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Gopi Chand Vs. Bishambar Nath - Court Judgment

LegalCrystal Citation
SubjectContract
CourtDelhi High Court
Decided On
Case NumberCivil Revn. No. 286 of 1973
Judge
Reported inAIR1977Delhi161
ActsProvincial Small Cause Courts Act, 1887 - Schedule - Articles 11 and 15
AppellantGopi Chand
RespondentBishambar Nath
Appellant Advocate Maheshwar Dayal, Adv
Respondent Advocate R.N. Chitkara, Adv.
Cases ReferredSundara Thevan v. Ananthan Kaladi
Excerpt:
.....failed to comply with the terms of the agreement. it was held in this decision that a suit by a vendee for recovery of purchase money on the failure of a contract by vendor to convey land is of a small cause nature. (11) and (15) of the second schedule to the provincial small cause courts act and the same would not be triable by the court of small causes a suit for refund of money in a contract of sale and it was settled that may as well amount to a suit for enforcement a contract of sale may as well amount to a suit for enforcement of contract. on the other hand, they have relied upon the various terms of the contract and contended that the respondent had failed to perform his part of the contract and as such according to the terms of the contract, the petitioners have become entitled..........incomplete), and the vendee sues to recover back the purchase money from the vendor, such a suit is a small cause ........... 10. in raghunath dass v. chingan : air1929all62 the rule of law has been laid down as follows: 'it seems to me that the plaintiff should have at the very outset been called upon to state whether it was a art of his case that at the time when rs. 110 were paid it was agreed that if it turned out that the judgment-debtor was not the owner of the property the amount would be refunded, that is to say that there was an express agreement as to warranty of title by the present defendant. if his case is that there was such an agreement for refund then the present claim would be one for the specific performance of that contract and would not be cognizable by a court.....
Judgment:
ORDER

1. This revision petition has been filed under S. 25 of the Provincial Small Cause Courts Act, 1867, against the judgment dated 17th January, 1973, of the Small Cause Court judge by which he has held that the suit is not triable by the Small Cause Court and as such returned the plaint to the plaintiffs for presentation to the proper court.

2. The material facts of the case are that on 20th July, 1971 the plaintiff petitioners and the defendant respondent entered into an agreement for purchase of an immovable property mentioned in the agreement. The stale price as agreed was Rs. 17,500 out of which Rs. 500 were, paid in cash by the petitioners to the respondent as earnest money at the time of the agreement and the balance amount of Rs. 17,000 was to be paid at the time of registration by 30th July, 1971.

3. Clause (4) of the Contract provides that in case the vendor does not perform his part of the contract then on the expiry of the stipulated period it would be open to the vendee to cancel the contract for sale of the property and enforce the same through a court of law. On the other hand, the vendor was entitled to forfeit all the amount of the earnest money if the vendee did not pay the balance amount of the consideration and have registration in his name by the stipulated time.

4. It is the common case of the parties that the contract of sale has not been fulfillled. On 6th October, 1971, the petitioners instituted a suit, giving rise to this revision petition, claiming a decree for Rs. 500 by way of refund of the earnest money on the allegation that contract of sale of the immovable the property had fallen through on the false promises of the defendant respondent. It was averred in the plaint that at the time of agreement, the respondent had assured the petitioners that the said property was free from all encumbrances and he undertook to show to the petitioners the necessary title deeds etc. In paragraph 3 of the plaint it is further stated that on this assurance the petitioners had paid Rs. 500 to the respondent by way of earnest money at the time of the, agreement on 20-7-1971. It is next stated that till 28th July, 1971, the respondent had put off the petitioners on one pretext or the other and evaded to show the original title deeds of the ownership of the said property. In paragraph 5 of the plaint it is stated that on 28-7-1971 the petitioners served the respondent with a legal notice and further extended two day's time over and above the stipulated period for showing them the said title deeds etc. but the respondent evaded the service of the same and failed to comply with the terms of the agreement. In paragraph 6 it is stated that the petitioners came to know that the respondent had mortgaged the property in question with some person of Ghaziabad and had pledged the title deeds with him. It is thus stated that due to the lapses and false promises of the respondent the agreement dated 20-7-1971 fell through which rendered the respondent liable to return the earnest money along with damages, and face criminal proceedings under S. 420, I.P.C. for obtaining money on false assurances. With regard to criminal action under S. 420, I.P.C. against the respondent the petitioners alleged that they would take action later on. In this way the petitioners only claimed payment of Rs. 500 by way of refund of earnest money paid by them.

5. The suit was contested and the respondent raised a (plea that the suit was not triable by the Small Cause Court and was barred by Arts. (11) and (15) of the Second Schedule to the Act. Following the authority of the Allahabad High Court in Raghunath Das v. Chingan : AIR1929All62 the court below upheld the plea of the respondent that the suit was not triable by the Small Cause Court and returned the plaint for presentation to the proper Court.

6. The learned counsel for the petitioners has challenged the said order of the court as being contrary to law. I have heard the learned counsel for the parties,

7. By virtue of S. 15 of the Provincial Small Cause Courts Act, a Court of Small Causes is required not to take cognizance of the suits specified in the Second Schedule. The exceptions of suits provided under Arts. (11) and (15) of the Second Schedule are as under

'(11) a suit for the determination or enforcement of any other right to or interest in immoveable property;

(15) a suit for the specific performance or rescission of a contract.'

8. In Sundara Thevan v. Ananthan Kaladi AIR 1924 Mad 903 the plaintiffs had instituted a suit for the recovery of purchase money. The defendant, however, raised an objection that the suit was not triable by the Court of Small Causes. It was held in this decision that a suit by a vendee for recovery of purchase money on the failure of a contract by vendor to convey land is of a small cause nature. It was observed that there was no reason why the plaintiffs should be confined only to sue for specific performance of the contract, or for its rescission and a suit for either of those relief's would not be of a small cause nature, as argued by the counsel for the defendant. The Court further observed, if there was a contract and defendant refused to perform it, plaintiff was at liberty under S. 39 of the Contract Act to put an end to it, and on his doing so, the defendant was bound to restore the earnest money to the plaintiff and the, plaintiff was entitled to sue for it and such a suit was of a small cause nature. His Lordship also considered two previous decisions of the Madras High Court reported as Nangiri Veerasalingam Sithapathy v. Sathirazu, (1909) 5 Mad Lt 296 and Pachayyappan v. Narayana 1988) 11 Mad 269

9. In Udairam v. Thakur Prasad AIR 1926 Nag 65 the Additional Judicial Commissioner held that if plaintiff does not sue for specific performance of the contract by the execution of such instrument of sale and it was settled that contract of sale and it was settled that when a contract of sale of immoveable property falls through (or the sale is set aside or is otherwise incomplete), and the vendee sues to recover back the purchase money from the vendor, such a suit is a small cause ...........

10. In Raghunath Dass v. Chingan : AIR1929All62 the rule of law has been laid down as follows:

'It seems to me that the plaintiff should have at the very outset been called upon to state whether it was a art of his case that at the time when Rs. 110 were paid it was agreed that if it turned out that the judgment-debtor was not the owner of the property the amount would be refunded, that is to say that there was an express agreement as to warranty of title by the present defendant. If his case is that there was such an agreement for refund then the present claim would be one for the specific performance of that contract and would not be cognizable by a Court of Small Causes. A suit for refund of money under a contract is undoubtedly one for specific performance of it. If, however, the plaintiff does not allege that it was the understanding that the amount would be repayable in case the title was subsequently found to be defective then he can only succeed in a Court of Small Causes by showing that the defendant had refused to perform his part of the contract and that the plaintiff has accordingly cancelled it. On such refusal by the defendant, the plaintiff can under S. 39, Contract Act cancel the contract and then sue for the recovery of the amount which had been paid by him. '

11. While laying down the above rule of law, the Allahabad High Court followed the two decisions of the Madras High Court in Sundara Thevan AIR 1924 Mad 903 (supra) and Nangiri Veerasalingam (1909) 5 Mad Lt 296 (supra).

12. I am of the view that the rule of law has been correctly laid down in Sundara Thevan v. Ananthan Kaladi (AIR 1924 Mad 903) and there is no real conflict between the Allahabad case and the Madras case. If the petitioners seek to enforce the specific performance of the contract for sale of immovable property then their claim is barred by Arts. (11) and (15) of the Second Schedule to the Provincial Small Cause Courts Act and the same would not be triable by the court of small causes A suit for refund of money in a contract of sale and it was settled that may as well amount to a suit for enforcement a contract of sale may as well amount to a suit for enforcement of contract. On the other hand, if the petitioners allege that by breach of the contract on the part of the respondent the contract has been cancelled and then a suit is filed for recovery of the earnest money, it would be triable by the Court of Small Causes and would not be barred by any of the articles of the Second Schedule. The instant case does not show that the petitioners at any stage rescinded the contract. On the other hand, they have relied upon the various terms of the contract and contended that the respondent had failed to perform his part of the contract and as such according to the terms of the contract, the petitioners have become entitled to recover the amount of the earnest money. The suit as framed is obviously for the specific performance of the contract or its rescission. The order of the court below is not contrary to law and does not call for any interference by this Court.

13. The result is that the revision petition is dismissed and the order of the court below is affirmed. The parties are left to bear their own costs. The parties are directed to appear before the court below on 25th October, 1976, when the plaint shall be returned in accordance with law.

14. Revision dismissed.


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