ORDER : -It is a misnomer to call the amount of Rs.500, deposited by the plaintiff for the due performance of the contract as earnest money. There is no question of any vendor or purchaser in the case. What the plaintiff agreed with the defendant was that he would construct a bus stand on a land belonging to him and after doing so lease out the building to the Panchayat Board on a rent of Rs.200 per year. After some procrastination it was found that the plaintiff did not perform the original contract. Later on he wrote to the Panchayat Board stating that for the due performance of the contract he would deposit a sum of Rs.500. Even in the correspondence which followed this agreement, there is nothing to show that in case the plaintiff did not build the bus stand within the time allowed to him the amount of Rs.500 paid by him would be forfeited.

2. In - Chiranjit Sing v. Har Swamp, AIR 1926 PC 1 at p.2 (A), Lord Shaw lays down,

"Earnest money is part of the purchase price when the transaction goes forward; it is forfeited when the transaction falls through, by reason of the fault or failure of the vendee."

From this it is clear that the appositeness of the term "earnest money"