Back
1974 Supreme(AP) 101
Andhra Pradesh High Court
Judges : A.V.KRISHNA RAO, O.CHINNAPPA REDDY
S.M.Ansarl - Appellant
Versus
Vejendla Subba Rao - Respondent
Decided On : 08-08-74
A purchaser who commits a breach of contract is not entitled to recover the earnest money paid, but may be entitled to recover the purchase price paid, except for the earnest money, if the vendor has not proved any damages suffered by him.
Headnote:
SALE OF LAND - CONTRACT - RESCISSION - PURCHASER'S RIGHT TO RECOVER PURCHASE PRICE - EARNEST MONEY - DISTINCTION - ADVANCE - MEANING - INTENTION OF PARTIES - VENDOR'S RIGHT TO RETAIN PURCHASE PRICE AS SECURITY FOR DAMAGES - ENGLISH AND INDIAN AUTHORITIES DISCUSSED.
Fact of the Case:
Plaintiff, a retired Army Captain, entered into an agreement with the Defendant, a Medical Practitioner, for the sale of a site in Nidubrole for the construction of a Cinema Hall. The Plaintiff paid a sum of Rs. 4,000/- as earnest money and the balance of the consideration was to be paid within 1 month. The sale deed was not executed before the due date. The Plaintiff paid additional amounts towards the balance of consideration. Later, the Plaintiff discovered that the area of the site was less than what was represented by the Defendant. He issued a notice to the Defendant rescinding the contract and claiming a refund of the amounts paid. The Defendant denied the allegations and claimed that the Plaintiff was not entitled to any damages. The trial court dismissed the Plaintiff's suit.
Finding of the Court:
The court found that the Plaintiff had committed a breach of contract and that the Defendant was not guilty of any laches or lack of bona fides in performing his part of the contract. The court also found that the contract was not vitiated by fraud and misrepresentation and that the Plaintiff was not entitled to rescind or repudiate the contract. However, the court held that the Plaintiff was entitled to recover the amounts paid towards the purchase price, except for the earnest money, as the Defendant had not proved any damages suffered by him.
Issues: 1. Whether the suit contract is vitiated by fraud and misrepresentation as alleged in the plaint? 2. Whether the plaintiff is entitled to rescind or repudiate the suit contract? 3. Whether the suit as framed is not maintainable? 4. Whether the plaintiff is estopped from filing the suit? 5. Whether the suit is barred by time? 6. Whether the plaintiff is entitled to any of the reliefs prayed for?
Ratio Decidendi: 1. The court held that the Plaintiff was not entitled to recover the earnest money paid as it was forfeited due to his breach of contract. 2. The court held that the Plaintiff was entitled to recover the amounts paid towards the purchase price, except for the earnest money, as the Defendant had not proved any damages suffered by him. 3. The court relied on English and Indian authorities to support its decision, including the principles that a party who commits a breach of contract cannot claim a refund of the purchase price unless the other party rescinds the contract, and that a vendor who rescinds a contract due to the purchaser's default is entitled to recover damages but must return any part of the price that may have been paid.
Final Decision: The court allowed the Plaintiff's appeal in part and decreed a sum of Rs. 22,500/- representing the advance made by him towards purchase money at 6 percent interest from the date of suit till recovery thereof. The parties were directed to bear their respective costs.
( 1 ) THE plaintiff appellant is a retired Army Captain residing at Chandole in Guntur District. He conceived the idea of constructing a Cinema Hall in nidubrole in the same District, Nidubrole had already two Cinema Homes. The defendant is a Medical Practitionor resid ng in Chandole Under Ex A-8 dated 19-3-1961, the defendant had purchased a site of an extent of ?5 3/4 cents in Nidubrole from one Kothamasu padmayathy. The plaintiff himself had owned about 10 cents immediately opposite to this site. The plaintiff and the defendant entered into an agreement, ext A-1 dated 31-10-1962 for the sale of the site purchased by the defendant under Ex. A-8. As per this agreement, the extent of the sice is mentioned as about 29 cents. The price agreed upon was Rs. 1175/- percent. Asum of rs. 4,000/- was paid on the date of the agreement as bayana . It was agreed that the corsideration should be paid at the rate for the extent of the site found on actual measu ement The balance of the consideration was to be paid within 1 months i e by 15-11-1962. in case the purchaser committed default in payment of the balance of consideration, interest was to be paid by him at one percent per mensem as and from the due date Possession of the sue was to be given to the purchaser on the date of the registration of the sale deed.
( 2 ) HOWEVER, the sale deed was not executed before 15-12-1962, The plaintiff had paid the defendant towards the balance of consideration payable, rs 4,000/-on 16-11-1962. Rs. 115,00/- on 3-2-1962, Rs. 3,000/- on 12-3-1963 and Rs. 4,000/- on 11-6-1963. Thus, inclusive of the bayana paid on the date of the agreement, the plaintiff paid to the defendant in all asum of Rs. 26,500/ -. On 15-10-1965, the plaintiff through his advocate Issued a notice In English to the defendant In this notice, the plaintiff had referred to the execution of ex. A. I and that he had paid in all a sum of Rs. 26,500/- including what he called the earnest money of Rs. 4000/- paid on 31-10-1962. It was averred in this notice that the plaintiff got the suit site measured on 9-9-1965 in the presence of the defendant and to his utter chagrin and disappointment, the area was only 25 cents and that the defendant had really purchased 25-3/4 cents from the previous owner Padmavathy. He accused the defendant of deciving him and committing fraud by false representation that he had purchased 29 cents from his vendor. It was only on he strength of such a representation the plaintiff had agreed to purchase the site at huge cos, He also accused the defendant of cheating. He expressed that 25 cents of land was insufficient for constructing a cinema Hall and stated that he was rescinding and repudiating the contract dated 31-10-1962 and called upon the defendant to return the sum of Rs. 26,5000/- paid with interest thereon within a week, failing which a suit would be filed for recovery of the amount. On 25-10-1965, the defendant sent a reply stating that he had sent an express Telegram on 18-10-1965 requesting the plaintiff to send him a copy of the contract of sale and that no reply wa sent. The present suit was filed by the plaintiff on 30-10-1965
( 3 ) IN the plaint, the plaintiff claimed in all asum of Rs if 501/- inclusive of interest on Rs. 26,500/~ paid from teh date of payment at 5 per cent and also a sum of Rs 1,000/- towards the amount spent by the plaintiff as preliminary to the construction of the cinema Hall. He claimed to have spent on 14-12-1965 this sum of Rs. 1,000/- for the services of an Engineer from guntur and also the blue prints of the theatre prepared
( 4 ) THE defendant resisted the suit den/ing the various allegations in the piaint. He stated in his written statement that the plaintiff was not enticed to any damages whatsoever and that the plaintiff himself was guilty of laches. The repudiation or rescission of the contract by the plaintiff was also illegal. The defendant was not guilty of any laches.
( 5 ) THE defendant w
