Earnest Money

Trial Court decreed the suit filed by the vendee / buyer but directed that in case the plaintiff /buyer failed to pay balance consideration within 30 days, the seller would be bound to return earnest money

Plaintiff/buyer filed revision as said findings / observation was affirmed by the Appellate Court

Held, that such observation / findings was contrary to the terms of the agreement, which (agreement) provided that in case the buyer (petitioner) failed to pay the remaining amount, earnest money would be treated forfeited

Said agreement provided that in case the seller failed or refused to arrange for the transfer, he would be bound to return double amount of earnest money

Said (latter) condition was not applicable since the buyer had opted for enforcement of the agreement by resorting to remedy for enforcement of agreement

If the petitioner failed to pay the balance consideration within 30 days, without further ado, the earnest money had to be forfeited

High Court set-aside judgments and decrees of both the Courts below to the extent of direction that in case the plaintiff /buyer failed to pay balance consideration within 30 days, the seller would be bound to return earnest money; modifying the decree that in case of said failure petitioner's suit shall stand dismissed and consequently the paid earnest money shall stand forfeited

Suit was decreed in the above terms.

Respondents / plaintiffs filed suit for cancellation of agreement to sell and the same was decreed in their favour for non-payment of balance consideration amount by appellant / defendant

Validity

Specific performance of an agreement of immoveable property is an equitable relief based on equity

Appellant / defendant, who had to show that he performed equity to claim equity from the Court, failed to discharge such burden as he had not paid or deposited balance sale consideration at the time when the suit was filed

It was not equity if appellant / defendant was allowed specific performance realizing that no efforts were made to deposit balance amount at the time when injunction was sought and/or when suit was filed, since doctrine of lis pendens was also an obstacle for seller

Division Bench of High Court declined to interfere in judgment and decree passed in favour of respondents / plaintiffs

Amount that was extended/paid at the time of execution of agreement which was not disputed, was rightly ordered to be returned along with profit accrued thereon along with damages and compensation extended to appellant / defendant, which discretion was lawfully exercised by Judge in Chambers of High Court as the amount was retained for a number of years

Intra Court Appeals were dismissed in circumstances.

Earnest money-Contract for sale of goods-Part payment received in advance-Deposit or earnest money in nature-Liable to forfeiture on breach of contract.

Sale of goods-Earnest money part of purchase price-"Earnest money" and "advance deposit" Synonymous-Liable to forfeiture if transaction falls through by reason of fouls or failure of vendee-Contract Act (IX of 1872), S. 74.

Earnest Money Not necessary to intimate forfeiture of, on breach of contract-[Kunwar Chiranjit Sing v. Har Swarup A I R 1926 P C 1 rel.]