Supreme Court upholds forfeiture of security deposit in auction of forest produce
Justices Vikram Nath & SC Sharma [10-07-2024]

Read Order: CHIEF CONSERVATOR OF FOREST & ORS v. VIRENDRA KUMAR & ORS [SC- CIVIL APPEAL NO. OF 2024]

LE Correspondent

New Delhi, July 17, 2024: In a significant judgment, the Supreme Court has overturned a High Court decision and upheld the forfeiture of a security deposit by the Forest Department in a case involving a sale auction of forest produce.

The case arose from a dispute over the applicability of different sets of terms and conditions for a forest auction held in 1998. The respondents, who were the highest bidders in the auction, had relied on a clause from the 1980-81 Terms & Conditions manual, which stated that if the acceptance or rejection of the sale is not informed to the contractor within 40 days, the contractor is not bound to take the contract. On the other hand, the Forest Department referred to the amended clause in the 1987-88 manual, which provided for a deemed approval if no communication is received within the stipulated period.

The Allahabad High Court had earlier ruled in favor of the respondents, setting aside the forfeiture order and directing the refund of the security deposit. However, the Supreme Court found that the High Court had erred in relying on the overwritten dates on the manuals without any signatures validating the changes.

The apex court held that in the absence of any manual published after 1987-88, the latest edition should prevail over the earlier one. The top court also noted that the respondents had failed to complete the work despite repeated notices from the Forest Department and only approached the court after the forfeiture order was issued. Emphasizing the responsibility of the contractors to inquire about the acceptance of the contract and the consequences of non-compliance as per the agreement, the Supreme Court allowed the appeal and upheld the forfeiture of the security deposit by the Forest Department.