1957 Present: Basnayake C.J., Gunasekara J., Pulle J., de Silva J., and
Sansoni J.

JOSEPH PERERA, Appellant, and LEWIS ABEYSEKERA,
Respondent

S. C. 140-D. C. Chilaw, 13,210

Contract-Informal agreement to sell immovable property-Time limit fixed for execution of deed of sale-Deposit of part of purchase price--Forfeiture clause- Failure of purchaser to pay balance sum within stipulated period-Right to claim refund of deposit-Unjust enrichment-Money had and received- Prevention of Frauds Ordinance, s. 2.

Where, under a non-notarial agreement to sell immovable property, a sum of money is paid in advance by the purchaser, but the sale subsequently falls through, the subsidiary agreement as to the destination of the money paid in advance is severable from the agreement for the sale of the immovable-property and is valid.

By a non-notarial agreement the defendant agreed to convey to the plaintiff certain immovable property for Rs. 45,000. The plaintiff paid Rs. 5,000 in advance and it was stipulated in the agreement that, upon payment of the balance sum of Rs. 40,000, the conveyance was to be executed on or before November 8, 1949, i.e., within fifteen days from the date of the agreement It was also agreed that should the plaintiff not pay the balance consideration within the fixed period, he was to forfeit the deposit of Rs. 5,000 and that should the defendant fail to fulfil his part of the agreement he should pay Rs. 10,000 as compensation to the plaintiff.

The balance sum of Rs. 40,000 was not paid by the plaintiff within the period of 15 days specified in the agreement. In the present action instituted by the plaintiff for the refund of the deposit of Rs. 5,000, the trial Judge found that the failure was due to the fact that essential steps relating to the investigation of the title to the property could not be completed within those 15 days because the defendant could not make available to the plaintiff the title deeds relating to the property ; the defendant therefore agreed to an extension of time, but subsequently on November 18, 1949, he repudiated the contract.

It was also decided by the trial Judge that it was not intended by the parties that time should be of the essence of the contract and that, in law therefore, the condition for the forfeiture of the deposit of Rs. 5,000 meant only that the purchase should be completed on or before November 8, 1949, or within a reasonable time thereafter.

Held, per GUNASEKARA, J., PULLE, J., and SANSONI, J. (BASNAYAKE, C.J., and DE SILVA, J., dissenting), that the plaintiff was entitled, to the return of his deposit of Rs. 5,000. Although the informal agreement relating to the sale of immovable property was void by virtue of the provisions of section 2 of the Prevention of Frauds Ordinance, the subsidiary agreement, in the same contract, as to the destination of the deposit of Rs. 5,000 was severable and effect could be given to its terms according to law.

APPEAL from a judgment of the District Court, Chilaw. This appeal was referred under section 51 (1) of the Courts Ordinance to a Bench of five Judges.

H. V. Perera, Q.C., with K. C. de Silva and J. A. D. de Silva, for Defendant-Appellant.

N. K. Choksy, Q.C., with E. G. Wikramanayake, Q. C., E. R. S. R' Coomaraswamy, B. A. R. Candappa and N. K. Rodrigo, for Plaintiff-Respondent.

Cur. adv. vult.

April 12, 1957. BASNAYAKE, C.J.-

In this action the plaintiff sued the defendant on three causes of action. For a first cause of action he alleged-

(a) that by agreement dated 24th October 1949 the defendant agreed to convey to him within 15 days of the execution of the agreement, for a sum of Rs. 45,000, a land about ten acres in extent, together with the buildings, furniture and the fibre mill thereon,

(b) that he paid to the defendant out of the consideration of Rs. 45,000 a sum of Rs. 5,000 as a payment in advance,

(c) that the failure to effect the co