LexRATTAN LAL (SINCE DECEASED) THROUGH HIS LEGAL REPRESENTATIVES versus S.N. BHALLA & ORS.
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A B [2012] 8 S.C.R. 100 RATTAN LAL (SINCE DECEASED) THROUGH HIS LEGAL REPRESENTATIVES V. S.N. BHALLA & ORS. (Civil Appeal No. 5787 of 2012) AUGUST 08, 2012 [ALTAMAS KABIR AND J. CHELAMESWAR, JJ.] Specific performance - Agreement to sell - Payment of C earnest money - As per clause of the agreement, if permission for transfer not granted within a specific time, the vendors had the option to determine the agreement - Permission not granted - Vendor determined the agreement and returned the earnest money - Purchaser by a letter D telling the vendors that they were willing to purchase the property even beyond the stipulated period and telling that they accepted the earnest money under protest - Suit for specific performance of the agreement - Dismissed by trial court - Order upheld by High Court - On appeal, held: E Agreement was wrongly terminated - The purchaser was always ready and willing to perform his part of contract - The refund of earnest money was accepted under protest - Vendors were not entitled to determine the agreement having not made positive efforts in procuring the necessary sale F permission and clearance certificates - Suit decreed - However, in view of the facts that the agreement was executed 34 years ago, during which period price of real estate has escalated sharply, and that the purchaser has not suffered any material loss, direction to vendors to pay the purchaser the G costs of litigation 1~e. Rs. 25,00,0001-. H Respondents entered into an agreement to sell the property in question with the appellant in the year 1978. The appellant (purchaser) paid Rs. 50,0001- as earnest 100 RATTAN LAL (SINCE DECEASED) THR. LRS. v. S.N. 101 BHALLA money. The agreement stipulated that the vendors were A to apply within 15 days for permission to transfer and to obtain Clearance Certificate from tax authorities. As per clause 9 of the agreement, if despite applying for the permission within stipulated time, the seller did not get the permission within 6 months from the date of the B agreement, the vendor had the option to determine the agreement. The vendors made application for transfer to the authority concerned within 15 days. The authority asked the vendors to file certain documents. Ultimately the C authority did not grant sale permission on the ground that affidavit filed by one of the vendors was defective. Thereupon the vendors determined the agreement to sell in terms of Clause 9 of the agreement, on the expiry of 6 months period. They also refunded the earnest money. D In the meantime, the purchaser sent a letter to the vendors requesting them to file necessary documents with the authority to enable the authority to give the sale permission. Purchaser also sent a telegram to the E vendors stating that he was ready to purchase the property even beyond 6 months. Since there was no response from the vendors, he ~ent a legal notice stating that he was ready and willing to purchase the property and that he had accepted the earnest money under F protest. Thereafter, the purchaser filed a suit for specific performance of the agreement. Trial court dismissed the suit on the ground that since the purchaser accepted the refund of earnest money, he abandoned his claim and was no longer ready and willing to purchase the property; G that it was the purchaser who was in default in submitting documents before the authority; and that since the suit was filed on the last day of limitation, this also showed that the purchaser was not ready and willing to complete the sale transaction. Appeal against the order H 102 SUPREME COURT REPORTS [2012] 8 S.C.R. A was dismissed by High Court. Hence the present appeal. Disposing of the appeal, the Court. HELD: 1. The Agreement to Sell dated 8th September, 1978, was wrongly terminated. The reasoning B of both the trial court and the High Court, cannot be supported. The acceptance of refund of the earnest money paid by the appellant to the respondents was not considered by the trial court as also the High Court in its proper perspective, as both the courts appeared to have C ignored the fact that such refund had been accepted by the appellant, without prejudice to his rights and contentions in the suit. That the said amount was received under protest, was not considered either by the trial court or by the High Court, which had relied mainly on the o provisions of Clauses 2 and 9 of the Agreement
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