JUDGMENT :

ALTAMAS KABIR, J.

1. Leave granted.

2. The Respondents are perpetual Sub-lessees of Plot No.C-2/13, Vasant Vihar, New Delhi, measuring 600 sq. yards, allotted to them through the Government Servants Cooperative House Building Society Limited. They erected a single-storeyed structure on the said land and vide Agreement dated 8th September, 1978, they agreed to sell the said property to the Appellant together with the building erected thereon for a consideration of Rs.5,90,000/-. The Appellant paid a sum of Rs.50,000/- to the Respondents in advance to enable them to apply for necessary permission for transfer and to obtain Clearance Certificate from the Tax authorities. The Agreement stipulated that on receipt of the said Clearance, the Respondents were to inform the Appellant of its receipt, and, thereafter, the Appellant was required to complete the sale within 60 days by paying the balance consideration agreed to between the parties. In case the Respondents failed to apply for permission to sell within 15 days from the date of the Agreement, the Appellant had the option to determine the Agreement whereupon the Respondents were required to refund the earnest money and to pay damages to the Appellant assessed at Rs.50,000/-.

3. The provision in the Agreement which is crucial for a decision in this Appeal is Clause 9, which is extracted hereinbelow :

“9. That if the Seller applies for sale permission within the time stipulated in clause 8 above, but does not get it within 6 months, the Seller may determine this Agreement and the Seller shall refund to the Purchaser the earnest money received by him without any damages or interest, within a period of 15 days from the date of determination of the Agreement.”

4. Inasmuch as, the sale was not being completed by the Respondents, the Appellant filed Suit No.278 of 2003, in the Court of Additional District Judge, Delhi, for specific performance of the contract.

5. Clause 2 of the Agreement to Sell stipulates that upon execution of the Agreement, the Respondents would immediately apply to the Delhi Development Authority (DDA) and the Competent Authority under the Urban Land (Ceiling and Regulation) Act, 1976, for permission to transfer the said property to the Purchaser/Appellant free from all encumbrances, after obtaining requisite permissions from any other Body or Authority. In Clause 3 of the Agreement, the Respondents also undertook to obtain the Income Tax Clearance Certificate immediately on obtaining the sale permission from the concerned authorities and to inform the Purchaser/Appellant by Registered Post with Acknowledgment Due accordingly.

As indicated hereinabove, Clause 4 of the Agreement stipulates that on being informed of the receipt of the requisite permission from the Respondents, the Appellant would have to complete the sale within a period of 60 days from the date of receipt of such intimation and on being furnished with the copies of the permission and the Income Tax Clearance Certificate.

6. Clause 8 of the Agreement to Sell is of special significance to the facts of this case and is, accordingly, extracted hereinbelow :

“8. That if for any reason the Seller fails to apply for permission to sell the said property to the Purchaser within a period of 15 days from the date of signing this Agreement, the Purchaser shall have the option to determine this Agreement and in that event the Seller shall refund the earnest money of Rs.50,000/- (Rupees Fifty Thousand only) as received by him and pay to the Purchaser damages which are assessed as the sum of Rs.50,000/- (Rupees Fifty Thousand only).”

7. As will be evident from the aforesaid Clause, the Purchaser was given the option to exit from the Agreement in case the Seller failed to apply for permission for sale of the property within a period of 15 days from the date of signing of the Agreement. Clause 9 of the Agreement which is crucial for a decision in this appeal, contains the right of the Seller to dete