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1976 DIGILAW 138 (DEL)

GOPI CHAND v. BISHAMBER NATH

1976-09-13

B.C.MISRA

body1976
B. C. Misra ( 1 ) THIS revision has been filed u/s 25 of Provincial Small Cause Courts Act, 1887, against judgment dt. 17-1-73 by which it is held that the suit is not triable by Small Cause Court. ( 2 ) THE material facts of the case are that on 20-7-71, plaintiff-petitioner and defendant respondent entered into an agreement for purchase of an immovable property mentioned in the agreement. The sale price as agreed was Rs. 17,500. 00 out of which Rs. 500. 00 were paid in cash by the petitioners to the respondent as earnest money at the time of the agreement and the balance amount of Rs. 17,000. 00 was to be paid at the time of registration by 30th July, 1971. Clause (4) of the Contract provides that in case the vendor does not perform his part of the contract then on the expiry of the stipulated period it would be open to the vendee to cancel the contract for sale of the property and enforce the same through a court of law. On the other hand, the vendor was entitled to forfeit all the amount of the earnest money if the vendee did not pay the balance amount of the consideration and have registration in his name by the stipulated time. ( 3 ) IT is the common case of the parties that the contract of sale has not been fulfilled, On 6th October, 1972, the petitioners instituted a suit, giving rise to this revision petition, claiming a decree for Rs. 500. 00 by way of refund of the earnest money on the allegation that the contract of sale of the immovable property had fallen through on the false promises of the defendant respondent. It was averred in the plaint that at the time of agreement, the respondent had assured the petitioners that the said property was free from all encumberances and he undertook to show to the petitioners the necessary title deeds etc. In paragraph 3 of the plaint it is further stated that on this assurance the petitioners had paid Rs. 500. 00 to the respondent by way of earnest money at the time of the agreement on 20-7-1971. It is next stated that till 28th July, 1971. In paragraph 3 of the plaint it is further stated that on this assurance the petitioners had paid Rs. 500. 00 to the respondent by way of earnest money at the time of the agreement on 20-7-1971. It is next stated that till 28th July, 1971. the respondent had put off the petitioners on one pretext or the other and evaded to show the original title deeds of the ownership of the said property In paragraph 5 of the plaint it is stated that on 28-7-1971 the petitioners served the respondent with a legal notice and further extended two days time over and above the stipulated period for showing them the said title deeds etc. but the respondent evaded the service of the same and failed to comply with the terms of the agreement. In paragraph 6 it is stated that the petitioners came to know that the respondent had mortgaged the property in question with some person of Ghaziabad and had pledged the title deeds with him. It is thus stated that due to the lapses and false promises of the respondent the agreement dated 20. 7. 71 fell through which rendered the respondent liable to return the earnest money along with damages, and face criminal proceedings under section 420 Indian Penal Code for obtaining money on false assurances. With regard to criminal action U/s 420 Indian Penal Code against the respondent, the petitioners alleged that they would take action later on. In this way the petitioners only claimed payment of Rs. 500. 00 by way of refund of earnest money paid by them. ( 4 ) THE suit was contested and the respondent raised a plea that the suit was not triable by the Small Cause Court and was barred by Articles (11) and (15) of the Second Schedule to the Act. Following the authority of the Allahabad High Court in Raghunath Das V. Chigan (A. I. R. 1929 Allahabad 62) the court below upheld the plea of the respondent that the suit was not triable by the Small Cause Court and returned the plaint for presentation to the proper Court. ( 5 ) THE learned counsel for the petitioners has challenged the said finding of the court as being contrary to law. I have heard the learned counsels for the parties. ( 5 ) THE learned counsel for the petitioners has challenged the said finding of the court as being contrary to law. I have heard the learned counsels for the parties. ( 6 ) BY virtue of Section 15 of the provincial Small Cause Courts Act, a Court of Small Causes is required not to take cognizance of the suits specified in the Second Schedule. The exceptions of suits proviced under Articles (II) and (15) of the Second Schedule are the under : " (11) a suit for the determination or enforcement of any other right to or interest in immoveable property : (15) a suit for the specific performance or rescission of a contract:"in Sundara Thevan V. Ananthan Kaladi (A. I. R. 1924 Madras 903) the plaintiffs had instituted a suit for the recovery of purchase money. The defendant, however, raised an objection that the suit was not triable by the Court of Small Causes. It was held in this decision that a suit by a vendee for recovery of purchase money on the failure of a contract by vendor to convey land is of a small cause nature. It was observed that there was no reason why the plaintiffs sould be confined only to sue for specific performance of the contract, or for its rescission and a suit for either of those reliefs would not be of a small cause nature, as argued by the counsel for the defendant. The Court further ovserved, if there was a contract and defendant refused to perform it, plaintiff was at liberty under section 39 of the Contract Act to put an end to it, and on his doing so, the defendant was bound to restore earnest money to the plaintiff and the plaintiff was entitled to sue for it and such a suit was of a small cause nature. His Lordship also considered two previous decisions of the Madras High Court reported as Nangiri V. Sath razu (1909) 5. M. L. T. 296; and Paehayyappan V, Narayana (1888) 11 Madras 269. His Lordship also considered two previous decisions of the Madras High Court reported as Nangiri V. Sath razu (1909) 5. M. L. T. 296; and Paehayyappan V, Narayana (1888) 11 Madras 269. ( 7 ) IN Udalram V. Thakur Prasad (A. I. R. 1926 Nagpur 65) the Additional Judicial Commissioner held that if plaintiff does not suffer specific performance of the contract by the execution of such instrument then at the most there was a contract of sale and it was settled that when a contract of sale of immoveable property falls through (or the sale is set aside or is otherwise incomplete), and the vendee sues to recover back the purchase money from the vendor, such a suit is a small cause. In Raghunath Dass v. Chingan (A. I. R. 1929 Allahabad 62) the rule of law has been laid down as follow: "it seems to me that the plaintiff should have at the very outset been called upon to state whether it was a part of his case that at the time when Rs. 110. 00 were paid it was agreed that if it turned out that the judgment-debtor was not the owner of the property the amount would be refunded, that is to say that there was an express agreement as to warranty to title by the present defendant. If his case is that there was such an agreement for refund then the present claim would be one for the specific performance of that contract and would not be cognizable by a Court of Small Causes. A suit for refund of money under a contract is undoubtedly one for specific performance of it. If, however, the plaintiff does not allege that it was the understanding that the amount would be repayable in case the title was subsequently found to be defective then he can only succeed in a Court of Small Causes by showing that the defendant had refused to perform his part of the contract and that the plaintiff has accordingly cancelled it. On such refusal by the defendant, the plaintiff can under Section 39, Contract Act cancel the contract and then sue for the recovery of the amount which had been paid by him. On such refusal by the defendant, the plaintiff can under Section 39, Contract Act cancel the contract and then sue for the recovery of the amount which had been paid by him. " ( 8 ) WHILE laying down the above rule of law, the Allahabad High Court followed the two decisions of the Madras High Court in Sundra Thevan (supra) and Nangiri Veerasasalingam (supra ). ( 9 ) I am of the view that the rule of law has been correctly laid down in Sundara Thevan v. Ananthan Kaladi (A. I. R. 1924 Madras 903) and there is no real conflict between the Allahabad case and the Madras case. If the petitioners seek to enforce the specific performance of the contract for sale of immoveable property then their claim is barred by Articles (11) and (15) of the Second Schedule to the Provincial Small Cause Courts Act and the same would not be triable by the Court of Small Causes. A suit for refund of money in a contract of sale may as well amount to a suit for enforcement of contract. On the other hand, if the petitioners allege that by breach of the contract on the part of the respondent the contract had been cancelled and then a suit is filed for recovery of the earnest money, it would be triable by the Court of Small Causes and would not be barred by any of the articles of the Second Schedule. The instant case does not show that the petitioners at any stage rescinded the contract. On the other hand, they have relied upon the various terms of the contract and contended that the respondent had failed to perform his part of the contract and as such terms of the contract, the petitioners have become entitled to recover the amount of the earnest money. The suit as framed is obviously for the specific perfomance of the contract or its rescission. The order of the court below is not contrary to law and does not call for any interference by this Court.