Failure to seek specific performance precludes forfeiture of advance sale amount as damages without proof of actual loss.

JUDGMENT

These appeals arise out of the very same judgment in A.S. No. 119 of 2010 on the files of Addl. District Court – II, Kollam.

2. O.S. No. 318 of 2004 is a suit instituted for return of advance money on an agreement of sale dated 11.02.2004 in respect of 127 cents which was agreed to be purchased at Rs. 4350/- per cent by the appellant in RSA No. 63 of 2014. Rs. 1,00,000/- was paid as an advance sale consideration. Defendants 1 to 3 were co-owners of the property having a different share. Six months period was fixed for performance of the agreement. On 21.06.2004, the plaintiff recalled the agreement by issuing a notice stating that there was some misdescription regarding the identity of the property and, therefore, he does not want to proceed with the contract. On 27.07.2004, a reply was sent by the defendant stating that there is misdescription of the property and they demanded the plaintiff to perform the contract. The plaintiff, however, was not interested in proceeding with the contract and, therefore, filed O.S. No. 318 of 2004 for return of advance money. The suit was dismissed on the ground that the defendants are entitled to set apart the amount paid as advance sale consideration towards the damages.

2.1. Aggrieved, A.S. No. 119 of 2010 was filed by the plaintiff. The First Appellate Court reversed the judgment and decree of the Trial Court qua defendants 2 and 3 but, however, sustained the dismissal of the suit against the 1stdefendant on the ground that he had entered into an another agreement and had sustained loss because of the failure of the plaintiff to perform the contract. Accordingly, the appeal was partly allowed allowing the plaintiff to recover a sum of Rs. 15,000/- with interest at 9% p.a. from the 2nddefendant and Rs. 10,000/- with interest at 9% p.a. from the 3rddefendant. Aggrieved by the said judgment, the plaintiff has preferred RSA No. 63 of 2014 whereas defendants 2, 3 and 4 have preferred RSA No. 825 of 2014.

3. This Court, on 22.08.2014 admitted RSA No. 63 of 2014 on the following substantial questions of law as framed in the memorandum of appeal as follows;

When there was no counter claim for “(a) realization of alleged damages, whether the courts below were justified in holding that defendants sustained loss and entitled to forfeit a portion of advance amount?

(b) Whether the courts below were justified in relying upon Exhibit.B1 and evidence of DW2 when there is no pleadings to that effect?

(c) When receipt of advance amount was admitted whether the plaintiff is entitled to realise it and charged upon the property under Section 55(6)(b) of Transfer of Property Act?”

3.1. On 24.07.2024, this Court admitted RSA No. 825 of 2014, on the substantial questions of law as framed in the memorandum of appeal as follows;

Whether the appreciation of evidence “1. by the appellate court is in a legal and lawful manner?

2. Whether the appellate court justified in rejecting the evidence of the DW1 regarding the loss sustained by the appellants due to the non performance of Exhibit-A1 agreement by the plaintiff?

3. When time is stipulated as an essence of sale agreement and liquidated damage is specified in the agreement itself, whether the aggrieved party can forfeit the liquidated damage specified in the sale agreement out of the sale consideration without any formal proof of loss suffered by the aggrieved party?”

4. Heard Smt. A. Jani, the learned Counsel for the appellant in RSA No. 63 of 2014 and Sri. Alexander George, the learned Counsel appearing for the appellants in RSA No. 825 of 2014.

5. The only question to be considered by this Court is whether the First Appellate Court was j