IMPORTANT POINT
A party can claim a refund of earnest money if the other party fails to provide a valid title, and time is not necessarily the essence of the contract.

JUDGMENT :

M.G. Priyadarsini, J.

Aggrieved by the judgment and decree dated 06.06.2019 in O.S.No.132 of 2012 (Old O.S.No.699 of 2011) (hereinafter will be referred as ‘impugned judgment’) passed by the learned XII Additional District Judge, Vikarabad, Ranga Reddy District (hereinafter will be referred as ‘trial Court’), the defendant preferred the present appeal to set aside the impugned judgment.

2. For the sake of convenience, the parties hereinafter are referred to as they are arrayed before the trial Court.

3. The brief facts of the case, which necessitated the appellant to file the present appeal, are as follows :

(a) The plaintiff filed O.S.No.132 of 2012 (Old O.S.No.699 of 2011) against the sole defendant claiming compensation of Rs.10,81,400/- together with subsequent interest @ 24% per annum and for costs due to breach of contractual obligations by the defendant. The brief averments of the plaint are as under:

(i) Plaintiff being Private Company Limited registered under the provision of Indian Companies Act intended to purchase land for establishment of stockyard, garage and parking. After negotiations with the defendant, the plaintiff agreed to purchase the agricultural land from the defendant to an extent of Ac.3.35 guntas in Sy.No.127/A2 at Fathepur Village, Shankarpally Mandal, Ranga Reddy District for consideration of Rs.21,50,000/- per acre making total sale consideration of Rs.83,31,250/-. Accordingly, an advance amount of Rs.4,00,000/- was received by the defendant through two cheques i.e., bearing Nos.225754 dated 05.10.2008 and 225767 dated 05.10.2008 drawn on IDBI, Visakhapatnam by the plaintiff which were encashed on 10.10.2008 and on 06.10.2008 respectively by the defendant. While receiving the advance sale consideration, the defendant executed an agreement of sale in favour of the plaintiff on the same day agreeing to sell the plaint schedule property for a consideration of Rs.83,31,250/-. The terms and conditions of said document are that total consideration was fixed at Rs.83,31,250/- and balance is payable within two months and the defendant agreed to deliver the possession with easement rights and to produce all previous title deeds relating to the schedule property and to pay all taxes. The defendant further agreed to get clearance certificate stating that it is not assigned land and no objection certificate from revenue authorities stating that land is not assigned land or surplus land under Land Ceiling Act.

(ii) When the plaintiff demanded the defendant to produce the title deeds, link documents and no objection certificate in respect of the land, the defendant postponed the arrangement of title deeds and link documents of proposed land and execution of agreement of sale under the guise of one pretext or the other and finally declared that the contract cancelled/rescinded for his failure to perform his contractual obligations and promised to refund the advance amount with interest.

(iii) In the month of April, 2009 when the plaintiff insisted the defendant agreed to refund the amount with interest thereon @ 24% per annum till the date of repayment. But defendant failed to keep his promise and played fraud. The defendant does not have title deeds or valid marketable right, title or possession over the suit schedule property. Hence, the contract of agreement of sale was void.

(iv) On 23.04.2011 the plaintiff got issued a registered lawyer notice seeking payment of advance amount with interest and damages. Since the contract was already frustrated by the defendant by breach of contractual obligations, the plaintiff filed the suit for compensation in lieu of specific performance of the contract. Since it is a commercial transaction and as the defendant caused a wrongful loss to the plaintiff, the defendant is liable to refund Rs.4,00,000/- together with interest @ 24% per annum as agreed by him. The plaintiff claimed advance amount of Rs.4,00,000/-, interest amount of Rs.2,81,,400/- and damages to a tune of R