JUDGMENT
1. This appeal arises out of a suit brought by the plaintiff for specific performance of an agreement to sell a plot of land in Akola Civil Station measuring 200 feet by 180 feet. The agreement is dated 3-6-1936 and is Ex. P.-1. The rate agreed on was 4 annas a square foot, and as the site measured 36000 square feet, the price, although not stated, would come to Rs. 9000. It was also agreed that Rs. 4000 was to be paid by 11 O'clock on 5-6-1936 and this was done. The sale-deed, however, was never executed and each side blamed the other for the failure. Subsequently the defendant 1, Laxminarayan, sold the plot in separate lots to the other defendants who were impleaded and who had begun construction of their houses on the plot before the suit was brought. The plaintiff claimed specific performance of the agreement after payment by him of the balance of Rs. 5000, and in the alternative claimed that he should be paid damages to the extent of Rs. 9000, with interest at 8 annas per cent, per month or, failing that, that the sum of Rs. 4000 paid towards the consideration of the sale should be returned to him with interest at the same rate.
2. The trial Court negatived the plaintiff's claim in all respects and held that it was he who broke the contract and further that time was of the essence of the contract and dismissed the plaintiff's suit. The plaintiff has appealed. The original defendant 1, Laxminarayan, is now dead and his son and his widow have been substituted in his place as respondents. The plaintiff was a money-lender and stated in his evidence that he found money-lending no longer profitable and wished to invest his capital in building. The defendant was the owner of considerable building sites in Akola Civil Station and had already conveyed a certain number of plots in individuals who each built his house thereon. The plaintiff wished to buy and the defendant wished to sell the area now under dispute measuring 200 feet by 180 feet for the purpose of building several houses thereon as a building investment. An experienced lawyer of Akola acted on behalf of both of them in drawing up the document and on 3-6-1936 a deed of agreement was drawn up. This is Ex. p-1 and it runs as follows:
“Kararchithi (deed of agreement) executed in favour of Badridas Ramrai shop at Akola, proprietor Lakshminarayan Badridas, resident of Akola by Bhalobandra Pandurang Rajandekar, resident of Rajanda at present at Akola to the following effect:
I have decided to purchase the site in front of the bungalow in the Civil Station belonging to you at the rate of 0-4-0 four annas per square foot. Description thereof:—
(1) The entire site measuring 180 or less if so found, from south to north and 200 feet from east to west, from the plot sold to Dr. Joglekar, adjoining the main road to the corner, i.e upto the fencing, of the road of the Bank. The site as mentioned above, at the rate of four annas per square foot.
The transaction regarding the said sale is subject to the following conditions.
(a) The cost of the sale-deed should be borne half and half, i.e, I will pay half and you should bear half.
(b) In case the Committee does not permit me to construct the three or as many bungalows as I have to construct, as per the rules of the Committee, I will be entitled to recover from you the consideration of the sale-deed with interest at the rate of eight annas per cent, per mensem and I will-return the site to you.
(c) You should neither give nor sell the plots on the Bide of my plot upto your bungalow or upto the present road on the northern side i.e on the back side (of the plot) of Dr. Joglekar to any non-Hindu.
(d) Upto 11 O'clock on 5-6-1936 I will pay rupees four thousand to you towards the consideration of the sale and will pay the remaining amount before the registering officer.
(e) I will get the sale-deed executed within one month.
(f) You should execute the sale deed after giving a guarantee that you are the absolute owner of the said plot.
(g) If between the road of the Bank and the plot given to me there is Kos (curve) upto five feet in breadth, I will take it free. If the Kos is more I will pay the price at the rate of two annas per square foot.”
3. Exhibit 1-D.8 is a counterpart of it.
4. On 5-6-1936 Ex. P-8 was executed and it was also drawn up by Mr. Deshpande who drew up Exs. P.-1 and 1 D. 8 and is headed Isar-chithi, that is to say, earnest note. It runs as follows:
“Isar-chithi (earnest note) executed in favour of Bhalchandra Pandurang Rajandekar, resident of Eajanda at present at Akola by Badridas Ramrai shop at Akola, proprietor Lakshminarayan Badridas Marwadi Agrawal, resident of Akola to the following effect:
On 3-6-1936 a souda (contract) was made between you and me for selling to you my plot and an agreement note has been executed in respect thereof. In accordance therewith I have this day received four thousand rupees from you on account of earnest money. It is settled to take the remaining amount of five thousand rupees before the Registering Officer. In lieu of this amount, i.e for a consideration of nine thousand rupees, it is agreed to sell to you the site, absolutely belonging to me situate in the north-west corner i.e the entire site from the plot sold to Dr. Joglekar by me and situate in the corner of the road towards the bank and the main road (leading to the station) upto the fencing in front of my bungalow in the Civil Station at Akola, measuring 180 feet from south to north or if less whatever it may be found (after taking measurements) and 200 feet from east to west, thus making 36,000 square feet i.e at the rate of four annas per square foot.
(b) You should bear half the costs of the sale-deed and we will bear half thereof.
(c) If the Committee does not grant permission according to its rules for constructing the three or whatever bungalows you have to construct, you will be entitled to claim the return of the consideration of the sale-deed together with damages and interest at the rate of 0-8-0 p.c p.m
(d) I will neither give nor sell any plot on the side of your plot upto our bungalow or upto the present road on the northern side i.e on the back side of Dr. Joglekar to any non. Hindu.
(d) The sale-deed should be got executed within one month.
(e) If there is a Kos upto five feet in breadth between the road of the bank and the plot given to you, I will give that site to you free. If the Kos is found to be more in breadth I will give that site to you taking 0-2-0 per square foot as price thereof. Hence this Isar-chithi (earnest-note) as above has been executed. It is binding on my estate and heirs.”
5. It reproduces the conditions of Ex. P-1 except that condition (f) in Ex. P-1 concerning the warranty of title is not included. Both documents recite that the sale-deed was to be executed within a month.
6. On 20-6-1936 the Akola Municipality published the following notice Ex. P-10 in the form of hand-bills:
“Necessary instructions to the buyers and sellers of the plots in the city.
These days there is a marked rise in the tendency on the part of rich and middle class people to purchase plots and build houses thereon. The only reason for this is the desire to get pure air, calm and quiet and cleanliness. But the people in general are not aware of the necessary requirements when purchasing plots for getting these things. Persons who own lands adjoining the town pay the Government fee and lay out plots in any manner they like and make money by selling such plots and those who have no knowledge regarding it go in for those plots and are duped. The attention of the land owner is concentrated on the fact as to how he will get more money and no attention is paid towards the comforts of the buyers of the plots. This will become clear if the layouts of the Gangadhar garden plots and Seth Eadhakisan Toshniwal plots on the Jatharpeth Eoad are studied. If, instead of discussing all the defects only one chief defect is told, the public will get an idea about it, and it is for example keeping the service lane only eight feet wide so that if the night-soil cart is taken therein it cannot be turned round. Hence the persons intending to layout plots should prepare layouts of their plots and should submit their plans to the Municipal Committee and get the same approved and then only they should sell those plots to others and the citizens should first see whether such plots have been passed by the Municipal Committee or not and then only they should purchase them so that they will have no difficulty in getting the permission for the construction of houses. The persons laying out plots should bear in mind the following important points when pre-paring the layouts:
(1) Each plot should be 60′ × 80′ at least.
(2) A strip of land 40 feet in breadth should be left for the main road.
(3) For the service lane (i.e a lane for the latrines) a strip of land at least 30 feet wide should be left, because water connecting pipes are given through these very lanes.
(4) The main roads should, if possible, be kept going from east to west.
(5) Plots should be laid out only if the land is of moorrum soil because in black soil land the firm land necessary for the foundation of the buildings is not near the surface and so for that only i.e for the foundation a considerable amount of the people is spent. In the same way if the black soil is very deep, the buildings sink and are cracked.
(6) While sending the plans the persons laying out the plots should make mention of the fact as to who should first construct the roads and drains.
After purchasing the plots the purchaser should, after taking into consideration the following points, send the plan to the Municipality and build house accordingly.
(1) The latrine should be constructed within one's own boundary limits after leaving a space of three or four feet from the boundary of the service lane and should build a wall (i.e a screen wall) 3 or 4 feet in height so as to make the service door i.e the place from where the night soil is removed, invisible after leaving a lane two and a half feet wide.
(2) The area of the first floor should be one third of the area of the plot. It should not be more.
(3) The plinth should be 2½ feet high from the ground.
(4) The plan should be prepared in such a way as to allow sufficient light and air into the house. The light coming from northern side is very good and, therefore, if possible, windows should be kept on that side.
(5) Well should be at a distance of 50 feet at least from this latrine.
(6) There should be separate roofs of the residential house and the latrine.
(7) The plan should be drawn on a tracing cloth and two copies of the same should be submitted.
(8) The plan should consist of the site plan in which well, latrine, the house to be built, etc., should be shown and distances thereof from the roads should also be shown. The site plan should be drawn on a scale of 20 feet to an inch at least.
(9) The principal plan should be drawn on a scale of sight feet to an inch and plan, cross section and front elevation should be shown therein.
It is learnt that at present Seth Lakshminarayan Shraogi is also laying out plots and trying to sell them. The public should therefore take the above instructions into consideration in this connection before purchasing the plots.
Special Notice
In accordance with Chapter XXII, Municipal Act, No. 2 of 1922 A.D as applied to Berar, special notice is hereby given that the Municipal Committee will compel the owners of the plots to construct roads and drains and to take water pipes, electric lights, etc., at their own cost. The sellers and the buyers of the plots should therefore take necessary precautions in this matter.”
7. The same notice was reproduced in a local newspaper on 24-6-1936 by Ex. p.n
8. It is the contention of the plaintiff-appellant that by reason of this notice the plaintiff was bound to obtain the sanction of the Municipal Committee to the layout of the plot comprising the necessary roads and sweepers' lanes in it before the execution of the sale deed and that the defendant Laxminarayan's persistent refusal to do this or to afford him any help in approaching the Municipal Committee was the reason why the contract went off. It is contended that this condition is to be read into the agreement of 3rd June, clause (b), and that as the condition has not been complied with the plaintiff is entitled under that clause to the return of his earnest money.
9. The defendant, on the other hand, con-tends that there was no such agreement between them at all and that any question of the Committee's refusing permission for the plaintiff to construct houses on the plot could not possibly arise until after the contract for the sale of the plot had been completed and that if the Municipal Committee then refused, the plaintiff would be entitled to the refund of the whole consideration.
10. On 2nd of July the plaintiff approached the Municipal Committee, vide Ex. 1-D-29:
“The applicant begs to state as follows:
1. On 3-6-1936 A.D the applicant entered into a contract with Shet Laxminarayan Shrawagee to buy 36000 square feet of land in front of his Cricket Ground before his bungalow and paid Rs. 4000 accordingly to Sheth Shrawagi on 5-6-1936 out of the said price (i.e price of the said land). Subsequently, public notices have appeared in the issues of the Prajapaksh, dated 20-6-1936 and 24-6-1936 with regard to Sheth Shrawagi's plots.
2. The applicant has to build 5 bungalows on the land taken (i.e bought) by him. Other people have bought some more plots near the said land and they intend constructing bungalows thereon.
3. The applicant learns that Sheth Shrawagee has not obtained sanction of the Municipal Committee to the layout of the said plots according to the notices published by it.
4. The applicant may kindly be informed whether the Committee will grant permission to him or not under these circumstances, to build bungalows on his 36000 square feet of land.
A map of the land taken (i.e bought) by the applicant is produced herewith.”
11. The Committee replied, vide Ex. P-12, that the application was premature in the following terms:
“Copy of the order dated 3rd July 1936 passed by the President, Municipal Committee, Akola, on his, Bhalchandra Pandurang Rajandekar's, application dated 2-7-1936 regarding the construction of bungalows in Shraogi's plots Ward No. 9.
The application filed is in fact premature and at this stage, I cannot express any opinion which may amount to permission or refusal. I may however advise the applicant that in case he is laying out plots and intends constructing bungalows thereon, he must be able to satisfy the Municipal Committee that there are within this area Pakka roads and lanes of sufficient width, proper drains, lighting arrangements and proper disposal of water by construction of drains upto the pacca municipal drains, etc. Unless the applicant does all this before he applies for permission he may be refused premission to build any house or houses as part of that scheme. The applicant be informed that no orders have been passed on his application in view of the circumstances stated above. The application be filed.”
12. The plaintiff then on 8-7-1936 served on the defendant the following notice (Ex. 1 D-24):
“On 3-6-1936 yon contracted to sell me the land in front of your bungalow in Civil Station, Akola, and I paid you Rs. 4000 in connection with the same on 5-6-1936.
It is learnt that you have laid out your land in Civil Station into plots and have sold some of them and it is learnt that you intend to sell the remaining land by laying out the same into plots. I informed you before that according to the contract and under law you are entirely responsible to have sanction accorded by the Akola Municipal Committee to construct bungalows on the plots taken (i.e bought) by me. I have also drawn your attention to the public notices issued by the Municipal Committee, Akola, on 20-6-1936 and 24-6-1936 A.D and asked you to obtain sanction from the Committee to construct my bungalows. You have made no efforts in this connection so far nor have you got the layout of all the plots in your entire land approved by the Committee.
You are, therefore, informed that you yourself should, within 15 days from receipt of this notice, get the layout of your plots approved by the Committee or have sanction accorded by the Committee to build my bungalows and you should execute a sale deed in my favour thereafter. If you fail to do this, you shall be responsible in every way according to law and you shall have to compensate for the loss that I may be put to. Be it known.”
13. It will be observed that no layout had been prepared either by the defendant or by the plaintiff. In answer to the Municipal Committee's reply, Ex. P-12 to the plaintiff, be put in a further application to the Committee, Ex. P-13:
“I am thankful to you for your guidance by giving instructions to me in respect of my application dated 2-7-1936.
The point however that requires further elucidation is this, whether the sanitary arrangements referred to by you are to be made only in the plot agreed to be purchased by me from Sheth Laxminarayan Sharwgi or whether they are to be made in the whole plot belonging to the latter as we learn that he intends to sell still more plots? In short whether the words “this area” in your directions dated 3-7-1936 mean the whole plot of Sheth Laxminarayan Shrawgi or only my portion out of it?
The Municipality was kind enough to guide the public by giving them directions in the handbill published on 20-6-1936 but neither this hand-bill nor your remarks on my application make the aforesaid point clear, in fact, the very object of my application was to get further guidance in the matter on which the handbill was silent.
I will, therefore, be highly obliged to you if you kindly make the aforesaid point clear so that it will be better for me to proceed in the matter accordingly.”
14. The defendant's reaction to the plaintiff's notice, Ex. 1 D-24 of 8-7-1936 was a peremptory telegraphic demand, Ex. 1 D-22, to get the sale-deed within 24 hours, otherwise he would sell to others and the plaintiff would be liable for damages. We note here that the defendant has not sued for damages and is apparently content with the decision of the Court below which permitted him to retain the Rs. 4000 advanced on 5th of June. The plaintiff sent a telegram in reply pointing out that he had already sent him a notice on the 8th and that the liability was the defendant's. Meanwhile the President of the Municipal Committee, presumably as the result of the plaintiff's application Ex. P-13, ordered that a letter should be sent to Laxminarayan asking him whether he intended to sell plots from the open area in his possession, and this was done by Ex. P-33 dated 13th of July. It was reported by the municipal peon that Laxminarayan refused to accept this notice. Further notices were exchanged between the parties. In Ex. 1-D-25 dated 13-7-1936 the defendant amplified his telegraphic notice of 10-7-1936, which we reproduce:
“Both of your notices, one dated 11-7-1936 sent by a telegram and the other dated 11-7-1936 sent by post, have been received. You know that, being simply in urgent need of money, I have sold you very important land in the front portion of my bungalow, and it is for this reason that the condition that you must perform the contract within one month is laid down in the course of our contract. You already know all these facts, but I again bring them to your notice. I should further like to bring the fact to your notice that the condition of the contract entered into between you and me on which you would be entitled to claim refund of the purchase money has not at all been satisfied so far.
On information received by me it appears that in order to raise a dispute with regard to the contract you have deliberately made such an application to the Committee as would make any thoughtful man feel sure that it will be rejected and on the basis of the same you are now picking a false dispute.
You are, therefore, hereby informed that you should immediately pay the amount remaining due by you and obtain the sale deed, and perform the contract. I will render and I have never refused to render, all the necessary help to you in the matter of obtaining sanction for proper construction of bungalows and the like on the land you may take (i.e buy). I shall further render necessary and reasonable help to you in connection with the question that may arise in respect of my vacant land in constructing a bungalow on your land in a proper way. All these things are, however, subsequent to your obtaining the sale deed by implementing the contract. You are, therefore, informed that instead of picking a false dispute you should implement the contract immediately. If you do not do so, I will consider that you do not want to implement the contract and I will sell the said land to another customer, for I badly stand in need of money, and I will recover from you the amount (i.e deficit) in the case of loss resulting and damages in respect of other loss that I may be put to.”
15. Again, if no other customer is available owing to the above dispute on your part, I shall recover damages from you in respect of all loss that I may be put to. Be it known.”
16. And on 3rd of August, not having received a reply to this, he finally informed him that unless the plaintiff produced a sale, deed within 8 days he would not be entitled to the refund of the earnest money and would be liable for any damages defendant 1 might suffer. On 11th August the plaintiff replied to this notice as follows (Ex. 1-D-27):
“Your notice dated 6-8-1936 has been received. You already know full well that the land contracted by me to be bought from you was being bought for constructing bungalows, and it is for this reason that you agreed to remove the obstacle, if any, that I may meet with in building structures on the said land, and to convince me that the said land can be used for duly constructing buildings.
You know full well the public notices issued by the Akola Municipality on 20-6-1936 and 24-6-1936. You have not got the layout of your land sanctioned by the Municipal Committee according to the said rules published. According to the contract, in point of fact, it was your duty to have obtained such sanction beforehand. But, as you guaranteed that I shall not be obstructed in any way by the Municipal Committee in constructing houses, I entered into the contract with you. You have made no efforts with the Committee for sanction but are, on the contrary, giving notices to me asking me to obtain the sale-deed and pay the remaining amount, This is not proper. You also know that I made an application to the Committee for sanction although it is up to you to obtain the same from it. In that connection also, instead of helping me you are on the contrary creating obstacles in different ways. Nor is this act of yours proper.
If you stand in need of money, I am ready to pay you the balance of the purchase money even before the execution of the sale-deed at interest at the rate of 12 annas p.c p.m provided that you furnish a proper security to me. Inform me immediately whether you cause permission to be granted by the Committee or not for the bungalows to be constructed by me on the land in respect of which the contract has been entered into. If you are ready to do so, I will immediately make over to you all the necessary maps, plans, estimates, and the like.
You should, therefore, send a reply to this notice in three days without fail. Be it known.”
17. And the correspondence closes with the defendant's reply, Ex. 1-D.-28:
“Your reply to the notice has been received. You will definitely know from a proper perusal of the written documents that have been effected in respect of the contract between you and me how very false your allegations are. From the disputes you are picking unnecessarily it appears clear that your mind in respect of the contract has changed. You say that you will pay me the amount at interest at the rate of 12 annas p.c p.m on a proper security, but by the grace of God such an occasion has not befallen and will not befall me. In view of the experience I have had with you, I do not want to enter into any other transaction with you. It appears clear from your notice that you are not ready to obtain the sale-deed pursuant to the contract. You cannot therefore claim now refund of the earnest money. Not only this, but you are liable to compensate for my loss. Be it known.”
18. In the following October and in January 1937 parts of the plot were sold in separate lots to some of the other defendants. The plots sold were sufficient for one house each which the purchasers proceeded to erect themselves after municipal sanction had been obtained, and the sanction was given as Laxminarayan had by that time submitted a layout showing roads and lanes which satisfied municipal requirements. No appearance has actually been entered on behalf of the subsequent purchasers and any reference to the defendant-respondent will be confined to the legal representatives of Laxminarayan since we are clear that specific performance in this case should in no circumstances be granted.
19. It is quite evident that the whole dispute centres on the value of the plot to the plaintiff. The plaintiff negotiated to buy the plot as a whole, and as a speculative builder it is clear that it was his intention to put into it as many bungalows as he conveniently could. In the deeds of agreement three or more bungalows were mentioned, and in his application, Ex. 1-D-29, to the Municipality he stated that he wanted to build five bungalows. This application was refused as he was not then the owner of the land, and obviously the Municipal Committee could not give permission without seeing the plan. The plaintiff agreed to buy the plot at the rate of 4 annas a square foot. There is evidence that an adjoining plot sufficient for the construction of one house alone was sold the month before to Dr. Joglekar (1-D.W. 4) at 0-6-3 a square foot. There is also evidence, which has not been disputed, that the sale price to the other defendants was in the neighbourhood of 3 annas a square foot only. Now it is obvious that in selling a plot sufficient for the construction of one house with no liability of providing roads or lanes, as there would be in a small housing estate, the price to be obtained, is higher, and the price of 4 annas a square foot which was agreed on between the parties would be dictated not only by the fact that the price would be cheaper on taking a larger area but because of the fact that a certain number of roads and lanes would have to be provided and would be to that extent a loss to the speculative builder. The lower price paid by the subsequent purchasers after the dispute does not represent the true value of the plots for their individual houses and is attributable either to the urgent need of money by Laxminarayan and/or also to the fact that litigation was very likely to result in consequence of the dispute. Indeed it was admitted by the subsequent purchasers that they had got a bargain and it is clear from the evidence that the defendant was in fact put to a loss in not being able to sell the area 200 feet by 180 feet as a whole.
20. The public notices given by the Municipality towards the end of June are laudable in their intent and purpose, but they cannot, as the plaintiff-appellant contends, impose on owners of land who wish to sell to speculative builders any legal obligation to approach the Municipality with a layout. The notices in fact do no more than warn such intending purchasers that there must be strict compliance with municipal regulations before permission to build would be accorded and against paying an unnecessarily high price for land in the hope that they would be able to crowd a large number of bungalows into a given space to the detriment of ventilation and sanitation. This was a matter to be settled between the vendor and the purchaser; but under the provisions of the Municipalities Act it is only the purchaser obviously who can actually ask the Municipality for permission to build. Where the owner of an estate sells an individual plot he can go, and does go as in the case of the subsequent purchasers here, to the Municipality, with and on behalf of the vendee, to satisfy the Municipality that in making his various sales he has left sufficient space to comply with the municipal requirements and has not sold and does not attempt to sell plots so closely contiguous as to offend. No such liability, either legal or moral, arises when a whole plot of land is sold with the object of enabling a purchaser, not to build a single house, but to develop a small building estate. In that case it is purely a question of price, and the liability for the layout will be on the purchaser who buys a large area of land and must himself determine the type of houses he is going to put on it, a Waiter which is of no concern to the vendor.
21. The plaintiff contends that the time one month which is given in the agreement for the execution of the sale-deed was so given for the express purpose of enabling the defendant to approach the Municipality with a proper layout. That this is not so in evident from the fact that the hand-bills are dated 20-6-1936, 17 days after the agreement was entered into and further publicity was given in the newspaper some days later. It is true, and it has been pointed out to us by the learned counsel for the appellant, that a somewhat similar but shorter notice pilloring a local land-owner had been published by the Municipality in August 1935, but it is significant that in the whole of the correspondence the plaintiff makes no reference whatever to this notice and emphasises Exs. P-10 and P-11, and also the fact that before 1936 the plaintiff was a resident of Bajanda and did not move to Akola permanently till November 1936 indicates that he was unaware of the notice of 1935 and that it could have had no influence in dictating cl. (b) of Ex. P-1 as is now suggested. The conclusion is clear that the plaintiff thought that he had got a reasonably good investment and that he was disillusioned when the municipal notices and warnings appeared as the result of which he would not be able to utilise as much of his proposed purchase for building space as he had hoped. His applications to the Municipality are disingenuous. That of 2-7-1936, Ex. 1-D-29, obliquely puts the blame on Laxminarayan for the going off of the contract which the plaintiff foresaw and, in our opinion, contemplated. The Municipal Committee seems to have foreseen it also. The second application of 9th July, Ex. P-13, after the due date had expired is made patently in had faith. Nothing could be more irrelevant than an enquiry whether the restrictions proposed by the Municipal Committee applied to the plot the purchase of which was under contemplation alone or to other plots, and obviously the hand-bills could not give any specific information in respect of the plaintiff's own prospective purchase. Incur opinion Laxminarayan helped his subsequent purchasers, as the respondents' learned counsel urges, because they were not hostile to him as was the plaintiff and also because, as has not been urged, Laxminarayan would be unable to sell plots for individual building unless he did assurs the Municipality that there would be compliance with the regulations which, as we have already pointed out, it would be quite unnecessary for him to do when he was selling the ground for the development of an estate. We have no hesitation in coming to the conclusion that the breach occurred, and the contract went off, by the default of the plaintiff who found that he had not got such a bargain as he thought he had.
22. Since we have reached this conclusion it is not really necessary to decide the next point urged, namely that the trial Court was incorrect in holding that time was of the essence of the contract. We have found that the plaintiff was not willing to carry out the contract and that it was on his account that the contract was not performed. The plaintiff tried to import into the contract a term which did not exist in it and which by the rules of evidence is not allowed to be proved. We are, however, in agreement with the finding of the Court below that time was of the essence of the contract and we briefly give our reasons.
23. The rule is that except in commercial) contracts the ordinary presumption is that time is not of the essence of the contract. That presumption, however, can be rebutted, and also, vide, 40 Bom. 2891 at p. 299, in addition to what is said in the contract itself, the intention of the parties, which equity lays down is to be ascertained from the contract itself, may also be inferred by what has passed prior to the contract.
24. Evidence has been given on behalf of the vendor Laxminarayan that he was extremely pressed for money, and this indeed is not denied and the fact is further confirmed by the offer of the plaintiff during the latter part of the dispute to lend the defendant money, an offer which the defendant indignantly repudiated. In Ex. P-1 it is made a term that the sum of Rs. 4,000 must be deposited before 11 O'clock on 5th June, that is two days after the agreement. It is unusual to name a time whereby a deposit must be paid with such exactitude and confirms the fact that the defendant was very much in immediate need, and it would also tend to the interpretation that the stipulation that the sale-deed was to be executed within a month was to be taken as an equally definite date in respect of the payment of the balance. The plaintiff's evidence is that when Laxminarayan asked him for ear-nest money he told him that he would be prepared to pay a substantial part of the purchase price and accordingly paid him Rs. 4000 out of Rs. 9000 two days later. We do not accept this as a straightforward account of the transaction. No one would volunteer to pay nearly half of the amount in advance two days after the agreement unless he had been seriously pressed to do so, and we do not believe that this was a spontaneous offer on the part of the plaintiff. In answer to the contention that if time really was of the essence of the contract the defendant would have insisted on payment on the due date whether we take it to be 3rd or 5th June we would refer again to the Privy Council decision in 40 Bom. 289 at p. 299 where it is laid down that equity would not assist where there has been undue delay on the part of one party to the contract and the other has given him reasonable notice that he must complete within a definite time. Here there was after the due date a very definite notice that the contract must be completed by the production of the sale deed and by payment of the balance within 8 days of the notice, vide Ex. 1-D-26. The time eight days, in view of the previous threats, vide Ex. 1-D-22, where the plaintiff was informed that he would be liable for damages unless he concluded the transaction within 24 hours and generally considering the conduct of the plaintiff, cannot be considered unreasonably short.
25. The plaintiff had claimed in the alternative, if specific performance were refused, a sum of Rs. 9000 by way of damages. It has been laid down by the Privy Council in 52 Bom. 5972 that a suit for damages for breach of a contract is incompatible with a claim in the plaint for specific performance. Again in A.I.R 1936 P.C 2363 it was laid down that the plaintiff cannot maintain an action claiming damages for the breach of an alleged contract unless he can aver and prove that he has performed or has at all times been ready to perform his part of the contract.
26. Lastly comes the question of the plaintiff's claim that Rs. 4000 paid as a deposit should be returned to him and is not forfeit. There is no clause relating to forfeiture of this money and it is strongly contended that since the amount paid in advance was a substantial portion of the total sum, namely Rs. 4000 out of Rs. 9000, a considerably larger proportion than is usually paid as earnest money, it must be taken as a part payment only and accordingly returned. In support of this contention the learned counsel cited A.I.R 1933 Nag. 2234 where Macnair J.C refused to interfere in revision with the decision of a Small Cause Court Judge who held that Rs. 380 paid in advance was a large proportion of the total sum eventually to be paid, namely Rs. 720, on a contract and that the defendants were entitled only to reasonable compensation under Section 74 of the Contract Act. With all respect we are unable to follow the reasoning of the learned Judicial Commissioner. In the course of the judgment it was stated:
“Revision would be proper if the Judge had omitted to notice that their Lordships of the Privy Council had decided a question which frequently arises in money suits.”
27. The learned Judicial Commissioner then quotes from A.I.R 1926 P.C 1.5 It appears then that the Judge of the Small Cause Court did quote this decision and yet while upholding it was stated that “revision would be improper,” by which we understand that revision would lie and the decision would have gone the other way if the Judge had omitted to cite the decision which he in fact did cite. Neither, with all respect, are we able to follow the argument that because the proportion is large the advance was a penalty. More apposite, in our opinion, is the distinction between a penalty for breach of contract and the forfeiture of a deposit made in A.I.R 1930 Bom. 213.6 There a sum of 25 per cent, of the agreed price had been deposited by the purchaser who failed to conclude the con tract and it was held that a deposit is a plain advance and that Sections 73 and 74 of the Contract Act, have no application in such a case and they are not intended to apply to it. Earnest money or deposit is a payment actually made and penalty is compensation sought, and the fact that in this particular case the words ‘in part payment’ were used is ineffectual to attract the provisions of Section 74 of the Contract Act. The fact that there was no forfeiture clause in the agreement, a point which is insisted on by the learned counsel for the appellant in attempting to draw a distinction, is immaterial as it is plain that the learned Judges held that the principle applied whether there was a forfeiture clause or no. Whether a deposit is described as earnest money or part payment is immaterial and the proportion that it bears to the sum contracted for is equally irrelevant. In 39 C.W.N 1747 at p. 181 a Divisional Bench of the Calcutta High Court stated as follows:
“Looking at the matter as a whole, I think that we should come to the conclusion that the money paid by the plaintiff to the defendant, was on the footing of, as he described it, ‘earnest money’ under the contract which had been arrived at between them. There was a long discussion before us as to the precise meaning of the expression ‘earnest money’ and as to ‘whether or not there is any difference in law between payment of earnest money and payment of deposit or part of the purchase price. It is not necessary that I should attempt to go into that question at any length, because once one comes to the conclusion that there was a contract, it seems to me that it does not matter very much whether one calls the payment earnest money or describes it as ‘part payment’. It seems clear that in this particular case the payment was really a sum remitted by the plaintiff to the defendant in part discharge of that percentage of the whole purchase money which was described as Down cash or ‘Cash down’, that is to say, 25 per cent, of the total purchase money of one lac on the assumption that there was a contract and that the money was paid in pursuance of it, it is clear to my mind on the authorities that if the contract went off or rather if it was not followed by “completion” owing to the default of the plaintiff, then the plaintiff cannot recover.”
28. We are in respectful concurrence with this view. It is admitted that both the exhibits, Exs. P-1 and p-8, were drawn up by an experienced lawyer. It is equally clear that Ex. P-8 is headed Isar-chithi, which means earnest money and nothing else, and when the lawyer drafted this document he would not have called it earnest money unless he was satisfied that it was in fact an earnest paid in order to ensure the completion of the contract, and the matter is in fact concluded by A.I.R 1926 P.C 1 where it is stated that earnest money is part of the purchase price when the transaction goes forward and it is forfeited when the transaction falls through by reason of the default or failure of the vendee. In that case there were both an earnest and a subsequent payment in part. The earnest was lost but the vendee was able to reclaim the subsequent additional payment to account. In the case before us the sum of Rs. 400O was described as earnest money. It is earnest money since the object was to ensure the performance of the contract. There was nothing in the nature of a penalty. Both parties at the time were eager that the contract should be performed. The plaintiff later in the month, as the result of the notices by the Municipal Committee, found that the contract was not to his liking and evaded it. He attempted to show that the contract was other than by the terms in it actually was and tried to import a further condition which is not only impermissible but which, as we have shown, had no foundation in fact. The consequent forfeiture is inevitable and the defendant, in our opinion, is entitled to retain the earnest money. The result is that the appeal fails and is dismissed with costs.
29. Appeal dismissed.