SRI TARSEM SINGH versus SRI SUKHMINDER SINGH

Citation: [1998] 1 S.C.R. 456 · Decided: 02-02-1998 · Supreme Court of India · Bench: S. SAGHIR AHMAD · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
SRI TARSEM SINGH 
v. 
SRI SUKHMINDER SINGH 
FEBRUARY 2, 1998 
B 
[S. SAGHIR AHMAD AND M. JAGANNADHA RAO, JJ.] 
Contract Act, 1872 : 
Section '20-Mistake as to a matter of fact-Applicability-Conditions 
C for-Mistake as to area of land agreed to be sold-Seller intended to sell land 
in terms of "bighas" and purchaser intended to purchase it in terms of 
''Kanals' '-Held : It is a mistake a~ to a matter of fact essential to the 
agreement . 
• 
D 
Sections 74 and 20-Parties under a mutual mistake with regard to a 
matter of fact essential to the agreement for sale-Agreement contained a 
stipulation that earnest money would be forfeited in case the purchaser did 
not perform his part of the contract by paying the balance amount of sale 
consideration-Held: Agreement itself is void under S.20-Hence, forfeiture 
clause is also void-Therefore, it cannot be enforced for recovery of 
E compensation under S. 74 as that Section contemplates a valid agreement. 
Section 20-Void agreement-Effect of-Held: When an agreement is 
void, and its terms are void none of its terms can be enforced, except where 
the clause constitutes a separate and independent agreement severable from 
F the main agreement. 
Sections 65 and 20-Earnest money-Forfeiture of-Parties under a 
mutual mistake with regard to a matter of fact essential to the agreement for 
sale right from its inception but realised the mistake at a much later stage-
Held: Amounts to agreement "discovered to be void" within the meaning of 
G S. 65-Hence, under such an agreement for sale the seller could not legally 
forfeit the earnest money by invoking the forfeiture clause in the agreement 
in case the buyer did not perform his part of the contract by paying the 
balance amount of sale consideration. 
Sections 13, 14 and 20-Mutual consent should be a free consent and 
H is the sine qua non for a valid agreement-A thing not understood in the same 
456 
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T. SINGH v. S. SINGH 
457 
sense by a party as is understood by the other party-Agreement would be A 
invalid under S.20 right fi'om its inception even if the discovery of this fact 
is made at a much later stage. 
Words and Phrases : 
"Discovered to be void" and "becomes void"-Meaning of-Jn the B 
context of S.65 of the Contract Act, 1872. 
The petitioner-defendant, who owned agricultural land, entered into a 
contract for sale of that land with the respondent-plaintiff at a certain rate 
based on the area of the land. At the time of the execution of the agreement ,,;;C 
the respondent pai4 earnest money to the plaintiff. Since petitioner did not 
execute the sale deed in favour of the respondent in terms of the agreement 
although the respondent was ready and willing to perform his ·part of the 
contract, the respondent filed the suit for Specific Performance against the 
petitioner which was decreed by the trial court. 
The decree was modified in appeal by the Additional District Judge who D 
held that the parties to the agreement, namely, the petitioner and the 
respondent both suffered from a mistake of fact as to the area of the land 
which was proposed to be sold as also the price (sale consideration) whether 
it was to be paid at the rate of per "bigha" or per "Kanai". The Lower 
Appellate Court also found that the respondent was not ready and willing to E 
perform his part of the contract. Consequently, the decree for Specific 
performance was not passed but a decree for refund of the earnest money 
was passed against the petitioner. This was upheld by the High Court. Hence 
this Special Leave Petition. 
On behalf of the petitioner-defendant it was contended that the decree F 
for refund of earnest money was erroneous since it. was stipulated in the 
agreement that in the event of the respondent not executing the sale deed by 
paying the balance amount of sale consideration the earnest money would 
stand forfeited; that a mistake of fact with regard to the 'price' of the 'area' 
would not be a matter essential to the agreement as the only dispute, in this G 
case, was with regard to the price of land, whether the price to be paid for 
the area calculated in terms of 'bighas' or 'Kanals'; that as per Section 73 
and 74 of the Contract Act, 1872 the forfeiture clause in the. agreement was 
liable to be enforced; and that Section 65 of the Act would apply when the 
agreement was 'discovered to be void' or where the 'contract becomes void' 
and not to an agreement which was void from its inception. 
H 
458 
SU

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