JUDGMENT :

R.F. Nariman, J.

Leave granted.

2. The facts of the present case show that there was an authorisation letter dated 08.03.1978 of the respondent to a certain power of attorney holder namely, Harnam Singh, to sell the property in question. Paragraph 6 of this authorisation letter reads as follows:

“Purchaser should be warned that his earnest money will stand as forfeited in my favour if he does not come forth to pay the balance amount to have the sale deed registered, inspite of my part being complete. Of course if I do not come forth before (sub) registrar to have balance amount and to have sale deed registered, the purchaser will have the right to have his earnest money back with equal amount as damages or to have sale deed registered under specific performance and relief act in his own, or his nominee's name.”

3. On 05.06.1978, in pursuance of this authorisation letter, an agreement to sell the said property was arrived at in a sum of Rs. 3,25,000/- out of which earnest money of Rs. 32,500/- was deposited along with the agreement. The agreement to sell also contained para 6, in which it was stated as under:

“Should the bargain fail to materialize action will be taken in accor