HON’BLE SRI JUSTICE N.R.L. NAGESWARA RAO APPEAL SUIT No.1334 OF 1992 JUDGMENT: The appeal is filed against the Judgment in O.S.No.91 of 1985 on the file of Additional District Judge, Hindupur. The appellants herein are the plaintiffs in O.S.No.91 of 1985. 2. The suit was one filed for recovery of Rs.40,000/- said to have been paid under a contract of sale for Rs.2,50,000/-, dated 10.07.1984 executed by the defendants in favour of the plaintiffs. A sum of Rs.20,000/- was paid on 10.07.1984 and a further sum of Rs.20,000/- was paid on 30.07.1984. In spite of several demands, the defendants have not executed the agreement of sale and it has also come to light that the title of the defendants is not clear and therefore, the plaintiffs filed the suit for refund of Rs.40,000/- with interest at the rate of 24% per annum. 3. The 1st defendant has filed a written statement admitting the execution of the sale for Rs.2,50,000/- and receipt of Rs.20,000/- on 10.07.1984 and Rs.20,000/- on 30.07.1984. The allegations that the plaintiffs were ready and willing to pay the balance of the amount and obtain the contract of sale are not contract. The conditions as stipulated in the agreement of sale were complied with by the defendants and therefore, the defendants are not liable to pay the amount since the contract stipulates that amount is liable to be forfeited. 2nd defendant remained ex parte. 4. On the basis of the above pleadings, the following necessary issues have been framed by the trial Court, for trial: 1) Whether the plaintiffs committed breach of contract? 2) Whether the defendants were always ready and willing to perform their part of contract? 3) Whether the defendants are liable to refund the advance amount to the plaintiffs? 4) To what relief? 5. On behalf of the plaintiffs, PW.1 was examined and marked Exs.A.1 to A.8. On behalf of the defendants, DW.1 was examined and marked Exs.B.1 and B.2. 6. After considering the evidence on record, the learned Additional District Judge, Hindupur, dismissed the suit of the plaintiffs. Aggrieved by the said judgment and decree, the present appeal is filed. 7. The points that arise for consideration are: 1) Whether there was a breach of contract committed by the plaintiffs? 2) Whether the contract has become impossible of performance under Section 56 of the Contract Act? 3) Whether the Judgment and decree passed by the learned Additional District Judge, Hindupur, is legal and sustainable? 8. POINTS: There is no dispute about the execution of the Contract of sale and also payment of Rs.20,000/- on the date of agreement of sale with a stipulation that if the plaintiffs are committed breach of contract, the amount already paid shall be forfeited. There is no dispute about the fact that payment of Rs.20,000/- on 30.07.1984 under Ex.A.2. The claim of the plaintiffs is that the defendants are to obtain an income tax clearance certificate and there was a delay on their part and subsequently, though it was not pleaded in the plaint the evidence discloses that the Government has acquired the land, which is supposed to be sold under the agreement of sale and therefore, according to the case of the plaintiffs, the contract has become impossible of performance and as such under Section 56 of the Indian Contract Act, 1872 (for short, ‘the Act’) the plaintiffs are entitled for refund of the advance paid. The learned Additional District Judge found that though it was admitted that the land was acquired by the Government, there is no material adduced by the plaintiffs on record to show as to on what date exactly the land was acquired by the Government. It was also further found by the learned Additional District Judge that unless it was shown that immediately after the execution of the Contract of Sale the land was acquired, the plaintiffs cannot take benefit of the acquisition. As can be seen from the evidence of the defendants, it was admitted by DW.1 that the acquisition proceedings have started on 11.10.1985. The date of contract is 01.07.1984. Even assumed for a moment, the time is treated as essence of the contract, after 30.07.1984 still there is a time for performance of the contract and at any rate the defendants have not given any notice to the plaintiffs cancelling the contract of sale due to the breach committed by them. In fact, it was only a notice given by the plaintiffs on 04.09.1984 under Ex.A.3, for which a reply is said to have been given by the defendants under Ex.B.1 to a later notice under Ex.A.5. Therefore, from the circumstances on record, bona fides of the plaintiffs in expressing the readiness and willingness to perform the part of the contract cannot be doubted. But, however, even assuming there is a default for performance of the contract since the contract has become impossible of performance by the supervened event of acquisition of land by the Government and even if the plaintiffs are ready and willing to get a conveyance from the defendants, no title can be passed. 9. The contention of the learned counsel for the appellants is at least to the extent of refund of Rs.20,000/- paid subsequently the lower Court should have considered the request. Therefore, in view of the above circumstances and in view of the admission of DW.1 that the land was acquired in the year, 1985, the case squarely falls within the purview of Section 56 of the Act and therefore, the plaintiffs are entitled for refund of money paid under Section 56 of the Act to a tune of Rs.20,000/-. 10. Accordingly, the appeal is allowed and the suit of the plaintiffs is decreed for a sum of Rs.20,000/- (Rupees Twenty Thousand only) with interest at the rate of 9% per annum from the date of suit till the date of decree and subsequently at the rate of 6% per annum from the date of decree till the date of realisation. Each party shall bear their own costs. _________________________ N.R.L. NAGESWARA RAO, J Date:17.08.2011 INL