1. The plaintiff, who filed the suit for recovery of amount and damages, have projected the instant second Appeal inveighing the judgment and decree dated 21.4.2007 passed by the Additional Subordinate Judge, Salem, in A.S. No. 224 of 2006 wherein and by which the judgment and decree dated 22.8.2006 recorded in O.S. No. 258 of 2004 on the file of the I Additional District Munsif, Salem, were reversed allowing the First Appeal at the instance of the defendant.

2. The case of the plaintiffs is that pursuant to the public notice issued by the defendant auctioning the suit property to an extent of 1220 sq.ft. on 29.12.2003, they offered to purchase the suit property at Rs.702/- sq. ft. thereby valuing the same at Rs.8,56,440/- and they became the successful bidders. It is stated that though they paid a sum of Rs.86,000/- by way of pay order on 29.12.2003 itself, the defendant by letter dated 31.12.2003, stated that there is possibility of increase of bid amount and they also replied for the same suitably. The case of the plaintiffs is that they sent letter dated 27.01.2004 for measuring the suit property and to receive the balance sale price, for which the defendant replied on 29.01.2004 directing them to remit the balance for execution of sale deed besides stating about the forfeiture of the EMD amount paid by them. It is the further case of the plaintiffs that the defendant by letter dated 30.01.2004, also stated that the suit property was sold in As is where is basis. The plaintiffs also stated that the actual property available on the ground is only 910 sq.ft. as per Salem Corporation records and not 1220 sq.ft. as mentioned in the auction notice. In view of the dilatory tactics adopted by the defendant, the plaintiffs requested for refund of the EMD amount along with 12% interest per annum besides issuing a legal notice on 26.3.2004. Despite expressing their readiness and willingness to purchase the property by paying balance consideration, since the defendant had not come forward to execute the sale deed, the plaintiffs filed the suit for recovery of the amount and also claiming damages. The plaintiffs also sought for direction to create charge over the suit property.

3. Resisting the suit, the defendant filed written statement denying all the averments made in the plaint. According to the defendant, one of the auction condition is that the EMD will be forfeited if the balance is not paid within 30 days from the date of confirmation of bid and the first plaintiff submitted his tender only after agreeing to abide by the auction conditions. It is stated that the property as a whole alone was proclaimed for sale and that there is no basis for claiming the refund of EMD amount. On these grounds, the defendant sought for dismissal of the suit.

4. Before the trial Court, the first plaintiff examined himself as P.W.1 and marked Exs. A.1 to A.27. To nullify the evidence of the plaintiff, one Radhakrishnan was examined as D.W.1 on the side of the defendant and Exs. B.1 to B.14 were marked.

5. The trial Court / learned I Additional District Munsif, Salem, on consideration of the evidence adduced and the materials available thereon, finding that the defendant is not entitled to forfeit the Earnest Money Deposit, decreed the suit as regards refund. Regarding the claim of damages and creating charge over the suit property, the trial Court dismissed the suit. Challenging the decreeing of the suit regarding refund of the amount, the defendant preferred appeal in A.S. No. 224 of 2006. The Lower Appellate Court, after appreciating the facts, relying on Ex. B.1 agreement, allowed the appeal dismissing the suit. Feeling aggrieved, the plaintiffs have come up with this Appeal.

6. At the time of admission of this appeal, this Court formulated the following substantial questions of law for consideration:-

(a) Whether the Lower Appellate Court erred in dismissing the suit only on the basis of Ex.B.1, which is one-sided and unilateral do