V LAKSHMANAN Vs. B R MANGALAGIRI

JUDGEMENT

(1.) This appeal by special leave arises from the judgment of the division bench of the High court of Madras dated 3/1 1/1983 made in Appeal No. 911 of 1977. The appellant-plaintiff had entered into an agreement with respondents on 23-8-1972 to purchase their 6 acres 76 cents of the land situated in Bhavani Village for a consideration of Rs. 2,75,000. 00 and paid Rs. 50,000. 00 as earnest money (stated as advance in the agreement). He undertook to have the sale deed registered within six months i. e. on/or before 23/2/1973. Time is, thereby, the essence of the agreement. The appellant had taken possession of the land and levelled the land and applied for permission for sanction of layout. The Gram Panchayat, Bhavani, refused to grant sanction. Thereafter, the appellant got issued a notice on 20/2/1973, calling upon the respondents to return the earnest money of Rs. 50,000. 00 and also Rs. 15,000. 00 said to be the expenditure incurred by them towards development which liability was denied by the respondents in their reply notice wherein they also claimed to have forfeited the earnest money for default committed by the appellant in the performance of his part of the agreement. The appellant laid OS No. 108 of 1973 on the file of the Additional Subordinate Judge, Erode, on 13/3/1973 which the trial court decreed on 30/4/1977. On appeal, as stated earlier, the High court reversed the decree and dismissed the suit.

(2.) It is contended by Shri Balakrishnan, learned counsel for the appellant, that, admittedly. Respondent 3 B. R. Srinivasan was a minor on the date of the agreement of sate: When the appellant orally had asked the 4th respondent/guardian to obtain permission from the court for effectuating the sale deed, the mother as natural guardian of the 3rd respondent had refused to obtain permission on the ground that it was not necessary to obtain the permission of the court. When the title was defective, no one would be prepared to purchase the land covered by the agreement of sale and, therefore, the High court was not right in dismissing the suit of the appellant. It is also contended that the amount of Rs. 50,000. 00 being an advance and not an earnest money, the whole amount cannot be forfeited unless the respondents proved that they had suffered damages which is a necessary condition to forfeit the advance amount. That amount only could be forfeited. No evidence was adduced to prove that the respondents had suffered damages. Subsequent sale made by the respondents pending the appeal was only a device adopted to deny the refund of the advancemoney paid by the appellant. The High court had committed grievous error of law in allowing the appeal. We find no force in both contentions.

(3.) The facts of the case and the conduct of the appellant lead us to conclude that the appellant is not justified in seeking to nor is he entitled to recover from the appellants Rs. 50,000. 00 paid by him. No doubt in the agreement it was stated that the amount was advance and not earnest money. Earnest money is a part of the purchase price. The nomenclature or label given in the agreement as advance is not either decisive or immutable. The appellant, after he had entered into the agreement, admittedly, had taken possession of the land and levelled the land for the purpose of making it into plots for sale to the third parties, in terms of the agreement. Admittedly, the appellant failed to obtain the sanction of the layout plan as the Gram Panchayat refused to sanction it. Thereafter, the appellant having found it difficult to effectuate the sales to third parties, he invented an excuse to get over the agreement and pitched upon the plea of oral request said to have been made to the respondents to obtain sanction of the court to alienate the share of the minor and of their refusal. Thereby, they were not willing to perform their part of the agreement and had refused to execute the sale deed. There is no truth in it. The agreement of sale fell through due to the default committed by the appellant. It is not the case that the appellant had issued notice to the guardian to obtain sanction of the court and that the mother had refused to get it nor is she willing to execute the sale deed. The amount paid is only by way of earnest money as part of the sale transaction and that the appellant failed to perform his part of the contract.