Court Orders Restoration of Petitioner's Status and Extension for EMD Deposit in Chandra Fabrics Pvt. Ltd. Case
In a significant ruling, the Allahabad High Court declared the closure of the portal by the Uttar Pradesh State Industrial Development Authority (UPSIDA) for depositing the balance Earnest Money Deposit (EMD) as arbitrary and illegal. The judgment, delivered by Justices Mahesh Chandra Tripathi and Kunal Ravi Singh, directed that the petitioner's status be restored, and the petitioner be allowed to deposit the balance EMD within an extended timeframe.
The case, titled Chandra Fabrics Pvt. Ltd. v. State of U.P. and others, revolved around the e-auction of an industrial plot in Ghaziabad. Chandra Fabrics, the highest bidder (H1), was unable to deposit the balance EMD by the originally stipulated date due to a medical emergency and alleged discrepancies in the auction catalogue's timing instructions. The court found that the closure of the portal before the extended deadline was not only arbitrary but also in violation of the principles of natural justice.
The petitioner's counsel argued that the auction catalogue provided a seven-day period for EMD payment, excluding weekends, which was not honored by the respondents. The court agreed, emphasizing that the interpretation of the auction terms should harmonize conflicting conditions to uphold the transaction. The court noted that the petitioner had made bona fide efforts to deposit the EMD and possessed sufficient funds.
In response to the petitioner's claims, the court ordered the reopening of the portal for EMD payment, allowing Chandra Fabrics Pvt. Ltd. to complete the transaction within an extended period. The court also quashed the approval for EMD forfeiture, citing a lack of due process and violation of natural justice.
This ruling highlights the importance of adhering to fair practices in commercial transactions and upholding the principles of natural justice. The decision ensures that procedural lapses do not unfairly disadvantage parties in administrative processes.
Bottom line:-
The closure of the portal for depositing balance Earnest Money Deposit (EMD) before the prescribed time frame was held arbitrary and illegal. Directions issued to restore the petitioner's status and allow the balance EMD deposit within the extended time frame.
Statutory provision(s): Indian Arbitration and Conciliation Act, 1996
Chandra Fabrics Pvt. Ltd. v. State of U.P., (Allahabad)(DB) : Law Finder Doc id # 2955357
