SEETHARAMA Vs. ABBAS

JUDGEMENT

(1.) THE defendant in a suit for recovery of money is the revision petitioner.

(2.) THE respondent instituted the suit for recovery of a sum Rs. 2,000/- which be had paid to the defendant at the time of execution of ext A1 agreement.

(3.) MRS. Devakikutty, learned counsel for the respondent-plaintiff on the other hand, contended that the amount in dispute was specifically paid as part of the purchase price of Rs. 25,000/- and therefore the same cannot be treated as 'earnest money' which, under law represents the guarantee that the contract will be fulfilled. This amount therefore cannot be forfeited unless the court in exercise of power under S 74 of The Contract Act finds that the amount sought to be forfeited is reasonable, the learned counsel submits. The counsel adds that so far as the sum already paid is concerned the same can be forfeited only if there exists a covenant in the contract enabling forfeiture, unlike in the case of earnest money.