IN THE HIGH COURT OF DELHI AT NEW DELHI
VALMIKI J.MEHTA, J.
M.C. Luthra – Appellant
Versus
Ashok Kumar Khanna – Respondent
RFA No.780 of 2017
Decided On : 27-02-2018
Contract Act, 1872 - Section 74 - Civil Procedure Code, 1908 - Section 96 - Recovery - Breach of agreement - Earnest money - Forfeiture Scope of - Trial court held none of the parties being guilty of breach of contract, the plaintiff is found to have filed the suit before the due date fixed for performance - Plaintiff cannot seek double the amount of earnest money paid - Appellant is held entitled to forfeit only a nominal sum of Rs. 50,000/- and not a sum of Rs. 9,00,000/- - As no loss is pleaded and proved to be caused to the appellant on account of the breach of the agreement to sell - Order of Trial court is partly modified - Decree passed in favour of the plaintiff for an amount of Rs. 8,50,000/- Trial court has not granted pre-suit interest - Pendente lite and future interest will be modified - Plaintiff will be entitled to interest at the rate granted by trial court of 12% per annum from the date of the agreement to sell.
VALMIKI J. MEHTA, J.
1. This Regular First Appeal under Section 96 of the Code of Civil Procedure, 1908 (CPC) is filed by the defendant in the suit impugning the judgment of the Trial Court dated 9.6.2017 by which trial court has decreed the suit for recovery of Rs.18 lacs filed by the respondent/plaintiff for an amount of Rs.9 lacs with interest at 12% per annum pendente lite and future. The counter-claim of the appellant/defendant to forfeit the amount of Rs.9 lacs was dismissed by the impugned judgment. The amount decreed of Rs. 9 lacs is the amount which was paid by the respondent/plaintiff to the appellant/defendant/counter-claimant under the agreement to sell dated 15.9.2005 entered into with respect to the property of the appellant/defendant being Flat no. D504, Chanakya Cooperative Society, Sector 4, Plot No.23, Dwarka, New Delhi.
2. At the time of issuance of the notice in this appeal on 12.9.2017, the following order was passed and which shows that the appellant/defendant/counter-claimant contended that the appellant/defendant should be held entitled to forfeit, if not the amount of Rs.9 lacs decreed in favour of the respondent/plaintiff, then at least the amount of Rs.3 lacs. This order dated 12.9.2017 reads as under:-
“C.M. Appl. No. 33138/2017 (for exemption)
Exemption allowed, subject to all just exceptions.
The application stands disposed of.
RFA 780/2017 and C.M. Appl. No. 33137/2017 (for stay)
1. Learned counsel for the appellant argues that the entitlement of the appellant/proposed seller, if not to forfeit the entire earnest money, was to forfeit a reasonable part thereof once the respondent/plaintiff was guilty of breach of contract, and which the respondent/plaintiff was in the facts of the present case. It is accordingly argued that ordinarily in cases like the present Court have allowed forfeiture of 10% of the price or lesser depending on the facts of each case, and therefore, it is argued that in the present case appellant is entitled to forfeit at least a sum of Rs.3,00,000/- from the amount of Rs.9,00,000/- received by the appellant. Reliance is placed upon the judgment of the Constitution Bench of the Supreme Court in the case of Fateh Chand Vs. Balkishan Dass AIR 1963 SC 1405 to argue that forfeiture of earnest money is permitted provided what is forfeited is the earnest money and not a part of the price with the description of the amount received being immaterial but substance of the actual payment having to be seen.
2. In view of the arguments urged by counsel for the appellant, till further orders unless varied by the Court and subject to the appellant depositing a sum of Rs.6,00,000/- in this Court within a period of two months from today there shall be stay of operation of the judgment and decree dated 9.6.2017.
3. Notice be issued to the respondent on filing of process fee, both in the ordinary method as well as by registered AD post, returnable on 22nd January, 2018.”
3. Today counsel for the appellant/defendant/counter-claimant has, in spite of what is recorded in the order dated 12.9.2017 of appellant/defendant restricting the claim of forfeiture to a reasonable amount of Rs. 3 lacs out of Rs.9 lacs, argued by placing reliance upon the judgment of the Supreme Court in the case of Satish Batra Vs. Sudhir Rawal (2013) 1 SCC 345 that since the amount of Rs.9lacs was paid by the respondent/plaintiff to the appellant/defendant as earnest money, hence in accordance with the ratio in the case of Satish Batra (supra) the entire amount of Rs. 9 lacs can be forfeited by the appellant/defendant as permitted by Clause 8 of the agreement to sell. The impugned judgment of the trial court is therefore prayed to be set aside and the counter-claim of the appellant/defendant is prayed for being decreed for entitling the appellant/defendant to forfeit the entire amount of Rs.9 lacs received by the appellant/defendant from the respondent/plaintiff.
4. There is no dispute between the parties that parties had en
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