The judgment established that a party committing breach of contract cannot claim repayment of consideration without rescission by the other party.

1. The appellant contracted to give and the respondent to accept, for a consideration of Rs. 10,090/-, the assignment of a decree which the former had obtained. On the date of the contract, the appellant was paid a sum of Rs. 1,000/- as part of the consideration, and more than three months later, another sum of Rs. 1,000/- was also similarly paid. Alleging default on the part of the appellant, the respondent has sued the appellant to enforce, repayment of the sum of Rs. 2,000/- which he paid. The appellant pleaded, that the respondent had committed breach of contract in not taking the assignment which the appellant was still prepared to give. The two courts have found that the respondent had committed breach and yet have decreed the suit holding that the appellant's remedy lay in damages against the respondent.

2. In this appeal the learned counsel first attempted to establish, that the payment made by the respondent was in the nature of a deposit by way of earnest or of guarantee for the due performance of the contract. The appellant had no such case in the written statement and the second of the payments was made not on the date of the contract, but only about three months later. There is nothing to distinguish between the nature of the two payments and this contention has only to be repelled. The distinction between a deposit with the seller by way of earnest and a part payment of the consideration to him, lies in the intention with which the deposit or the payment is made. In the former, the intention is to assure the seller that the buyer is in earnest or is sincere and guarantees or secures the due performance of the contract on his part and when the transaction goes through the amount deposited is adjusted towards the sale consideration; in the latter, this intention is not present, but there is simply a part payment. In the former the deposit is forfeited on default, though decided cases have evolved certain principles of equity which it is unnecessary to consider.

3. The question in the present case is whether the respondent who had committed breach of contract is entitled to recover from the appellant, who not only is ready and willing to perform his part of the contract but also insists upon the respondent doing likewise. In the case of breach of contract, the injured party, according to Cheshire, the learned author, may take one of two courses. "He may, despite so violent a breach, hold the defaulting party to his promise. If he adopts this course, he himself remains liable on the contract, but he may recover damages for any loss sustained. His alternative course is to accept the breach as discharging the contract" - Cheshire and Fifoot on Law of Contract, 5th Edition, page 495. In the latter event, he would be relieved from further performance of the contract and may sue for damages. 'One who simply breaches his contract does not thereby rescind it, though his act may give the other party a right to claim rescission and restoration." - Black on Rescission and Cancellation, 1916 edition. Volume I, page 5. The respondent though guilty of breach of contract, cannot be supposed to have by such breach rescinded or put an end to the contract by himself; that is a right which the other party to the contract may avail himself of. "Upon the rescission of a contract, either of the parties will be entitled to demand and recover from the other whatever was paid to him as the consideration of the contract or in execution of its terms, making allowance, of course, for the set-off of corresponding demands on the other side." - See Black on Rescission and Cancellation, Volume II, page 703. Mayne and Mcgregor observe in their work on Damages, 12th edn., page 238, that

"If there is no agreement, whether express or implied, that money paid shall not be returnable on default, then nothing in the nature of agreed liquidated damages exists in the contract and the defaulter is entitled, if the other party rescinds on the basis