The original petitioner died during pendency of this writ petition and the additional petitioners 2 and 3 were impleaded as his legal heirs. The 1st petitioner participated in a auction sale of timber conducted on 9.9.1997. In a sale notified by the 2nd respondent at the Mudikkal Depot, he has bid in auction 27.768 Cubic Meters of Rosewood for an amount of Rs.15,03,642/-, on depositing an earnest money of Rs.20,000/-. On the confirmation of the sale, notice was issued requiring remittance of the balance amount, on or before 5.1.1998. The petitioner approached the authorities concerned seeking extension of time for payment of the balance amount. On different occasions the time for payment of balance amount was extended by various authorities, ultimately till 20.5.1998. But the petitioner failed to remit the balance amount and to remove the Rosewood auctioned. Under such circumstances Ext. P1 notice was issued by the 3rd respondent intimating the petitioner about cancellation of the sale and informing that the timber will be re-auctioned on 8.7.1998, at the risk and cost of the petitioner. On receipt of Ext.P1 the petitioner submitted Ext.P2 before the 1st respondent contending that he is not responsible for the loss, because there was no agreement entered accepting any binding contract. The petitioner sought direction to the 3rd respondent to arrange the re-sale not at the risk of the petitioner. From Ext.P3 it is evident that the timber in question was re-auctioned on 3 dates, on 8.11.1999, 18.2.2000 and on 18.5.2000 and the respondents have suffered a total loss of Rs.9,51,953/-. Through Ext.P3 the petitioner was required to remit the said amount along with Income Tax due, on or before 27.1.2001. A statement of calculation was also attached along with Ext.P3. On receipt of Ext.P3 the petitioner again approached the Government seeking to cancel the demand. When the said representation was not considered by the Government he had approached this court in an earlier writ petition filed. In Ext. P6 judgment this court directed the Government to consider Ext.P4 and to pass appropriate orders, within a period of 2 months. This court also observed that the benefit of settlement scheme or amnesty scheme, if any available, to be extended to the petitioner. Ext.P8 is the consequential order issued by the Government. On consideration of Ext.P4 representation, the Government have rejected the contention of the petitioner that there was no concluded contract, by observing that there was confirmation of sale by the competent authority. Contentions raised based on provisions of the Sale of Goods Act 1930 as well as Indian Contract Act 1872, were also repelled by finding that the alleged delay in conducting re-auction happened only because of the latches on the part of the petitioner. Evidently the petitioner had again approached the Government in Ext.P9 and P10 representations submitted to the hon'ble Chief Minister and also to the hon'ble Minister for Forests. Since those representations were not considered, this writ petition is filed seeking to quash Ext.P8 order. Inter alia, the petitioner is seeking direction for consideration of Exts.P9 and P10.
2. Contentions of the petitioner are mainly two fold.
One is that there is no concluded contract by which liability can be fetched upon the petitioner with respect to the loss suffered on re-sale. Ext.P5 is the terms and conditions of the auction sale which would indicate that the auction will be confirmed by the competent authority and the bidder will be permitted to remove the timber only after 7 days of confirmation of the auction. It is mentioned that on confirmation of the sale, notice will be issued to the bidder requiring him to remit the balance amount due, by enclosing the requisite challan. From the counter affidavit filed by the 2nd respondent it is evident that the Conservator of Forest, High Range Circle, Kottayam, who is the competent authority, had confirmed the auction sale on 29.10.1997 and it was intimated to the petitioner through the notice issued on 7.11.1997 by enclosing the requisite challan. As per the said notice, the petitioner was required to remit the amount on or before 5.1.1998. Thereafter on the request of the petitioner the time stipulated for payment was extended up to 4.2.1998 by the 3rd respondent. The petitioner again approached the 2nd respondent seeking further extension of time by submitting Ext.R2(a) request. It was allowed and the time was again extended till 6.3.1998, subject to condition of payment of 24% penal interest and 2.5% surcharge. The petitioner again submitted yet another request before the 2nd respondent on 18.3.1998 seeking postponement of the re-auction, stating that he has already made a request for extension of time. On that basis the re-auction was adjourned. The request made by the petitioner in this regard is produced as Ext.R2 (b). The petitioner again approached the hon'ble Minister by Ext.R2(c) representation seeking extension of further time by undertaking to pay the penal interest and other charges as fixed by the Government. The Principal Chief Forest Conservator had extended the time on the basis of Ext.R2(c) on 20.5.1998, subject to condition of the petitioner making payment of 48% penal interest and 2.5% surcharge.
3. From the situation as narrated above, it is evident that the petitioner had accepted the confirmation and approached the authorities seeking extension of time on different occasions. Therefore, basically the petitioner is estopped from taking any contention that there was no concluded sale. Further, going by the terms of Ext.P5 and from the facts enumerated with respect to confirmation and issuance of notice requiring payment of the balance amount, it is evident that there exists a concluded contract. Learned counsel for the petitioner relied on a decision of the hon'ble Supreme Court in Valji Khimji and company vs. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. and others(2008 (9) SCC 299). The hon'ble apex court held that with respect to auction sale the auction will be subject to subsequent confirmation by some authority under the relevant statute or under the terms and conditions of the auction. When the said authority had not confirmed the auction, the auction cannot be treated as complete and no right will accrue until such confirmation. But in the case at hand on the facts it is evident that the competent authority had confirmed the auction and the confirmation was intimated to the petitioner. Further, this court takes note of the provisions contained in section 64 of the Sale of Goods Act 1930, wherein it is held that the auction sale will be completed when the auctioneer announces its completion by the 'fall of the hammer' or in other customary manner. Here there is clear evidence to the effect that he was required to make payment of the balance amount. Therefore the petitioner cannot be heard to contend that there exists no concluded contract with respect to the auction sale.
4. Another contention raised is with respect to denial of the liability for payment of loss suffered to the State, on the basis that there occurred delay on the part of respondents 2 and 3 in conducting the re-auction within any reasonable time. According to the learned counsel for the petitioner, damages for non-acceptance of goods by termination of the contract can be claimed only within the para meters of section 56 of the Sale of Goods Act. It is pointed out that under section 56 where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may sue him for damages for non-
acceptance. The measure of damages for non-acceptance is the estimated loss directly and naturally resulting in the ordinary course of event from the buyers breach of contract. Where there is an available market for the goods in question the proper measure of damages, prima facie, is to be ascertained by the difference between the contract price and the market price at the time of breach. If however, the market rate on the date of breach of the contract is not available, it is open to them to produce evidence regarding identity with a view to awarding proper damages.
5. The petitioner relies on decisions of the hon'ble Supreme Court in Bungo Steel Furniture Pvt. Ltd. vs. Union of India(AIR 1967 SC 378) and S.K.A.R.S.M. Ramanathan Chettiar vs. National Textile Corporation Ltd. (AIR 1985 Ker. 262). Contentions based on the dictum in those cases is that, there occurred delay in conducting the re-auction, despite issuance of Ext.P1 notice. It is pointed out that even though Ext.P1 notice was issued as early as on 26.5.1998 the auction was conducted only on 8.11.1999, 18.2.2000 and 18.5.2000. Therefore the delay occurred in conducting re-auction was only due to latches on the part of respondents 2 and 3, for which the petitioner is not liable to make good the loss.
6. The auction in question was conducted on 09-09- 1997. The time limit stipulated for payment of the balance amount was extended till 20-05-1998, based on applications submitted by the petitioner. In Ext.P1 notice through which cancellation of sale was intimated to the petitioner it is specifically mentioned that, the timber will be re-auctioned at the risk and cost of the petitioner in the auction scheduled to be conducted on 08-07-1998. In the counter affidavit filed by the 2nd respondent it is mentioned that, when the petitioner failed to deposit the sale value and charges within the extended period, the re-auction was conducted by the Forest Department on various dates such as 08-06-1998, 08-07-1998, 06-08-1998, 07-08-1998, 07-10-
1998, 05-11-1998, 08-03-1999, 08-04-1999, 06-05-1999, 08-
06-1999, 08-07-1999, 09-08-1999, 09-09-1999, 07-10-1999, 08-11-1999, 07-12-1999, 18-02-2000, 13-03-2000, 17-04-
2000, 18-05-2000. It is stated that 20 lots were sold in the auction conducted on 08-11-1999, 15 lots were sold in the auction on 18-02-2000 and remaining one lot was finally sold on 18-05-2000. Eventhough learned counsel had contended that the re-auction was conducted for the first time only on 08-11-1999, it cannot be accepted on the basis of the above said facts. Therefore basically the contention that there occurred delay in the matter of re-auction cannot be accepted. However, if there was no bidders in any particular re-auction sale or when re-auction was adjourned for any other valid reasons, the petitioner cannot be permitted to get rid of the liability based on the delay caused because of any such reasons.
7. Further contention raised by learned counsel is that the probable import value which may be fetched on re- auction ought to have been assessed based on the date of cancellation of the same. But such a procedure cannot be accepted when the specific conditions of the auction sale stipulates that the defaulter will be liable to pay difference in the cost which will be fetched by way of re-auction to be conducted. Hence this court do not find any reason to interfere with the impugned proceedings for exonerating the petitioner from the liability of the risk and cost with respect to the difference in sale value.
8. Lastly, learned counsel for the petitioner had drawn attention of this court to the calculation statement attached along with Ext.P3 notice. It is contended that the components of Forest Development Tax, Sales Tax, Income Tax and penal interest and surcharge claimed are not legally sustainable since those amounts cannot be considered as loss sustained to the Government because of the default on the part of the petitioner or on the basis of the re-auction conducted. Learned counsel for the petitioner submits that the loss only to the extent of the difference in value fetched on the re-auction and no other presumptive charge cannot be levied as loss sustained to the public exchequer. Learned Special Government Pleader appearing on behalf of respondents pointed out that the specific conditions included in Ext.P5 auction notice is to the effect that if there is default on the part of the bidder and if only a lesser amount is fetched in the re-auction the component of Sales Tax with respect to the difference in the amount as well as expenses incurred for conducting the re-auction can be realised from the first bidder. But it is to be noticed that, since the first sale was not materialize there cannot be any Sales Tax or Forest Development Tax or Income Tax due on such sale. The amounts due towards Sales Tax, Forest Development Tax or Income Tax cannot be treated as the cost of the timber. It cannot be considered that any loss has been suffered to the Government based on cancellation of the first sale with respect to the tax element (component) because the sale was not taken place. So also the penal interest and surcharge on penal interest demanded through Ext.P3 cannot be sustained because those are liabilities which were imposed on the petitioner for the purpose of extending the date stipulated for payment of the balance amount.
9. Under the above mentioned circumstances, while repelling the contentions of the petitioner refuting liability to pay the loss suffered, which is demanded through Ext.P3, this court is of the opinion that the quantification of the amount need to be assessed afresh by excluding the elements of Forest Development Tax, Sales Tax, Income Tax, surcharge and surcharge on penal interest demanded through Ext.P3. The 2nd respondent is directed to re- compute the amount demanded under Ext.P3 by taking note of the observations contained herein above. A fresh notice shall be issued to the petitioners 2 & 3 re-calculating the demand as per the directions contained herein above.
10. Learned counsel for the petitioners pointed out that the amount demanded under Ext.P3 was recovered pursuant to Ext.P8 order. But this court in the interim order dated 17-08-2009 had clarified that, recovery already effected pursuant to Ext.P8 order shall be subject to further orders to be passed in this writ petition. Therefore it is only just and proper to direct refund of excess amount if any collected, based on re-calculation to be made as mentioned above.
11. Hence this writ petition is disposed of by directing the 2nd respondent to take needful steps as directed above and to effect refund of the excess amount if any found collected, to the petitioners 2 & 3. Needful steps in this regard shall be completed at any rate within a period of 2 months from the date of receipt of a copy of this judgment.
Pmn/AMG Sd/-
C.K. ABDUL REHIM JUDGE True copy P.A. to Judge