ABAS ALI Vs. KODHUSAO

JUDGEMENT

(1.) THE question referred for the consideration of this Full Beach is as follows: If A agrees to sell a property to B and earnest money or an advance payment of part of the purchase-money is paid to A, and if B subsequently commits a breach of the contract is B entitled to recover from A, the advance payment or earnest money in question?

(2.) IT will be convenient to consider first the question of earnest money simpliciter, leaving out of account the item of an advance payment of part of the purchase money, regarding which it is possible that different legal incidents might arise.

(3.) THE application of this principle to the question before us settles the case in my opinion. It need hardly be said incidentally that, in the question we have before us, we assume that it is immovable property which has been agreed to be sold. It has been urged by the pleader for the applicants that their Lordships' decision on this question must be regarded as a mere obiter dictum. I am wholly unable to see any ground whatever for this suggestion. Very obviously, the matter in question formed the crux of the appeal and the mere brevity of their Lordship's judgment on the question at issue cannot, in any way, justify the assumption that their Lordships had not given-full consideration to the questipn involved. It would be utterly unreasonable to assume that, when their Lordships issued the dictum in question, they had not in mind the fact of the existence of the Indian Contract Act and the fact that provisions like Sections 63, 64, 73 and 74 there of are on the Statute Book. I find it impossible to assume that their Lordships were not laying down a general proposition of law on the point involved. It has even been suggested that their Lordships, in deciding the question, were, at the time, dealing with a decision of the Allahabad High Court, which has been in the habit of taking the view followed by Drake-Brockman, J.C., in Mangal Lal v. Mt. Nanhi A.I.R. 1922 Nag. 104, quoted above, and that their decision might have been different had they been dealing with a case from certain other High Courts which have taken, in the past, the contrary view. I find it utterly impossible to make any such assumption which would involve the absurdity that their Lordships assumed that the incidents of the law of contract would differ on a matter like this as between different High Courts. In the circumstances, it seems to me clear that this Court, in view of the decision of their Lordships, is bound to answer the question referred to the Full Bench in the negative; in other words, my answer to the said question would be as follows: If A agrees to sell a property to B and earnest money is paid to A, and if B subsequently commits a breach of the contract, B is not entitled to recover from A the said earnest money.