( 1 ) THE appellant entered into an agreement with the respondent for sale of 5-3/4 cents of vacant land in survey No. 101/2c of Kankanady village for a sum of Rs. 2,875 at the rate of Rs. 500 per cent. He paid Rs. 1,000 as part payment of ,the consideration undertaking to pay the balance at the time of execution of the sale deed on or before 30-9-1966. Complaining breach of the contract, the appellant sued the defendant-respondent for the return of the money paid by him. The defendant resisted the suit contending infer alia, that he on his part did not commit any default; that it was ithe plaintiff who committed the default, that the part payment made by the plaintiff was in the nature of an earnest money and, therefore, liable to forfeiture. ( 2 ) BOTH the Counts have accepted the contentions of the defendant and dismissed the suit. Hence, this second appeal by the plaintiff. ( 3 ) THE question raised in this appeal relates to the nature of the payment made and the duty of the defendant to return the same upon the breach of the contract committed by the plaintiff. There appears to be some sort of misconception in construing these aspects of the matter in the courts below and also in the arguments addressed in this Court. The appellate Court has stated that the payment by the plaintiff was as a guarantee for the purchase of the plot and it wag an earnest money which the defendant was entitled to forfeit since the plaintiff has committed the breach. Similar was the finding recorded by the trial Court. The agreement did not provide that the money paid by the plaintiff was either towards due performance of the contract or intended to remain as 'earnest'. The terms of the agreement as incorporated in Ext. P1 simply provide that the plaintiff has paid Rs. 1,000 towards the part payment of consideration undertaking to pay the blance at the time of execution of the sale deed. ( 4 ) IT was urged by Shri A. M. D'sa, learned Counsel for the appellant, that the payment as per Ext. P1 was only a part of consideration and not as earnest, and, therefore, not liable to forfeiture. On the other hand mr. ( 4 ) IT was urged by Shri A. M. D'sa, learned Counsel for the appellant, that the payment as per Ext. P1 was only a part of consideration and not as earnest, and, therefore, not liable to forfeiture. On the other hand mr. U. L. Narayana Rao, learned Counsel for the respondent strongly supported the view taken by the Courts below. He also urged that there is no distinction between part payment of consideration and advance payment or deposit towards due performance of any contract. All these, according to him, are in the nature of 'earnest' liable to be forfeited upon the default of the party making the payment. In support of the contention, he relied upon the decision of this Court in Letitia Castelino v. Jerome D'silva, 1971 2 Myslj 157 . wherein it was observed that where money is paid under a contract, the nomenclature employed, whether earnest or advance, is not really the crux of the matter and where the amount is paid on the date of the agreement, there is an initial presumption that the amount is paid as security for due performance of contract and such an amount is liable to be forfeited. ( 5 ) AT the outset, I may paint out that the observations in Letitia. castelino's case (1) may not be helpful to the case before me, as on the facts, therein, it was found that the parties intended to treat the deposit as earnest money. There is no dispute on the proposition that if the paymenit is intended to be an earnest money under a contract for sale of property movable or immovable, then, that earnest money could be forfeited upon the breach of the contract on the part of the buyer. But, the same cannot be the principle in case of part payment of consideration or the deposit for guaranteeing due performance of the contract. In these two types of cases, the payment made, without anything more in the contract, cannot be regarded as earnest money, and the party who received the amount cannot simply forfeit it. In other words, to put emphatically if the money paid is only towards 'part payment of price' or as deposit for guaranteeing due performance of contract, the rule of forfeiture governing 'earnest' has no application. In other words, to put emphatically if the money paid is only towards 'part payment of price' or as deposit for guaranteeing due performance of contract, the rule of forfeiture governing 'earnest' has no application. The Court, therefore, in each case, must carefully scruti- nise the terms of the contract and the intention of the parties before reaching the conclusion wheither the payment is by way of earnest or simply a part payment of consideration or as security deposit for due performance of contract. ( 6 ) THE distinction between 'earnest money' and 'security deposit for due performance of contract' has been explained by the Supreme Court in Maula Bux v. Union of India, AIR. 1970 SC. 1955. The forfeiture of earnest money, if the amount is reasonable does not fall within Sec. 74 of the contract Act. If the deposit made by the purchaser is not to be applied towards part payment of the price when the contract is completed, then, it goes out of the category of earnest money because as observed by the Judicial Committee in Chiranjit Singh v. Har Swarup, AIR. 1926 PC. 1. " Earnest money is part payment of the purchase price when the transaction goes forward; it is forfeited when the transaction falls through by reason of the fault or failure of the vendee. "a deposit which cannot be applied for part payment of the price, will be security for guaranteeing due performance of the contract. The forfeiture of this kind of security depends upon the proof of actual loss or the necesity to provide reasonable compensation under Sec. 74 of the said Act. Under Sec. 74 when the loss In terms of money can be determined, the party claiming compensation must prove the loss suffered by him. These principles have been reiterated by the Supreme Court in Union of India v. Rampur Distillery Chemical Co Ltd. , AIR, 1973 SC. 1098, ( 7 ) LIKEWISE, there is a distinction between 'earnest money' and 'part payment of price' without anything more in the contract as to the forfeiture of the latter. The decision of this Court in kcn. Gowda and Bros v. Malakram Tekchand and Sons, AIR, 1958 Mys, 10. has explained that difference. 1098, ( 7 ) LIKEWISE, there is a distinction between 'earnest money' and 'part payment of price' without anything more in the contract as to the forfeiture of the latter. The decision of this Court in kcn. Gowda and Bros v. Malakram Tekchand and Sons, AIR, 1958 Mys, 10. has explained that difference. Das Gupta, cj, speaking for the Bench observed that there is a fundamental difference between 'earnest money' and 'part payment of price' and that' has to be decided hi each case whether or not a payment was made by way of earnest or by way of advance, i. e. , part payment of price. The nomenclature 'earnest' or 'advance' does not matter and' the right of forfeiture has no application to money received as such part payment. Here I may add, the Court must look to the terms of the agreement. If the parties intended in the contract by incorporating the terms that the part payment of the purchase price is liable to be forfeited by reason of the fault or failure of the purchaser, then the part payment could be construed as 'earnest' and not otherwise. ( 8 ) COMING now to the facts of the present caste, it is very clear that the payment made by the plaintiff was only towards part payment of consideration and nothing more was said about it in Ext. P1. It was therefore not intended to remain as an earnest. Therefore, the view taken by both the courts below cannot be sustained. The defendant has also not proved the extent of damages suffered by him. ( 9 ) IN the result, the appeal is allowed. The judgment and decree of the Courts below are set aside. The suit is decreed as prayed for. Having regard to the circumstances of the case since the plaintiff has committed the breach of contract, the parties are to hear their own costs throughout. --- *** --- .