The court clarified that claims for earnest money are governed by Art.120 of the Limitation Act when a contract is voided by legal changes, while additional sums may fall under Art.97, affecting their recoverability due to time limitations.

1. These two letters Patent Appeals (Letters Patent Appeals Nos. 26 - D and 27 - D of 1964) arise out of the same proceedings and being directed against one main judgment of a learned Single Judge, may be disposed of by one judgment. The only question falling for our determination relates to the plea of limitation and lies within a narrow compass, namely, whether Art.97 of the Limitation Act applies to the case or whether it is governed by the residuary Art.120, no other Article being applicable in terms. Of course at one stage Shri Hardy ,learned Counsel for the respondents also attempted to apply Art.62 of the Limitation Act but this attempt was not seriously persisted in.

2. Turning now to the facts, on 26-11-1946, Messrs Gokal Nagar Sugar Mills Co. Ltd., (hereafter called the vendor Company) entered into an agreement to sell the building in question situated in Lahore (now in West Pakistan) for a consideration of Rs. 1,35,000 to Shri Ram Lal Puri (hereinafter called the vendee) who paid Rs. 20,000 by way of earnest money at the time of the agreement. The sale was to be completed by 5-4-1947. On 1-4-1947 the vendee sought extension of time for the completion of the sale up to 20-4-1947, to which the vendor company agreed. On 17-4-1947 the vendee paid Rs. 30,000 as an additional advance seeking extension of time by another month which was agreed to. Nothing further happened in the matter and both sides it seems, kept quiet. The vendor company remained at Lahore till 11-8-1947 and the country was partitioned on 15-8-1947, forcing the parties to leave Lahore and to come to India. The vendee also tried without success to have his claim of Rs. 50,000 verified against the property in question.
On 8-12-1952, he presented his application under S.10 of the Displaced Persons (Debts Adjustment) Act LXX of 1951 seeking payment of Rs. 50,000 as debt due to him from the vendor - company within the contemplation of debt as defined in S.2 (6) of the said Act. The Tribunal seemed to be of the view that there was no hitch or hesitation on the part of the vendor - company in giving effect to the agreement to sell and it was the petitioner who never made any effort to finalise the agreement. The property in dispute was later declared evacuee property by the Custodian in Pakistan, but the vendor - company was not to blame for this delay. It was due to the vendee's own default.
It then proceeded to hold that though there was frustration of the contract for which the vendor - company was not to blame, nevertheless, the company was not justified in forfeiting anything more than the money paid by the petitioner by way of earnest inasmuch as the company had realised the sale price of the property in dispute from subsequent vendees. Even the subsequent vendees, as observed by the learned Tribunal, has filed claim in respect of the property in dispute which had already been verified and accepted by the authorities. The sum of Rs. 30,000/- paid by the petitioner after the payment of earnest money could, therefore, not be forfeited and the vendor - company was not entitled to retain it.
On this view, the vendee's application was allowed to the extent of Rs. 30,000/- and a decree passed for the said amount; On the plea of limitation, the conclusion of the learned Tribunal was expressed in the following words : -
"The petition was filed on 8-12-1962. By virtue of the provisions of S.36(a) of the Displaced Persons (Debts Adjustment) Act, 1951, the limitation was extended by one year from the commencement of the said Act viz