JUDGMENT 24.07.2009 1. These are applications by the plaintiff under Order XXXIX Rules 1 and 2 CPC and by the Defendant under Order XXXIX Rule 4 CPC in a suit for specific performance of an agreement dated 23rd August 2007 whereby the defendant agreed to sell to the plaintiff property at 381, Pocket 5, Ground Floor, Sector 22, Rohini, Delhi admeasuring 60 sq. m. The total consideration of the property was Rs. 21 lakhs. The plaintiff paid to the defendant an earnest money of Rs.2 lakhs as part of the total consideration. It was agreed that the plaintiff would pay Rs. 2 lakhs after execution of the conveyance deed in favour of the defendant and the balance consideration would be paid at the time of the execution of final conveyance deed and handing over of the physical possession of the property. This was agreed to be done within forty-five days from the date of conversion of the property into freehold. 2. The Plaintiff states that thereafter the plaintiff had been requesting the defendant verbally as well as telephonically to get the property converted into freehold. In March 2008, the plaintiff learnt that the defendant was in the process of selling the premises to a third party without informing the plaintiff. The plaintiff apprehended that the defendant was entering into a fresh transaction with the third party since the market value of the property had increased. on behalf of the plaintiff on 12March 2008 to the defendant. The notice reiterated the plaintiffV readiness and willingness to perform his part of the contract by offering to pay the balance sale consideration. Despite receipt of the notice, the defendant failed to respond. Thereafter the present suit was filed. 3. It is stated in the plaint that the plaintiff is still ready to pay the balance sale consideration of Rs.19 lakhs to the defendant. On 14th May 2008 while directing notice to issue in the application (IA No.5897 of 2008) under Order 39 Rules 1 and 2, this Court passed an interim order restraining the defendant from alienating or transferring or parting with the possession of the suit property to any other third person. After the written statement was filed by the defendant along with an application (IA No. 8690 of 2008) under Order XXXIX Rule 4 CPC, issues were framed by order dated 24th November 2008. After the written statement was filed by the defendant along with an application (IA No. 8690 of 2008) under Order XXXIX Rule 4 CPC, issues were framed by order dated 24th November 2008. the agreement to sell is not specifically enforceable for the reason of onus to prove was on the parties. By n order dated 20 March 2009 the case was then set down for hearing on the aforesaid issue which was to be treated as a preliminary one. This order disposes of the aforementioned preliminary issue. 4. According to learned counsel for the Defendant, the agreement dated 23rd August 2007 stipulates that upon the failure of the defendant to carry out his obligation thereunder twice the earnest money would be refunded to the Plaintiff and the agreement would be treated as cancelled. It is submitted that in view of such a clause in the agreement, the prayer for specific performance was not capable of being granted to the plaintiff particularly in light of the Section 14 of the Specific Relief Act, 1963 read with Section 20 thereof. Reliance has been placed on the judgment in Dadarao v. Ramarao (1999) 8 SCC 416 . On the other hand, the learned counsel for the plaintiff relies upon the judgments of the Supreme Court in M.L. Devender Singh v. Syed Khaja AIR 1973 SC 2457 and the subsequent judgment in 3__VRX]D_ v. Shondrilo Naidu (2004) 6 SCC 649 in which it is held that the decision in Dadarao v. Ramarao was per incuriam. A reference is also made to the decision in P.S. Ramakrishna Reddy v. M.K. Bhagyalakshmi III (2007) SLT 704. 5. In order to appreciate the respective contentions of the parties, the receipt for the bayana paid by the Plaintiff needs to be examined. The original is in Hindi and its translation in English as filed by the Defendant reads as under: ³(DUQHVW Money receipt I, Vinod Kumar son of Sh Hansraj Resident of 146, Bharat Nagar, Delhi 52, has received in cash a sum of Rs.2,00,000/- (Rupees two lacs only) from Sh. Manoj Kumar son of Sh. Roshan Lal, resident of N-2/41, Mohan Garden Uttam Nagar, Delhi, towards the sale of his house No.381Pocket 5, Sector 22, situated in Rohini, Delhi the area of which is 60 sq. mtrs. and has given the receipt. Manoj Kumar son of Sh. Roshan Lal, resident of N-2/41, Mohan Garden Uttam Nagar, Delhi, towards the sale of his house No.381Pocket 5, Sector 22, situated in Rohini, Delhi the area of which is 60 sq. mtrs. and has given the receipt. Total consideration agreed for the sale of my aforesaid flat has been agreed in the sum of Rs.21,00,00/- (Rupees twenty one lacs only), and the final documents will be executed in favour of the purchase i.e. Manoj Kumar, within 45 days of converting the property into freehold, and further as per the saying of the said Manoj Kumar, I will complete all the formalities for the sale of the said property, in the Kutchery, and will be receiving the balance consideration thereof. The expenses for the purchase of the papers/stamps will be born by the purchaser. In case I back out from the agreed conditions, I will pay double the amount (of earnest money), and in case the purchaser fails to pay the balance consideration as agreed, then the earnest money as paid above, will be forfeited. Total consideration Rs.21,00,000/-half of which is Rs.10,50,000/-. Earnest money Rs.2,00,000/- half of which is Rs.1,00,000/-Balance Rs.19,00,000/- half of which is Rs.9,50,000/-. The present sale has been finalized through Sandeep Chaudhary, to whom the purchaser and seller will be paying 2% commission for the total sale consideration, and in case the sale is not finalized for any reason, then Sh.___________will be liable to pay a commission of 4%. The time of payment is within 45 days from the date of getting the property converted into freehold. Note: At the time of preparation of the conveyance deed another sum of Rs.2,00,000/- will be paid as part payment. Complete work will be got done in the ground floor of the flat No.381 Pocket 5 (before possession is handed over). Loan 12-15 lacs. Sd/- English Sd/- English Purchaser Seller Sd/-:LWQHVV´ 6. Note: At the time of preparation of the conveyance deed another sum of Rs.2,00,000/- will be paid as part payment. Complete work will be got done in the ground floor of the flat No.381 Pocket 5 (before possession is handed over). Loan 12-15 lacs. Sd/- English Sd/- English Purchaser Seller Sd/-:LWQHVV´ 6. It needs to be noticed out that the actual Hindi version of the forfeiture clause of the above agreement reads as under: ³$JDU_ PHLQ_ VDXGH_VH_ SLFKH\_ KDWXQJD_KDWXQJL_ Wo bayane ki rakam ka dugna khariddaar ko dunga/dungi aur agar khariddaar antim tarikh tak baki rakam nahi dette to bayana jabt aur sauda cancel yaa khatam samjha MD\HJD_´___ The precise English translation of the above clause is: ³LQ_WKH_HYHQW_WKDW_,_ (i.e., the seller) back out of the agreement, then I will pay to the purchaser twice the earnest money, and in the event the purchaser does not pay the balance consideration before the last date (specified in this agreement) then the earnest money will stand forfeited and the agreement will be treated as having been cancelled or having come 7. A plain reading of the above clause shows that the eventuality of the agreement coming to an end attaches only to the contingency of the purchaser failing to pay the balance consideration. As far as the seller is concerned, his liability to pay twice the earnest money in the event of his backing out of the agreement alone spelt out as the consequence. 8. In Dadarao v. Ramarao the default clause in the agreement to sell stated that in the event the sale deed was not executed by the seller by th 15 April 1972 in addition to the earnest money a further sum of Rs.500/-would When the sale deed was not executed, the purchaser filed a suit for specific performance. The trial court dismissed the suit stating that the remedy of ordering specific performance was a discretionary one. This was reversed by the first appellate court and specific performance was ordered. The order of the appellate court was affirmed by the High Court in appeal. In a further appeal by the seller, the Supreme Court observed that the sum of Rs.500/-if the agreement had not stipulated what would happen in the event of the sale deed not being executed then perhaps the plaintiff could have asked for a decree of specific performance. In a further appeal by the seller, the Supreme Court observed that the sum of Rs.500/-if the agreement had not stipulated what would happen in the event of the sale deed not being executed then perhaps the plaintiff could have asked for a decree of specific performance. The judgments of the appellate court and High Court were set aside and the judgment of the trial court was restored. Consequential directions were issued to the seller to return to the purchaser the earnest money and the extra sum of Rs.500 together with interest. 9. In Dadarao v. Ramarao which is a judgment notice was not taken of the earlier judgment of M.L. Devender Singh v. Syed Khaja in which after referring to Section 10 of the Specific Relief Act and the Explanation appended thereto, and Sections 14, 20 and 23 it was held that the jurisdiction of a court to grant specific performance or taken away by merely fixing a sum even as interpreted the wording of Sections 20 and 23 circumstances of the each case before it, whether specific performance of Emphasis was placed on the presumption to be drawn in terms of the Explanation 1 to Court shall presume that the breach of a contract to transfer immovable property cannot be adequately relieved by compensated in money, and that the breach of a contract to transfer movable property can be thus relieved.´ 10. In P. Souza v. Shondrilo Naidu, a two-judge Bench of the Supreme Court referred to the decisions in M.L. Devender Singh v. Syed Khaja and Dadarao v. Ramarao, and concluded: ³a distinction between liquidated damages and penalty may be important in common law but as regards equitable remedy, the same does not play any significant role´. It was noticed that in Manzoor Ahmed Magray v. Ghulam Hassan Aram (1999) 7 SCC 703 and A. Abdul Rashid Khan v. P.A.K.A. Shahul Hamid (2000) 10 SCC 636 , the ratio of M.L. Devender Singh had been reiterated. It was held by the Supreme Court in P. Souza that inasmuch as the decision in Dadarao v. Ramarao did not notice the binding decision in M.L. Devender Singh and the statutory provisions, it was per incuriam. It was held by the Supreme Court in P. Souza that inasmuch as the decision in Dadarao v. Ramarao did not notice the binding decision in M.L. Devender Singh and the statutory provisions, it was per incuriam. Later in P.S. Ramakrishna Reddy v. M.K. Bhagyalakshmi, the Supreme Court followed its earlier decision in P.Souza v. Shondrilo Naidu and rejected the contention that specific performance could be refused if there was a default clause which stipulated that in the event of the commission of a breach, the appellant was entitled to forfeit the amount paid by way of advance. It is emphasized that the document should be read as a whole keeping in view the intention of the parties. 11. Having considered the above law as explained by the Supreme Court and in light of the facts and circumstances of the present case, it appears to this Court that the preliminary objection as to the maintainability of the present suit should be decided against the defendant and in favour of the plaintiff. While the agreement spells out the consequence of cancellation in the event of the buyer committing a breach, if the seller commits the breach he is bound to refund to the purchaser twice the earnest money. This does not in any manner imply that the purchaser cannot seek specific performance. In such event the seller cannot be permitted to take advantage of being in breach by denying to the purchaser specific performance of the agreement to sell. 12. For the above reasons, the preliminary issue No.1 is decided in favour of the plaintiff and against the defendant. It is held that the present suit for specific performance is maintainable as such notwithstanding that the default clause entitles the Purchaser to be refunded twice the earnest money in the event of a breach of the agreement being committed by the Seller. th 13. The interim order passed by this Court on 14 May 2008 is made absolute during the pendency of the suit. IA No.5897 of 2008 is accordingly disposed of. IA No. 8690 of 2008 is dismissed. CS(OS) No.918/2008 th 14. In light of the above order, issue No.1 framed by this Court on 24November 2008 is decided in favour of the plaintiff and it is held that the suit is maintainable as such. 15. The suit is set down for trial on the remaining issues. IA No. 8690 of 2008 is dismissed. CS(OS) No.918/2008 th 14. In light of the above order, issue No.1 framed by this Court on 24November 2008 is decided in favour of the plaintiff and it is held that the suit is maintainable as such. 15. The suit is set down for trial on the remaining issues. The suit be listed before the Joint Registrar on 6 October 2009 by which date the plaintiff will file the affidavits of evidence by way of examination-in-chief of his witnesses. The cross-examination of such witnesses will commence on that date. The cross examination of the witnesses of the parties should be concluded preferably within a period of six months. Thereafter the case be listed before the Court.