No Party Should Suffer Due To The Act Of Court : Supreme Court

                                     It is good to learn that the Supreme Court has once again just recently on November 28, 2019 very rightly reiterated in a latest judgment titled Odisha Development Corporation Ltd Vs. M/s Anupam Traders & Anr. In Civil Appeal No. 9083 of 2019 (Arising out of SLP (Civil) No. 17627 of 2019) along with others the time tested maxim “actus curiae neminem gravabit” which in simple and straight language means that, “No party should suffer due to the act of Court.” This begs the question: Why should any party ever suffer due to the act of court? This is what has been laid down so precisely and explicitly by the top court in this latest case which must be always followed also by all the Courts!

To start with, this latest, landmark and extremely laudable judgment authored by Justice A.S. Bopanna for himself, Justice R Banumathi and Justice Hrishikesh Roy after granting leave in para 1 sets the ball rolling in para 2 wherein it is observed that, “The appellants in eleven of these appeals are the Odisha Forest Development Corporation Ltd. (“OFDC Ltd.” For short) and the State of Odisha is the appellant in two other appeals. The appeals filed by the State of Odisha relate to the same orders in respect of the same private respondents who were the writ petitioners regarding whom the Odisha Forest Development Corporation Ltd. has also filed the appeal. Further, though separate orders passed by the High Court in different writ petitions relating to various petitioners are assailed in all these appeals, the issue involved is the same. Hence all these appeals were clubbed, heard together and are accordingly disposed of by this common judgment. For the purpose of narration of facts, the case as in Civil Appeal arising out of SLP(C) No. 17627/2019, titled Odisha Forest Development Corporation Ltd. vs. M/s Anupam Traders & Anr. Is taken note, which reads as hereunder.”

While elaborating in detail, para 3 then says that, “The appellant OFDC Ltd. issued an e-tender notification dated 22.11.2016 inviting offers online from intending purchasers for advance sale of phal Kendu leaf (KL) of 2017 crop as per the ‘lots’ indicated in the notification.  The private respondent had responded to the notification and made its offer. The bid was opened on 07.12.2016. The private respondent being the successful bidder was required to execute an agreement and deposit the provisional security deposit of Rs. 5,00,000/- (Rupees Five Lakh). The private respondent herein executed an agreement dated 20.01.2017. In terms of the agreement, on the actual quantity of leaves collected, the additional security deposit covering 25% of the purchase price of the lot was to be deposited before 31.05.2017. The private respondent in the instant case was therefore required to deposit the differential security amount of Rs. 27,14,765/- less, the security amount of Rs. 5,00,000/- (Rupees Five Lakh) already paid.”

While continuing in the same vein, it is then stated in para 4 that, “In view of the requirement to pay the same before 31.05.2017, the private respondent addressed a letter dated 02.06.2017 seeking extension of time to pay the said security amount. The extension sought was declined by the appellant through the communication dated 06.06.2017. Since the amount required to be deposited was not made, the appellant cancelled the agreement dated 20.01.2017 by issuing the notice dated 21.08.2017. Since such cancellation would be at the ‘cost and risk’ of the private respondent, the lot was to be put to re-tender. The appellant accordingly proceeded to issue a fresh e-tender notification on 22.08.2017 for sale of the same ‘lots’ of the phal Kendu leaves.”

Moving on, para 5 then states that, “At that stage the private respondent aggrieved by extension of time not being granted, filed the writ petition in W.P. (C) No. 11498/2017, the same was withdrawn and a writ petition bearing W.P. (C) No. 18718/2017 was filed wherein the order dated 21.08.2017 passed by the appellant cancelling the agreement dated 20.01.2017 as also the subsequent Auction Notice dated 22.08.2017 were assailed. In the said writ petition, interim order against the subsequent auction through notice dated 22.08.2017 was sought. While considering the same, the High Court while allowing the appellant to proceed with the subsequent tender process, had stayed the finalization of the sale subject to the private respondent herein depositing an amount of Rs. 20,00,000/- (Rupees Twenty Lakhs only) within one week with the appellant herein. The said order was passed on 08.09.2017 wherein it was further directed that the said amount would be kept in a separate deposit by the appellant. The application filed by the appellant herein seeking vacation of the interim order was considered and at that stage since the vacation of the stay was not opposed by the private respondent herein, it was vacated on 28.03.2018 due to which the subsequent sale was completed on 24.04.2018. The private respondent herein thereafter sought leave to withdraw the writ petition in W.P.(C) No. 18718/2017 thereby giving up the challenge to the cancellation of the auction process wherein the private respondent had taken part and also the challenge to the subsequent auction which had been conducted by the appellant. The High Court while disposing of the writ petition as withdrawn, despite objection put forth by the appellant herein directed refund of the deposit which was made pursuant to its interim order dated 08.09.2017. The appellant herein is, therefore, aggrieved by the order dated 30.04.2019 only to the extent whereby the High Court has directed refund of the amount available with the appellant.”

Going forward, para 6 then points out that, “The facts in the connected appeals is to the same effect except the variation in the ‘lot’ number, quantity of Kendu leaves which was purchased by each of the private respondents therein and the number of the writ petition filed before the High Court. The names of the different tenderers in the individual writ petitions that were filed and the quantum of amount ordered to be deposited by the High Court will be detailed in later part of this judgment. However, in all the cases the writ petitions have been withdrawn and the refund of the deposit ordered is directed to be refunded. In that view, the basic contention which is common, on consideration which answer all the appeals herein.”

To put things in perspective, it is then stipulated in para 15 that, “In a circumstance of the present nature, when it is noticed that the termination of the agreement itself was for non-deposit of the additional security amount to the extent of 25% of the value, the deposit ordered by the High Court cannot be classified as additional deposit in terms of the contract at that stage. If ultimately the writ petition was taken to its logical conclusion and the private respondents had succeeded in such proceedings, only in such event the said amount could have been considered as a belated payment towards additional security deposit and in any event, the consideration in that regard would be in terms of the directions that would have been issued by the High Court. Though that be the position and presently since the writ petition was withdrawn unconditionally, the question is as to whether the respondents were entitled to refund of the amount as a matter of right when all future action for disposal of the subject Kendu leaves was at the …….. ‘cost and risk’ of the private respondents as per Clause 13 of the agreement which is extracted supra. Hence even if the said amount is not considered as the additional security amount in its true spirit as per the agreement and the right of forfeiture at this stage is not accepted in its technical sense in favour of the appellant, the right of the appellant to recover the loss suffered in terms of the agreement cannot be ignored.”

As it turned out, the Bench does not hesitate to point out in para 19 that, “Presently, though the learned senior advocate for the appellant had furnished a chart showing the original price as against the resale price, thereby projecting the net loss suffered by the appellant, the correctness of the same cannot be adjudicated in a proceeding of the present nature arising out of a writ proceeding. The matter being contractual and also requiring factual determination, the same can only be done in an appropriate proceeding. Therefore, though at this stage the said amount of deposit as ordered by the High Court cannot be considered as additional security deposit nor the actual determination of the loss suffered, when in a circumstance the action of the appellant to re-tender was caused to be deferred, through a proceedings initiated at the instance of the private respondent, the condition to deposit the amount should have been considered by the High Court in the background of its intent to protect the interest of appellant. In that circumstance, when the contention of loss being caused was put forth the amount ought to have been allowed to be retained till the procedure as contemplated in law is followed and a decision is taken though not directly as forfeiture.”

Most importantly, it is then observed in para 20 that, “As noticed above, the appellant in any event would have the right to determine the loss suffered and recover the same in accordance with law as the process to re-tender, was at the ‘…….cost and risk’ of the private respondent as stated in the notice of termination. In that circumstance, when it is prima-facie indicated that due to the delay caused at the instance of the private respondents the value of the Kendu leaves had reduced, thereby causing loss, in view of legal proceedings initiated by the private respondents, the Court will have to bear in mind the maxim actus curiae neminem gravabit, namely, no party should suffer due to the act of Court. In such event, since the interim order was at the instance of the respondent the appellant should in our opinion be permitted to retain the amount and complete the process by providing opportunity to the private respondents.”

As a consequence, it is then observed in para 21 that, “In the above circumstance, the direction to refund the amount unconditionally is not found justified and is accordingly set aside. The appellant shall issue appropriate notice(s) to the private respondents indicating details about the manner in which they computed the loss after conducting the second auction at the ‘cost and risk’ of the private respondent. On receiving response to the same, a detailed consideration be made and a speaking order be passed in that regard. The respondents are at liberty to challenge the speaking order to be passed by the appellant and the process being pursuant to a contractual matter the private respondent if aggrieved are entitled to avail their legal remedy before the appropriate forum, in accordance with law and the entitlement of the amount will be decided therein. As per the speaking order passed by the appellant, if it is found that the loss suffered is within the amount available in deposit, appropriate adjustment should be made and the balance if any, be refunded. On the other hand, if the loss caused is found to be more than the amount in deposit, the amount available shall be adjusted and the appellant would have the liberty of initiating action for the recovery of the additional amount, if any, in accordance with law. Such procedure shall be completed within the outer limit of two months from the date on which a copy of this order is available. Until such time, the amount available in fixed deposit as ordered by the High Court shall be retained in the same position and shall not be appropriated for the benefit of the appellant. The adjustment of the amount by the appellant if made after passing the speaking order, the same shall be without prejudice to the contention of both parties and the same shall be subject to the outcome of the proceedings in the matters where the respondents may challenge the speaking order in accordance with law.” Lastly, para 22 then holds that, “Accordingly, all the appeals are allowed in part with no order as to costs. Pending applications, if any, shall stand disposed of.”

On a concluding note, it may well be said that this commendable judgment once again reiterates the time tested maxim “actus curiae neminem gravabit”, which postulates that, “No party should suffer due to the act of Court.” Very rightly so! It also makes it absolutely clear that if the Court in a given case imposes the condition, the same is to be treated as being with a purpose and not as an empty formality! There can be no denying or disputing it! Certainly, no questions can be raised on this!

Sanjeev Sirohi

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