R. S. A. No. 2482 of 2007 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Case No. : R. S. A. No. 2482 of 2007 Date of Decision : September 30, 2010 Baldev Singh .... Appellant Vs. Keshwa Nand and others .... Respondents CORAM : HON'BLE MR. JUSTICE L. N. MITTAL * * * Present : Mr. Vijay Lath, Advocate for the appellant. Mr. Arvind Mittal, Advocate for respondents no.1 to 6 and 8 to 10 (who are also legal representatives of respondent no.7 – since deceased). * * * L. N. MITTAL, J. (Oral) : The instant second appeal has been preferred by plaintiff Baldev Singh, who was fairly successful in the trial court, but has been non- suited by the lower appellate court. It is undisputed that defendants, vide agreement to sell dated 17.05.1996, agreed to sell 08 kanals 19 marlas land to the plaintiff @ Rs.4,000/- per marla and received Rs.40,000/- as earnest money. Defendants also received further amount of Rs.2,00,000/- on 20.08.1996 R. S. A. No. 2482 of 2007 2 and Rs.1,00,000/- on 26.11.1996. Lastly, date for execution of sale deed was extended to 20.04.1997. Plaintiff's case is that before 20.04.1997 – the date stipulated for execution of sale deed, Punjab Government made announcement for development of Anandpur Sahib in view of forthcoming 300th birth anniversary of Khalsa at Anandpur Sahib and consequently, Development Authority was formed to prepare plan for acquisition of land of Anandpur Sahib town and surrounding villages. In view thereof, the plaintiff sought refund of his earnest money of Rs.3,40,000/- from the defendants, who agreed to pay the same to the plaintiff at his house on 20.04.1997, but the defendants did not turn up. Accordingly, the plaintiff sought refund of earnest money of Rs.3,40,000/- with interest at the rate of 1½% per month w.e.f. 20.04.1997 till recovery. The plaintiff included Rs.1,78,500/- as interest for pre-suit period and therefore, filed suit for recovery of Rs.5,18,500/-. The defendants, while admitting the agreement and receipt of earnest money of Rs.3,40,000/- from the plaintiff, controverted the other plaint allegations and inter alia pleaded that the plaintiff did not have requisite money for getting the sale deed executed and committed breach of agreement, although defendants were always ready and willing to perform their part of the agreement and therefore, earnest money paid by the plaintiff stands forfeited. Various other pleas were also raised. R. S. A. No. 2482 of 2007 3 Learned Additional Civil Judge (Senior Division), Anandpur Sahib, vide judgment and decree dated 27.05.2004, decreed the plaintiff's suit for recovery of Rs.3,40,000/- with interest @ 6% per annum from the date of filing of suit till recovery. However, first appeal preferred by defendant no.1 has been allowed by learned District Judge, Rup Nagar vide judgment and decree dated 16.10.2006 and thereby, suit filed by the plaintiff stands dismissed. Feeling aggrieved, plaintiff has preferred the instant second appeal. I have heard learned counsel for the parties and perused the case file. At the outset, it may be noticed that learned counsel for the respondents has today filed in Court affidavit of respondent no.1, pursuant to order dated 21.04.2010. The same is taken on record, subject to all just exceptions. Learned counsel for the appellant contended that the agreement was frustrated because of acquisition of the suit land and therefore, the plaintiff-appellant is entitled to return of earnest money paid by him to the defendants along with interest thereon. On the other hand, learned counsel for the respondents vehemently contended that process for acquisition of land started on 15.08.1997 with publication of notification under Section 4 of the Land Acquisition Act, 1894 (in short – the Act), whereas date of execution of sale R. S. A. No. 2482 of 2007 4 deed was 20.04.1997 i.e. before issuance of notification under Section 4 of the Act and therefore, plaintiff had already committed breach of the agreement by not getting the sale deed executed on the stipulated date i.e. 20.04.1997, when the process of acquisition had not commenced. It was also contended that plaintiff did not have requisite money with him to get the sale deed executed and the plaintiff himself committed breach of the agreement. It was also pointed out that defendants had even sent notice dated 10.07.1997 for getting the sale deed executed in terms of the agreement, but the plaintiff neither sent any reply to the notice nor got the sale deed executed. I have carefully considered the rival contentions. It is correct that formal process for acquisition of land commenced with publication of notification under Section 4 of the Act in the newspaper on 15.08.1997, as produced in evidence. However, the Court cannot be oblivious of the fact that issuance of formal notification under Section 4 of the Act is preceded by a lengthy process. The plaintiff's version is, therefore, very plausible that announcement for development had been made on Baisakhi day i.e. on 13.04.1997 and therefore, the agreement was frustrated. However, even assuming that process for acquisition started after 20.04.1997 i.e. the date stipulated for execution of sale deed, even then the plaintiff is entitled to refund of the earnest money with interest at reasonable rate. Time is not the essence of the contract in case of agreement R. S. A. No. 2482 of 2007 5 to sell immovable property. In the instant case, it is all the more so because vide agreement dated 17.05.1996, date for execution of the sale deed was stipulated to be 19.11.1996. However, prior to it, the defendants on 20.08.1996, received Rs.2,00,000/- and again on 26.11.1996, received Rs.1,00,000/- and date for execution of sale deed was extended till 20.04.1997. Thus, intentions of the parties are very clear that time was not the essence of the contract in the instant case. The agreement was frustrated on account of acquisition of the land and therefore, neither the plaintiff nor the defendants can be held guilty of breach of the contract. However, since the agreement was frustrated, defendants are under obligation to return the amount of Rs.3,40,000/- received by them from the plaintiff. Sending of notice dated 10.07.1997 by the defendants to the plaintiff was very clever device to seek undue advantage in the event of litigation. As noticed herein before, notification under Section 4 of the Act was published in newspaper dated 15.08.1997. Consequently, much prior to sending notice dated 10.07.1997, necessary proceedings preceding the issuance of notification under Section 4 of the Act must have been commenced and therefore, the defendants sent notice dated 10.07.1997, which cannot be attached undue significance. Even on principles of justice, equity and good conscience, the plaintiff-appellant is entitled to succeed. Under the impugned agreement, total sale consideration was Rs.7,16,000/- only. However, as per affidavit R. S. A. No. 2482 of 2007 6 of defendant no.1 filed today in Court, defendants have received Rs.78,80,580/- as compensation for the suit land including interest and statutory benefits. The defendants have thus received more than ten times the sale consideration stipulated in the agreement. From the aforesaid affidavit, it appears that this amount has been received pursuant to Award of the Reference Court under Section 18 of the Act awarding compensation @ Rs.20,000/- per marla. It appears that in first appeal in this Court, the compensation may further be enhanced. Be that as it may, defendants have already received more than ten times the sale consideration stipulated in the agreement. Thus, on principles of equity, justice and good conscience as well, the plaintiff-appellant is entitled to refund of Rs.3,40,000/- with interest as awarded by the trial court. It may be added that the trial court has not awarded any interest to the plaintiff for three years preceding the filing of the suit. Even since the date of filing of suit till recovery, interest has been awarded by the trial court at a very modest rate of 6% per annum only. For the reasons aforesaid, I find that following substantial question of law arises for determination in the instant second appeal :- “Whether judgment of the lower appellate court, non-suiting the plaintiff by reversing the well reasoned judgment of the trial court, is illegal and perverse and therefore, not sustainable ?” R. S. A. No. 2482 of 2007 7 For the reasons recorded herein above, this substantial question of law is answered in favour of the plaintiff-appellant. Accordingly, the instant second appeal is allowed. Judgment and decree dated 16.10.2006 passed by the lower appellate court are set aside and judgment and decree dated 27.05.2004 passed by the trial court are restored with proportionate cost throughout. September 30, 2010 ( L. N. MITTAL ) monika JUDGE