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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

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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 107 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)

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of s.8 of the Act 108 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. 109