The court upheld the enforceability of earnest money forfeiture under specific contractual terms, emphasizing the necessity for proof of damages in default situations.

JUDGMENT :

Anil Kshetarpal, J.

I. Facts of the case:-

1. The defendant assails the correctness of the judgments passed by the courts below while partly decreeing the plaintiff's suit for recovery of Rs.1,05,00,000/- but refusing to pass a decree for the specific performance of the agreement to sell in favour of the plaintiffs.

2. Execution of the agreement to sell on 15.02.2012 with respect to 29 kanals 3 marlas land on receipt of Rs.50,00,000/- out of total sale consideration of Rs.2,83,65,000/- is admitted between the parties. From a bare perusal of the agreement to sell, it is evident that possession of the property was delivered to the proposed purchasers and it was agreed that upto 26.03.2012, on payment of 1,20,00,000/- sale deed of half share of 29 kanals 3 marlas land would be executed in favour of the proposed purchasers or their nominees whereas sale deed of the remaining part shall be executed on receipt of the balance sale consideration on 15.05.2012. It was provided that if the proposed purchasers fail to make the remaining payment, the earnest money shall stand forfeited.

3. It is further an admitted fact that Rs.22,00,000/- was paid on 13.03.2012 by the proposed purchasers to the defendants (appellants) and Rs.38,00,000/- was paid on 26.03.2012.

4. On 21.01.2013, the plaintiffs filed a suit claiming that on 15.03.2012, they visited the office of the Sub-Registrar alongwith balance sale consideration, however, defendant did not come forward to honour the agreement to sell. It was also asserted that defendant no.1 failed to deliver the possession, although, it was recorded in the agreement to sell. Plaintiffs also sent a notice on 23.05.2012 to the defendant to which they replied. However, defendant failed to honour the agreement. He also failed to get the property redeemed. It was also asserted by the plaintiff that defendant no.1 had previously also executed an agreement to sell on 14.07.2011 with respect to the suit property but due to technical reasons, the aforesaid agreement was cancelled and with mutual consent a new agreement on 15.02.2012 was executed.

5. Defendant no.1 contested the case while alleging that previously also defendant entered into an agreement to sell in favour of the plaintiff on 12.07. 2011 for a total sale consideration of Rs.2,83,65,000/-. He had received Rs.50,00,000/- as earnest money from the plaintiff and the sale deed was to be executed on 05.04.2012. The sale deed of half share of the property was to be executed and registered on 30.12.2011 on payment of Rs.1,20,00,000/-, however, plaintiff did not honour the agreement whereas defendant no.1 remained present in the office of the Sub-Registrar on 30.12.2011. Defendant no.1 got his presence marked by swearing an affidavit duly attested by the Sub-Registrar. On 03.01.2012 notice was sent to the plaintiff informing that the agreement stands cancelled and their earnest money stands forfeited. On 04.01.2012 the notice sent by plaintiffs was received by defendant no.1 to which reply was sent by the defendant on 11.01.2012. Again plaintiffs sent notice on 03.01.2012, which was replied on 13.01.2012. Thereafter, the plaintiffs filed a suit for permanent injunction, which was dismissed as withdrawn on 05.12.2012. During the pendency of the suit, a settlement was arrived at and a fresh agreement to sell was executed on 15.02.2012. On 26.03.2012, the defendant remained present in the office of the Sub-Registrar but the plaintiffs did not turn up. Ultimately, the defendant got his presence marked by swearing an affidavit duly attested by the Executive Magistrate on 26.03.2012. In the evening, the p