Holding

The appellant’s failure to pay the 15% within the stipulated period triggers forfeiture of earnest money, and Sections 45(3)‑(4) do not apply as he is not a transferee; the impugned orders are set aside and the case remitted to the Revisional Authority for fresh consideration.

Summary

Jagmohan Singh applied for a free‑hold residential plot under PUDA's scheme, deposited the required earnest money and was allotted a plot. The letter of intent required him to pay 15% of the price within 60 days, extendable by 30 days, failing which the earnest money would be forfeited. He sought extensions (granted up to 31‑Oct‑2001) and applied for transfer, but no transfer order was passed and he did not pay the balance; the Estate Officer cancelled the letter of intent and forfeited the earnest money. The appellant challenged the forfeiture, arguing that principles of natural justice and Section 45(3)‑(4) of the Punjab Regional and Town Planning and Development Authority Act, 1995, should apply. The Supreme Court held that the failure to pay within the stipulated period triggers forfeiture and that Section 45(3)‑(4) apply only to transferees, but set aside the lower courts' orders and remitted the matter to the Revisional Authority for fresh consideration. The appeal was disposed of with the case remitted, and no costs were awarded.

Issues considered

Whether the appellant’s failure to deposit the 15% balance within the period stipulated in the letter of intent results in forfeiture of earnest money.
Whether Sections 45(3) and 45(4) of the Punjab Regional and Town Planning and Development Authority Act, 1995, requiring compliance with natural justice, apply to a person who is not a "transferee".
Whether the Estate Officer’s order forfeiting the earnest money without a show‑cause notice is valid.
Whether the revisional and appellate authorities erred in rejecting the appellant’s request for extension and relief, in view of similar cases and the doctrine of proportionality.
Whether the matter should be remitted to the Revisional Authority for fresh consideration.

Legislation cited

Code of Civil Procedure, 1908s. Order 47 Rule 1

Subjects

urban developmentplot allotmentearnest moneyforfeiturenatural justicePunjab Regional and Town Planning and Development Authority Actrevisionwrit petitionextension of timetransfer

Judgment

[2008]6S.C.R.117

JAGMOHAN SINGH A
II.
STATE OF PUNJAB & ORS.
(Civil Appeal· No. 3044 of 2008)
APRIL 29, 2008 B
[S.B. SINHA AND LOKESHWAR SINGH PANTA, JJ.]

Urban Development:

Punjab Regional and Town Planning and Development c
Authority Act, 1995 - s. 45(3) and (4)- Draw of lots for allotment
of plots - Failure to deposit balance amount by successful
applicant - Forfeiture of earnest. money - Challenge to -
Rejected by forum below as a/so courts below - On appeal,
held: In terms of letter of intent, failure to deposit the amount
0
within the stipulated period entails in forfeiture of earnest money
- s. 45(3) and (4) requiring compliance of principles of natural
iustice not applicable since applicant not a transferee -
However, Estate Officer did not consider that applicant had
applied for transfer on which no order was passed - Revisional
Authority rejected the revision application in view of ban order E
by Development Authority to receive any payment regarding
allotment of plots - In an almost similar situation, Revision aI
Authority had granted extension - In terms.of the order by this
Court, applicant has undertaken to deposit the amount as and
when directed - Plot may be assigned if revision application F
is allowed - On facts, in the interest of justice, matter remitted
to Revisional Authority for consideration of applicant's case
afresh.
The first respondent invited applications for allotment G ·
of freehold residential plots. In terms of the brochure, the
successful applicant was to deposit 15% of the amount
within 60 days of the date of issuance of letter of intent.
The said period could be further extend.ed by 30 days. In
117 H
118 SUPREME COUHT REPORTS [2008] 7 S.C.R.

A case the refusal to accept the offer of allotment was
received after 90 days of issuance of letter of intent, the
entire money deposited was to be forfeited. Appellant
applied for allotment of plot and deposited the earnest
money. He was successful at the draw of lots. A letter of
B intent was issued. Appellant sought permission to
mortgage the plot but the same was rejected. He sought
another permission but he was not communicated the
result. Appellant did not deposit the balance amount. The
Estate Officer by letter dated 13.1.2002 cancelled the letter
c of intent and forfeited the earnest money. Appellant filed
Revision Application and the same was dismissed. In the
Review application no etrder was passed. Thereafter, he
filed writ petition but the same was dismissed. Appellant
then filed Review Petition on the ground that in several
cases first respondent had granted opportunity to large
0
number of people to deposit balance of 15% amount even
after the period of 60 days. High Court held that the review
was not maintainable as the said documents came to the
knowledge of appellant only after the decision in writ
petition. Hence the present appeal.
E
Disposing of the appeal, the Court
HELD: 1.1 The appellant did not deposit the 15% of
the amount of tentative price of the plot within 60 days
from the issuance of letter of intent. In terms of clause (9)
F of the letter of intent, 1failure on his part would entail I •

forfeiture of the earnest money. Sub-sections (3) and (4)
of s. 45 of the Punjab Regional and Town Planning and
Development Authority A.ct, 1995 may not be stricto sensu
applicable as the principles of natural justice, were
G required to be complied with only in the cases of
transferees. [Paras 12 and 13] [126-G; 127-A, B]
1.2 It appears that in terms of the office order dated
•13.11.2002, the earnest money was directed to be forfeited
H only on the premise that he did not comply with the terms
1
JAGMOHAN SINGH v. STATE OF PUNJAB & ORS. 119

-. r
_, of the letters of intent. The Estate Officer did not take into A
consideration the fact that the appellant had applied for
transfer. He had also sought for extension of time to
deposit the amount. Extension was granted upto 8.6.2001.
It appears that further extension was also granted upto
'> 31.10.2001. However, no order was passed on his B
A. application for transfer. Admittedly, no show cause notice
was issued. The order passed by the Estate Officer was a
revisable one. The Revisional Authority rejected the
revision application, inter alia, upon taking into
consideration a purported order of ban issued by PUDA c
to receive any payment with regard to the allotment of
plots in sectors 76-80 from the defaulters by an order
dated 3.1.2003. The said order has not been brought on
record by the respondents. It now transpires that almost
in a similar situation which may not be absolutely
D
identical, the Revisional Authority itself in exercise of its
' ....... statutory power granted extension. [Para 14] [127-B-F]
Teri Oat Estates (P) Ltd. v. UT, Chandigarh and Ors.
2004 (2) SCC 130; Jintendra Kumar and Ors. v. State of
Haryana and Anr 2008 (2) SCC 161 - referred to. E
1.3 Order 47 Rule 1 CPC does not preclude the High
Court or a court to take into consideration any subsequent
event. If imparting of justice in a given situation is the goal
of the judiciary, the court may take into consideration (of
, ,, course on rare occasions) the subsequent events.
[Para 15) [128-B, CJ
F

Board of Control for Cricket in India and Anr v. Netaji
CricketClub and Ors. 2005 (4) SCC 741 - referred to.
1.4 In terms of this Court's order dated 10.10.2007, G
the entire amount has been deposited. Appellant has
' .-;,. undertaken to deposit the amount as and when directed
to do so by the authorities. It may be true that his name
~
has not appeared in the draw of lots but it has not been
denied or disputed that if his revision application was H
120 SUPREME COURT REPORTS [2008] 7 S.C.R.

-1.<
A allowed, a plot of land may be assigned in his favour.
[Para 16] [129-C, D] "

1.5 In the peculiar facts and circumstances of this
case, the interest shall be subserved if the impugned
judgments are set aside and the matter is remitted to the
B Revisional Authority for consideration of the appellant's ~

case afresh in the light of various orders passed by the "
said Authority as also the High Courts. [Para 17]
[129-D, E]
Baldev Singh Jha_ij v. The Secretary to the Government
c of Punjab and Ors. C. W.P. No.15845 of 2006 decided on
29.9.2006 - referred to.
CIVIL APPEAL APPELLATE JURISDICTION : Civil
Appeal No. 3044 of 2008. }

D
From the final Judgment and Order dated 11.12.2006 of
the High Court of Punjab & Haryana at Chandigarh in Civil Writ ••• .
.
Petition No. 12123 of 2006.
Sumeet Mahajan, Payal Mahajan and Ashok K. Mahajan
E for the Appellant.
C.K. Sucharita, Ku1ldip Singh, R.K. Pandey and T.P. Mishra
for the Respondents.
The Judgment of the Court was delivered by
F S.B. SINHA, J. 1. Leave granted. ;-~

. 2. First respondent invited applications for allotment of
3950 free hold residential plots in Sector 76-80, SAS Nagar,
Mohali. Appellant applied for allotment of a plot measuring 500
sq. yards on 1.3.1.2001. He deposited the requisite earnest
G
money therefor being a sum of Rs.1,87 ,500/-. He was successful
at the draw of lots for allotment of a plot which was held on ~ ....
30.3.2001. A letter of intent was issued on the same day. Before
the said draw of lots, a brochure was issued which, inter alia,
contained the following clauses :
.H
i
I
JAGMOHAN SINGH v. STATE OF PUNJAB & ORS. 121
f~ r [S.B. SINHA, J.]

"2.REFUND OF EARNEST MONEY A

In case applicants asks for refund before draw of lots for
issuance of letter of intent, refund shall be allowed after
deducting the processing fee of Rs.500/-.
. ,.t

(
Unsuccessful applicants shall be refunded their earnest B
money after 90 days from date of draw. However, interest
... @ 10% per annum shall be allowed for the period beyond
.181 51 day in case refund is made after 180 days.·

In case, the successful applicant refuses to accept the
offer of allotment and his refusal is received after the draw c
of lots and within 90 days of issue of letter of intent 10%
of earnest money deposited shall be forfeited and balance
will be refunded to him without interest. In case refusal is

-'"' received after 90 days, the entire money deposited shall
be forfeited." .
The letter of intent contained the following terms and
D

conditions :
"You are requested to deposit 15% amount i.e.
Rs.2,81,250.00 of the above price within 60 days of the E
date of issue of this letter. This period of 60 days can be
further extended by 30·days by the undersigned on your
request This extension will be subject to payment of interest
. ,; \ @ 2% per month (calculated on daily basis for the period
of delay beyond 60 days) on the amount due. All payments F
should be made in the shape of crossed bank draft in
favour of "Estate Officer, PUDA, SAS Nagar", payable at
SAS Nagar/Chandigarh.
5. You are also requested to submit an affidavit (specimen
provided along with the application form) attested by a G
Y,>-
Magistrate that you or your spouse or any minor child do
not own any residential plot/house/flat (except ancestral
,; property) in Urban Estate, SAS Nagar (Mohali).
6. In case your application is as a member of any reserved
H
122 SUPREME COURT REPORTS [2008] 7 S.C.R.

A category, you will also have to submit the proof (as per
brochure) of belonging to that catgegory.

7. Further, if you, including your family members, have got
more than one plot at SAS Nagar (Mohali) through this
scheme, you will be allowed to retain only one plot and you ',._

B will have to surrender extra plot(s) within 60 days of issue
of Letters of Intent. In case this intimation is received by t
undersigned withi!1 the specified period, the earnest
money of plot surrendered shall be refunded after deducting
•
processing fee of Rs.500/-. If you fail to inform the
c undersigned in this regard and the fact of multiple
allotments is detected at a later stage, all Letters of lntenU
Allocation Letters/Allotment Letters will be deemed to have
been cancelled and the amount deposited with PUDA
shall be forfeited.
D j. '
8. In case you are not interested in accepting this offer of
allotment, you may send your refusal to undersigned within
90 days of issue of this letter. In this case, 10% of Earnest
Money deposited shall IJe forfeited and the balance shall
be refunded to you without interest.
E
9. In case you neither deposit money within 90 days as
per Point No.4 above nor give your refusal to accept this
offer within 9 days, the entire earnest money deposited by
you shall be forfeited." i •

F 3. The matter relating to allotment of plots admittedly is
governed by Punjab Regional and Town Planning and
Development Authority Act, 1995 (The Act).
Section 2(m) of the Act defines "transferee" to mean 'a
person including a firm or other body of individuals, whether
G
incorporated or not, to whom a site or building is sold, leased --· 'I
or transferred under this Act and includes his successors and
assignees'.
4. Sub-sections (3) and (4) of Section 45 of the Act reads
H thus :
JAGMOHAN SINGH v. STATE OF PUNJAB & ORS. 123
>. ) [S.B. SINHA, J.]

"(3) If the transferee fails to pay the amount due together A
with the penalty in accordance with the order made under
sub-section (2) or commits a breach of any other condition
of transfer, the Estate Officer may, by notice in writing call
upon the transferee to show cause within a period of thirty
, \ ....-< days, why an order of resumption of the land or building or B
both, as the case may be, and forfeiture of the whole or
any part of the money, if any, paid in respect thereof which
in no case shall exceed ten per cent of the total amount of
the consideration money, interest and other dues payable
in respect of the transfer of the land or building or both, c
should not be made.

(4) After considering the cause, if any, shown by the
transferee in pursuance of a notice under sub-section (3),
and any evidence that he may produce in respect of the
.f ~
same and after giving him a reasonable opportunity of D
being heard in the matter, the Estate Officer may, for
reasons to be recorded, in writing, make an order resuming
the land or building or both, as the case may be and direct
the forfeiture as provided in sub-section (3) of the whole
or any part of the money paid in respect of such transfer." E

5. Appellant allegedly sought for permission to mortgage
the plot as per prescribed Form No.VI along with letter of approval
dated 19.10.2001. No permission, however, was granted.
,. ., Again, an application for grant of permission to mortgage the
F
said plot was filed on 5.2.2002. He was not communicated with
the result of the said application. Admittedly, the appellant did
not deposit the balance amount. The Estate Officer, by reason
of a letter dated 13.1.2002, cancelled the letter of intent and
forfeited the earnest money.
G
A revision application was filed thereagainst before the
v >-
Secretary to the Government of Punjab which, by reason of an
order dated 5.3.2004 was dismissed, simply stating :
"I have heard both the parties, and also perused the record
of the case placed before me during the course of hearing. H
124 SUPREME COURT REPORTS [2008] 7 S.C.R.
j ~·

A I am in agreement with the Sr. Law Officer, PUDA, Mohali
that the petitioner has failed to avail all the opportunities
offered by PUDA to deposit the initial 15% price of the
said plot even within the extended period of 60 days. He
should have arranged sufficient amount in advance to
B deposit after draw of lots and all his pleas for failing to do ~- ,>

so seems to be lame e'xcuses. After going through all the
facts, I find no merit in this case and, accordingly, the
revision petition is rejected."
6. An application for review was filed but according to the
c appellant, no order has been passed thereupon. He thereafter
filed a writ petition before the High Court which by reason of a
judgment dated 11.12.2006 has been dismissed. He filed a
review petition, inter alia, on the premise that other instances
had come to his knowledge where the first respondent had )

D granted opportunity to a lar!~e number of people to deposit the )- \.,
balance 15% of the amount even after the period of 60 days
elapsed, by a long margin. However, the High Court opined that
the review application was not maintainable as the said
documents had come to knowledge of the appellant only after
E the decision in the writ petition.
7. Appellant is, thus, before us.
8. Mr. Mahajan, learned counsel appearing on behalf of
the appellant, would contend that in view of the fact that by reason
I
F of forfeiture of the earnest money deposited by him, the appellant
~

suffered civil consequences, the respondents were bound to
comply with the principles of natural justice particularly when in
almost similar situation not only possession had been granted
upon condoning delay but a1lso permission had been granted to
mortgage the properties to others who were similarly situated.
G
Our attention in this behalf has been drawn to the case of Shri -<.."
Gulshan Kumar, wherein the Revisional Authority directed :
· "In view of the above circumstances, I deem it fair, just and
reasonable to d_irect the Estate Officer, PUDA to accept
H the 15% instalment along with compound interest @ 15%
JAGMOHAN SINGH v. STATE OF PUNJAB & ORS. 125

.. )
[S.B. SINHA, J.]

per annum, along with the surcharge/penal interest in · A
accordance with the terms and conditions of the
prospectus and policy decisions of PUDA but also along
with a penalty equivalent to 10% of the total tentative
allotment plot price, which would otherwise have been
... liable to forfeiture, in accordance with the stipulation of B
_,,(
Section 45(3) of the Punjab Regional & Town Plan~ing
and Development Act, 1995.

With the above stipulation the revision petition is partly
accepted and the impugned orders are set aside subject,
however, to the following conditions, that the 15% amount c
along with interest, penal interest, surcharge, etc. and in
addition a penalty equivalent to 10% of the total allotment
price· shall be deposited within 30 days of the
communication of this order."
.(
D
•I .>, 9. It was furthermore contended that no distinction can be
made between a person in whose favour a letter of intent has
~r'; been issued and the one in whose favour a transfer has been ·
made. Our attention has further been drawn to another order of
the High Court Baldev Singh Jhajj v. The Secretary to the
Government of Punjab & Ors. [Civil Writ Petition No.15845 of E
2006 decided on 29.9.2006], wherein it was opined :

"Without going into the detailed facts pleaded in the present
petition, we take note of a contention raised by Shri A.R.
Takkar, learned counsel for the petitioner. It has been F
' \
argued by the learned counsel that in identical
circumstances of same allottees, as is the controversy in
the case of the petitioner, the requisite relief had been
granted to the aforesaid allottees by the authorities but
the claim of the petitioner was rejected by the appellate
G
authority as well as the Revisional Authority. As a matter
Y,> of fact when the factum of the grant of relief to the similarly
situated persons came to the notice of the petitioner, he
filed a review application before the revisional authority
bringing to its notice all such orders in which relief had
H
126 SUPREME COURT REPORTS [2008) 7 S.C.R.

I «
A been granted to the allottees. However, the review petition
filed by the petitioner has been rejected by the revisional
authority vide order dated May 23, 2006 (Annexure P-17)
by holding that there was no power of review.
After taking into consideration the plea raised by the
B petitioner, but without commenting on the merits of the ,
)..
claim raised on his behalf, we find that if persons similarly
situated had already been granted relief which has been
claimed by the petitioner also, then it is only appropriate
that the claim of the petitioner be reconsidered by the
c revisional authority."

10. The learned counsel urged that PUDA itself was not in
a position to hand over possession as a larger number of
litigations were pending and in that view of the matter, it shall
not suffer any loss, as particularly in view of the fact that pursuant
D
to this Court's order dated 10.10.2007 the requisite amount has
not only been deposited, the appellant ready and willing to deposit ;. '
the balance amount in time.
11. Ms. Sucharita, learned counsel appearing on behalf of
E the respondent, on the other hand, would contend:

(i) In view of the dear stipulation contained in the
brochure as also the letter of intent, the principles of
natural justice were not required to be complied with.

F (ii) Appellant being not a transferee within the meaning
of Section 2(m) of the Act, the provisions of sub- ' -".

sections (3) and (4) of Section 45 would not apply.
(iii) The orders of the Revisional Authority relied upon by
the appellant stand completely on different footings
G as in those cases, no letter of intent had been
delivered.
-<( ' f
12. Indisputably, the appellant has not deposited the 15%
o~ the amount of tentative price of the plot within 60 days from
the issuance of letter of intent. It may further be true that in terms
H I
JAGMOHAN SINGH v. STATE OF PUNJAB & ORS. 127
[S.B. SINHA, J.]
.. i
of clause (9) of the letter of intent, failure on his part would entail A
forfeiture of the earnest money.
· 13. Sub-sections (3) and (4) of Section 45 of the Act again
may not be stricto sensu applicable as the principles of natural
justice, as envisaged therein, were required to be complied with
"' ,,_ only in the cases of transferees. B

14. It, however, appears that in terms of the office order
dated 13 .11 .2002, the earnest money was directed to be
forfeited only on the premise that he did not comply with the
terms of the letters of intent. The Estate Officer did not take into c
consideration the fact that tne appellant had applied for transfer.
He had also sought for extension of time to deposit the amount.
Extension was granted upto 8.6.2001. By a letter dated 9.10.
2001, however, it appears that further extension was granted
upto 31.10.2001. No order, however, has been passed on his
D
•f J,
application for transfer. Admittedly, no show cause notice was
issued. The order passed by the Estate Officer was a revisable
one. The Revisional Authority had rejected the revision
application, inter alia, upon taking into consideration a purported
order of ban issued by PUDA to receive any payment with
regard to the allotment of plots in Sectors 76-80 from the E
defaulters by an order dated 3.1.2003. The said order dated
3.1.2003 has not been brought on record by the respondents.
It now transpires that almost in a similar situation which
may not be absolutely identical, the Revisional Authority itself in F
) \
exercise of its statutory power has granted extension.
Forfeiture of earnest money, therefore, had not been
adhered to in a large number of cases. In Teri Oat Estates (P)
Ltd. v. U. T, Chandigarh & Ors. [(2004) 2 SCC 130], this Court
has taken notice of the fact that different orders were being G
passed by the High Court from time to time. The orders passed
,., ,,.. by the High Court have been upheld therein upon applying the
doctrine of proportionality as contradistinguished from
Wednesbury Unreasonableness principle. [(See also Jintendra
Kumar & Ors. v. State of Haryana & Anr. [(2008) 2 SCC 161]. H
128 SUPREME COURT FtEPORTS [2008] 7 S.C.R.
f ,.
A 15. In Teri Oat (supra), it was opined that the power of
forfeiture should be taken recourse to as a last resort and the
action of the statutory authority is required to be judged on the ,
(""

touchstone of Article 14 of the Constitution of India. The High
Court in its judgment failed to consider this aspect of the matter.
B It is furthermore evident that order 47 Rule 1 of the Code "
of Civil Procedure does not preclude the High Court or a court
"'
to take into consideration any subsequent event. If imparting of
justice in a given situation is the goal of the judiciary, the court
may take into consideration (of course on rare occasions) the
c subsequent events.
This Court, in Board of Control for Cricket in India &
Anr. v. Netaji Cricket Club & Ors. [(2005) 4 SCC 741 ], held
as under:
D "89. Order 47 Rule 1 of the Code provides for filing an
;.. i,
application for review. Such an application for review would
be maintainable not only upon discovery of a new and
important piece of evideince or when there exists an error
apparent on the face of the record but also if the same is
E necessitated on account of some mistake or for any other
sufficient reason.
90. Thus, a mistake on lthe part of the court which would
include a mistake in. thH nature of the undertaking may
also call for a review of the order. An application for review
F would also be maintainable ifthere exists sufficient reason " --4.

therefor. What would constitute sufficient reason would
depend on the facts and circumstances of the case. The
words "sufficient reason" in Order 47 Rule 1 of the Code
are wide enough to include a misconception of fact or law
G by a court or even an advocate. An application for review
may be necessitated by way of invoking the doctrine "actus
curiae neminem gravabif'." '""'~

It was furthermore observed :
H "93. It is also not correct to contend that the Court while
JAGMOHAN SINGH v. STATE OF PUNJAB & ORS. 129
[S.B. SINHA, J.)
• I
exercising its review jurisdiction in any situation A
whatsoever cannot take into consideration a subsequent
event. In a case of this nature when the Court accepts its
own mistake in understanding the nature and purport of
the undertaking given by the learned Senior Counsel
appearing on behalf of the Board and its correlation with B
as to what transpired in the AGM of the Board held on 29-
9-2004, the subsequent event may be taken into
consideration by the Court for the purpose of rectifying its
own mistake.
16. It has been stated before us that in terms of this Court's C
order dated 10.10.2007, the entire amount has been deposited.
Appellant has, as noticed hereinbefore, undertaken to deposit
the amount as and when directed to do so by the authorities. It
may be true that his name has not appeared in the draw of lots
but it has not been denied or disputed that if h.is revision D
application was allowed, a plot of land may be assigned in his
favour.
17. We do not intend to ente~ into the merit of the matter
as we are of the opinion that in the peculiar facts and
circumstances of this case, the interest shall be subserved if E
the impugned judgments are set aside and the matter is remitted
to the Revisional Authority for consideration of the appellant's
case afresh in the light of various orders passed by the said
Authority as also the High Courts.
F
18. The Appeal is disposed of accordingly. In the facts and ·
circumstances of the case, there shall be no order as to costs.
N.J. Appeal disposed of.