IMPORTANT POINT
A purchaser in breach of a sale agreement is entitled to recover the advance payment unless the vendor proves damages resulting from the breach.

JUDGMENT :

Sathish Ninan, J.

The suit for return of advance sale consideration paid under an agreement for sale, was decreed in part. Challenging that part of the decree which declined relief, the plaintiff is in appeal.

2. Ext.A1 agreement dated 09.12.2013 was entered into between the plaintiff and the defendant, where under, the plaint 'A' schedule property was to be purchased by the plaintiff from the defendant for a total consideration of Rs. 1,79,50,000/-. The discharge of the consideration was to be by conveyance of the plaint 'B' schedule property having a value of Rs.50 lakhs in favour of the defendant and the balance amount of Rs. 1,29,50,000/- to be paid. The period fixed for performance was up to 30.09.2014. As evidenced by Ext.B1 memorandum dated 07.06.2015, the period fixed for performance was extended up to 20.08.2015. Under the agreement the plaintiff paid a total amount of Rs.85 lakhs towards advance sale consideration. Alleging that the defendant failed to convince the plaintiff of the extent and title, the suit was instituted for return of the advance sale consideration.

3. The execution of Ext.A1 agreement and Ext.B1 mediation memorandum, are not in dispute. The receipt of Rs.85 lakhs towards advance sale consideration is also admitted. It is the contention of the defendant that the plaintiff was not ready and willing to perform the agreement. It was claimed that consequent to the default on the part of the plaintiff to perform the agreement, the defendant sustained damages. He sought appropriation of the advance amount of Rs.85 lakhs, towards the damages.

4. The trial court held that the plaintiff had committed breach of the agreement. It is also found that the defendant has failed to prove the damages suffered by him consequent on the breach. However, the court opined that, upon the breach of the agreement, the defendant must have sustained damages and fixed the sum of Rs.10 lakhs. The plaintiff was granted a decree for recovery of the balance Rs.75 lakhs.

5. We have heard Sri.G.P.Shinod, the learned counsel for the appellant-plaintiff and Sri.Vinod Bhat, the learned counsel for the respondent-defendant.

The points that arise for determination are:-

(i) In the absence of any proof of damages, was the trial court right in having not granted a decree allowing the plaintiff to recover the entire advance sale consideration paid?

(ii) Is the plaintiff entitled for interest on the advance sale consideration and if so at what rate?

6. Law is well settled that even if the plaintiff-purchaser is in breach of the agreement for sale, he is entitled for return of the advance sale consideration paid unless, the defendant-vendor proves that he has sustained any damages consequent to the breach (See: Ahammedkutty Bran v. Sukumaran [ 2024 (3) KHC 494])

7. It is the case of the defendant that consequent on the non-performance of the agreement by the plaintiff, he has suffered damages. The manner in which the defendant claims to have suffered damages is narrated in paragraph 23 of the written statement. The same reads thus :-

“23. There was a coffee hulling mill with one 10 HP motor, one 2 HP motor, and one 8 HP motor, with all accessories such as a coffee huller, elevator, vibrator motor shed, husk shed, 3 phase electric connection and buildings in the A schedule property. The defendant No.1 was eking livelihood by running the mill in the A schedule property. The functioning of T.V.R. Mill in the A schedule property, was stopped by the defendants, with the sole intention and expectation that, the plaintiff would perform his part of the agreement well within time. Three phase electric connection was also dismantled on the request of the plaintiff. The claims of workers in the Mill were also not renewed since the agreement with plaintiff. Over and above all these, the buildings in the A schedule property also was demolished on the request of the plaintiff. All the machineries, allied articles were sold at a throw away price. In fact, e