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CASE NO.: Special Leave Petition (civil) 10742  of  1999

PETITIONER: MOHAMMED GAZI

       Vs.

RESPONDENT: STATE OF M.P. & ORS.

DATE OF JUDGMENT:       31/03/2000

BENCH: S. Saghir Ahmad & R.P. Sethi.

JUDGMENT:

SETHI,J.

Leave granted. L...I...T.......T.......T.......T.......T.......T.......T..J

   Whether  a  person can be penalised for no fault of  his merely  by  resorting  to  equity clause in  favour  of  the@@             JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ respondent-State  particularly when such person is found  to@@ JJJJJJJJJJJJJJJJ have  not  been  benefitted  or the State  deprived  of  the benefits  on account of the stay order issued by the  Court? is  the  question  of  law to be  decided  in  this  appeal. Another  related  question requiring determination is as  to whether  on  account  of the pendency of the  writ  petition filed  by  another  party without  impleading  the  affected person  as  a party in which the stay order granted  by  the Court,  such person can be directed to forfeit a part of the security amount deposited by him particularly when the court itself  found  that even the equities were equally  balanced between the State and such person.

   The  facts of the case giving rise to the  determination of  the  questions of law formulated hereinabove are that  a tender  notice inviting tenders for disposal of Tendu leaves for  1995 session was issued by the respondent-State on 20th November,  1995.   Respondent  No.4 offered  his  tender  in respect  of  different  lots including Lot  No.597  and  was declared  the  highest  bidder  for the  said  lot  on  20th December, 1995.  On account of some complaints made by other bidders  and on account of alleged manipulations on the part of   the  official-respondents  the   highest  bid  of   the respondent No.4 was not accepted and his tender cancelled by order  dated  27th January, 1996.  Fresh notice for  tenders for the aforesaid lot were issued on 20th May, 1996 in which the  appellant  herein was declared the highest bidder.   In the  meantime,  the  respondent  No.4  filed  writ  petition No.2147/96  in  the  High  Court challenging  the  order  of cancellation   of  tender  dated   27th  January,  1996  and re-tender  notice dated 23rd May, 1996.  He also prayed  for interim  relief  to  the extent that pursuant to  the  fresh

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tender  notice dated 20th May, 1996 the official-respondents be  restrained from executing any fresh agreement.  The High Court vide order dated 18.6.1996 issued an interim direction restraining  the  official-respondents from taking any  step pursuant  to  the fresh tender notice.  It is  pertinent  to note  that  the  appellant  herein was not  impleaded  as  a party-respondent  in  the  aforesaid   writ  petition.    He received  a letter from official-respondents 1 to 3  calling upon him to execute purchase agreement as per Clause 7(2) of the  tender  notice with the Conservative of  Forests  after depositing the balance security as shown in the letter dated 1.9.1996.   Consequently,  the appellant deposited a sum  of Rs.2,68,217.72 as security amount.  The appellant also filed an  application for intervention in the writ petition  filed by respondent No.4 which was rejected on 1.4.1997.  The writ petition  filed by the respondent No.4 was disposed of by  a learned  Single  Judge of the High Court by  quashing  order dated  27.1.1996  to the extent by which the  earnest  money deposited  by  respondent  No.4  had  been  directed  to  be forfeited  and a direction was issued to refund the  earnest money  to respondent No.4.  After disposal of the  aforesaid writ  petition the appellant requested the respondents 2 and 3  to refund his security amount of Rs.2,68,217.72 vide  his letter dated 24.4.1997.  He pleaded that since Tendu leaves, which was a perishable item, had already perished and rotten with  the result that its value had become useless by  lapse of  time.   He also prayed for 18% interest on the  security amount  which was alleged to have illegally been detained by official-respondents  for no fault of the appellant.  It  is contended  by  the  appellant that after  his  letter  dated 24.4.1997  the  respondent  No.2 sent an ante  dated  letter dated  10.4.1997  directing  the appellant  to  execute  the agreement  by  10.5.1997  and deposit the  remaining  tender price in four instalments as detailed therein.  Apprehending that  the  authorities might proceed to forfeit his  earnest money  and  blacklist him, the appellant was constrained  to file  writ petition No.1934/97 in the High Court praying for quashing of order dated 1.4.1997 and refund of earnest money along  with an amount of Rs.10 lakhs claimed as damages.  He further prayed that he should not be compelled to enter into an  agreement  in pursuance to letter dated 19.6.1996.   The writ  petition was allowed by a learned Single Judge of  the High Court on 10.12.1997 with a direction to the respondents 1  to  3  to  refund the security amount  to  the  appellant forthwith.   Not  satisfied  with the order of  the  learned Single  Judge, the respondents 1 to 3 filed a Letters Patent Appeal before the Division Bench of the High Court which was partly allowed vide the order impugned in this appeal.

   It  is  not  disputed  that  on  account  of  litigation initiated   by  respondent  No.4   without  impleading   the appellants as party in his litigation, he was prevented from taking the benefit of the acceptance of his tender notice by the  official-respondents.   It also cannot be  denied  that Tendu leaves are a perishable item.  For no fault of his the appellant was prevented from collecting the Tendu leaves for which  he  had deposited his security amount.  It  is  worth noticing  that  when the writ petition filed  by  respondent No.4  was  partly allowed by a learned Single Judge  of  the High Court, the official-respondents had not filed a Letters Patent Appeal.

   In  the writ petition No.1934/97 filed by the appellant, the learned Single Judge of the High Court held on facts:

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   "In  view  of  these circumstances, this  Court  has  no hesitation  in holding that the contract between the parties has  frustrated.  The respondents are not entitled to compel the  petitioner to purchase or lift the Tendu leaves at  the price  quoted  by  him.  The respondents are duty  bound  to return the money received from the petitioner at the time of submission  of  the tender.  If the respondents  suffer  any losses  because of the acts of the respondent No.4 they  are free  to take proper legal proceedings before the  competent court  of  law  for recovery of damages if the  laws  permit them.  The petition is allowed.  No costs."

   The  Division  Bench, while disposing of the  LPA,  also found  that the appellant could not be held responsible  for not  lifting the Tendu leaves and thereby had not  committed breach  of  any condition of the tender.  Finding  that  the State  was also not responsible for any breach, the Division Bench  decided  to pass the order impugned on the  basis  of equities.  The arguments advanced on behalf of the appellant before  the  Division Bench that there was no fault  on  his part  because he had offered bid and was prepared to  accept the  Tendu leaves which he could not lift on account of stay order  were found by the Division Bench to be not erroneous. The  Division Bench held that "the submisson of the  learned counsel does not appear to be erroneous".  As the State also could  not  be held responsible for the fault, the  Division Bench  directed  that a sum of Rs.30,000/- be deducted  from the earnest money of the appellant.  Such a direction of the High  Court  cannot be sustained in view of the findings  on fact  returned in favour of the appellant.  In the facts and circumstances  of  the  case, the maxim of  equity,  namely, actus  curiae  neminem gravabit - an act of the Court  shall prejudice  no  man,  shall  be applicable.   This  maxim  is founded  upon justice and good sense which serves a safe and certain  guide  for  the administration of law.   The  other maxim  is, lex non cogit ad impossibilia - the law does  not compel  a  man to do which he cannot possibly perform.   The law  itself and its administration is understood to disclaim as  it  does  in  its general aphorisms,  all  intention  of compelling  impossibilities,  and the administration of  law must  adopt  that general exception in the consideration  of particular cases.  The applicability of the aforesaid maxims has  been approved by this Court in Raj Kumar Dey &  Ors.vs. Tarapada  Dey & Ors.[1987 (4) SCC 398] and Gursharan Singh & Ors  vs.  NDMC & Ors.  [1996 (2) SCC 459].  Keeping in  view the  facts  and  circumstances  of the case we  are  of  the opinion  that  the Division Bench of the High Court was  not justified  in  directing  the  deduction   of  the  sum   of Rs.30,000/-  from  the  security  amount  deposited  by  the appellant.   We  find  that  the learned  Single  Judge  had assigned  cogent reasons for return of the earnest money  to the  appellant and those findings could not be disturbed  by the Division Bench allegedly on the ground of equities.  The appeal  is allowed by setting aside the impugned order dated 1.12.1998  passed by the Division Bench of the High Court of M.P.   in  LPA No.270/98.  The order of the  learned  Single Judge  is restored and the appellant held entitled to refund of  the whole amount of the earnest money deposited by  him. No costs.