( 1 ) THIS second appeal was admitted on 29. 3. 1997 to consider the following substantial question of law, which is referred to as hereunder:"are not the Courts below in error in dismissing the plaintiffs suit, when it is an admitted fact that in pursuance of the 231 2005 (3) ALD June 1st allotment letter issued by the State government, the plaintiff had deposited the earnest money".

( 2 ) HEARD Sri S. Surya Prakasa Rao, learned Counsel representing the appellant- plaintiff and also the learned Standing counsel representing Machilipatnam municipality.

( 3 ) THE second appeal is preferred by the unsuccessful plaintiff in both the Courts below in getting the relief of Specific performance. The appellant-plaintiff filed the suit in OS No. 185 of 1986 on the file of the Principal District Munsif, Machilipatnam for the relief of Specific Performance of agreement of hire purchase system of the schedule house quarters by executing an agreement as per the terms of G. O. (P. S.) No. 2017 LA, Wealth and Local administration Department, dated 3. 9. 1958, by the 1st defendant-1 st respondent, machilipatnam Municipality, for allotment of house quarters as per G. O. Ms. No. 4, housing Municipal Administration and urban Development, dated 17. 1. 1977 and to deliver vacant possession of the schedule house quarters and also prayed for the execution of agreement and delivery of vacant possession after removing the 2nd defendant-2nd respondent herein from the quarters or in the alternative for granting a decree for a sum of Rs. 11,000/- against the respondents-defendants along with subsequent interest @ 12% p. a. In the Court of first instance, P. W. I and D. W. I were examined and Exs. A1 to A15 and Exs. Bl to B40 were marked. On appreciation of the evidence available on record, the Court of first instance dismissed the suit without costs, giving opportunity to the plaintiff to take back 20% of the deposit from the 1st defendant (1st respondent ). Aggrieved by the same, the unsuccessful plaintiff carried the matter by way of appeal in A. S. No. 174 of 1989 on the file of the learned 1st additional District and Sessions Judge, krishna, Machilipatnam and the Court below partly allowed the appeal directing the 1st respondent to repay the amount deposited by the plaintiff along with interest @ 12% p. a. from the date of deposit till the date of payment. With the said modification, the judgment and decree of the Court of first instance had been confirmed. Aggrieved by the same, the present second appeal had been preferred and the substantial question of law referred to supra had been framed by this Court.

( 4 ) LEARNED Counsel on record made several submissions inclusive of certain submissions relating to the concluded contract and the right to enforce the agreement. The parties are referred to hereinafter as arrayed in the Original Suit for the purpose of convenience. The plaintiff pleaded in the plaint as hereunder: the plaintiff is working as Health Inspector in Medical and Health Department, machilipatnam. The defendant municipality constructed houses at Noble Road Margin, venugopalapuram, Machilipatnam for allotment be deserving candidates as per the G. O. Ms. No. 2017 L. A. dated 3. 9. 1986 framing the rules to regulate the allotment of houses on hire purchase system by the local bodies in Andhra Pradesh. The defendant municipality issued notification calling for the applications who are desirous of allotment of houses as per G. O. Ms. , No. 2017 L. A. , and who are eligible to apply for allotment of the houses and publication was made by the municipality in Andhra Patrika daily dated 10. 8. 1975. The plaintiff is son of an Ex-military person and he is working as Healdi Inspector and applied for Low Income Group house after complying with the procedure as per the rules framed under the above said government order. The defendant municipality issued proceedings as per r. O. C. Noa. 1901/75 dated 1. 2. 1977 to the plaintiff all