IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.P.BALACHANDRAN FRIDAY, THE 27TH JUNE 2008 / 6TH ASHADHA 1930 RSA.No.453 of 2008 (D) ---------------------------- AS.253/2003 of DISTRICT COURT, THRISSUR OS.3260/2000 of I ADDL.M.C.,THRISSUR .................... APPELLANT/APPELLANT/DEFENDANT: ---- ----------------------------------------- MARY ANTONY, W/O. MANJALI ANTONY, PARAVATTANY DESOM, OLLUKKARA VILLAGE, THRISSUR TALUK, THRISSUR DISTRICT. BY ADV. SRI.P.V.CHANDRA MOHAN RESPONDENT: RESPONDENT/PLAINTIFF: ------------------------------------------------ TOM FRANCIS, S/O. AKKARA FRANCIS, PANAMKUTTICHIRA DESOM, OLLUR VILLAGE, THRISSUR TALUK, THRISSUR DISTRICT. THIS REGULAR SECOND APPEAL HAVING COME UP FOR ADMISSION ON 27/06/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.P.BALACHANDRAN, J. ------------------------------------------------ R. S. A. No.453 of 2008 ------------------------------------------------ Dated this the 27th day of June, 2008 JUDGMENT The defendant in O.S.3260/2000 on the file of the Munsiff's Court, Thrissur is the appellant. The respondent/plaintiff filed the suit aforesaid for return of advance amount paid under Ext.A1 agreement inter alia on the allegations that he entered into Ext.A1 agreement with the defendant on 22/09/2000 for purchase of the scheduled property from the defendant; that as per the agreement, plaintiff had to buy the property for a consideration of Rs.47,000/- per cent; that Rs.25,000/- was paid as advance on the date of agreement; that the agreement was to be performed by 23/10/2000; that as per the agreement the defendant had liability to satisfy the plaintiff regarding his clear title to the scheduled property; that the R. S. A. No.453 of 2008 -2- plaintiff was always willing and ready to perform his part of the contract, but however, on perusal of copies of documents supplied by the defendants, the plaintiff could understand that the assignors of the defendant did not have absolute right over the property that her assignors were one Mary and Saju; that Saju though referred to as son of Mary and her husband Ittoop, he was not son born to them; that it was Mary and Ittoop who purchased the property as per document No.970/77; that Ittoop did not have any children and therefore, Mary alone would not inherit the property belonging to Ittoop absolutely; that Ittoop had executed will in the year 1974 bequeathing his property to his wife Mary; that the scheduled property was purchased after the execution of the said will; that the plaintiff therefore, required the defendant to clear the cloud over the title by getting R. S. A. No.453 of 2008 -3- release deed executed by heirs of Ittoop with respect to the plaint schedule property and for the purpose the time specified in the contract was extended for another fifteen days; that the defendant did not do anything to clear the cloud over the title to the property and she took the stand that she had absolute right to assign the property; that the plaintiff demanded for return of the advance paid as the defendant was found to have no clear marketable title over the scheduled property and notice was issued to her through lawyer on 08/11/2000, but the defendants sent a reply raising untenable contentions and hence, the suit. Plaintiff also claimed by way of nominal damages an amount of Rs.1,000/-. 2. The appellant/defendant resisted the suit. She filed written statement challenging the maintainability of the suit and contending R. S. A. No.453 of 2008 -4- that the plaintiff was not ready and willing to perform his part of the contract that it is incorrect to say that she had no marketable title over the scheduled property; that she was always ready and willing to perform her part of the contract; that the assignors of the defendant were Mary and Saju though Mary is the only beneficiary under the will executed by her husband Ittoop and that therefore, the defendant was not to procure any release deed from the legal heirs of Ittoop that the defendant has replied to the enquiries made by the plaintiff affirming that she had got valid marketable title over the scheduled property; that the plaintiff had withdrawn from the contract purposefully since the real-estate business suffered a crisis due to sudden fall in prices of land subsequent to Ext.A1 contract and the defendant sustained loss because of the breach so committed by the R. S. A. No.453 of 2008 -5- plaintiff; that believing that the plaintiff would perform his part of the contract she had entered into an agreement with one Thomas for purchase of his property at the rate of Rs.40,000/- per cent and that an amount of Rs.50,000/- was given to him as advance that she could not perform the said contract entered into with Thomas and Thomas has not returned the advance paid and has appropriated it as compensation for the loss incurred by the breach of contract and that therefore, she is entitled to compensation from the plaintiff so as to redeem the loss suffered by her; that the amount of Rs.25,000/- paid by the plaintiff has to be set off against the loss incurred by her. She further advanced a counter claim for Rs.25,000/- as damages for the loss she has sustained by the breach of contract by the plaintiff. R. S. A. No.453 of 2008 -6- 3. The respondent/plaintiff filed replication contending that the defendant is not entitled to any set off or counter claim; that the alleged agreement with Thomas is false; that the defendant did not actually sustain any loss and however, she did not do anything to mitigate the alleged loss and the suit has to be decreed. 4. On the above pleadings, the trial court raised necessary issues for trial and after trial and considering the evidence adduced at trial which consisted of oral evidence of PW1 and DWs.1 and 2 and documentary evidence of Exts.A1 to A5 and B1 to B8 decreed the suit for recovery of an amount of Rs.23,000/- deducting an amount of Rs.2,000/- as nominal damages to the defendant and with interest on Rs.23,000/- at 6% interest per annum from the date of decree. R. S. A. No.453 of 2008 -7- 5. The defendant filed A.S.253/03 before the District Court, Thrissur and the plaintiff, not being satisfied with the decree passed by the trial court did prefer a cross appeal as well assailing the decree of the trial court to the extent it has gone against him. The trial court dismissed the appeal, but allowed the cross objection and consequently, the suit filed by the respondent/plaintiff stood decreed for realisation of Rs.25,000/- with interest at 6% per annum from the date of decree till realisation. Hence, this R.S.A by the defendant. 6. It is vehemently contended before me by the learned counsel for the appellant that as per Ext.A1 agreement, in case of failure to perform the contract, the defendant was to forfeit the earnest money paid under the said agreement; that the amount paid under Ext.A1 is not advance amount, but is money paid in R. S. A. No.453 of 2008 -8- earnest and that therefore, the decree passed by the courts below deserves to be interfered with. He further, contends that in the light of the decision of the Apex Court in Shree Hanuman Cotton Mills v. Tata Air Craft Ltd. (1969(3) SCC 522) wherein the difference between money paid as earnest money and money paid as advance is distinguished, what has been paid under Ext.A1 is not advance, but earnest money and that therefore, the appellant is entitled to forfeit the said amount. All the same, when it is pointed out that the earnest money can be forfeited only in the event of default in performance of the contract committed by the respondent, counsel for the appellant submits that there was no justification at all in the plaintiff having rescind the contract and asking return of the amount paid under Ext.A1 for the reason that there is cloud on the title of the appellant as her vendor Mary was R. S. A. No.453 of 2008 -9- having absolute right over the scheduled property agreed to be sold under Ext.A1 by reason of Ext.B3 will and that therefore, the reason assigned by the respondent/plaintiff to withdraw from performing Ext.A1 agreement is only a ruse to avoid purchasing the property in performance of Ext.A1 and that therefore, the appellant was entitled to forfeit the amount paid under Ext.A1. 7. The decision relied on by the learned counsel for the appellant rendered by the Apex Court in Shree Hanuman Cotton Mills v. Tata Air Craft Ltd. (cited supra) is one dealing with the question as to what constitutes “earnest” in contract for sale of goods. The position as such cannot be imported into contract for sale of immovable property for the basic reason that in contract for sale of goods time is the essence of contract whereas it is not so in contract for sale of immovable property and R. S. A. No.453 of 2008 -10- consequently, the meaning of the word “earnest” cannot as such be imported into contracts for sale of immovable property. However, that question does not gain importance on the facts of this case for the reasons stated hereunder. Under Ext.A1 agreement for sale of immovable property, the appellant/defendant was to satisfy the plaintiff regarding his clear title to the scheduled property before the sale deed is executed. The relevant portion of the agreement is as follows:- 8. The second party is the plaintiff and the first party is the appellant/defendant. It goes without saying that no purchaser of immovable property can be expected to purchase property in performance of an agreement unless R. S. A. No.453 of 2008 -11- the vendor satisfies the intending purchaser that he has got clear title to the scheduled property. In the instant case, the title deed of the defendant is Ext.A2 and is one executed by Mary/wife of Ittoop who is beneficiary under Ext.B3 will executed by her husband Ittoop. Ext.B3 will is dt.31/01/74. The recitals therein go to show that Ittoop the testator and Mary the beneficiary who is his wife are not having any issues. As per clause (2) of Ext.B3 will, the testator has reserved with him the right to possess and enjoy all the movable and immovable properties which he has and standing in his name with right of alienation. Clause (3) further provides that whatever is found as balance on his death as also bank deposits, insurance, Provident Fund, pension etc. will belong to his wife the beneficiary in absolute rights. The contention of the learned counsel for the appellant is R. S. A. No.453 of 2008 -12- that the property acquired subsequently will also be covered by Ext.B3 will. Admittedly, the scheduled property was acquired jointly in the names of the testator Ittoop and his wife Mary subsequent to execution of Ext.B3 will. Obviously, therefore, a doubt may arise as to whether Ext.B3 will, will operate also on acquisitions to be made by the testator or whether it would operate only in relation to both movable and immovable properties possessed and enjoyed by the testator as on the date of Ext.B3 for the reason that Ext.B3 deals specifically with properties in his name with the further reference that those properties will be enjoyed by him absolutely with right of alienation and that whatever is the balance is to enure to the benefit of his wife the beneficiary under Ext.B3. If at all it is found that Ext.B3 will is not to operate on subsequent acquisitions made by the R. S. A. No.453 of 2008 -13- testator Ittoop, naturally the question will arise as to who are legal representatives of the testator on his death. Admittedly, Ittoop and Mary had no issues though the document in favour of the defendant is executed also by one mentioning himself to be son of Ittoop and Mary. When Ittoop and Mary are not having any issues and if Ext.B3 will does not cover subsequent acquisitions by Ittoop, his wife Mary the widow will not get absolute right over the scheduled property which is subsequently acquired. Naturally therefore, there was sufficient reason for the plaintiff to suspect that the defendant is not having absolute and clear title over the scheduled property. The question is not as to whether as defendant contends the legal position would be that subsequent acquisition also will be covered by Ext.B3 but as to whether the suspicion that has aroused in the mind of the R. S. A. No.453 of 2008 -14- plaintiff that the defendant is not having clear title to the scheduled property agreed to be sold to him under Ext.A1 is a reasonable suspicion which a party can have. In view of what has been stated above, obviously this is a case where an ordinary prudent man can feel a reasonable doubt as to whether under Ext.B3 will, the defendant would get absolute title over the scheduled property which had been acquired by Ittoop and Mary after the date of Ext.B3 will. For the above reason, the respondent/plaintiff was justified in withdrawing from performing the contract as the appellant/defendant has not convinced him with respect to clear title for her over the scheduled property. The appellant/defendant was therefore, bound to return whatever she had received under Ext.A1 agreement whether as advance or as earnest money and she was not entitled also in the circumstances to claim R. S. A. No.453 of 2008 -15- any amount by way of damages even assuming that she has suffered damage for any reason whatsoever. Thus, there is absolutely no merit in this appeal and there is no question of law and much less any substantial question of law arising for consideration by this court in this R.S.A as is attempted to be formulated in the appeal memorandum. 9. In the result, I dismiss this R.S.A in limine refusing admission. K.P.BALACHANDRAN, JUDGE kns/-