1960 Supreme(P&H) 227

PUNJAB & HARYANA HIGH COURT
G.D.Khosla and Tek Chand JJ.
Sardarilal
Versus
Shrimati Shakuntla Devi
Regular First Appeal No. 90 of 1951,
Decided On : DECEMBER 21, 1960

Section 54 of the Transfer of Property Act requires that the transfer of ownership by way of sale of tangible immovable property of the value of one hundred rupees and upwards can be made only by a registered instrument.

Headnote:

TRANSFER OF PROPERTY ACT - SECTION 54 - SALE OF IMMOVABLE PROPERTY - REGISTRATION - PART PERFORMANCE - SECTION 53-A - FORFEITURE OF EARNEST MONEY - DAMAGES.

Fact of the Case:

The plaintiff, Shrimati Shakuntala Devi, entered into an agreement with the defendants, the sons of Shri Rup Lal, proprietors of the firm of Messrs. Ushnak Mal Mul Chand, to purchase a house in Model Town, Lahore, for Rs. 58,000. The plaintiff paid Rs. 5,000 as earnest money and Rs. 18,000 and Rs. 10,000 as part of the purchase price. The defendants were to get the sale deed registered within three months and receive the balance of the purchase price at the time of registration. If the sale was not completed within the stipulated period, the earnest money would be forfeited and the agreement to sell would be considered cancelled. The plaintiff was entitled to get the sale effected compulsorily through Court in case the defendants failed to do so. The plaintiff took possession of the house in April 1947. Due to communal riots in Lahore in May 1947, the transaction of sale could not be completed within the stipulated period. The plaintiff sent a registered notice to the defendants in April 1948 stating that she was entitled to a refund of the earnest money and the advance amount of Rs. 28,000, i.e. Rs. 33,000 in all, along with interest. The defendants replied that it was the plaintiff who left Lahore without leaving any information with them and that she intentionally committed breach of the contract. They claimed to be entitled to forfeit the earnest money and to get damages consequent upon the breach of the contract by the plaintiff. The plaintiff instituted a suit for the recovery of Rs. 33,000 paid by her to the defendants.

Finding of the Court:

The trial Court held that the plaintiff was not ready and willing to perform her part of the contract and that the breach of the contract was committed by the plaintiff and not by the defendants. The plaintiff was not entitled to the amount claimed. The defendants were entitled to forfeit the earnest money of Rs. 5,000 but they were liable to refund to the plaintiff Rs. 28,000. The defendants were not entitled to adjust the amount of damages incurred by them towards adjustment from the amount in suit. The defendants were not entitled to claim anything beyond earnest money by way of damages even if the breach of contract was committed by the plaintiffs. The plaintiff was not entitled to interest on the amount in suit. The defendants were not entitled to forfeit Rs. 28,000, their right being restricted to rent for the period the house was under plaintiffs occupation. The plaintiff was granted a decree for Rs. 28,000 and the parties were left to bear their own costs.

Issues: 1. Whether the plaintiff was ready and willing to perform her part of the contract and the breach was made by the defendants? 2. If issue No. 1 is proved, is the plaintiff not entitled to the amount claimed? 3. If issue No. 1 is not proved whether the defendants have incurred any damages and if so how much? 4. Are the defendants not entitled to adjust the amount of damages incurred by them towards adjustment from the amount in suit? 5. Can the defendants claim anything beyond earnest money by way of damages even if the breach of contract was committed by the plaintiffs? 6. Is the plaintiff entitled to interest on the amount in suit, if so how much and at what rate? 7. Did the plaintiffs husband not take possession of the premises sold and if the possession was taken what is its effect on the suit?

Ratio Decidendi: 1. Section 54 of the Transfer of Property Act, which requires that the transfer of ownership by way of sale of tangible immovable property of the value of one hundred rupees and upwards can be made only by a registered instrument, was applicable to the area in which the property in dispute was situated. 2. The equitable principles of English law cannot be invoked for treating the transaction as tantamount to transfer of ownership in the absence of a registered instrument of transfer. 3. Section 53-A of the Transfer of Property Act, which imports the English doctrine of part performance, confers no title on the transferee but permits this provision to be used in defence and not for attack. 4. The defendants were entitled to forfeit the earnest money of Rs. 5,000 but they were liable to refund to the plaintiff Rs. 28,000, which was paid as part of the purchase price and could not be forfeited. 5. The defendants were not entitled to retain any amount by way of damages except the sum of Rs. 5,000 which had been paid by way of earnest, which amount is forfeitable on a different basis altogether.

Final Decision: The appeal of the defendants was dismissed and the decree granted by the trial Court in favour of the plaintiff for Rs. 28,000 was upheld. The parties were left to bear their own costs.