CHANDRAKANTARAJ URS, J. ( 1 ) THIS is an application by the official liquidator under s. 446 (2) (b) of the Companies Act, 1956, praying for a decree against the respondent. Smt. Achamma Joseph, in the sum of Rs. 25,000 together with interest 18 per cent. per annum from date of payment of advance by the managing director of the company in liquidation (M/s. Bangalore Refractories and Ceramics Private Ltd.) (hereinafter referred to as "the company") and thereafter at 6 per cent. per annum till date of realisation together with court costs and current interest. Respondent and her counsel remained absent after notice on October 13, 1978. The respondent was placed ex parte by an order made by Venkataramiah J. , and the application was decreed ex parte on October 20, 1978, by an order made by him. However, that order came to be set aside in Company Application No. 130/1978 by Venkatachaliah J. While setting aside the ex parte order and decree, the learned judge partially decreed the Company Application No. 102/1978 in the sum of Rs. 15,000 which claim was admitted by the respondent and left it open for the disputed amount of Rs. 10,000 to be decided in the proceedings. ( 2 ) THE official liquidator has stated in his application that the company and the respondent entered into an agreement of sale dated March 6, 1975, for purchase of dry land measuring 3. 20 guntas approximately, with a pump house and shed standing thereon, situated in Bhattarahalli village, Hoskote Taluk, bearing S. No. 27. The land was agricultural land and the price agreed as consideration was for Rs. 40,000 per acre plus Rs. 2,000, being the value of the pump house. On the date of the agreement, the promoter of the company paid by a cheque drawn in favour of the respondent the sum of Rs. 25,000 as an advance towards the agreed sale consideration. The agreement of sale provided for the respondent-vendor to get the necessary sanction from the appropriate revenue authorities for the conversion of the land for non-agricultural use (industrial purpose ). 25,000 as an advance towards the agreed sale consideration. The agreement of sale provided for the respondent-vendor to get the necessary sanction from the appropriate revenue authorities for the conversion of the land for non-agricultural use (industrial purpose ). It further provided that the sale should be duly completed and registered in accordance with law before 30th September, 1975, in two lots and the balance of sale consideration was to be paid at the time of the sale of the first lot and thereafter the second lot of the schedule property was to be completed within one month therefrom. The cost of the transaction of sale including stamp duty was required to be met by the purchaser-company. It further provided that if the vendor failed to obtain conversion of the land, the agreement would stand lapsed on the dates specified and the buyer should within a week thereafter receive refund of the advance paid without further claim for any damages. It also provided that if the company failed to complete the transaction within the time stipulated and provided the conversion sanction had been obtained by the vendor by then, the vendor should forthwith determine the agreement on the expiry of the due date, viz. , September 30, 1975 and forfeit Rs. 10,000 out of the buyer's advance paid towards the sale consideration. ( 3 ) IT is further alleged that the respondent-vendor failed to secure the sanction of the appropriate authority for the conversion of the same land for industrial use within the stipulated time and, therefore, the agreement lapsed on 30th September, 1975, rendering the respondent-vendor liable to refund the sum of Rs. 25,000 within a week from the said date. It is also stated that the managing director of the company, Mr. R. P. Agarwal, obtained the necessary sanction from the deputy Commissioner, Bangalore, on October 8, 1975. Thereafter, in spite of repeated personal visits and requests as well as letter dated December 4, 1976, December 31, 1976, and January 17, 1977, followed by legal notices dated February 14, 1977, and April 4, 1977, the respondent-vendor failed to complete the sale in favour of the company or refund the advance amount to the company. In the result, the company could not proceed with the construction of the building for the factory though all preparations in that behalf had been made. In the result, the company could not proceed with the construction of the building for the factory though all preparations in that behalf had been made. In these circumstances, it is alleged that the respondent committed total breach of agreement dated March 6, 1975, and, therefore, the company was entitled to refund of the advance consideration paid in the sum of Rs. 25,000. ( 4 ) AFTER the provision liquidator was appointed in proceedings for voluntary liquidation of the company in Company Petition No. 13/1978, the provisional liquidator issued a letter dated May 4, 1978, calling upon her to remit the aforementioned sum of Rs. 25,000 together with interest thereon from the date of receipt of the said letter. A reply was received through the advocate of the respondent bearing the date June 8, 1978. In the said reply, the respondent took the stand that only a sum of Rs. 15,000 was due and payable by her and that she would pay the amount within six months. Therefore, the official liquidator has moved this court for a decree alleging breach of agreement on the part of the respondent. The cause of action for the application arose on september 30, 1975. The provisional liquidator was appointed on March 2, 1978. The application filed was in time. ( 5 ) IN the objections filed by the respondent, the respondent took the stand that she did not commit any default in respect of the sale agreement and the default was committed by Mr. R. P. Agarwal. She further took the stand that she was always ready and willing to sell the land and complete the transaction. The time specified in the agreement, according to the stand taken, was not the essence of the contract. Therefore, she has reiterated the stand taken by her reply to the letter of the official liquidator. ( 6 ) SHE has further alleged that she applied for permission for conversion of the land for industrial purpose on May 19, 1975 and received the sanction order dated October 27, 1975. She has stated that, however, there was a deemed sanction by 19th September, 1975, under the provisions of the land Revenue Act and, therefore, she was ready and willing to execute the sale deed from the latter date onwards. It is alleged by her that her husband and asked Mr. She has stated that, however, there was a deemed sanction by 19th September, 1975, under the provisions of the land Revenue Act and, therefore, she was ready and willing to execute the sale deed from the latter date onwards. It is alleged by her that her husband and asked Mr. R. P. Agarwal to apply for permission to purchase under the Karnataka Vacant Land Act, 1975, and that he got the order of the Deputy Commissioner in that behalf only on October 8, 1975. In these circumstances, she has denied the allegation that she had failed to obtain the necessary conversion certificate before the date stipulated in the agreement of sale. She has asserted that she deposited the conversion fine pursuant to the order of sanction dated October 27, 1975. It is further alleged that she got a draft sale deed prepared from her counsel, Mr. Saptharishi and Mr. Agarwal corrected the draft of the sale deed. She has further alleged that the sale was agreed to be completed by the end of november, 1975. At that point of time, the respondent has claimed that she made available photostat copies of all concerned documents to Mr. Agarwal. It is stated by her that about november 18, 1975, Mr. Agarwal left for Madras to make some arrangements for finance intimating the name and address of his financier at Madras through a chit. It is further stated that she was required to contact one Mr. Goel on the telephone which was also in the chit. But when her husband rang that number at Madras he got no reply. Towards the end of November, 1975, mr. Agarwal returned to Bangalore and informed her that he was not able to secure the finance and, therefore, requested to drop the transaction. The respondent has asserted that Mr. Agarwal started writing letters from 4th December, 1976, to cover up his defaults and after her husband consulted her advocate, he was advised that there was no need to send any reply, as the default was committed by Mr. Agarwal. Lastly, she has stated that she has suffered considerable loss and damages on account of the default committed by the purchaser. She has alleged that soon after the agreement, there were several parties who were prepared to purchase the land at Rs. 45,000 per acre. Agarwal. Lastly, she has stated that she has suffered considerable loss and damages on account of the default committed by the purchaser. She has alleged that soon after the agreement, there were several parties who were prepared to purchase the land at Rs. 45,000 per acre. On account of the agreement with the company, offers are said to have been rejected. In these circumstances, she has stated that Rs. 10,000 is a reasonable compensation for the loss sustained by her on account of the default of the company and, therefore, she is entitled to return only Rs. 15,000 and that too in instalments as she did not have any income to pay the entire sum at once. ( 7 ) ON account of the rival contentions as above, an enquiry became necessary and the official liquidator examined Mr. Agarwal, the managing director of the company in liquidation, at the relevant time and marked as many as 10 documents including the agreement dated March 6, 1975. The respondent has examined her husband, Mr. Joseph, and Mr. Saptharishi, her advocate, and marked as many as 9 documents including the conversion order dated October 27, 1975, copies of the draft sale deed, corrected copies of the draft sale deed, chit containing the address of the financier at Madras and some correspondence between Canara Bank, Bangalore, and herself. In the light of the above facts, the points for determination that arise on the pleadings and undisputed facts are : (1) Whether the company was in default in not completing the sale transaction in accordance with the provisions contained in the agreement dated March 6, 1975 ? and (2) Whether the respondent has proved financial loss as asserted by her on account of the default of the company, if any, and in that circumstance whether she is entitled to any compensation from out of the advance paid to her ? ( 8 ) BEFORE discussing the oral and documentary evidence in the case, it is necessary to notice that the respondent in her pleadings has taken the definite stand that time was not the essence of the contract, viz. , the agreement of sale dated March 6, 1975 (Ex. P-1 ). ( 8 ) BEFORE discussing the oral and documentary evidence in the case, it is necessary to notice that the respondent in her pleadings has taken the definite stand that time was not the essence of the contract, viz. , the agreement of sale dated March 6, 1975 (Ex. P-1 ). If that is so, the provision in the agreement of sale that the sale should be completed before September 30 1975, in respect of the 1st lot and one month thereafter in respect of the second lot was a condition which was not intended to be acted upon by the respondent-vendor. ( 9 ) THE official liquidator has examined Mr. Agarwal in support of the claim as P. W. 1. He has testified to the circumstances preceding the sale agreement and the execution of Ex. P-1. Exhibit p-3 is the permission obtained by him for the alienation under the Karnataka Vacant Landers in urban Area (Prohibition of Alienation) Act, 1975. It is dated October 8, 1975. He has stated that the respondent would not get the permission from the revenue authorities for diversion of use of the land in question in time and that, in spite of his repeated oral demands, the respondent would not execute the sale deed and, therefore, he was compelled to write the letters, Exs. P-4, P-5 and p-6 demanding refund of the advance paid as she had failed to effect transfer of the properties in question. The said letters have been written in December, 1976, and January, 1977. Exhibit P-6 has been followed by legal notice as per Ex. P-7. In the legal notice the company has taken a firm stand that the breach of the agreement was caused by the respondent. It even contains an offer, as late as February, 1977, that the company is willing to purchase the property under and as per Ex. P-1. Exhibit P-7 was followed by a reminder as per Ex. P-8. In his evidence he has asserted that he was always wiling to perform the company's obligations under Ex. P-1. In his cross-examination he has admitted carrying on the negotiations of sale with the husband of the respondent, Mr. Joseph. He has denied knowledge of Ex. R-1, the permission granted for conversion of the land. He has denied that he ever declined to purchase the lands in question. P-1. In his cross-examination he has admitted carrying on the negotiations of sale with the husband of the respondent, Mr. Joseph. He has denied knowledge of Ex. R-1, the permission granted for conversion of the land. He has denied that he ever declined to purchase the lands in question. He has denied that any draft sale deed was ever given to him or that he settled the same with Mr. Joseph and the Advocate, Mr. Saptharish. He has asserted that he has not met or seen Mr. Saptharish. He has further denied that the company lacked funds for purchasing the lands or that he made a trip to Madras to raise funds for the purchase. In fact nothing useful has been elicited from this witness in cross-examination to support the stand of the respondent. ( 10 ) MR. Saptharishi, Advocate, is R. W. 1. He has in his evidence stated the Mr. Joseph and P. W. 1 came to him in November, 1975, in connection with the preparation of a sale deed. He was given instructions by Mr. Agarwal in that behalf. He has produced his office company of the draft sale deed as per Ex. R-9. He has stated that Ex. R-2 is the other carbon copy similar to Ex. R-9. He has stated that one copy of the draft sale deed was sent to P. W. 1 by post and another copy was handed over to Mr. Joseph in person. After that he heard from neither of them. In cross-examination he has admitted that the corrections in Ex. R-9 are made in his handwriting at the time of handing over the same to Mr. Joseph. ( 11 ) MR. Joseph, R. W. 2, has deposed to facts which tend to corroborate the evidence of P. W. 1 except in regard to the preparation of the draft sale deed. He has admitted that he was all along acting for his wife, the respondent. He has admitted that Mr. Agarwal agreed to extend the time for completion of the sale beyond September 30, 1975, though the same was not reduced to writing. He has asserted that the draft sale deed was corrected by P. W. 1 and returned to him. He has admitted that he was all along acting for his wife, the respondent. He has admitted that Mr. Agarwal agreed to extend the time for completion of the sale beyond September 30, 1975, though the same was not reduced to writing. He has asserted that the draft sale deed was corrected by P. W. 1 and returned to him. He has also asserted that he saw P. W. 1 off at the railway station to Madras where P. W. 1 was expected to raise funds for completing the sale transaction. He has also stated that P. W. 1 expressed in November, 1975, that the company could not go through the sale and wanted the return of the advance amount in full with interest while the respondent was willing to repay Rs. 15,000 and forfeit Rs. 10,000 in terms of the sale agreement, Ex. P-1. R. W. 2 has also deposed to the effect that on account of the sale falling through, the respondent could not pay back certain loans to the Canara Bank, Town Hall Branch, Bangalore, which had doubled itself causing loss to the extend to nearly Rs. 30,000. In cross-examination. R. W. 2 has not been able to corroborate the evidence of R. W. 1 in the matter of the draft sale deed. On the other hand, the indications are the there is too much discrepancy in the evidence to give credence to Ex. R-2 and Ex. R-3 as carbon copies which R. W. 1 has spoken as the ones prepared by him. These document do not stated comparison with Ex. R-9. Exhibit R-3 is in typewriter ribbon ink as can be seen with naked eyes while R-2 is a carbon copy, of which pages 3 and 4 are different from the other pages. The explanation offered by R. W. 2 in this behalf is more an after-thought than the probable truth. ( 12 ) IT is not necessary to refer to and discuss the other documentary evidence as they are not in controversy. ( 13 ) THE respondent's silence regarding the whole affair till the official liquidator's notice as per ex. P-9 lends credence to P. W. 1's version that he was willing to go through the sale and purchases the property as late as in February, 1977, as is evidenced by Ex. P-8. ( 13 ) THE respondent's silence regarding the whole affair till the official liquidator's notice as per ex. P-9 lends credence to P. W. 1's version that he was willing to go through the sale and purchases the property as late as in February, 1977, as is evidenced by Ex. P-8. If the respondent took a firm stand and sent a reply to the official liquidator's latter, Ex. P-9, nothing prevented her from acting in the same manner a little over a year before. Her explanation that she maintained silence on legal advice at the relevant time is not easy to believe when she admittedly was in a bad position financially with her bank and would have normally jumped at the chance of completing the sale and pay off her debts. These circumstances compel me to conclude that the respondent had avoided the sale without sufficient cause and the company had not committed any default. This answers the first point determined for consideration. ( 14 ) THE next point for consideration is whether the respondent has suffered loss on account of the default of the company in regard to Ex. P-1. As I have held that the company was not in default but the respondent, loss, if incurred at all by her, cannot be compensated at the expense of the company. There is no evidence that any loss was suffered by the respondent except the self-serving testimony of R. W. 2. ( 15 ) SHRI S. V. Subramaniam, learned counsel, has relied upon the decision of the Supreme Court in the case of Shree Hanuman Cotton Mills v. Tata Air Craft Ltd. , AIR1970 SC 1986 , (1969 )3 SCC522 , [1970 ]3 SCR127. In the said case, the Supreme Court was dealing with a forfeiture of earnest money in accordance with the contract between the parties where time was the essence of contract. In the case on hand, as pointed out by me earlier in the course of this order, the respondent has admitted that time was not the essence of the contract and that is borne out by the conduct of the parties to Ex. P-1. The ruling of the Supreme court has no application to the facts of this case. ( 16 ) IN the result, the application of the official liquidator is liable to succeed as prayed for with the following modifications. P-1. The ruling of the Supreme court has no application to the facts of this case. ( 16 ) IN the result, the application of the official liquidator is liable to succeed as prayed for with the following modifications. Interest at 18 per cent. per annum on Rs. 10,000 shall be calculated from the date of Ex. P-8 till date of application and at 6 per cent. per annum from the date of application till date of realisation as default on the part of the respondent must be reckoned from a date subsequent to Ex. P-8 and not before. If the respondent has paid any amount, the same shall be given as a deduction with corresponding counter interest. It is ordered accordingly and it is supplemental to the order made by Venkatachaliah J. , on December 1, 1978.