Case: Ramesh Chand  Vs. M/S. Tanmay Developers Pvt. Ltd.

2. The appellants-herein are aggrieved by the common judgment and order passed by the High Court of Punjab and Haryana at Chandigarh in F.A. No.1941 of 2013, dated 4th February, 2015. The High Court by the impugned judgment and order has directed refund of the earnest money by M/s. Tanmay Developers Private Ltd. Five agreements to sell were entered into between the M/s. Tanmay Developers Pvt. Ltd. and the land owners on 22.07.2006, 22.07.2006, 22.07.2006, 24.07.2006 and 21.06.2006. Out of the five agreements, earnest money of Rs. 54,25,000/- was paid out of the total sale consideration of Rs,4,52,81,250/- as per agreement on 22.07.2006. As per agreement dated 22.07.2006, Rs. 1,56,000,00/- was paid as earnest money out of total sale consideration of Rs. 12,54,37,500/-. As per yet another agreement on 22.07.2006, earnest money of Rs. 21,00,000/- was paid out of a sum of Rs. 1,50,93,750/-. As per agreement dated 24.07.2006, earnest money of Rs. 90,00,000/- was paid out of total sale consideration of Rs. 7,71,31,250/-. As per agreement dated 21.06.2006, earnest money of Rs. 2,60,000/- was paid out of a total sale consideration or Rs. 14,29,687/-. Period for performance of agreement had expired in the month of September/October, 2006. The land-owners on failure of purchaser to get the sale deed executed forfeited earnest money.3. A notification under Section 4 of the Land Acquisition Act, 1894 (for short, "the Act") was issued on 18.3.2008 for acquiring the land which was the subject matter of the agreements. Three suits were filed for recovery of earnest money in September, 2009 and one suit was filed for specific performance of agreement to sell by the respondent- M/s. Tanmay Developer in the month of March, 2008 which was decreed on 18.04.2014 and the appeal filed by the land owners was pending at the time when the impugned judgment and order was passed by the High Court. Similarly, three other suits which were filed for recovery of the earnest money were pending. The Land Acquisition Officer has passed the award on 19.09.2008. No reference under Section 18 of the Act was sought by M/s. Tanmay Developers; however, during the pendency of the suits/appeal the respondent had filed application under Section 30 of the Act for referring the dispute to the Civil Court for refund of earnest money alongwith interest. The Land Acquisition Officer accordingly referred the matter.4. The Reference Court on 7.12.2012 has passed an award rejecting the prayer made by respondent No.1 on the ground that the dispute with respect to the forfeiture of earnest money and whether M/s. Tanmay Developers Pvt. Ltd. was entitled for specific performance could not be adjudicated under Section 30 of the Act and it would not be appropriate for the Reference Court to decide these disputed issues between the parties in view of civil suits/appeal. The Reference Court held that the dispute under Section 30 of the Act arising out of the apportionment of the compensation or any part thereof involved the vexed question of title or the civil rights of the parties arising out of such transaction could not be adjudicated by substituting the judicial forum into the civil court. The Reference Court could not decide question of refund of earnest money by applying the provisions of Chapter 2 of Part II of the Specific Relief Act, 1963. Such powers can be exercised by the Civil Courts. Aggrieved thereby the respondent No.1 filed appeals before the High Court which have been allowed by the impugned judgment and order.5. The respondent No.1 had sought apportionment of the compensation only on the ground that agreement for sale had been entered into by the land owners and prayed for refund of the earnest money along with the interest at the rate of 12 per cent per annum, since the agreement had become incapable of being specifically performed due to the acquisition of land. It was contended on behalf of the land owners that Respondent No.1 was not ready and willing to perform its part of the contract. Time was essence of the contract. There had been forfeiture of the earnest money on failure of respondent No.1 to get the sale deed executed within stipulated period. Respondent No.1 was not having requisite amount of money hence could not be said to be ready and willing to purchase the property. In the facts and circumstances, the right of forfeiture of earnest money had been rightly exercised. Thus, respondent No.1 was not entitled for refund of the earnest money or apportionment of compensation particularly due to pendency of the civil suits/appeal.

Court's reasoning:
8. It was not rightly disputed that several civil suits with respect to refund of the earnest money and for specific performance of the agreement to sale were filed by the respondent No.1 before reference was sought under Section 30 of the Act. Once remedy in the form of civil suits had been resorted to, in our considered opinion, it was not at all proper exercise of power to invoke provisions under Section 30 of the Act with regard to apportionment of the compensation by directing refund of earnest money. It is not mandatory to make a reference to the civil court under Section 30 and adjudication of dispute in an appropriate case can be ordered by way of the civil suit. In the instant case civil suits had already been preferred by respondent No.1. It was not appropriate to decide same dispute under Section 30.The High Court in the impugned judgment has not decided aforesaid objections raised by the appellants/land owners without examining facts and circumstances of the case and due to pendency of civil suits, it was not open to the High Court to order refund of the earnest money.11. A perusal of Section 18 of the Act makes it clear that reference can be sought to a civil court with respect (i) the measurement of the land, (ii) adequacy and quantum of compensation, (iii) persons to whom it is payable and (iv) the apportionment thereof amongst the persons interested. The application under Section 18 is required to be filed within stipulated time whereas no limitation is prescribed under Section 30 of the Act. It is discretionary upon the court to refer a dispute under Section 30 of the Act. The same is confined to the apportionment of the compensation or as to a person to whom the same is payable. The scope of Section 30 of the Act is narrow as compared to Section 18 as laid down in G.H. Grant v. State of Bihar AIR 1966 SC 237 and in Sharda Devi v. State of Bihar, 2003(1) R.C.R.(Civil) 552 : (2003) 3 SCC 128. 12. We need not go into the question whether holder of agreement is "person interested" as defined in Section 3(b) of the Act. As we are satisfied that respondent No. 1 could not have resorted to the remedy of reference for refund of the earnest money as for this very purpose he had filed civil suit earlier in point of time. In the reference petition refund of earnest money had been prayed with interest at the rate of 12 per cent per annum. In civil suit refund had been sought with 18 per cent interest per annum and in one suit specific performance was prayed.The facts in the said case were different and the said decision could not have been utilized by the High Court for setting aside the well reasoned award passed by the reference court declining to entertain the prayer made by the respondents, in view of the availing remedy of the civil suits. The High Court should have in fairness reflected that the said decision was rendered by this Court in the context of civil suit. The High Court has referred it in the manner as if it was a case which has been decided under Section 30 of the Act with respect to the apportionment of the compensation.