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TMI Blog1977 (12) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... efused but the learned Judge allowed the claim for refund of the sum of ₹ 3 lakhs to the appellant. The plaintiff appellant preferred this appeal. The respondent preferred a cross-objection in respect only of the said decree for the refund of the sum of ₹ 3 lakhs paid as earnest and towards the agreed purchase price. It is the respondent's cross-objection which has come up for our consideration. Accordingly, the respondent is virtually in the position of the appellant before us. 3. The facts shortly are that between 30th April, 1963 and 6th May, 1963 it was agreed by and between the above parties through one Ramkishanji Dhanuka that the respondent would sell to the appellant and the appellant would purchase from the respondent the property being the said premises in suit free from all encumbrances at and for the price of ₹ 10,75,000. One of the terms of the contract was that the appellant would advance a sum of ₹ 25,001 to the respondent towards and on account of the earnest money and in part payment of the agreed price or consideration. According to the appellant the agreement was arrived at orally but some of the terms of the agreement would appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to whether the appellant was or is ready and willing to perform his part of the contract and in respect of the payment by the appellant for a sum of ₹ 25,001 and of ₹ 2,75,000. The learned trial Judge held against the appellant in respect of his findings relating to the terms of the contract. In other words, it was held that the appellant had failed to prove the terms of the contract. The further finding was that the appellant was not ready or willing to perform his part of the agreement between the parties. The result, thereof, was that the suit was dismissed by the learned Judge. The learned Judge then held:-- Now that the plaintiff has lost, the question is whether the plaintiff is entitled to any portion of this money. As far as the earnest money is concerned there is no case of forfeiture of the earnest money. There is no oral evidence to that effect nor has the defendant proceeded on the basis of forfeiture. The argument advanced on behalf of the defendant was that if there was no contract money was not recoverable. It was said that if the agreement was ineffective the entire money was irrecoverable. Reliance was placed by counsel on behalf of the defendant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in points, that has to be considered in this cross-objection is whether the respondent cross-objector was entitled to forfeit the said amount, in the facts and circumstances of the case involved herein, 8. We have to consider here as to what was the character of the said sum of ₹ 3,00,001. Was the entirety of the amount paid as earnest? If not, to what extent, it was, if at all? The learned Judge noted in his judgment that counsel for the respondent made an offer during the trial to refund the sum of ₹ 3 lakhs, to the appellant but the appellant did not accept the offer and the case proceeded. Obviously, the appellant was thinking that the appellant would win and would get the decree for specific performance of the agreement but that had not been the case at the end. It is also to be noted that the respondent chose not to raise any issue on the question of forfeiture nor did the parties advance any separate argument on the point before the learned trial Judge. 9. The question as to what amounts to earnest and what are the characteristics thereof and under what circumstances the same might be liable to be forfeited upon default of the purchaser in completing the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions made by Wright J. in the case of Farr Smith Co. v. Messrs. Ltd, (supra). 10. Mr. Dipankar Ghose, learned counsel, appearing on behalf of the appellant contends, following the above principle as enunciated by the Supreme Court in the aforesaid case, that the sum of ₹ 2,75,000 was in any event, not paid on the conclusion of the contract, According to the appellant the contract was concluded by correspondence exchanged between 30th April, 1963 and 6th May, 1963. The appellant's further case was that the said agreement was modified or altered by subsequent agreement of 21st Aug. 1963 when the appellant agreed to pay the said further sum of ₹ 2,75,000 as earnest and in part payment of the purchase price. Mr. Ghose contends that this part of the appellant's case has been disbelieved and the trial Court has found that there was no such agreement. It follows, therefore, that such subsequent agreement went out of the way because that case was rejected by the trial Court. In any event, even according to the respondent, the agreement arrived at for the purchase of the premises was contained in letters written between 29th April, 1963 and 6th May, 1963 and the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the appellant who wanted to replace the previous cheque and to cancel the previous one and to replace the same by another cheque. The respondent after receiving the second cheque sent on 10th June, 1963 cancelled the previous one. That being the position, in my opinion, the position relating to the payment of the earnest money of ₹ 25,001 remained unaltered and must be held to have been made before the conclusion of the agreement, and Mr. Ghose's above contention must be rejected. Of course, what is the effect of the payment of ₹ 25,001 when the appellant's original agreement has been discarded by Court, is another question and that would be discussed on the basis of money had and received as urged by Mr. Ghose. 13. Mr. Ghose contends that the Court has found that the respondent's version relating to the contract as pleaded in para 7 of the written statement is correct. That has been accepted by the Court, but the question is, does that improve or alter the position? The appellant must establish its own contract or fail. The question of proving the contract as set up by the respondent does not become material because the appellant's case is that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s agreement. Mr. Bhabra has pointed out that in the agreement as pleaded in para 7 of the written statement it has been pladed that the earnest was to be paid not on the basis of the said agreement between the parties but as indicated above. There was neither any issue nor any proof that such earnest was paid in pursuance of the said contract as pleaded by the respondent. 15. Mr. Ghose has argued that the case of forfeiture, if any, of the earnest money was pleaded by the respondent and, therefore, if the respondent insisted on that then an issue ought to have been raised; but neither any issue was raised nor any evidence was adduced. It has been recorded in the last portion of the judgment that no attempt was made to advance any argument on that point. From the last portion of the said judgment it would appear that the respondent sought to argue some other point on the question of forfeiture. 16. The learned Judge has noted therein that there was no case of forfeiture of the earnest money. No oral evidence was adduced to that effect nor did the respondent proceed on the basis of forfeiture. The only argument that was advanced on behalf of the respondent, as recorded by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stance, in respect of the two important matters the said two agreements differ. One of the important terms of the appellant's agreement was that the vacant possession would be given but such a definite term is absent in the agreement as pleaded by the respondent. Similarly, the appellant asked for a good and marketable title but according to the respondent's version they were not obliged to give anything beyond the marketable title only. In the next place, no issue to that effect was raised in the court below. Issue No. 2 as raised was whether the money was paid pursuant to the agreement as alleged in the plaint. There was no issue which was raised as to whether it was paid pursuant to the agreement as alleged in paragraph 7 of the written statement. Lastly, the trial Court did not come to any finding that the earnest was paid pursuant to the respondent's agreement. All that the Court has found was that there was the agreement as pleaded in para 7 of the written statement and one of the terms was that the sum of ₹ 25,001 should be the earnest; but there again, there is no finding of the Court that the said sum was paid in terms of the said contract as pleaded by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a decree for specific performance. The issue as to breach of contract was not raised before the trial Court. Now an attempt is being made to prove that there was a breach. Since the parties did not go to trial on this point, the respondent is not entitled to raise this point here in the appeal stage. 21. Mr. Ghose has relied on the case of Nagubai Ammal v. B. Shama Rao, reported in AIR 1956 SC 583 in support of the proposition that the evidence adduced in one case on a particular issue cannot be made the foundation for the decision of a separate point on which no issue was raised at the trial and on which the parties did not go to trial. There the Supreme Court relied on the observation of Lord Dunedin in Siddik Mahomed Shah v. Mt. Saran, AIR 1930 PC 57 (1), that 'no amount of evidence can be looked into upon a plea which was never put forward. Upon that the Supreme Court observed at page 598:-- The true scope of this rule is that evidence let in on issues on which the parties actually went to trial should not be made the foundation for decision of another and different issue, which was not present to the minds of the parties and on which they had no opportunity of ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his part of the contract. At page 98 Bowen L.J. observed:-- It is quite certain that the purchaser cannot insist on abandoning his contract and yet recover the deposit. Then again, at page 99 Bowen L. J. observed;-- We have to look to the conduct of the parties and to the contract itself, and putting the two things together, to sea whether the purchaser has acted not merely so as to break his contract, but to entitle the other side to say he has repudiated and no longer stands by it, Fry, L. J. at page 105 observed:-- But in my opinion there has been such default as justifies the vendor in treating the contract as rescinded: it affords the vendor an alternative remedy, so that he may either affirm the contract and sell under this clause or rescind the contract and sell under his absolute title. The case of Howe v. Smith (1884) 27 Ch D 89 (supra) has been followed by Eve J. in the case of Hall v. Burnell, reported in (1911) 2 Ch 551, 554, 555. 24. The principle has been followed in India by our High Court even as far back as in 1897 in the case of Alokeshi Dassi v. Hara Chand Dass, reported in ILR (1897) 24 Cal 897. Maclean C. J. sitting with Banerjee, J. (late ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand in the way of the appellant recovering the earnest by way of refhnd, as has been decreed by the learned Judge, 27. Before I deal with the facts involved in the present case on the question of refund of earnest it is necessary to bear in mind, at this stage, that both the parties are faced with some limitations in attacking the findings of the learned Judge of the Court below. The appellant having failed to obtain relief by way of specific performance of the agreement, preferred the appeal but for some reason or other best known to him the appeal has not been pursued by him. It has come to an end except for the purpose of the cross-objection. It is practically now the respondent's appeal limited to the point of refund of the earnest. But to my mind, the appellant is slightly in an advantageous position in the sense that to support the learned Judge's decree for refund of the earnest money he would be in a position to dispute the correctness of the finding of the learned Judge in matter connected with the date of completion of the sale and in respect of the findings relating to the want of readiness and willingness on the part of the appellant amounting to breach, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point and, accordingly, at this stage the respondent cross-objector could not be allowed to challenge that part of the decree which directed refund of the earnest money. 30. A point has been raised before us relating to the statutory charge as provided under Section 55 of the T. P. Act. It has been urged that in deciding Tata Aircraft's case the Supreme Court did not take into consideration the same. My learned brother in his judgment, which is going to be delivered, has dealt with that point and as such I do not propose to deal with the same, but I agree with the findings arrived at by the learned Judge on that point. I had the opportunity to go through the draft of the judgment prepared by my learned brother. 31. I, accordingly, confirm the judgment and decree of the learned trial Judge that the sum of ₹ 3,00,000 should be refunded. As however more than 11 years have elapsed and the respondent had the use and benefit of the said sum of ₹ 3,00,000 so long without making any payment to the purchaser or to his heirs in terms of the decree, it seems to me that it would be fair and reasonable if we pass the following decree. 32. It is ordered and decreed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failure or default of the purchaser. 41. The principle of law regarding earnest of a bargain has been summarised by the Supreme Court in Tata Aircraft case, . 42. I will now consider the point concerning Section 55 of the T. P. Act. It arises in this way. The Court is dealing with the question whether under the facts and circumstances of the case, the respondent as seller is entitled to forfeit the earnest money paid by the plaintiff as buyer. Howe v. Smith, (1884) 27 Ch D 89 on which Mr. Bhabra relies is an English case dealing with the point in question on the basis of old equity cases and so forth. Tata Aircraft case relates to movable property. So. there was no occasion for the Supreme Court to consider the meaning and effect of Section 55(6) of the T. P. Act in that case. Although there may not be ultimately much difference as indicated hereinafter, I think I should indicate what appears to me in course of argument as to the effect of Section 55 of the T. P. Act under the facts of this case. 43. I shall read relevant portions of Section 55 of the T. P. Act. It is stated below: Section 55 : In the absence of a contract to the contrary, the buyer and the seller o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ient to exclude the operation of Section 55(6). Admittedly, there is no express term to the contrary in the facts of the present case. There is also no evidence as to whether the parties by using the word 'earnest' excluded the operation of Sub-section (6). These are all questions of fact. Therefore, the rule in Sub-section (6) would be attracted, viz., that the 'buyer will be entitled to the benefit of charge unless the buyer properly (improperly?) declines to accept delivery. It follows, therefore, that if the buyer improperly 'declines to accept' delivery he is not entitled to a charge under Sub-section (6). So, although, this is a statutory charge under Section 55(6), but to answer whether the seller can forfeit the earnest, ultimately, the same question arises, viz., has the buyer repudiated the contract? 45. Mr. Bhabra has relied on the decision of the Privy Council in Chiranjit Singh v. Bar Swarup, AIR 1926 PC 1 and submitted that there was forfeiture of earnest money in case of immovable property in that ease. But it should be noted that in the facts of that case the buyer of the immovable property was unable to purchase the same due to certain unavoi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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