GIAN CHAND versus GOPALA AND ORS.

Citation: [1995] 1 S.C.R. 412 · Decided: 18-01-1995 · Supreme Court of India · Bench: K. RAMASWAMY, N. VENKATACHALA · Disposal: Appeal(s) allowed
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

A 
GIAN CHAND 
+· 
v. 
GOPALA AND ORS. 
JANUARY 18, 1995 
B 
[K. RAMASWAMY AND N. VENKATACHALA, JJ.) 
Contract Act, 1872--Section 33-Contingent contract-Agreement to 
purchase lan~amest money paid-Notification u/s 4(1) Land Acquisition 
Act already published-Whether vendee entitled to obtain refund of earnest 
c money-Held, yes. 
The appellant entered into an agreement with the respondent to 
purchase land belonging to the respondent for a consideration and paid 
a sum of Rs. 20,000 as earnest money. The sale deed was to be executed 
D 
on or before 30-4-1978. The appellant came to know that notification u/s 
4(1) of the Land Acquisition Act, 1894 was published on 3.8.1977 which 
fact was concealed from the appellant. He filed a suit for refund of the 
earnest money. The Trial Court decreed the suit. The decree was reversed 
on appeal. The appellate court set aside the suit on the ground that he 
was 
not ready and willing to perform his part of the contract. In 
E second appeal, the High Court dismissed the same in limine. Hence this 
appeal. 
The question raised for consideration was whether the appellant was 
,,. 
entitled to obtain refund of earnest money. 
• 
F 
Allowing the appeal, this Court 
HELD : 1. The contract in question being a contingent contract 
based on uncertain future events, (here is a case of suppression of fact 
-
even otherwise) that event having occurred by notification issued under s.6 
G of the Land Acquisition Act, 1894, the contract became impossible of 
performance. Therefore, it got frustrated and the contracting party was 
}.. 
entitled to enforce the terms of the contract for refund of earnest money. 
His readiness and willingness was not relevant in such circumstances after 
the notification under s.4 (1) and declaration under s.6 were published. 
H 
[414-G-H, 415-A] 
412 
I J 
GIANCHANDv. GOPALA· 
413 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4710 of A 
1992. 
From the Judgment and Order dated 11.8.86 of the Punjab & 
Haryana High Court in R.S.A. No. 931 of 1986. 
G.K. Bansal and Sanjay Bansal for the Appellant 
Prem Malhotra for the Respondents. 
The following Order of the Court was delivered : 
B 
This appeal, by special leave, arises from the judgment of the learned C 
Single Judge of the High Court of Punjab & Haryana in R.S.A. No. 
931/1986, dated 11.8.1986. The appellant had entered into an agreement 
with the respondent on 13.1.78 to purchase 1/3rd share of the land belong-
ing to the respondent for a total consideration of Rs. 78.000 and paid a 
sum of Rs. 20,000 as earnest money. The sale deed was to be executed on D 
or before 30.4.78. Later the appellate came to know that notification u/s 
4(1) of the Land Acquisition Act, 1894 was published on 3.8.77 which fact 
was concealed to the appellant, so he had filed the suit for refund of the 
earnest money. The Trial Court in Suit No. 620/82 decreed the suit for 
refund of the earnest money with interest at 6% per annum from 25.1.1980 
till the date of realisation of the decree amount. Feeling aggrieved, the E 
respondent filed Civil Appeal No.110/83. The District Judge by his Judg-
ment and decree dated 28.9.1985 reversed the decree and dismissed the 
suit. In Second Appeal, the High Court dismissed the same in limine. Thus 
this appeal, by special leave. 
F 
The only question for consideration is whether the appellant is 
entitled to obtained refund of earnest money. One of the terms of the 
contract, admittedly entered into between the parties, is that in the event 
of acquisition of land by the Government for a public purpose, the respon-
dent "shall return the earnest money without interest. " Admittedly, since 
the notification u/s 4(1) of the Land Acquisition Act was already published, G 
the question arises whether the appellant could get a sale deed executed 
and in its absence whether he is entitled to obtain refund of earnest money 
paid under the agreement. On publication of notification under s.4(1) of 
the Act, though it is not conclusive till declaration u/s 6 was published, the 
owner of the land is interdicted to deal with the land as a free agent and H 
414 
SUPREME COURT REPORTS 
[1995) 1 S.C.R. 
A to create encumbrances thereon or to. deal with the land in any manner 
detrimental for public purpose. Therefore, though notification u/s 4(1) is 
not conclusive, the owner of the land is prevented from encumbering the 
land in that such encumbrance does not bind the Government. If ultimate-
ly, declaratio
Excerpt shown. Read the full judgment & AI analysis in Lexace.