Learned Senior Counsel, Dr. S. Muralidhar vehemently submitted no error could be said to have been committed by High Court. We set aside.

Harshness of a provision is no reason to ‘Read Down’ same.

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Privy Council in Kunwar Chiranjit Singh v. Har Swarup, (1926) 23 LW 172 was referred to and relied upon by High Court of Bombay in Dinanath Damodar Kale v. Malvi Mody Ranchhoddas, AIR 1930 BOM 213. We would like to refer to Stockloser v. Johnson, (1954) 1 All ER 630 and particularly to observations of Denning, L.J., which, if we may say so with respect, has great clarity. It is clear, forfeiture of earnest money can be justified if terms of contract are clear and explicit.

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We are conscious of Kailash Nath Associates v. Delhi Development Authority, (2015) 4 SCC 136 wherein it was held, Section 74 of The Indian Contract Act, 1872 will be applicable to cases of forfeiture of an earnest money deposit. However, where such forfeiture takes place under terms and conditions of a public auction, Section 74 will have no application.

Since, forfeiture of an earnest money deposit under Rule 9(5) of SARFAESI Rules, 2002 is taking place pursuant to terms and conditions of a public auction, Section 73 and 74 of 1872 Act will have no application whatsoever.

– Hon’ble Justice J.B. Pardiwala, Central Bank of India v. Shanmugavelu, [Civil Appeal No. 235-236 of 2024].

Reiteration of principles of interpretation of statutes as suggested by Hon’ble Justice O. Chinnappa Reddy in Girdhari Lal v. Balbir Nath Mathur, (1986) 2 SCC 237 is so lucid, we feel hesitant to say anything more.

An instructive passage is found in B.R. Enterprises v. State of U.P., (1999) 9 SCC 700. “The words are not static but dynamic. This infuses fertility in the field of interpretation.” On whether harshness of a provision could afford ‘Reading Down’ same, Three-Judge Bench in Authorised Officer, Central Bank of India v. Shanmugavelu, (2024) 6 SCC 641 has held, “Rule of ‘Reading Down’ is only for making a provision workable and its objective achievable. However, harshness of a provision is no reason to ‘Read Down’ same, if its plain meaning is unambiguous and perfectly valid.”

– Hon’ble Justice Dipankar Datta, Allahabad University v. Geetanjali Tewari (Pandey), [Civil Appeal Nos. 12411-12414 of 2024] decided on 18.12.2024.

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In this regard, reference may be made to Authorized Office, Central Bank of India v. Shanmugavelu, 2024 INSC 80 wherein one of us, Justice J.B. Pardiwala, held, where Legislature makes a conscious departure from general law or contractual terms by providing for a particular consequence by way of a statutory provision, then general law or contractual terms will have no application.

– Hon’ble Justice J.B. Pardiwala, M. Rajendran v. M/s. KPK Oils and Proteins India Pvt. Ltd., [Civil Appeal No. 12174 of 2025] decided on 22.09.2025.