Mohammad Sultan Rowther vs Naina Mohammad and Others

The plaintiff is the appellant. The suit is to recover Rupees 1,120. The plaintiff''s case is that the defendants, who are the owners of S. No. 14/2

measuring 6.70 acres in Valandaravai village, offered to sell to the plaintiff for a sum of Rs. 5,000 and received an advance of Rs. 1,000. Out of

the balance it was agreed that Rupees 2,000 could be adjusted towards the othi subsisting on the property and the balance of Rs. 2,000 was

payable before the Sub Registrar at the time of the registration of the sale deed. The case of the plaintiff is that in pursuance of the agreement the

plaintiff got the stamp papers and wrote out the document and took it to the defendants for their signature and registration. But the defendant

refused to complete the transaction and register the document. Thereupon on 28-4-1964 in pursuance of the mediation it was agreed that a release

deed from the brothers-in-law of the plaintiff in respect of the suit property should be obtained in the name of the defendants'' father and on the

same day defendants should execute a sale deed in the name of the plaintiff that the plaintiff requested his brothers-in-law to execute a release

deed, but they claimed that they wee entitled to a half share in the suit property and that they would not execute the release deed. Thus, the sale

deed could not be completed and the agreement had become impossible of performance. On 29-6-1964 the plaintiff caused a registered notice to

be issued to the defendants calling upon them to refund the advance of Rs. 1,000 received by them. The defendants refused to return the advance

and the present suit is filed for recovery of the sum paid.

The defense to the suit is that the plaintiff agreed to purchase the property for Rs. 8950, that in order to evade the payment of the excess stamp

duty the consideration was proposed to be mentioned in the sale deed as Rupees 5,000, that they did not agree for the consideration being

mentioned as Rupees 5,000 in the sale deed that the plaintiff did not offer to pay the entire consideration for the sale deed and consequently the

sale transaction could not be completed. The further defense is that they were not aware of the fact that the plaintiff got the sale deed written on

27-4-1964 and they came to know about it only after receiving a notice from the Taluk Office in connection with the refund of the stamp papers.

The further contention was that the defendants represented to the plaintiff that the property proposed to be sold belonged to them absolutely, that

the plaintiff insisted that he should obtain a release deed before taking the sale deed, that it was agreed that the plaintiff should obtain a release

deed from his brothers-in-law and then take the sale deed that the plaintiff''s brothers-in-law refused to execute the release deed that as the plaintiff

did not act in terms of the agreement dated 28-4-1964, he should forfeit the advance paid by him, the defendant therefore contended that plaintiff

having committed default the advance paid had been forfeited and that the plaintiff is not entitled to claim the amount and the defendants are not

liable to pay interest on the said sum in any event and the defendants prayed for the dismissal of the suit.

The trial Court held that the plaintiff committed default inasmuch as he failed to act in terms of the contract, that the plaintiff is not entitled to the

refund of Rs.l,000 and that though it was not agreed between both parties that if the plaintiff defaulted, he should lose the advance. In the result, the

suit was dismissed.

The plaintiff filed A. S. 120 of 1968 to the District Judges. Ramanathapuram at Madurai. The learned Judge while holding that time is not the

essence of the contract to sell the immovable property held that the plaintiff committed default and that he is not entitled to the refund of the

advance paid by him. The plaintiff his filed the above second appeal.

The question that arises for consideration is whether the sum of Rs. 1,000 which was paid as advance out of a total promised consideration of

Rs. 5,000 for the sale deed which the defendants agreed to execute in favor of the plaintiff and which was not executed is liable to be forfeited by

the defendants. The agreement between the parties in this case is Ex. A.1 dated 28-4-1964, whereunder the plaintiff agreed to purchase 6-70

acres of land in S. No. 14/2 of Valandaravai village belonging to the defendants for a sum of Rs. 5,000. The above written contract appears to

have been written contract appears to have been preceded by an earlier oral agreement and in pursuance of which Rs. 1,000 was paid. It is not

clear that the sum of Rs. 1,000 was paid by way of advance or a security deposit for due performance of the contract. The contract, however,

does not contain any provision relating to the forfeiture of the said sum of Rs. 1,000 paid in case of any default by the plaintiff. The question is

whether in the absence of any specific provision in the agreement relating to the forfeiture the defendants are entitled to forfeit the sum of Rs. 1,000

paid by the plaintiff even assuming that the plaintiff even assuming that the plaintiff has committed default. In this connection three recent judgments

of the Supreme Court have been referred to viz., Maula Bux Vs. Union of India (UOI), . Shri Hanuman Cotton Mills and Others Vs. Tata Air

Craft Limited, and an earlier decision of the Supreme Court in Fateh Chand Vs. Balkishan Das, . In every one of the above decisions in the

contract entered into between the parties there were specific provisions for forfeiture of the advance or earnest money in case of default. In the

present case the agreement entered into between the parties does not contain any provision entitling the defendant to forfeit the advance paid in

case of default. The plaintiff''s case is that it was the defendant who insisted upon the release deed being executed by the heirs of the plaintiff''s

father-in-law and that he was willing to take the sale deed without getting any such release deed. The defendants, on the other hand, contended

that they never insisted upon the release deed being executed by the heirs of the plaintiff''s father-in-law and that they were always willing and

ready to execute the sale deed. Both the courts below have held that the plaintiff is at fault. In the absence of a specific clause in the contract, the

defendants are not entitled to forfeit the advance of Rs. 1,000. But the defendant is however, entitled to be compensated for the plaintiff''s default

which has been found by the courts below. The defendant will be entitled to only reasonable compensation which I assess at Rs. 500.

In the result the second appeal is allowed in part and the plaintiff is entitled to a refund of Rs. 500 out of the advance of Rs. 1,000 paid. The

parties will bear their own costs throughout. No leave.

Appeal allowed in part.