IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN FRIDAY, THE 24TH JUNE 2011 / 3RD ASHADHA 1933 RFA.No. 406 of 2003() --------------------- OS.140/1999 of ADDL.SUB COURT, IRINJALAKUDA .................... APPELLANTS/DEFENDATS 1 TO 3: -------------------- 1. FRANCIS, S/O.PANJIKKARAN KOCHU VARKEY, THIRUMKULAM VILLAGE AND DESOM, MUKUNDAPURAM TALUK, THRISSUR DISTRICT. 2. POLACHAN, BROTHER OF 1ST APPELLANT, -DO- -DO- 3. MARY, D/O.THEKKANATH ESTHAPPANOSE AND W/O. 1ST APPELLANT, -DO- BY ADV. SRI.ROY CHACKO RESPONDENTS (PLAINTIFFS 1 AND 2): ----------------------- 1. ALI, S/O.PLAKKAL HAMEED, THIRUMKULAM VILLAGE, KOZHUKADAVU DESOM, MUKUNDAPURAM TALUK, THRISSUR DISTRICT. 2. JOSE, S/O.PARASSERI PORINCHU, ALAMITTAM DESOM & VILLAGE, MUKUNDAPURAM TALUK, THRISSUR DISTRICT. ADV. SRI.G.SREEKUMAR (CHELUR) FOR R2 THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 24/06/2011, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: I.A.NO.2327/2003 DISMISSED SD/- THOTTATHIL B.RADHAKRISHNAN, JUDGE 24.6.2011 SD/- P.S.GOPINATHAN, JUDGE //TRUE COPY// PA TO JUDGE THOTTATHIL B. RADHAKRISHNAN & P.S.GOPINATHAN, JJ. -------------------------------------- R.F.A.No.406 OF 2003 -------------------------------------- Dated this the 24th day of June, 2011 J U D G M E N T ~~~~~~~~~~ Thottathil B. Radhakrishnan, J. The defendants in a suit for return of advance under a contract for sale are the appellants. 2. Ext.A1 agreement was entered into between the parties whereby, the plaintiffs agreed to convey an item of property to the defendants. The agreement was not honoured. Ultimately, the vendee sued for return of the advance. The defence set up was that the plaintiffs had committed breach of the contract, as a result of which the defendants suffered damage and therefore, are entitled to appropriate the advance paid towards compensation. The court below did not countenance that defence. It held that there was nothing on record to prove that the defendants had suffered any loss attributable to any act or omission of the plaintiffs. It did not find it favourable to hold that the defendants had suffered any loss on account of a subsequent agreement under which they R.F.A.No.406/2003 2 had agreed to purchase yet another item of property from the brother-in-law of the 1st defendant. The court below hence granted a decree for recovery of the advance with 6% interest per annum from 2.8.1997, i.e., the date of Ext.A1 agreement, till recovery, however, without any charge being created on the plaint schedule property. This is under challenge. 3. The learned counsel appearing for the defendants/appellants argued that the amount of Rs.1.5 lakhs paid by the plaintiff at the time of Ext.A1 and the subsequent payment of Rs.50,000/- on 20.11.1996, essentially form security or earnest money and therefore, the same can be appropriated even in terms of Ext.A1, on default of plaintiff to perform his part of the contract. It is argued that the court below had found that it was the plaintiff who had committed the breach and therefore, the further finding in the impugned judgment that the defendants are liable to return the advance is unfounded in law. The learned counsel for the appellants made reference to the decision of the Privy Council in Chiranjait Singh v. Har Swarup [AIR 1926 (Privy Council) 1] and the judgments of the Apex Court in Maula Bux v. Union of India [AIR 1970 SC R.F.A.No.406/2003 3 1955], H.C. Mills v. Tata Air Craft [AIR 1970 SC 1986] and Huda v. Kewal Krishan Goel [1996 (4) SCC 249], as also the decision of this Court reported as Ambunchi v. Sarada Amma [1974 KLT 471]. The thrust of the argument of the learned counsel for the appellants, relying on the aforesaid decisions, is that the money paid at the time of entering into the contract for sale could be treated as earnest or security and it would change such character and form part of consideration only in cases where the contract is discharged by performance. 4. We are unable to accept the appellants' plea. In the case in hand, Ext.A1 contract contains the clear recital that what is paid is as advance. The terms of Ext.A1 are categoric to the effect that the amounts paid as advance at the time of entering into Ext.A1 are towards part of consideration. Equally so is the amount of Rs.50000/- paid at a later point of time. Ext. A1 also says that in the event of the vendor suffering any damage on account of the non performance of any obligation of the vendee under the contract, the vendor will be entitled to appropriate the amount as if it is security. Therefore, even in terms of the contract between the parties as contained in Ext.A1, the clear R.F.A.No.406/2003 4 term is that the question of appropriation by treating the advance as security or earnest would arise only in the event of the vendor establishing that he had suffered damage on account of the act or omission of the vendee in performing his part of the contract. Going through Ext.A1, we find that some portions of Ext.A1 are in printed form. It is, obviously, prepared by appropriate assistance of a professional. Under such circumstances, we do not find any room to read Ext.A1, in any manner, other than as is available on a plain reading of its clear terms. 5. The defendants projected a further case that the amount that was to be generated by the sale intended as per Ext.A1 was to be utilised for a different transaction under which they were to purchase yet another item of property and that the said contract failed. The court below did not find this being proved any legal evidence. 6. In so far as the plea of the defendants that the land value in the area had come down after the agreement and thereby the defendants had lost their probable profit, all that R.F.A.No.406/2003 5 has to be noted is that the defendants continued to hold the property as on the date of suit and there is no evidence on record to show that the defendants had suffered any damage on account of any reduction in the price of land in the locality. This is not a case where the defendants had, under compelling circumstances, been forced to sell the property at a lower price to somebody else and had thereby suffered any loss. 7. For the aforesaid reasons, on the totality of the facts and circumstances and the evidence on record, we do not find any ground to interfere with the impugned judgment and decree. In the result, the appeal fails and the same is accordingly dismissed with costs. (THOTTATHIL B. RADHAKRISHNAN, JUDGE) (P.S.GOPINATHAN, JUDGE) ps/25/6