CHIEF CONSERVATOR OF FOREST & ORS.versusVIRENDRA KUMAR & ORS.

                [2024] 7 S.C.R. 2427 : 2024 INSC 514

                 Chief Conservator of Forest & Ors.
                                 v.
                       Virendra Kumar & Ors.
                      (Civil Appeal No. 7414 of 2024)
                                 10 July 2024
           [Vikram Nath* and Satish Chandra Sharma, JJ.]

                           Issue for Consideration
       Validity of forfeiture by forest department of the security deposit
       made by successful auction bidder due to failure to comply with
       work mandate, considered.

                                  Headnotes†
       Auction – Conditions of sale – Forfeiture of security deposit –
       Respondent emerged as successful bidder in auction
       conducted by forest department, Gorakhpur (U.P.) in 1998
       for certain forest produce – Parties executed an Agreement
       in terms of relevant Conditions of Sale – However despite
       being informed about last date to deposit the bid amount
       and complete the work, followed by two subsequent reminder
       letters/notices, Respondent failed to comply with the said
       mandate – Resulting in forfeiture of Respondent’s security
       deposit and re-auctioning – Forfeiture challenged in High
       court on the ground that department’s approval was not
       given within stipulated time, and hence Respondent applied
       for withdrawing its bid – In its support, Respondent relied on
       Condition of Sale Manual applicable in 1980-81 overwritten as
       “1997-98” since auction took place in 1998 and argued that
       concerned provision mandated communicating approval/
       disapproval within 40 days from auction – High Court allowed
       the writ petition – Decision challenged in this SLP:
       Held: 1. High Court erred while relying on Manual applicable
       in 1980-81 because the year in this manual was overwritten as
       “1997-98” without bearing any signature – A fact noted by High
       Court but not given due weightage. [Para 14]
       2. Court accepted Appellant’s argument that no manual was
       published after 1987-88 and hence it will prevail over previous

* Author
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     edition of 1980-81 that Respondent sought to reply on – As 1987-88
     edition did not contain provision regarding above-noted 40 days’
     time period, and required the successful bidder to enquire about
     the status of acceptance of contract if no formal communication is
     received by him within 35 days, and provided for deemed approval
     in absence for formal approval within stipulated time-period of
     35 days, the Respondent could not escape the consequences of
     withdrawing from auction. [Para 15-16]
     3. On facts, Respondent did not comply with the initial letter
     and subsequent reminders which reflected its non-diligent and
     lackadaisical approach that couldn’t be overlooked and thus the
     forfeiture of security deposit of Respondents was valid. [Para 17-18]

                                List of Acts
     Conditions of Sale Manuals.

                             List of Keywords
     Forest Department; Auction; Security amount; Forfeiture;
     Lackadaisical approach; Re-auction.

                            Case Arising From
     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7414 of 2024
     From the Judgment and Order dated 11.01.2011 of the High Court of
     Judicature at Allahabad in WC NO. 55072 of 2000
                         Appearances for Parties
     Ms. Garima Prashad, Sr. A.A.G., Sudeep Kumar, Ms. Manisha, Advs.
     for the Appellants.
     Amit Sharma, R.C. Kohli, Advs. for the Respondents.
                Judgment / Order of the Supreme Court

                                 Judgment
     Vikram Nath, J.
1.   Leave granted.
2.   This appeal by special leave is against the judgment and order
     dated 11.01.2011 passed by the High Court of Judicature at Allahabad
     in Writ Petition (C) No. 55072 of 2000. The said Writ Petition in the
[2024] 7 S.C.R.                                                      2429

     Chief Conservator of Forest & Ors. v. Virendra Kumar & Ors.


     High Court was filed by the Respondents herein challenging the
     notice dated 17.01.2000 passed by the Divisional Forest Officer,
     Gorakhpur forfeiting the security amount of the Respondents. For
     the sake of convenience, we will refer to the parties as per their
     instant status before this Court.
3.   Brief facts of the matter are that the Forest Department had issued
     a public notice dated 05.03.1998 inviting registered contractors for
     participation in a sale auction. In pursuance of the said notice, sale
     auction was completed on 27.03.1998 as per prescribed procedure
     and the Respondents offered the highest bids in respect of the
     various lots. On being declared as the successful bidders, an
     agreement was executed between the Appellant and the Respondent
     on the same date with respect to the lot No. 195 (38-H Nasirabad,
     Bankee Range). On the following day itself, a proposal was sent to
     the Conservator of Forests and Regional Director, Eastern Circle,
     Gorakhpur, U.P. by the Divisional Forest Officer for approval of the
     auction proceedings. The said approval was granted by the Regional
     Director on 14.05.1998.
4.   Post approval of the auction proceedings, the Divisional Forest Officer
     addressed a letter to the Respondent on 15.09.1998 calling upon him
     to deposit the bid amount of Rs. 2,92,000/- against the respective
     lots latest by 25.09.1998, obtain their work orders and conclude the
     work latest by 08.10.1998. It was further stated that in case, the
     work is not completed within the stipulated time as aforesaid, the
     security amount deposited with reference to the said auction shall be
     forfeited and auction proceedings shall be quashed. Even after the
     issuance of the aforesaid letter, the Respondents did not complete
     their work and accordingly, a public Notice dated 26.10.1998 was
     issued by the Forest Department directing the Respondent once
     again to deposit the bid money and conclude the work. Another
     notice dated 23.04.1999 was issued to the Respondent stating that
     the entire work should be completed latest by 15.05.1999, failing
     which, the amount of security deposited shall be forfeited and the
     lots in question shall be put to fresh auction. Respondent failed to
     take action and accordingly on 17.01.2000, the Divisional Forest
     Officer issued a letter to the Respondent communicating that for
     non-compliance of the directions given to them, the security amount
     deposited by them is being forfeited and the lot is being put to
     re-auction.
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5.   As mentioned at the outset earlier, the Respondents, being aggrieved
     by the communication dated 17.01.2000, filed the Writ Petition
     before the High Court praying for directions to the Appellants to
     refund the security amount deposited by the Respondent. Before
     the High Court, the Respondents argued that since the approval to
     the auction was not granted within the stipulated period, they had
     applied to withdraw from the auction and were not bound by the said
     offer made in the auction and accordingly, security amount could not
     have been forfeited.
6.   The agreements between the parties were executed in terms of
     conditions of sale of the various forest produce. There were two
     Conditions of Sale Manuals produced before the High Court. The
     first manual was published in the year 1980-81 and the second
     manual was published in the year 1987-88. The High Court, in its
     judgment, observed that there is cutting over the dates of both the
     manuals relating to application of the order mentioned therein. In
     the first manual, in place of year 1980-81, it has been cut and made
     enforced for 1997-98 and in the second manual, in place of 1987-
     88, it has been cut and made enforced for 1989-90. High Court also
     noted that the cuttings do not bear any signatures.
7.   The Respondents, for their argument of non-forfeiture of security
     amount, relied heavily on sub-clause (viii) of Clause 10 of 1980-81
     Terms & Conditions of Sale and Auction of Jungle Wood wherein it
     was provided that if the acceptance or rejection of sale of lots is not
     informed to the contractor after 40 days, then the contractor will not
     be bound to take the contract on the accepted bid. Whereas, the
     Appellants relied on the conditions contained in sub-clause (viii) of
     Clause 10 of 1987-88 Conditions of Sale, wherein it has been provided
     that if the approval of the concerned officer is not received within
     the stipulated period and if the competent authority approves the
     bid of the lot, then it will be deemed that the lot has been approved.
8.   The High Court observed that the Respondents were relying on the
     conditions made applicable in 1997-98 while the Appellants were
     relying on the conditions made applicable in 1989-90 and since
     the auction was held in the year 1998, the conditions applicable in
     the year 1997-98 will govern the sale by auction pursuant to which
     agreements have been executed. Accordingly, since the Respondents/
     contractors were not communicated about the approval or disapproval
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     Chief Conservator of Forest & Ors. v. Virendra Kumar & Ors.


     of sale of lots within 40 days, they were not bound by the said offer
     made in the said auction and could withdraw themselves. Thereby, it
     was held that the recovery sought to be made from the Respondents
     was illegal as being contrary to the Conditions of Sale contained
     in sub-clause (viii) of Clause 10 of the Terms & Conditions of Sale
     applicable in the year 1997-98. The Writ Petition was allowed by the
     High Court, setting aside the Appellant’s order dated 17.01.2000 and
     directing the Appellants to refund the forfeited amount.
9.   Aggrieved by the impugned order, the Appellants are before us. An
     interim stay of the impugned order of the High Court was granted
     by this Court vide order dated 08.08.2011.
10. The case of the Appellants, largely, is that the relevant Manual
    operative in the Financial Year 1997-98 is that on which the Financial
    Year 1987-88 is printed. As per this Manual, the Clause 10 (viii)
    was amended and the condition of communicating the approval of
    the auction within 40 days was deleted. It was provided that if no
    communication regarding approval of the auction is received within
    the prescribed period, it shall be deemed that the approval of the lots
    had been accorded by the competent authority. In the absence of
    any Manual published after the year 1987-88, the said Manual with
    printed year 1987-88, being the latest Edition, shall prevail over the
    earlier Edition of the Manual with printed year as 1980-81.
11. Further, it was argued that the Respondents are bound by the terms
    and conditions as per Agreement dated 27.03.1998 executed by it
    with the Appellants immediately after the conclusion of the auction
    proceedings. In this regard, it was also highlighted that Condition
    No. 2-D of the said agreement clearly provides that if any purchaser
    fails to deposit the installments as agreed upon, the Forest Officer
    is entitled to cancel the auction and forfeit the amount of security
    deposited, amongst other things.
12. Learned Addl. Advocate General appearing for the Appellants has
    also drawn the Court’s attention to sub-clause (vii) of Clause 10
    of 1987-88 Conditions of Sale wherein it is provided that if the buyer
    does not receive any information regarding acceptance of the contract
    within 35 days from the date of auction, then he should contact
    the Deputy Conservator of Forests/Conservator of Forests and get
    information in this regard. The Forest Department will not bear any
    responsibility for not receiving timely information.
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13. We have heard learned Counsel for the parties and perused the
    relevant documents on record.
14. We are unable to bring ourselves to agree with the observations
    made by the High Court. The High Court specifically noted that the
    cutting over the dates of both the manuals of Conditions of Sale
    do not bear any signature and yet, went ahead with considering
    the over-writing as valid and weighed the applicability of respective
    Manuals based on such over-writing. In the absence of signatures
    according any sanction to such over-writing, we believe that the High
    Court has seriously erred by making a finding that the Manual for
    Year 1980-81 will supersede the Manual for Year 1987-88 and will
    be applicable for an auction held in the year 1998.
15. Since these are the only two Conditions of Sale Manuals produced
    before us as well as the High Court, we find force with the Appellants’
    argument that in the absence of any Manual published after the
    year 1987-88, the said Manual with printed year 1987-88, being the
    latest Edition, shall prevail over the earlier Edition of the Manual and
    be applicable to the instant auction.
16. The Manual of 1987-88 seems to have brought in amendments in
    the form of sub-clauses (vii) and (viii) of Clause 10, as mentioned
    above, which impose the responsibility on the contractor to enquire
    about the acceptance of the contract if no information is received
    within 35 days and also grants a deemed approval in cases where
    the approval is not received within the stipulated period. Once, it has
    been determined that the Manual of 1987-88 will be relevant for the
    instant case, it follows that the liability rested on the shoulders of the
    Respondents to enquire about the status of approval, and they could
    not have withdrawn from the auction after executing the agreement
    without bearing its consequences. The said consequences were
    clearly stated in Clause 2-D of the agreement dated 27.03.1998 and
    include forfeiture of security amount.
17. There is yet another relevant consideration that we have taken into
    account while reaching the final decision. It is the fact that in spite of
    repeated notices by the Appellants calling upon the Respondents to
    complete the work within a stipulated period, the Respondents failed
    to come forward and do the needful. Respondents came forward by
    filing a Writ Petition, only after the communication dated 17.01.2000
    forfeiting the security amount. It reflects on the non-diligent and
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     Chief Conservator of Forest & Ors. v. Virendra Kumar & Ors.


     lackadaisical approach adopted by the Respondents which cannot
     be overlooked by this Court.
18. We thus hold that the security amount deposited by the Respondents
    rightly deserves to be forfeited by the Appellants.
19. Accordingly, the appeal is allowed. The impugned order
    dated 11.01.2011 is, hereby, set aside and the notice issued by the
    Appellants dated 17.01.2000 is upheld as valid.
20. Pending application(s), if any, is/are disposed of.

     Result of the case: Appeal allowed.



     †
         Headnotes prepared by: Niti Richhariya, Hony. Associate Editor
                                 (Verified by: Abhinav Mukerji, Sr. Adv.)