respondents may be forfeited upon cancellation of the land allotment?

Subjects

earnest moneyforfeitureland allotmentcooperative housing societypremium escalationcancellationDelhi Development Authorityinterest

Judgment

,·

DELHI DEVELOPMENT AUTHORITY A
T v.
SHILPA CO-OPERATIVE GROUP HOUSING
SOCIETY LTD. ETC.

FEBRUARY 27, 1996
B
[G.N. RAY AND B.L. HANSARIA, JJ.]

Housing

Housing Society~A/lotment of land by Development Auth01ity-Es- C
calatio11-Refusal to accept allotment-4:;ancellatio11 of allotment-F01feiture
of eamest mo11ey-Extent of-Held on facts 50% of the actual total deposit
should be f mfeited.

The respondent-Societies were allotted land by the appellant·
Authority. In view of the escalation in premium they refused to accept the D
allotment and the same was consequently cancelled. On the question as to
how much of the earnest money deposited by the respondent-Societies
should be allowed to be forfeited by the Authority, the High Court held
that in view of the judgment of this Court in Delhi Development .ktth01ity
v. Glihsthapa11a Cooperative Group Housing Society Ltd., it should have E
forfeited a sum of Rs. 5 lacs only. In appeal to this Court it was contended
for the Development Authority that the Glihsthapana case was inapplicable
to the facts of the present appeals because in that case, the co-operative
society had not made any deposit after 10.5.1993 i.e. the date on which this
Court had disposed of the petition ied by the Housing Society while the
respondent in the present appeals had paid further sum of money after F
10.5.1993.

Allowing the appeals, this Court

HELD : 1. The decision in G1ilzstlzapa11a's case was based on the fact
that there was no acceptance of the offer given by the appellant-authority G
on· 3.11.1992 at the enhanced premium, whereas the deposits made in cases
at hand after the order of 10.5.1993 clearly shows that the offer of 3.11.1992
was accepted. The ratio in G1ihsthapana case cannot apply. It would have
been permissible for the Authority to forfeit the entire earnest money due
form the respondents in view of the law laid down in Glihsthapha case. If H
1119
1120 SUPREME COURT REPORTS [1996] 2 S.C.R. ) -.
A the Authority is allowed to do so, the amount liable to be forfeited would
be on very high side.. Keeping in view the many rounds of litigation and
the hardship which would be caused to the parties, justice demands that
the respondent-Societies may not be burdened with huge sums in this
regard. Accordingly it is directed that the Authority may be allowed to
forfeit 50 per cent of the amount calculated not on the total amountwhich
B the respondents were required to deposit pursuant to the allotment order
of 3.11.1992 but on the component of the earnest money out of actual total
deposit. [1121-E; 1122-C-E; F-G]

*Delhi Development Authm-i.ty v. G1ihstlzapana Co-operative Group
C Housing Society Ltd., JT (1995) 2 SC 530, explained and held inapplicable.
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 3962-64
of 1996.

From the Judgment and Order dated 17.9.94, 14.12.93 and 10-11-94
D of the Delhi High Court of Delhi in C.W.P. Nos. 3562/94, 5662/93 and 4664
of 1994.

Arun Jaitley, V.B. Saharya for Saharya & Co. for the Appellants.

• Bishwajeet Bhattacharjeet and A Bhattacharjeet for the Respon-
E dents.

Rajeev, for Rakesh Sharma for the Respondent in C.A. No. 3963/96.

The Judgment of the Court was delivered by

p HAN SA RIA, J. Leave granted.

2. The short point which needs determination in these appeals is :
How much of the earnest money deposited by the respondents should be
allowed to be forfeited by the appellant ? The deposil had connection with
the allotment of land made in favour of the respondents by the appellant,
G whiCh proposal did not ultimately come through because of the escalation
of premium, for which reasons the allottees refused to accept the allotment,
resulting in cancellation of the same.

3. This Court had occasion to examine this very question in Delhi
Development Authority v. Glihsthapana Co-operative Group Housing Society
.H Ltd., JT (1995) 2 SC 530. It is by referring to this decision that the High
_J

\ D.D.A.v. SHLPACO-OP. GROUP HSG.SOCY. LID. [HANSARIA,J.)1121

Court, in the impugned judgment, has held that the appellant could have A
- forfeited a sum of Rs. 5 Lacs only. The appellant's case is that the facts in
Grihsthapana's case were different; and so, what was decided therein is not
applicable. The respondent's stand on the other hand is that their cases
are covered by the aforesaid decision.

4. Shri J aitley, appearing for the appellant, has contended that the B

.. distinction lies in the fact that in Grihsthapana's case, the co-operative
society had not made any deposit after 10.5.1993 which is the date on which
this Court had disposed of the Special Leave Petitions filed by Green
Valley Co-operative Group Housing Society making a grievance about
escalation of the rate of premium. By that order this Court has only c
extended the time to pay instalments at. the escalated rate upto 31 May,
1993 without interest, and thereafter with interest upto 31.7.1993. It is an
admitted position that the respondents in the present appeals had paid
further sum of money after the order of this Court dated 10.5.1993, which
fact was missing in the earlier case.
D
5. Shri Bhattacharjee, appearing for the respondents in appeals
arising out of SLP(C) Nos. 24713 & 24721 of 1995, has urged that the fact
of deposit after 10.5.1993 can not make the ratio in Grihsthapane's case
inapplicable. We are afraid, we cannot agree because the decision in that
case was based on the fact that there was no acceptance of the offer given E
by the appellant on 3.11.1992 at the enhanced premium, whereas the
deposits made in cases at hand after the order of 10.5.1993 clearly shows
that the offer of 3.11.1992 was accepted. The submission on behalf of the
respondent in appeal relatable to SLP(C) No. 415/96 that the membership
of the co-operative society was reduced to 76, as against 135, and so, the
F
deposit made subsequent to 10.5.1993 should not be taken to be a deposit
on behalf of all the members, cannot be accepted to have made any
difference because when the deposit was made on 31.5.1993 it was on
.... behalf of 135 members .

6. Shri Bhattacharjee was at pains in submitting that though the facts G
of G1ihsthapana's case were not on all fours with the cases at hand. Civil
Appeal No. 930/95 relatable to Ahluwalia Co-operative Group Housing
Society Limited, which was one of the appeals in the batch disposed of by

- the aforesaid judgment, was one in which some deposit had made after
10.5.1993; and so, what was decided in Ahluwalia's appeal would, in any H
~

1122 SUPREME COURT REPORTS [1996] 2 S.C.R. ~
J -·

A case, be applicable. As to this, Shri Jaitley has contended that when the
earlier civil appeals were taken up in batch, the facts of Ahluwalia were
not specifically brought to the notice of the Court; and it is because of this
that benefit of what was decided in the facts of G1ihsthapana was made
available to Ahluwalia. As the decision in that case is based on the facts
of Grihsthapana's case, we find no difficulty in stating that the benefit which
B had come to be made available to Ahluwalia was inadvertent and cannot
be extended to the respondents herein.

7. The aforesaid shows that the ratio in Grihsthapana case cannot
apply and it would have been permissible for the appellant to forfeit the
C entire earnest money due from the respondents in view of the law laid down
in G1ihsthapana case. If we were to allow the appellant to do so, we find
that the amount becoming liable to be forfeited would be on very high side
inasmuch as in the case of Shilpa Co-operative - respondent in appeal
arising out of SLP(C) No. 24713/95 - this amount would be in a neighbour-
hood of Rs. 22 lacs, even if we were to reckon the amount of earnest money
D which had been actually deposited, and not what was required to be
deposited. We would think that keeping in view the many rounds of
litigation and the hardship which would be caused to the respondents,
Justice demands that we may not burden the respondents with huge sums
in this regard. Shri J aitley has urged that the appellant is at no fault and
E indeed it has suffered because of lapse of the respondents, being required
to pay interest on the amount taken on loan by it; and so, if we were to
give some relief to the respondents, the hardship of the appellant may also
be borne in mind.

8. Having considered the cases of both the sides and the facts and
circumstances of the appeals at hand, we are of the view that 50 per cent
F of the amount which had otherwise become due to the appellant should be
allowed to be forfeited. We make it clear that 50 per cent would be
calculated, not on the total amount which these respondents were required
to deposit pursuant to the allotment order of 3.11.1992, but on the com- .....
ponent of the earnest money out of actual total deposit. The appellant
G would refund the remaining amount to the respondents within a period of
six weeks from today, failing which the respondents would be entitled to
interest @ 18% per annum from today till payment.

9. The appeals are allowed accordingly. No order as to costs.

T.N.A. Appeals allowed.