Regular First Appeal filed by the defendant against a judgment decreeing a sum of Rs.4 lacs. The High Court dismissed the appeal, upholding that forfeiture of advance money is liable only when loss is proved, applying Kailash Nath Associates.
The appeal was dismissed, ruling that the appellant is liable to refund Rs.4 lacs as no loss was proven.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
*** IN THE HIGH COURT OF DELHI AT NEW DELHI**
RAM BABU SHARMA ..... Respondent Through:
CORAM:
HON’BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J (ORAL)
C.M. No.3330/2018 (exemption)
C.M. stands disposed of.
RFA No.91/2018
of Civil Procedure, 1908 (CPC) is filed by the defendant in the suit impugning the judgment of the Trial Court dated 27.10.2017 by which
trial court has decreed the suit for a sum of Rs.4 lacs alongwith
RFA No.91/2018 Page 1 of 7
interest @ 9% per annum being the advance price paid by the respondent/plaintiff to the appellant/defendant under the agreement to sell dated 4.5.2012 and which agreement to sell could not go through.
RFA No.91/2018 Page 2 of 7
the legal notice dated 12.12.2012, the subject suit for recovery of Rs.4 lacs with interest came to be filed.
pleaded by the appellant/defendant that the agreement to sell was signed in good faith because the agreement to sell was prepared in english by the respondent/plaintiff and neither the appellant/defendant nor her husband were well versant with the english language. The appellant/defendant pleaded that she was the owner of the suit property having purchased it from the earlier owner Sh. Ved Prakash for a sum at Rs.11,80,000/- vide registered power of attorney dated 3.9.2008 registered before the concerned sub-registrar. It was pleaded
that nothing was concealed by the appellant/defendant from the respondent/plaintiff and that it was the respondent/plaintiff who was responsible for not going ahead with the transaction.
framed:-
RFA No.91/2018 Page 3 of 7
paras 5 and 6 of the impugned judgment and which paras read as
under:-
“5. The plaintiff examined himself as PW1 and deposed the entire set of facts as contained in the plaint by way of his affidavit Ex.PW1/A and also relied upon two documents Ex.PW1/1 and PW1/2.
Kailash Nath Associates Vs. Delhi Development Authority (2015) 4
SCC 136 and that of a Single Bench judgment of this Court in C.M(M) No.961/2017 titled as Dr. VB Roy & Anr. Vs. Ravindra
RFA No.91/2018 Page 4 of 7
Kishore Sinha decided on 5.9.2017, and which ratios are to the effect
that there cannot be forfeiture of an earnest money or an advance price
paid unless pursuant to the breach of contract loss is caused by the guilty party to the aggrieved person. This relevant discussion is found
in paras 15 and 16 of the impugned judgment and these paras read as
under:-
“15. The Hon'ble Supreme Court in Kailash Nath Associates Vs. Delhi Development Authority (2015) 4 SCC 136 held in para No. 21 as under :
"21. Based on the facts of this case, the Single Judge was correct in observing that the letter of cancellation dated 06.10.1993 and consequent forfeiture of earnest money was made without putting the appellant on notice that it has to deposit the balance 75% premium of the plot within a certain stated time. In the absence of such notice, there is no breach of contract on the part of the appellant and consequently, earnest money cannot be forfeited".
It was further held in para 29 as under :
"29. Based on the facts of this case, it would be arbitrary for the DDA to forfeit the earnest money on two fundamental grounds. First, there is no breach of contract on the part of the appellant as has been held above. And second, DDA not having been put to any loss, even if DDA could insist on a contractual stipulation in its favour, it would be arbitrary to allow DDA as a public authority to appropriate Rs. 78,00,000/- (Rupees Seventy Eight Lakhs) without any loss being caused. It is clear, therefore, that Article 14 would apply in the field of contract in this case and the finding of the Division Bench on this aspect is hereby reversed".
RFA No.91/2018 Page 5 of 7
“12. I have inquired from the Counsel for the petitioners/defendants, whether in the absence of any forfeiture clause in writing, any forfeiture can be effected. Attention of the Counsels is invited to the dicta of the Supreme Court in Kailash Nath Associates Vs. Delhi Development Authority (2015) 4 SCC 136 and thereafter to the judgment of this Court dt. 31st July 2017 in CRP No. 3/2017 titled Palm Art Apparels Pvt. Ltd. Vs. Enkay Builders Pvt. Ltd. holding that forfeiture can only be of earnest money and not of part sale consideration and only when there is a specific agreement therefor and in the absence thereof, without proof of damage having been suffered, no forfeiture can be effected".
case of Kailash Nath Associates (supra) essentially follows the Constitution Bench judgment of the Supreme Court in the case of Fateh Chand Vs. Balkishan Dass AIR 1963 SC 1405 and which judgment holds that the existence of a loss being caused pursuant to the breach of contract is a sine qua non for a claim of damages. Forfeiture of advance money paid under an agreement to sell is actually forfeiture on account of the loss which is presumably caused to the seller of the property and once there is no pleading and proof of loss by the appellant/defendant the appellant/defendant could not have forfeited the advance price paid under the agreement to sell dated 4.5.2012.
RFA No.91/2018 Page 6 of 7
the challenge to the impugned judgment which rightly holds that the appellant/defendant is liable to refund a sum of Rs.4 lacs paid by the respondent/plaintiff to the appellant/defendant as advance price paid
under the subject agreement to sell dated 4.5.2012. Dismissed.
FEBRUARY 05, 2018 VALMIKI J. MEHTA, J Ne
RFA No.91/2018 Page 7 of 7
2 issues framed by the court
Whether forfeiture of advance price paid under an agreement to sell can be claimed without proof of loss caused to the seller.
Whether the trial court correctly allowed the suit for recovery of the advance money paid by the plaintiff.
Colour shows how this judgement treated each authority
Kailash Nath Associates Vs. Delhi Development AuthorityApplied¶35
Kailash Nath Associates Vs. Delhi Development Authority (2015) 4 SCC 136 · Who else cites this
Dr. VB Roy & Anr. Vs. Ravindra Kishore SinhaDistinguished¶37
Dr. VB Roy & Anr. Vs. Ravindra Kishore Sinha
Fateh Chand Vs. Balkishan DassDistinguished¶51
Fateh Chand Vs. Balkishan Dass AIR 1963 SC 1405 · Who else cites this
1 provisions across 1 enactments
Rajesh
Ram Babu Sharma
Valimli J. Mehta
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
Valimli J. Mehta
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