Pasumarti Seethanna vs Thammandra Yasikalappa

Phillips, J.—The lower appellate Court has found that the plaintiff committed default in respect of a contract to purchase 1501 bags of rice

from the first defendant. The plaintiff paid a sum of Rs. 6,000 in advance and the lower appellate Court has held that the plaintiff is entitled to return

of this money after deducting certain sums which the defendant is entitled to retain. The 2nd defendant (widow of first defendant) now appeals and

contends that she is entitled to retain the whole Rs. 6,000 on the ground that it was paid as deposit. This question of whether it was paid as a

deposit has not been raised in either of the lower Courts ; but the appellant relies on certain cases for the proposition that whenever money is paid

in advance on account of a contract, the vendor is entitled on breach of contract to retain the whole sum. That is the effect of the rulings cited

where the money has been paid as deposit. In Roshan Lal v. Delhi Cloth and General Mills Co. (1911) 33 All. 166 where earnest money was paid

and in Bishan Chand v. Radha Kishan Das (1897) 19 All. 489 where a deposit was paid, it was held that the vendor was entitled to retain the

money deposited on breach of the contract. The Full Bench decision in Natesa Aiyar v. Appavu Padayachi (1915) 38 Mad.178 relates to a

contract in which there was a specific olause of forfeiture and does not appear to be applicable here. In Nawab Khaju Habibulla v. Arman Dewan

23 C.W.N. 40 the law on the point has been reviewed with great care and the conclusion arrived at is that:

The deposit, if nothing more is said about it, is according to the ordinary interpretation of businessmen, a security for the completion of the

purchase so that in the event of the contract being performed, it must be brought into account and if the contract is not performed by the payer, it is

forfeited to the payee : but every payment made by the purchaser to the vendor is not in the nature of a deposit liable to be forfeited if the

purchaser violates his contract. It is incumbent on the Court in such case to ascertain the real intention of the parties from all the terms of the

contract.

This with all respect, appears to me to be the correct interpretation of the law on the subject--whether an advance is given as security for

performance of the intention of the parties. It may well be that in a certain contract, the purchaser may, to oblige the vendor, pay some of the

purchase-money in advance- Can it be said in that case that he paid that money as a security for performance of the contract? If be did not: pay it

as security, there is no reason why the vendor should retain such money, unless he has himself suffered damage to an equivalent or greater sum

owing to the purchaser''s breach. The question has not been raised at all in the present proceedings. There is no definite written contract from

which the intention of the parties can be ascertained, but so far as appears from the lower appellate Court''s judgment, it was not the intention of

the parties to treat this money as a deposit. It is found that the defendant wanted ready money to pay to his vendors and also that the defendant

actually returned a portion of the deposit when the contract came to an end. Without a finding or some evidence from which it may be inferred that

this advance was in the nature of a security deposit, I cannot allow the objection to be taken now.

A further objection is taken by the appellant as to the damage sustained, but this appears to be purely a question of fact which the lower

appellate Court was entitled to decide finally and this objection must be disallowed.

The respondent has filed a memorandum of objections in which be first of all objects to the lower appellate Court''s finding that he was guilty of

breach of contract. This is a question of fact and it appears to me that on the facts found by the lower appellate Court, namely, that certain rice

was available for delivery to the plaintiff and the plaintiff refused to accept it on some excuse or other, not having the cash ready to pay for

delivery, it has rightly found that the plaintiff committed default. The argument that there is no finding that the defendant bad rice ready for delivery

does not appear to me to be correct, in view of the statement that the plaintiff made some excuse or other to avoid taking delivery.

A further point is raised by the respondent and that is that interest should have been allowed to him from the date of the plaint to the date of the

first Court''s decree. On reading the judgment of the lower appellate Court, I think this contention is correct and that the omission to provide for

this interest in the decree is a mistake, This mistake apparently could not be corrected in the lower appellate Court because this appeal was filed

before an opportunity could be obtained.

The objection is allowed and the decree-will be modified to the extent of allowing; interest at 6 per cent. from the date of plaint 20th September,

1920, till payment. In the result, the second appeal is dismissed with costs and the memorandum of objections, subject to the modification above,

is dismissed, respondent paying and receiving proportionate costs.