( 1 ) QUESTIONING the correctness of a Division Bench decision of this Court in Capatain S. M. Ansari v. Dr. Vejendla Subba Rao (1975) 2 APLJ (HC) 136 a Division Bench presided over by one of us (Bilal Nazki,j.) referred this letters patent appeal to the Full Bench.

( 2 ) THE fact of the matter lies in a very narrow compass. The defendant is the appellant. On 17-9-1974 the parties entered into an agreement in terms whereof the plaintiff respondent agreed to purchase two rolling machines from the defendant for a sum of Rs. 53,000/ -. Prior thereto the plaintiff had inspected the said two rolling machines and paid a sum of Rs. 10,000/- each on 17-9-1974 and 28-9-1974. the defendant was required to deliver the machines upon the receipt of the balance amount of Rs. 33,000/ -. The plaintiff made an allegation to the effect that after a month he found that the machines which were inferior and worn out, were sought to be sold in place of machines which were agreed to be sold. He made his protest and asked for refund of Rs. 20,000/ -. A notice dated 8-6-1977 marked as Ex. A. 2 was issued by the plaintiff wherein the said sum of refund was claimed with interest at 12% per annum. The defendant sent a reply dated 20-6-1977 disputing the allegations made therein and he expressed that he is ready and willing to deliver the mahcines against the pyment of balance of purchase price of Rs. 33,000/- together with interest from the expiry of one month from the date of contract and that the contract cannot be unilaterally cancelled or rescinded by the plaintiff.

( 3 ) THE plaintiff respondent filed a suit on 20-9-1977 for refund of the said amount of Rs. 20,000/- together with interest. The learned trial Judge framed inter alia the following issue which is relevant for the purpose of answering the reference. Whether the plaintiff is entitled for refund of the advance paid?

( 4 ) THE learned Trial Judge after going through the material evidence on record held : the evidence of DW. 2, PW. 2, Ex. A. 1, very clearly show that both parties agreed that this Rs. 20,000/- shall be part of the said consideration and they never intend to treat it as earnest money. If the amount paid already is not part of sale consideration than the balance would not be Rs. 33,000/- as the total price is admittedly Rs. 53,000/ -. So I have no hesitation to come to the conclusion that this amount of Rs. 20,000/- is part of the sale consideration and is paid in advance and the parties never forfeit it on the happening or non-happening of an event. There is no clause in Ex. A. 1 or in the oral agreement of PW. 1 and DW. 2 that the amount can be forfeited. So in view of the rulings relied by the plaintiff even though the breach is on the part of the plaintiff he would be entitled to refund of the amount, or it is part of sale consideration and was paid in advance.

( 5 ) DESPITE the aforementioned finding, the suit was decreed directing the defendant to refund the said sum of Rs. 20,000/- together with interest at the rate of 12% per annum. On appeal,the learned single Judge affirmed the judgment, but modified the decree by reducing the rate interest to 6%.

( 6 ) IN the letters patent appeal before the Division Bench, the decision of Privy Council in Chiranjit Singh v. Har Swarup, AIR 1926 PC 1, was referred for the proposition that as the defendant had all along been ready and willing to perform his part of contract, he has not committed any breach therein and that no decree could have been passed.

( 7 ) THE counsel appearing for the plaintiff-respondent relied on the decision in Captan S. M. Ansari (supra ). Having regard to the divergence of judicial opinion as noticed hereinbefore, the matter has been referred to this Bench.

( 8 ) THE relief for specific performance of contract is based on equity. Only because, the suit can be decreed, the same by itself may not entitle the plaintiff to obtain a decree. In the instant case, a finding of fact has been arrive