SUDHIR RAWAL Vs. SATISH BATRA

JUDGEMENT

(1.) The challenge by means of this Regular First Appeal under Section 96 of Code of Civil Procedure, 1908 (CPC) is to the impugned judgment of the trial Court dated 23.10.2009. By the impugned judgment, the trial Court dismissed the suit for recovery of Rs.7 lacs which was filed by the appellant/plaintiff being the amount which was paid by the appellant/plaintiff/proposed buyer under an agreement to sell with the respondent/defendant/proposed seller. The trial Court upheld the entitlement of the respondent/defendant to forfeit the amount of Rs.7 lacs received pursuant to the agreement to sell.

(2.) The facts of the case are that the parties entered into an agreement to sell dated 29.11.2005 whereby the respondent/defendant had agreed to sell to the appellant/plaintiff the property bearing No.14/11, Second Floor, Punjabi Bagh, New Delhi for a total sale consideration of Rs.70 lacs. An advance payment of Rs.7 lacs was received by the respondent/defendant under the agreement to sell.

(3.) An entitlement of the proposed seller to forfeit the advance price or earnest money received is an issue which is no longer res integra. The Constitution Bench of the Supreme Court way back in the judgment of Fateh Chand Vs. Balkishan Dass, 1964 1 SCR 515 has held that even if the proposed buyer is guilty of breach of contract, the seller cannot forfeit the advance price or earnest money unless he pleads and proves that loss has been caused to the seller/defendant on account of breach of contract of the appellant/plaintiff/buyer. The relevant paragraphs of the decision in the case of Fateh Chand are 8,10,15 and 16 and the same read as under:-