Re: Pashupati Roy & Ors vs

Debangsu Basak, J

The Court : In a proceeding under Section 7 of the Charitable and Religious Act, 1920, the petitioners seek interim relief with regard to an immovable

property of the trust.

Learned advocate appearing for the petitioners submits that, the trust is running a charitable school. The school is in possession of an immovable

property. The petitioners invited the Court to put up a portion of the immovable property for sale. Such permission was granted. Pursuant to such

permission being granted by this Court, the petitioners advertised and invited the public to participate in such sale. A purchaser was identified. He

refers to the sale notice issued pursuant to the order of the Court. He submits that, the sale notice stipulates that, the earnest money of 2% of the

successful bidder will be forfeited in case he fails to make full payment within the stipulated period fixed by the Hon’ble Court. He submits that,

the successful purchaser offered a sum of Rs.10,20,00,000/- as the purchase price. The offer was accepted. The sale was confirmed in favour of the

successful purchaser by Court. The Court initially stipulated a time for deposit of the balance consideration. Subsequent thereto, time to deposit the

entire consideration was extended from time to time. According to him, the last of such extension was granted on October 14, 2015, for a period of

twelve weeks. The successful purchaser, however, did not deposit the entire purchase price within the stipulated time. The successful purchaser

claimed that a ‘No Objection Certificate’ is required from the Urban Land Ceiling Department. He submits that, the school entered into

correspondence with the relevant authorities of the State. He draws the attention of the Court to a communication issued by the school to the

successful purchaser, to the effect that, the appropriate authority informed the school that the school department of the state did not have any

objection to the school selling the land should the sale proceeds be utilised for the school. He submits that, in spite of receipt of such communication,

the successful purchaser did not deposit the entirety of the purchase price. Even today, the successful purchaser is not agreeable to proceed with the

contract. He draws the attention of the Court to the prayers made in the application. He submits that, the petitioners are before Court with the view of

concluding the existing contract between the petitioners and the successful purchaser. It is the successful purchaser who is not willing to continue with

the contract. Therefore, he submits that, the successful purchaser not having deposited the entire purchase price within the time stipulated by the

Court, in terms of the sale notice published, 2% of the earnest money should be forfeited.

Learned advocate appearing for the petitioners contends that, the present application should be construed to be an extension of time to make the

deposit. Since the purchaser is not willing to make the deposit within the extended time, the forfeiture clause as stipulated in the sale notice should be

enforced against the successful purchaser. He submits that, since the school is a charitable school and since the school authorities kept the money

received from the successful purchaser in fixed deposits and the school is running on the interest income of such fixed deposits, the petitioners should

be allowed some time to refund purchase price. He submits that, expeditious steps be taken for the purpose of inviting fresh offers. A period of four

weeks be granted to the petitioners for the completion of the new sale. The petitioners should be allowed four weeks’ time to refund the purchase

price received from the successful purchaser after forfeiture of 2% of the earnest money.

Learned advocate appearing for the successful purchaser submits that, the petitioners did not place all the orders passed by the Court from time to

time in this proceeding. He refers to and relies upon an order dated May 4, 2016. He submits that, by such order the successful purchaser was

allowed to deposit a sum of Rs.3,00,00,000/- within four weeks with the Receiver. The successful purchaser did so within the time stipulated. The

Court did not stipulate any time for the balance deposit to be made. Therefore, since the Court did not stipulate any time for the successful purchaser

to deposit the entirety of the sale consideration, the successful purchaser should not be made liable for the forfeiture. The clause referred to by the

petitioners in the sale notice is not applicable as the Court is yet to stipulate the time within which the deposit by the successful purchaser is to be

made. He submits that, there was an issue with regard to the clearance from the Urban Land Ceiling Authorities. Such issue was not cleared. In any

event, the successful purchaser is not willing to proceed any further with the contract. He submits that, the petitioners are at liberty to advertise the

property for sale. The petitioners, however, should refund the entire amount received from the purchaser without making any forfeiture.

Learned advocate appearing for the purchaser submits that the sale condition as stipulated in the sale notice stood modified subsequently by conduct

of the parties. The parties approached the Court for extension of time to make the deposit. Therefore, such forfeiture clause is not applicable.

As noted above, the petitioners, who are trustees of a charitable trust, are before Court in an interim application in a proceeding under Section 7 of the

Charitable and Religious Act, 1920. The charitable trust is the owner of premises no.57C Barrackpore Trunk Road, Kolkata. The petitioners filed an

application under Section 7 of the Charitable and Religious Trust Act, 1920 being ACR No.2 of 2014 seeking liberty to sale two bighas of land to the

east of such premises and for consequential reliefs with regard thereto. The Court passed orders for sale. A sale notice was published. The relevant

clause of the sale notice is as follows:

‘The earnest money of 2% of the successful bidder will be forfeited in case he fails to make full payment within the stipulated period fixed by the

Hon’ble Court.’

The successful purchaser participated in the sale pursuant to such sale notice. By the order dated January 14, 2015, the bid of the successful

purchaser was accepted at and for a sum of Rs. 10.20 crores. The successful purchaser deposited a demand draft of Rs. 17.60 lakh with the

Receiver. By the order dated January 14, 2015, the Receiver was directed to encash such demand draft. The successful purchaser was directed to

deposit the balance consideration within a period of eight weeks from the date of the order, failing which, the Receiver was asked to invite fresh

offers. In terms of the relevant clause of the sale notice, therefore, the Court fixed the time for making full payment on January 14, 2015. The

successful purchaser did not deposit the balance consideration within the time stipulated by the order dated January 14, 2015.

The successful purchaser filed an application for extension of time to comply with the order dated January 14, 2015. Such application being GA No.

943 of 2015 was disposed of by an order dated March 23, 2015. Time to pay the balance consideration was extended for a period of eight weeks from

the date of such order.

In the application for extension of time to make the balance payment, the successful purchaser raked up the issue of permission under Urban Land

(Ceiling and Regulation) Act, 1976. With regard thereto, the Court by the order dated March 23, 2015 directed that, the Urban Land Ceiling Authority

will take into consideration the applicability of Section 9 (4) of the Act of 1976 while deciding on the application for grant of permission.

By a writing dated March 17, 2016 the School Education Department granted no objection to the selling of 40 cottah of land from the school

compound of the charitable school by the petitioners subject to the condition that the sale proceeds are utilised for the purpose of school only.

There is an order dated October 14, 2015 passed by the Court extending the time to make the full payment for a period of twelve weeks from the date

of such order.

The petitioners approached the Court with regard to the sale by way of an application being GA 1253 of 2016 in the proceeding under Section 7 of the

Act of 1976. In such application, the order dated May 4, 2016 was passed. The successful purchaser was directed to pay the entirety of the

corporation dues upto date within two weeks from the date of the order to the petitioners, who in turn were directed to deposit the same with the

Corporation within a week thereafter. The successful purchaser was also directed to pay a sum of Rs. 3 crore to the Receiver within four weeks

from the date of the order. The Receiver was directed to keep such amount invested in renewable term fixed deposit in terms of the order dated

January 14, 2015.

The successful purchaser deposited the sum of Rs. 3 crore with the learned Receiver within the time period stipulated in the order dated May 4, 2015.

As noted above, the total purchase price is Rs. 10 crore 20 lakh. From time to time, the successful purchaser deposited a sum of Rs. 3,70,20,968/-.

As noted above, the sale was in terms of sale notice published. The sale notice stipulates that earnest money of 2% of the successful bidder will be

forfeited, in the case the purchaser did not make full payment within the stipulated period fixed by the Hon’ble Court. There are four orders

placed on record relating to the payment of the full consideration. The first order is dated January 14, 2015, by which the sale was confirmed. The

balance consideration was directed to be paid within eight weeks from the date of such order. The time to deposit the balance payment was extended

on the application of the successful purchaser on March 23, 2015. Subsequent thereto, time was again extended on October 14, 2015 that too for a

period of twelve weeks. The balance payment was not made within the extended time as done lastly on October 14, 2015. There is a subsequent

order dated May 4, 2016 which allows the successful purchaser to deposit a sum of Rs. 3 crore with the Receiver and to pay the Corporation dues.

The successful purchaser did so within the time period stipulated by the order dated May 4, 2016. The order dated May 4, 2016 is silent as to the fate

of the transaction in the sense that although the successful purchaser defaulted in paying the entirety of the balance consideration money on May 4,

2016, the Court did not provide as to what would happen to the transaction. In fact, the Court allowed the successful purchaser to deposit a sum of

Rs. 3 crore with the Receiver and pay the corporation dues which the successful purchaser did within the time stipulated. The order is silent as to the

payment of the balance consideration.

In my view, given the nature of the order dated May 4, 2016, the Court having extended the time to pay a portion of the balance consideration and not

having fixed the period to pay the other portion of the balance consideration, the Court was yet to stipulate the period within which the full payment

was to be made by the successful purchaser. That being so, the forfeiture of 2 % of the earnest money paid by the successful purchaser does not

arise as the Court is yet to fix the time for the successful purchaser to deposit the balance consideration, finally.

The successful purchaser not being in a position to continue with the transaction, it would be appropriate to direct the Receiver to pay the entire

amount lying with him received from the successful purchaser within a period of six weeks from date.

The other reliefs made in the application so far as fresh sale is concerned, requires consideration. At this stage, the petitioners are at liberty to issue

fresh advertisement inviting offers on the same terms and conditions as that of the sale notice published earlier. The Receiver will issue such sale

notice in the same newspaper as that of the earlier sale.

List the application on February 19, 2020 under the same heading for the purpose of allowing the parties to assist the Court with regard to the fixation

of reserve price for the sale.