whether the seller is entitled to forfeit the earnest money deposit where the sale of an immovable property falls through by reason of the fault or failure of the purchaser ? .-2015 S.C. [2012] MSKLAWREPORTS



 Law is, therefore, clear that to justify the forfeiture of advance money being part of ‘earnest money’ the terms of the contract should be clear and explicit. Earnest money is paid or given at the time when the contract is entered into and, as a pledge for its due performance by the depositor to be forfeited in case of non-performance, by the depositor. There can be converse situation also that if the seller fails to perform the contract the purchaser can also get the double the amount, if it is so stipulated. It is also the law that part payment of purchase price cannot be forfeited unless it is a guarantee for the due performance of the contract. In other words, if the payment is made only towards part payment of consideration and not intended as earnest money then the forfeiture clause will not apply.

When we examine the clauses in the instant case, it is amply clear that the clause extracted hereinabove was included in the contract at the moment at which the contract was entered into. It represents the guarantee that the contract would be fulfilled. In other words, ‘earnest’ is given to bind the contract, which is a part of the purchase price when the transaction is carried out and it will be forfeited when the transaction falls through by reason of the default or failure of the purchaser. There is no other clause militates against the clauses extracted in the agreement dated 29.11.2011.

We are, therefore, of the view that the seller was justified in forfeiting the amount of Rs.7,00,000/- as per the relevant clause, since the earnest money was primarily a security for the due performance of the agreement and, consequently, the seller is entitled to forfeit the entire deposit. The High Court has, therefore, committed an error in reversing the judgment of the trial court.

Consequently, the appeal is allowed and the impugned judgment of the High Court is set aside. However, there will be no order as to costs.-2015 S.C. [2012] MSKLAWREPORTS

Popular posts from this blog

Court fee - Sec.34 of A.P.C.F & S.V.Act - partition of Plaints-A and B-Schedule properties, in the manner pleaded by her, and for grant of future profits. Plaint-A Schedule comprised of, four items of immovable properties, and Plaint-B Schedule comprised of, nine items of jewellery. Pleading that the parties are in joint possession of the said properties, the petitioner paid Court-fee of Rs. 200/- under Sub-section (2) of Section 34 of the A.P. Court Fees and Suits Valuation Act, 1956 (for short 'the Act'). The trial Court returned the plaint, through its order dated 23-6-2006, directing the petitioner herein, to pay Court fee on movable properties, on her shares, as per the Act, within the time stipulated by it.= In the instant case, the petitioner asserted that, herself and the respondents are in joint possession of the Plaints-A and B-Schedule properties. In a way, the trial Court was satisfied, that the immovable properties mentioned in Plaint-A schedule are in joint possession, and in that view of the matter, it did not insist on payment of ad-valorem Court-fee, on such items. It, however, took a different view, as regards the movable properties. Neither from the plaint, nor from the endorsement made by the trial Court, it is found that there is any distinction, as to the nature of rights claimed, in respect of Plaint-A Schedule properties, on the one hand, and Plaint-B schedule properties, on the other hand. In fact, the nature and incidence of possession, of an immovable property, gives rise to, relatively greater consequences of law, than the possession of an item of movable property. The possession of an item of immovable property can be said to be more assertive, firm and lasting, than the one, of movable property. The endorsement made by the trial Court cannot be sustained, either on law, or on facts. 2015 A.P.(2006)MSKLAWREPORTS

partition of Plaints-A and B-Schedule properties, in the manner pleaded by her, and for grant of future profits. Plaint-A Schedule comprised of, four items of immovable properties, and Plaint-B Schedule comprised of, nine items of jewellery. Pleading that the parties are in joint possession of the said properties, the petitioner paid Court-fee of Rs. 200/- under Sub-section (2) of Section 34 of the A.P. Court Fees and Suits Valuation Act, 1956 (for short 'the Act'). The trial Court returned the plaint, through its order dated 23-6-2006, directing the petitioner herein, to pay Court fee on movable properties, on her shares, as per the Act, within the time stipulated by it.= In the instant case, the petitioner asserted that, herself and the respondents are in joint possession of the Plaints-A and B-Schedule properties. In a way, the trial Court was satisfied, that the immovable properties mentioned in Plaint-A schedule are in joint possession, and in that view of the matter, it
Read more

Sec.482 Cr.P.C. - Section 8 of the Andhra Pradesh Public Examination (Prevention of Malpractice and Unfair Means) Act, 1997 - Part B question Paper was missed ( said to be distributed to A1 along with other students by A2 an invigilator ) - Charge - she was negligent in performing the invigilation duties. - Their Lordships held that Mere negligence in performing invigilation duties, does not attract the offence set-forth in the Act. Therefore, in absence of any allegation that the petitioner herein has committed the offence set out in Section 5 of the Act, she cannot be subjected to prosecution for which the penalty has been provided under Section 8 of the Act.- Quashed the criminal proceedings - 2015 Telganga & A.P. msklawreports

Law  :- Sec.482 of Cr.P.C. Sub  :- Quash the criminal proceedings Offence  :-Section 8 of the Andhra Pradesh Public Examination (Prevention of Malpractice and Unfair Means) Act, 1997 Summary : -  The investigation revealed that clandestinely question paper Part-B has been removed from the exam hall and it was passed on to Accused No.1 for eventually facilitating in malpractice. However, the police after investigation, filed the charge-sheet.   The petitioner (A-2) along with A-1 is sought to be proceeded against under Section 8 of the Andhra Pradesh Public Examination (Prevention of Malpractice and Unfair Means) Act, 1997 (Act for short).     Section 5 of the Act reads as under: Prevention of leakage by person entrusted with examination works: No person who is entrusted with any work pertaining to a public examination shall, except where he is permitted by virtue of his duties so to do, directly or indirectly divulge or cause to be divulged or make known to any o
Read more

Order 38 Rule 5, only the properties of the defendant can be attached and not the properties in the hands of garnishee has no statutory support nor the support of any precedent.-2015 A.P.(2004) MSKLAWREPORTS

Order 38 Rule 5, only the properties of the defendant can be attached and not the properties in the hands of garnishee has no statutory support nor the support of any precedent. "Order 38, Rule 7 C.P.C. provides that the attachment under Order 38, Rule 5 shall be made in the manner provided for the attachment of property in execution of a decree. It is trite, the attachment envisaged under Order 38, Rule 5 CPC is an attachment before judgment. The restriction found by the learned Single Judge that under Order 38 Rule 5, only the properties of the defendant can be attached and not the properties in the hands of garnishee has no statutory support nor the support of any precedent. The attachment of debts due to the defendant from third party could be attached before judgment under Order 38 Rule 5 CPC.-2015 A.P.(2004) MSKLAWREPORTS
Read more