Conflicting Time Limits In E-Auction Catalogue Must Be Harmonised To Uphold Transaction, Not Void It: Allahabad High Court

The Allahabad High Court has held that where two conditions of an e-auction catalogue prescribe conflicting time limits for payment by the highest bidder, they must be interpreted harmoniously in a manner which upholds the transaction rather than voids it. The dispute turned on two conditions of the catalogue issued by the Uttar Pradesh State Industrial Development Authority (UPSIDA) for allotment of plots through e-auction. Its date chart fixed 19.03.2021 for intimation to the H1 bidder and 24.03.2021 as the last date for payment of balance earnest money, stating that dates were to be calculated excluding Saturdays and Sundays. Condition 2(c)(iii) of the post-auction stage separately allowed the H1 bidder 7 days from receipt of the intimation email to allocate the balance amount.The bench of Justice Mahesh Chandra Tripathi and Justice Kunal Ravi Singh held,“…the parties hereinabove have entered into a commercial transaction of auction which is confined to the conditions as prescribed in the auction catalogue. Thus the interpretation is to be solely based upon the interpretation of the terms and conditions and, in case of conflict, to harmonize the conflicting condition in a way to uphold the transaction rather than to void it.”Petitioner, a manufacturer of readymade garments, bid for industrial plot no. D-22, TDS City, Ghaziabad, admeasuring 5146.40 square metres, reserved for a garment industry in a non-polluting zone. Two earlier auctions were aborted for lack of competition and the earnest money refunded. The plot was advertised afresh as Rollover-2 on 27th February 2021, on terms permitting the auction to proceed even where fewer than three bidders participated.The petitioner was declared the highest bidder and told by email dated 20.03.2021 to deposit the balance earnest money of Rs. 1,98,934.09 by 24.03.2021, failing which the Rs. 73,22,040.60 already paid would be forfeited. Citing a medical emergency, the petitioner did not deposit on that date, and its attempt to deposit on 25.03.2021 was rejected as the portal no longer permitted any deposit. Emails seeking to deposit were sent, and a further email went to the Managing Director of UPSIDA, however no reply was received. The earnest money was forfeited on 07.04.2021 on the approval of the Chief Executive Officer of UPSIDA.Petitioner pleaded that the refusal was arbitrary and contrary to the catalogue. It was argued that the intimation email due on 19th March 2021 was sent on 20th March 2021, and the date chart cut down the 7 days granted by the catalogue to 5 days inclusive of Saturday and Sunday. It was also pleaded that the approval for forfeiture had never been supplied despite request, leaving the petitioner unable to challenge it.UPSIDA submitted that the last date for deposit was 24.03.2021, and the petitioner had neither sufficient balance in the e-wallet nor the willingness to deposit. It was argued that the writ petition was not maintainable in view of the arbitration clause.Noting that no arbitrator had been appointed and the preliminary objection was not pressed at the hearing, the Court relied on Surendra Pal Singh vs. State of U.P. and Others to hold that once pleadings have been exchanged, a writ petition ought not to be thrown out for availability of an alternate remedy.On merits, the Court observed that the intimation email was sent on 20.03.2021 and not on 19.03.2021 as the date chart required, so that the date chart was not complied with by UPSIDA itself. It noted that 20.03.2021 was a Saturday and 21.03.2021 a Sunday, and that excluding those two days as the date chart directed, the period stood extended till 26.03.2021. Reckoned from 20.03.2021, the 7 days allowed by condition 2(c)(iii) also ended on 26.03.2021.Applying the rule of harmonious construction laid down by the Supreme Court in Shri Nashik Panchavati Panjarpol Trust & others vs. the Chairman & another, that a document must be read as a whole and an ambiguous clause construed consistently with its other clauses, the Court held that so read there was no conflict between the two conditions.“…the refusal to accept the balance deposit on 25.03.2021 and 26.03.2021 is arbitrary on the part of respondent no. 2. The closure of the time to deposit the balance amount on the portal is also arbitrary, and the said action of the respondent is liable to be held illegal.”Noting that the emails of 25.03.2021 and 26.03.2021 were forwarded to UPSIDA and went unanswered, the Court held that no liability could be attached for non-deposit on 24.03.2021 once the period was found to expire on 26.03.2021. It further observed that those emails showed the petitioner had sufficient balance in the e-wallet.On the forfeiture, the Court noted that the approval of the Chief Executive Officer was annexed to neither counter affidavit and was never supplied to the petitioner despite request, which disentitled the petitioner from challenging it in the proceedings. It held,“Even if the condition in the...

Conflicting Time Limits In E-Auction Catalogue Must Be Harmonised To Uphold Transaction, Not Void It: Allahabad High Court

Upasna Agrawal

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Conflicting Time Limits In E-Auction Catalogue Must Be Harmonised To Uphold Transaction, Not Void It: Allahabad High Court

Upasna Agrawal

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Upasna Agrawal

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