Mesbahuddin Ahmed Vs. M/s.James Finlay

Appellate Division Cases

(Civil)

PARTIES

Mesbahuddin Ahmed……………….. Appellant.

-Vs-

M/s.James Finlay……………. Respondent.

Md. Ruhul Amin CJ

M.M. Ruhul Amin J

I\Id. Jovnul Abedin J

Judgment Dated: 4th April 2007

The only question that falls for consideration is whether the forfeiture of the earnest money by the defendant, in the facts and circumstances of the present case, is sustainable in law……………………. (9)

Careful reading of the letter of acceptance, Ext.2(a), shows that the acceptance of the offer of the plaintiff by the defendant was absolute. The word “provisional” used in the letter of acceptance did not make the acceptance of the offer conditional as there was no counter offer as it only spelt out some consequential measures to be taken by the plaintiff to fulfill his part of the contract, namely to pay 25% of the total consideration money within one month of the date of acceptance of the offer as a condition precedent to the execution and registration of the sale deed and in that event the plaintiff buyer would be required to defray all necessary expanses including purchasing of stamp and registration expenses etc. . Hence the contention that there was no concluded contract between the parties for want of absolute acceptance of the offer by the defendant seller has no force …………………………………(13)

In the aforesaid letter of acceptance of the offer, as stated above, the plaintiff buyer was required to pay 25% of the price offered by him to purchase the suit property within one month of the date of acceptance of the offer. This date was mutually extended by the defendant at the request of the plaintiff. But the plaintiff buyer failed to pay the aforesaid sum even within the extended time and thus committed breach of the contract. The defendant seller was therefore entitled to forfeit and it did forfeit the earnest money for breach of the above terms and conditions of the contract. In this view of the matter, the impugned judgment and order of the High Court Division dismissing the appeal does not call for any interference …………………….(14)

Mahnntdul Islam. Senior Advocate, instructed by Md. Aftab Ilossain. Advocate-on-Record…………………. For the Appellant

Respondent……………….Not represented.

Civil Appeal No.03 Of 2000

(From the judgment and order dated 29.11.1993 passed by the High Court Division in First Appeal No.238 of 1991.)

JUDGMENT

Md. Jovnul Abedin J: This appeal by leave by the plaintiff-appellant is from the judgment and decree dated 29.11.1993 passed by a Division Bench of the High

Court Division in First Appeal No.238 of 1991 allowing the appeal and thereby dismissing the suit filed by the plaintiff-appellant for refund of’TkJ5,00,000/being

earnest money forfeited by the defendant-respondent.

2. The plaintiff filed Other Suit No.70 of 1987 on the allegations, inter alia, that the defendant by publishing an advertisement in the Daily Azadi dated 23.2.1987 invited

tender for sale of 4.6291 acres of hilly land together with two one-storied buildings

thereon situated at Chatteswan Road, Chittagong. In pursuance thereof the plaintiff submitted a tender in the prescribed form offering Tk.2.S7,0O.O0()/-. fie also deposited TkJ 5.00.000 – with the defendant as earnest money. Offer of the plaintiff was provisionally accepted subject to the fulfillment of certain terms and conditions which included payment of the balance amount of Tk.56,75.000′-within one month from the date of acceptance calculated (a). 25% of the bid money. The money was not paid. The plaintiff suggested amendments in clauses 4.6 and 12 in the draft agreement for sale of the suit property, which, the plaintiff was called upon to sign. Discussions and negotiations then followed but there was no decision. The plaintiff awaited furl her discussions in ihe matter and was read} to pay the money sought but suddenly he received a Letter from the defendant informing him that the earnest money paid by him stood forfeited. Thereupon the plaintiff requested the defendant to accept the balance of the 25% of the bid money and also to agree to the suggested amendments to the draft agreement. But the defendant did not agree. In the circumstances, the plaintiff claimed that the forfeiture was illegal..

3. The defendant contested the suit by filing written statement contending that the terms and conditions of the tender notice constituted the contract of sale of the suit property between the parties as soon as the tender of the plaintiff was accepted by the defendant and since the plaintiff failed to pay 25% of the bid money for the suit property even within the extended time, the earnest money was forfeited in terms of the contract as the forfeiture of the earnest money was in accordance with the terms of the contract concluded between the parties.

4. The trial court, on consideration of the evidence on record, decreed the suit.

5. The defendant went in appeal being First Appeal No.238 of 1991 to the High Court Division, which set aside the judgment and decree of the trial court.

6. Leave was granted to consider the submission that the Tender Notice, Ext.l, whereby tender was called was not an integral part of the contract. It is only in this exhibit the forfeiture clause was mentioned. Ext.l required submission of the tender in the prescribed application form, Ext.3, which did not include any forfeiture clause. Furthermore, the acceptance of the tender by the letter of acceptance vide Ext.2(a) was only provisional and there was therefore no contract. Further, even this acceptance letter, Ext.2(a), having not provided any forfeiture clause, the forfeiture of the earnest money was illegal.

7. We have heard Mr. Mahmudul Islam, the learned Counsel for the appellant and perused the judgment of the High Court Division and other connected papers.

None appears for the respondent.

8. Mr. Islam submits that since the offer made by the plaintiff by submitting tender

in the prescribed application form and the acceptance of the offer by the defendant

by letter of acceptance vide Ext.2(a) did not contain any clause for forfeiture of

earnest money, the forfeiture of the earnest money by the defendant is illegal. It is further

submitted by Mr. Islam that since the acceptance of the plaintiffs offer by the defendant is not absolute being provisional, there is no contract of sale of the suit property between the parties and as such the forfeiture of the earnest money of the plaintiff by the defendant is also illegal. The learned Judges of the High Court Division have, therefore, erred in allowing the appeal and thereupon dismissing the suit causing failure of justice.

9. The only question that falls for consideration is whether the forfeiture of the earnest money by the defendant, in the facts and circumstances of the present case, is sustainable in law.

10. The defendant with a view to selling the suit property in Chittagong published a

tender notice in The Daily Azadi inviting tender from the intending buyers in sealed

quotations to be submitted in the prescribed application form as per terms and

conditions for sale set out in the tender notice. The terms and conditions set out in

the tender notice are as under:

” 1. Intending buyers may inspect the property by prior arrangement on any working day between 10 a.m. and 4 p.m. before submission of the quotations.

2. Each quotation must be submitted in the prescribed form along with a Bank Draft/Pay Order of Tk.15,00,000/- as” earnest money in favour of the “JAMES FINLAY PLC”.

3. The Bank Draft/Pay Order representing the earnest money of the unsuccessful persons

will be returned, Earnest money of the successful person may be adjusted with the sale price of the said property.

4. The person whose quotation shall be accepted will have to pay 25% of the offered price to the seller within one month from the date of acceptance of the quotation and execute the contract for sale for such terms and conditions as the seller shall prescribe failing which the earnest money shall be forfeited.

5. The quotation must reach the undersigned up to 3 p.m. on 17th March 1987 and all quotations shall be opened on the same date at 4 p.m. at the office of the seller in the presence of the persons submitting the quotations or their authorised representatives, if any.

6. The seller reserves the right to reject any or all quotations without assigning any reason whatsoever. The prescribed application forms, terms and conditions for sale, are available from the office of the seller on payment of Tk.500/- per set which is not refundable.”

11. The tender notice published in the Daily Azadi was not an offer but a mere invitation by the defendant seller to all the intending buyers for making offers for sale. In the tender notice the intending buyers were asked to make their offers in the prescribed application form as per the said terms and conditions contained in the tender notice which, among others, provided for forfeiture of the earnest money of the plaintiff by the defendant in the

event of any breach of the said terms and conditions for sale by the plaintiff.

12. The plaintiff accordingly submitted his tender i.e. his offer in the prescribed application form, Ext.3, accompanied by pay order of Tk.15,00,000/- by way of earnest

money with a declaration made therein that he would abide by the above terms and conditions for sale of the suit property by the defendant seller. The plaintiff also made a declaration in his aforesaid tender application that he would pay the amount of consideration to the defendant seller of the suit property within the schedule time and would also abide by all the terms and conditions to be imposed by the defendant seller from time to time. The said offer of the plaintiff was accepted by the defendant seller by its letter of acceptance, Ext.2(a) . Consequently there was a concluded contract between the plaintiff buyer and the defendant seller as regards sale of the suit property.

13. Careful reading of the letter of acceptance, Ext.2(a), shows that the acceptance of the offer of the plaintiff by the defendant was absolute. The word “provisional” used in the letter of acceptance did not make the acceptance of the offer conditional as there was no counter offer as it only spelt out some consequential measures to be taken by the plaintiff to fulfill his part of the contract, namely to pay 25% of the total consideration money within one month of the date of acceptance of the offer as a condition precedent

to the execution and registration of the sale deed and in that event the plaintiff buyer would be required to defray all necessary expanses including purchasing of stamp and registration expenses etc. . Hence the contention that there was no concluded contract between the parties for want of absolute acceptance of the offer by the defendant seller has no force.

14. In the aforesaid letter of acceptance of the offer, as stated above, the plaintiff buyer was required to pay 25% of the price offered by him to purchase the suit property within one month of the date of acceptance of the offer. This date was mutually extended by the defendant at the request of the plaintiff. But the plaintiff buyer failed to pay the aforesaid sum even within the extended time and thus committed breach of the contract. The defendant seller was therefore entitled to forfeit and it did forfeit the earnest money for

breach of the above terms and conditions of the contract. In this view of the matter,

the impugned judgment and order of the High Court Division dismissing the appeal

does not call for any interference.

15. The appeal is accordingly dismissed without any order as to costs.

Source : V ADC (2008), 104