Earnest money is liable to forfeiture by the vendor when the contract goes off for default on the part of the purchaser, notwithstanding Sections 64, 65 and 74 of the Indian Contract Act.

( 1 ) THIS rule has been obtained by the plaintiff against the dismissal of his suit for, inter alia, recovery of a certain sum of money, paid by him as earnest money in connection with an agreement for sale of land. In the suit, there was also a claim for interest by way of damages. The suit has been dismissed by the learned 'subordinate Judge, exercising powers under the Provincial Small Cause Courts Act, and in this Rule, the plaintiff has challenged the said dismissal.

( 2 ) THE material facts lie within a short compass and they are as follows : On March 24, 1948, the defendant-opposite parties executed in favour of the plaintiff-petitioner a 'baina' or agreement for sale, Ex. 1, in respect of certain lands and received from him (the plaintiff) a sum of Rs. 501/- as and by way of earnest money. Later on, the parties differed as to the extent and scope of the subject-matter of the said 'baina', Ex. 1 with the result that the transaction eventually fell through. Thereupon, the plaintiff demanded back the earnest money and, the defendants having refused to, return the same, the plaintiff instituted the present suit.

( 3 ) THE plaintiff's main allegations were that the transaction had fallen through owing to default on the part of the defendants, in other words, that the defendants were guilty of breach of contract, and, that, accordingly, the plaintiff was entitled to a return of the earnest money and was also, in the circumstances, entitled to interest by way of damages. The defence, inter alia, was that the defendants had, in the exercise of their lawful rights, forfeited the earnest money and, as such, the plaintiff was not entitled to its return or to any relief in the suit. According to both parties, the contract was at an end. Each party, however, accused the other of having broken the contract. The plaintiff contended that the 'baina' Ex. 1, entitled him to the disputed lands in mokarari rights (including the subordinate interest, if any), in other words, to the superior or mokarari interst and also to the subordinate interst, if any, in the disputed lands, and to khas or actual possession of the said lands. The defence, on the other hand, was that, upon a proper construction of the 'baina', Ex. 1, the plaintiff was entitled only to the superior or mokarari interest in the disputed lands as distinct from the subordinate interest, if any, and was entitled to possession only of the superior interest and not to actual or khas possession of the said lands.

( 4 ) THE learned Subordinate Judge held against the plaintiff on the question of construction of the 'baina', Ex. 1, and found that the plaintiff was the party in default, in other words, that the plaintiff was guilty of breach of contract, and he held, further, that the defendants had lawfully forfeited the earnest money. On the above findings, the learned Subordinate Judge dismissed the plaintiff's suit. In this Rule, two contentions have been raised on behalf of the plaintiff-petitioner. One is that, on the queston of construction of the 'baina', Ex. 1, the learned Subordinate Judge was in error in not accepting the plaintiff's case, as set out above, and that, because of this mistake, the learned Subordinate Judge came to a wrong conclusion on the question of responsibility for the breach of contract, in other words, that he was wrong in finding that the plaintiff was guilty of the breach. The second contention is that, even assuming that the learned Subordinate Judge's construction of the 'baina', Ex. 1, was correct and that the plaintiff had been guilty of breach of contract, still the defendants were not entitled to forfeit the earnest money and the plaintiff was, notwithstanding the default on his part, entitled to its return.

( 5 ) THE first contention of the petitioner presents no serious difficulty. The 'baina', Ex. 1, expressly mentions that the defendants had only the superior or mokarari interest in the disputed lands and that ther