PETITIONER: V. LAKSHMANAN Vs. RESPONDENT: B.R. MANGALAGIRI & ORS. DATE OF JUDGMENT13/01/1995 BENCH: K. RAMASWAMY & N. VENKATACHALA, JJ. ACT: HEADNOTE: JUDGMENT:
ORDER
1 This appeal by special leave arises from the judgment
of the Division Bench of the High Court of Madras dated No-
vember 3, 1983 made in Appeal No. 911 / 77. The appellant-
plaintiff had entered into an agreement with respondents on
August 23, 1972 to purchase their 6 acres 76 cents of the
land situated in Bhavani Village for a consideration of
Rs.2,75,000/- and paid Rs.50,000/- as earnest money (stated
as advance in the agreement). He undertook to have the sale
deed registered within six months i.e. on/or before February
23, 1973.Time is, thereby, the essence of the agreement.
The appellant had taken possession of the land and levelled
the land and applied for permission for sanction of layout.
The Gram Panchayat, Bhavani, refused to grant sanction.
Thereafter, the appellant got issued a notice on February
20, 1973, calling upon the respondents to return the earnest
money of Rs.50,000/and also Rs. 15,000/- said to be the
expenditure incurred by them towards development which
liability was denied by the respondents in their reply
notice wherein they also claimed to have forfeited the
earnest money for default committed by the appellant in the
performance of their part of the agreement. The appellant
laid O.S. No. 108/73 on the file of the Addl. Subordinate
Judge, Erode, on March 13, 1973 which the trial court
decreed on April 30, 1977. On appeal, as stated earlier,
the High Court reversed the decree and dismissed the suit.
2. It is contended by Shri Balakrishnan, learned counsel
for the appellant, that, admittedly, respondent No.3 B.R.
Srinivasan was a minor on the date of the agreement of sale.
When the appellant orally had asked the 4th respondent
guardian to obtain permission from the Court for
effectuating the sale deed, the mother as natural guardian
of the 3rd respondent had refused to obtain permission on
the ground that it was not necessary to obtain the
permission of the Court. When the title was defective, no
one would be prepared to purchase the land covered by the
agreement of sale and, therefore, the High Court was not
right in dismissing the suit of the appellant. It is also
contended that the amount of Rs.50,000/- being an advance
and not an earnest money, the whole amount cannot be
forfeited unless the respondents proved that they had suf-
fered damages which is a necessary condition to forfeit the
advance amount. That amount only could be forfeited. No
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evidence was adduced to prove that the respondents had
suffered damages. Subsequent sale made by the respondents
pending the appeal was only a device adopted to deny the
refund of the advance money paid by the appellant. The High
Court had committed grievous error of law in allowing the
appeal. We find no force in both contentions.
3. The facts of the case and the conduct of the
appellant lead us to conclude that the appellant is not
justified in seeking to nor is he entitled to recover from
the appellants Rs.50,000/- paid by him. No doubt in the
agreement it was stated that the amount was advance and not
earnest money. Earnest money is a part of the purchase
price. The nomenclature or label given in the agreement as
advance is not either decisive or immutable. The appellant,
after he had entered into the agreement, admittedly, had
taken possession of the land and levelled the land for the
purpose of making it into plots for sale to the third
parties, in terms of the agreement. Admittedly, the
appellant failed to obtain the sanction of the lay out plan
as the Gram Panchayat refused to sanction it. Thereaf-
ter,.the appellant having found it difficult to effectuate
the sales to third parties, he invented an excuse to get
over the agreement and pitched upon the plea of oral request
said to have been made to the respondents to obtain sanction
of the court to alienate the share of the minor and of their
refusal. Thereby, they were not willing to perform their
part of the agreement and had refused to execute the sale
deed. There is no truth in it. The agreement of sale fell
through due to the default committed by the appellant. It
is not the case that the appellant had issued notice to the
guardian to obtain sanction of the court and that the mother
had refused to get it nor is she willing to execute the sale
deed. The amount paid is only by way of earnest money as
part of the sale transaction and that the appellant failed
to perform his part of the contract.
4. It is true that in the written statement filed by
the defendants, defendant Nos. 1,2, brothers and 4 being
the mother representing defendant No.3 minor, as a natural
guardian, had pleaded in paragraph 12 that the agreement to
the extent of the share of the minor, is void. Under s.8(3)
of the Hindu Minority and Guardianship Act, 1956, Act 32 of
1956 (for short, ‘the Act’), it is only voidable at the
instance of the minor or any person claiming under him. The
guardian has to obtain permission from the court under s.8.
In this case, admittedly, during the pendency of the suit,
the third respondent-minor after becoming the major on July
31, 1975, was duly declared as major and the mother was dis-
charged from guardianship. Thereafter he filed a memo
adopting the written statement filed by the defendants 1 and
2, his brothers. In their written statement and also in the
reply notice got issued by them, respondents No. 1, 2 and 4
expressly averred and was testified in the evidence of the
first defendant that they are “ready and willing to perform
their part of the contract”. When the minor became major,
he had adopted their written statement, it would certainly
mean, as rightly pointed out by the High Court, that the
minor was also willing to perform his part of the contract
along with his brothers. He thereby elected to abide by the
terms of the contract. It is not the case that the
appellant had called upon the respondents in writing to
obtain permission from the court as required under sub-s.(2)
of s.8 of the Act
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and that they refused to obtain such a sanction. In the
suit notice also he did not call upon them to get the
sanction of the court. On the other hand, he asked them to
return the advance amount. When the minor had attained
majority pending the suit and had elected to abide by the
terms of the agreement of sale, the need to obtain sanction
from the court became unnecessary. Under these
circumstances, the necessity to obtain permission from the
court under sub-s/(2) of s.8 of the Act became redundant.
It is seen, from the conduct of the appellant, that he is
not willing to perform his part of the contract and he wants
to wriggle out of the contract. It is also seen that time
is the essence of the contract. Sale deed was required to
be executed on or before February 23, 1973, the appellant is
the defaulting party and he has not come to the court with
clean hands.
5. The question then is whether the respondents are
entitled to forfeit the entire amount. It is seen that a
specific covenant under the contract was that the re-
spondents are entitled to forfeit the money paid under the
contract. So when the contract fell through by the default
committed by the appellant, as part of the contract, they
are entitled to forfeit the entire amount. In this case
even otherwise, we find that the respondents had suffered
damages firstly for one year they were prevented from
enjoying the property and the appellant had cut off 150
fruit bearing coconut trees and sugarcane crop was destroyed
for levelling the land apart from cutting down other trees.
Pending the appeal, the respondents sought for and were
granted permission by the court for sale of the property,
Pursuant thereto, they sold the land for which they could
not secure even the amount under contract and the loss they
suffered would be around Rs.70,000/-. Under those
circumstances, their forfeiting the sum of Rs.50,000/- can-
not be said to be unjustified. The appeal is accordingly
dismissed with costs.
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