Srinivasa Reddy, J.:—
In this second appeal the appellant-plaintiff challenges the judgment and decree dated 17-8-1995 passed in R.A No. 1/95 on the file of the Civil Judge and JMFC, Chikkaballapur affirming the judgment and decree dated 16.11.1994 passed in O.S No. 122/91 dismissing the suit for specific performance of the agreement of sale.
2. Reference is made to the parties to this appeal by their rank and status in the suit.
3. The plaintiff filed the suit on the following averments:
The defendant as manager of his family entered into the suit agreement to sell two lands for a legal necessity of his family. The consideration of Rs. 30,000/- was paid in full. The defendant had agreed to execute a registered deed after removal of the then existing ban on registration of fragments. The plaintiff is ready and willing to perform her part of the contract but the defendant was not ready and willing to perform his part of the contract despite causing issue of a legal notice demanding the defendant to execute the sale deed.
4. The defendant denied the execution of the agreement itself.
5. Both the courts below have recorded concurrent findings to the effect that the plaintiff has established the execution and the passing of the consideration under the agreement Ex. P. 1. Despite coming to the said conclusion both the Courts below have reached the conclusion that the agreement to sell cannot be enforced because by its very nature Ex. P. 1 is not an agreement to sell but a sale contract executed on an improperly stamped paper and being unregistered is invalid. In the light of these findings the suit and the first appeal filed by the plaintiffs have been dismissed. Aggrieved, the plaintiffs have come up in this second appeal.
6. The findings that Ex. P. 1 is not an agreement to sell but a contract of sale executed on an improperly stamped paper and is unregistered are pure findings of fact and cannot be questioned in this second appeal. In fact the appellants do not question these findings at all.
7. I have heard learned Counsel on both sides.
8. Learned Counsel Mr. M.S Purushothama Rao submitted that the Courts below erred in not granting the relief after coming to the conclusion that the execution of Ex. P. 1 is proved. It is his further submission that even after coming to a conclusion that Ex. P. 1 is unenforcible in law, the Courts below ought to have ordered return of the earnest money paid under Ex. P. 1 to which relief the plaintiffs were entitled in equity.
9. The substantial questions of law that arises for consideration in this appeal are:
1. Whether the Courts-below were right in refusing to grant the relief of proof of execution of the agreement and passing of consideration in pursuance to such agreement?
2. Whether the Courts-below were right in declining to make an order for return of earnest money to the plaintiff?
Point No. 1:—
10. It is not in dispute that the defendant was incapable of performing his part of the contract even as on the date of entering into the agreement owing to a statutory bar that was in operation under the provisions of Prevention of Fragmentation and Consolidation of Holdings Act. The said Act prevented transfer of property which may lead to fragmentation of a holding. Ex. P. 1 is dated 1983. The said Act was repealed only on 3-12-1990. Even construing Ex. P. 1 as an agreement to sell, no decree could have been passed by the Courts below as the agreement entered into between the parties was unenforceable in law even as on the date of agreement. Therefore the suit filed by plaintiff for specific performance has been rightly rejected by the Courts below and the concurrent findings-of the Courts-below on this issue does not call for any interference.
Point No. 2:—
11. It is submitted by learned Counsel Mr. Purushothama Rao that having refused to pass a decree for specific performance the Courts should have in equity made an order for the return of earnest money along with interest. Learned Counsel for the defendant, however, submitted that the plaintiff is not entitled for the return of the earnest money without a specific prayer being made in the plaint in that regard. The only question that, therefore, remains for consideration in this appeal is whether the plaintiff is entitled for the return of the earnest money.
12. Section 21 of the specific Relief Act stipulates how the Court should exercise its power to award compensation or damages for any breach of contract. The Section provides:
“Section 21. Power to award compensation in certain cases — (1) In a suit for specific performance of contract, the plaintiff may also claim compensation for its breach, either in addition to, or in substitution of such performance.
(2) If, in any such suit, the Court decides that specific performance ought not to be granted, but that there is a contract between the parties which has been broken by the defendant, and that the plaintiff is entitled to compensation for that breach, it shall award him such compensation accordingly.
(3) If, in any such suit, the Court decides that specific performance ought to be granted, but that it is not sufficient to satisfy the justice of the case and that some compensation for breach of the contract should also be made to the plaintiff, it shall award him such compensation accordingly.
(4) In determining the amount of any compensation awarded under this section, the Court shall be guided by the principles specified in section 73 of the Indian Contract Act, 1872 (9 of 1872).
(5) No compensation shall be awarded under this Section unless the plaintiff has claimed any such compensation in the plaint, the Court shall at any stage of the proceeding, allow him to amend the plaint on such terms as may be just, for including a claim for such compensation.
Explanation:— The circumstances that the contract has become incapable of specific performance does not preclude the Court from exercising the jurisdiction conferred by this section.”
Section 21 operates on the basis of the principle specified in Section 73 of the Contract Act. Under Section 73 of the Contract Act when a contract has been broken, the party who suffers by such breach is entitled to receive from the party who has broken the contract compensation for any loss or damage caused to him. The compensation under Section 21 is also to be assessed in the same manner as in breach of contract under Section 73, that is to say the plaintiff is bound to prove some loss or damage suffered by him on account of the breach committed by the vendor. In a case where the contract cannot be executed because of a statutory bar and for no fault of the vendor, the purchaser would not be entitled to any compensation or damages because the contract is not broken by the breach committed by the vendor. The only relief that can be granted by the Court is such case is to direct the return of earnest money with some interest. In such cases the Court can exercise its discretion and grant relief to the party affected because the contract became unexecutable for reasons other than breach of the vendor. In Mack and Krishnaswami Nayudu1 Madras 591 in such a situation the Court held:
“In a suit for specific performance the wide discretion a Court has in granting relief to the two parties to the contract is incapable of strict definition and must depend on facts of each case. Thus, even though the suit for specific performance brought by a vendee is dismissed, yet the Court may in its discretion order the vendor to return the amount deposited with him by the vendee.”
In Amna Bibi v. Udit Narain Misra . Madras Journal. the plaintiff paid off the liabilities of the defendants on certain mortgages and decrees under contracts whereby defendants agreed to treat the amount paid by the plaintiff as earnest money on account of the sale of certain villages and to execute the necessary sale-deeds. The plaintiff brought two suits alleging that a condition of the said contracts was that the sale deeds were to be executed within a month of the date thereof and that the defendants did not execute the sale deeds within the stipulated time, and claimed recession of the said contract and a refund of earnest money with interest. Both Courts in India held that time was not of the essence of the contract and dismissed the suits. The plaintiff subsequently brought two suits for specific performance of the said contract or, in the alternative, for a refund of earnest money with interest. The High Court held that the specific performance could not be decreed because the terms of the contract could not be ascertained, but decreed refund of the earnest money with interest, holding that Art. 97 of the Second Schedule of the Indian Limitation Act applied to the case. The decision in Amnabi, supra, proceeds on general principles to award relief of return of the monies paid. Their Lordship in appeal observed that, ‘we are glad to be able, consistently with what justice and fair dealing dictate, to give the plaintiff respondents that relief, that is the alternative claimed in his plaint.’
13. The right to seek return of earnest money, therefore flows from general principle and a prayer for return of the earnest money is not governed by Section 21 which deals with award of compensation or damages, entitlements to which follows only from a breach by the party who has broken the contract. As earnest money cannot be equated with either damages or compensation so as to say that it is to be governed by Section 21. The bar that prohibits award of compensation under sub-section (5) of Section 21 unless a claim is made for such compensation in plaint would certainly not be applicable to earnest money so as to preclude the Court from exercising its jurisdiction and to order its repayment. Damages and compensation are not to be equated with earnest money while determining the right of purchaser to seek for its return. In cases where specific performance is refused, the Court may direct a refund even though plaintiff has not specifically asked for it in the plaint. The Court must do so if the relief causes no prejudice to the defendant. In B.R Mulani v. A.B Asawathanarayana,3 the Apex Court on coming to the conclusion that the specific performance of an agreement cannot be ordered as it was not agreement of sale purely, however decreed suit for repayment of monies paid. In Y.R Mahadev v. K. Dayalan . 1997 4 Kar L.J 264., also a learned Single Judge of this Court has taken a similar view and held that the Court getting into equity jurisdiction can grant relief of refund of earnest money with interest thereon even where party has not expressly claimed such relief in plaint. The decision in K. Nabeesahed Nadaf v. B.S Pattanshetti . 1998 6 K.L.J 547. is on the question whether the Court could grant monetary compensation in substitution of specific performance while denying the relief of specific performance. The Court held that such a course is open to the Court under the doctrine of unconscionability. But the doctrine of unconscionability cannot be applied to the facts of the present case where the contract has become impossible of performance because of a statutory bar.
14. Learned Counsel for respondent relied on the decision in Ram Rattan v. Bajrang Lal,6 wherein the Apex Court has held that when the document is tendered in evidence by the plaintiff while in witness box and objection is raised by the defendants that the document is inadmissible in evidence as it is not duly stamped or for want of registration, it is obligatory upon the trial Judge to apply his mind to the objection raised and to decide the objection in accordance with law. As both courts have not granted the relief of specific performance of the agreement and I have concurred with the said findings of the Courts below the question whether the agreement could have at all been admitted in evidence does not assume much importance. In the very decision at para 3 their Lordship observed, “on the question whether the document was duly stamped it was said with some justification that it was not open to the Court to exclude the document from being read in evidence on the ground that it was not duly stamped because in any event under Section 33 of the Stamp Act it is obligatory upon the Court to impound the document and recover duty and penalty as provided in proviso (a) to Section 35.” Therefore, the said decision is not of much help to the respondents. The ratio of the decision in Adcon Electronic Pvt Ltd. v. Daulat . 2001 7 SCC 698 is that no direction for handing over possession of an immovable property can be granted in the absence of specific prayer to that effect. As such a relief is not being granted to the present plaintiff the said decision is not of any relevance to the disposal of this appeal. Learned Counsel for the respondent relied upon the ratio of the decision in S.M Patel v. A.J Daginawala,8 to substantiate the contention that the relief of earnest money could not be granted as such a relief would be time-barred under Art. 113. The suit is one for specific performance and the relief of return of earnest money was not even pleaded in the suit. The relief is being granted by the Court on application of general principles of law to the case. The agreement is executed on 6-8-1983 and no specific date was fixed for its performance. The plaintiff could have had notice of refusal of performance by the defendant only on or after 3-12-1990 when the notices issued by him, one by registered post and another by certificate of posting, evoked no reply from the defendant. As the plaintiff can be given the relief of return of earnest money in a suit for specific performance in exercise of the discretionary power, without there being a specific pleading to that effect, the period of limitation would begin to run from the date of refusal by the defendant. As the suit is filed in the year 1991 itself after issuance of notice on 3-12-1990, it must be held that under Art. 113 of the Limitation Act the claim for earnest money is not time-barred. Therefore, the ratio of the decision in S.M Patel, supra, is of no assistance to the defendant in this case.
15. Thus, in the ultimate analysis, I have to hold that the appellant though is not entitled for the relief of specific performance or for damages in substitution of specific performance, is certainly entitled to get back the earnest money paid by him under the agreement even in the absence of a plea in the plaint in that regard. It is trite law that no man should be allowed to gain out of his own default.
16. In the result, for the reasons stated above, the appeal is partly allowed. The suit is decreed for return of earnest money paid under the agreement and the respondent-defendant is directed to repay the earnest money received by him from the appellant with simple interest at 6% per annum from the date of agreement till the realisation of the sum by the appellant-plaintiff.
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