ANAND SINGH Vs. ANURAG BAREJA

JUDGEMENT

(1.) The challenge by means of this Regular First Appeal filed under Section 96 of the Code of Civil Procedure (CPC), 1908 is to the impugned judgment of the Trial Court dated 16.5.2011. By the impugned judgment, the Trial Court dismissed the suit of the appellant/plaintiff/proposed buyer for recovery of Rs. 10,00,000/- paid under an agreement to sell dated 4.11.2006 with respect to property bearing No. WZ-49B (admeasuring 300 square yards), Khasra No. 144-145, Village Palam, Delhi.

(2.) Learned counsel for the appellant/plaintiff has argued the appeal with reference to the Constitution Bench judgment of the Supreme Court reported as Fateh Chand Vs Balkishan Dass, 1963 AIR(SC) 1405, wherein the Supreme Court has said that even if the buyer is guilty of breach of performance of an agreement to sell, however, seller cannot forfeit the earnest money received under the agreement to sell, as the forfeiture is hit by Section 74 of the Indian Contract Act, 1872 being in the nature of the penalty and forfeiture cannot take place unless loss is pleaded and proved by the seller. Paragraphs 8, 10, 15 and 16 of the judgment in the case of Fateh Chand are relevant and read as under:

(3.) It is therefore clear that a seller under an agreement to sell, when he has received monies under the agreement to sell, cannot forfeit such amount, unless loss is pleaded and proved by him. It is the respondents/defendants who have to plead and prove entitlement to forfeiture on account of loss having been caused on account of breach of contract by the appellant/plaintiff/proposed buyer. Thus, even assuming the appellant/plaintiff/proposed buyer is guilty of breach of contract, yet, the respondents/defendants will have to raise appropriate pleadings with respect to loss, get an issue framed, and thereafter lead evidence on such issue to show that losses have been caused to them on account of breach of the agreement to sell by the appellant/plaintiff/proposed buyer, entitling the forfeiture of the amount.