Authority: High Court of Gujarat at Ahmedabad

Order Date: 17/07/2026

Case Overview

  • Petitioners: M/s Seebaat Developers (Petitioner) vs. State of Gujarat & others (Respondents).
  • On 12‑03‑2024 the Respondent authority issued Tender No. DTS/RNT/39/2024 to sell various plots by e‑auction; Plot No. 11 was the subject.
  • Tender required bidders to pay Earnest Money Deposit (EMD) and tender fee by 12‑06‑2024 and submit a sealed bid by 14‑06‑2024.
  • Seebaat Developers deposited an EMD of Rs 22,92,024 (and tender fee) and claimed to have submitted a sealed bid; Respondents denied receipt of the sealed bid, citing a technical glitch.
  • Auction was conducted on 19‑06‑2024 without the petitioner; the plot was sold to the highest bidder.
  • Respondents sought to forfeit the petitioner’s EMD of Rs 29,92,040, invoking Clause 3(a) and Clause L of the tender which state that failure to submit a sealed bid results in forfeiture.
  • The petitioner argued that forfeiture amounted to unjust enrichment and that the tender’s general conditions, particularly Clause 22.2, required refund of EMD to all unsuccessful bidders once the preferred bid is accepted.
  • Clause 22.2 provides that the EMD shall be returned to an unsuccessful bidder within 45 days or on acceptance of the preferred bidder’s bid or if the auction is cancelled.
  • The Court examined the interplay of these clauses, concluding that forfeiture applies only when the auction does not conclude successfully and the authority suffers a loss.
  • The Court noted that the purpose of EMD is to ensure a successful sale; once the plot is sold at the reserve price or higher, the purpose is fulfilled and the EMD must be returned.
  • Legal precedents cited by the Respondents (Pooja Ceratech Pvt. Ltd. vs. ONGC, National Highways Authority of India vs. Ganga Enterprises, NTPC Ltd. vs. Ashok Kumar Singh) were distinguished because they involved withdrawal of bids or did not contain a clause analogous to Clause 22.2 and did not involve land‑sale auctions.
  • The Court referenced the Madras High Court decision in Rubina vs. Authorized Officer, emphasizing that forfeiture clauses must be a genuine pre‑estimate of loss and cannot be enforced where no loss occurs.
  • The Court held that the petitioner, having paid the EMD and tender fee, is deemed to have made a sealed bid equal to the reserve price; therefore, the Respondent’s claim of non‑submission is untenable.

Final Outcome

  • The writ petition is allowed.
  • The forfeiture of the petitioner’s EMD of Rs 29,92,040 is declared illegal and quashed.
  • The Respondent authority is directed to refund the full EMD amount to Seebaat Developers within four weeks of receipt of this order.

Topics: Legal Dispute, Earnest Money Deposit, Real Estate Auction