S NATESA MUDALIAR DIED Vs. T SULOCHANA AMMAL

JUDGEMENT

(1.) THE defendants in Origiginal Suit No. 59 of 1971 on the file of the Court of the Subordinate Judge of Vellore, are the appellants. Pending the appeal the first appellant (first defendant) died. THE second appellant (second defendant) and appellants 3 and 4 have been brought on record as legal representatives.

(2.) THE facts of the case may be briefly set out as follows: THE second defendant is the son of the first defendant. THE suit property is a house property in Vellore town. On 7th December, 1969 defendants 1 and 2 entered into Exhibit A-1 agreement with the plaintiff by which they promised to sell the suit property to the plaintiff for a sum of Rs. 1,60,000. On the date of the agreement a sum of Rs. 27,500 was paid by the plaintiff to defendants 1 and 2 as advance. It was agreed that on or before 6th March, 1970 the plaintiff should pay the balance of Rs. 1,32,500 and get the sale deed executed and registered. If the plaintiff failed to do so the advance amount of Rs. 27,500 would be forfeited. If, on the other hand, defendants 1 and 2 committed default in the execution of the sale deed within the fixed period, defendants 1 and 2, should refund the advance amount of Rs. 27,500 and further will be bound by the proceedings that might be taken by the plaintiff for specific performance. According to the plaintiff, since defendants 1 and 2 committed breach of Exhibit A-1 agreement she filed the suit for the recovery of the advance amount of Rs. 27,500 together with interest. THE total sum claimed in the plaint is Rs. 29,649.50. It is the plaintiff's case that at the time of Exhibit A-1 agreement the defendants undertook to show the title deeds before the execution of the sale deed but failed to do so. THEy assured the plaintiff that there were no encumbrances over the property agreed to be sold. However, the plaintiff obtained an encumbrance certificate and found that the property was subject to a prior encumbrance of Rs. 50,000 to one Vijayaranga Mudaliar. THEre was another mortgage dated 6th January, 1964 to the extent of Rs. 29,000 subsisting in favour of Chagganlal Kalidoss and C"mpany. Yet another mortgage for Rs. 40,000 in favour of one Kuppusami Naicker of Madras. THE plaintiff also came to know that the property agreed to be sold was subject to orders of attachment obtained in execution of decree in Original Suit No. 6818 of 1965 and Original Suit No. 82 of 1968 on the file of the City Civil Court, Bombay, for a total sum of Rs. 30,000. THE heirs of one of the mortgagees, Kuppusami Naicker had obtained a mortgage decree and were taking steps to bring the hypotheca to sale. THE defendants were said to be in arrears of income-tax to the extent of Rs. 10,000 and municipal tax to the extent of Rs. 7,000. On 5th March, 1970 the plaintiff issued a notice Exhibit B-35 calling upon the defendants to discharge the encumbrances and tax liabilities to enable the sale transaction to be pushed through or in default to return the advance sum of Rs. 27,500. THE defendants sent a reply Exhibit B-16 on 8th March, 1970 wherein they have stated that the plaintiff has committed breach of the contract and that consequently the sum of Rs. 27,500 was liable to be forfeited. Consequently the plaintiff has filed the suit for the recovery of the advance amount of Rs. 27,500 with interest at 6%. per annum from 7th December, 1969 till the date of realisation. THE plaintiff has further pleaded that even if the Court were to find that she has committed breach of the contract, the defendants could not forfeit the entire sum of Rs. 27,500 under section 74 of the Contract Act.

(3.) AN additional written statement has been filed by the first defendant. In the additional written statement it is stated that the case of the plaintiff that the clause relating to forfeiture of the advance amount, amounts to a penalty is not sustainable. According to the defendants they have suffered greater loss than the plaintiff. A valuable property of the defendants had to be sold in Court sale, because of the breach committed by the plaintiff and the defendants had to suffer a loss of Rs. 30,000. Further, the defendants have suffered loss by way of accumulation of interest on the debts unpaid by them. They have also lost the advantage of the discount which their creditors had agreed to give them provided the amounts were paid on the agreed date.