Neelam Khanna vs Kanchan Arora
2011 Latest Caselaw 717 Del

*                IN THE HIGH COURT OF DELHI AT NEW DELHI


+                                RFA No.218/2001


%                                                         7th February, 2011

NEELAM KHANNA                                               ...... Appellant
                                       Through:       Mr. Jasmeet Singh with Mr.
                                                      Saurabh Tiwari, Advocates

                           VERSUS


KANCHAN ARORA                                                ...... Respondent
                                       Through:       None


CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

    1.    Whether the Reporters of local papers may be
          allowed to see the judgment?

    2.    To be referred to the Reporter or not?

    3.    Whether the judgment should be reported in the Digest?


VALMIKI J. MEHTA, J (ORAL)

1.       The challenge by means of this Regular First Appeal under section 96

         Code of Civil Procedure, 1908 is to the impugned judgment and decree

         dated   30.04.2001   whereby     the      suit   for   recovery   filed    by

         respondent/plaintiff was decreed for the amount of earnest money paid

         under an Agreement to Sell.


RFA No.218/2001                                                       Page 1 of 3
 2.   The appellant as seller had agreed to sell to the respondent/plaintiff as

     buyer a plot of land bearing no.189, Block B, Sector VIII at Dwarka, New

     Delhi for total consideration of Rs.9,50,000/- and pursuant to which

     agreement, the appellant received a sum of Rs.1,00,000/-. The appellant

     sought to forfeit the earnest money of Rs.1,00,000/- on the ground that

     it was the respondent who committed a breach of contract. The trial

     court has however rejected the contention of the appellant and decreed

     the suit for recovery.


3.   Learned counsel for the appellant argued that it was the respondent

     who has breached the contract and therefore, the appellant, was

     justified in forfeiting the earnest amount. I am unable to agree. The

     position of law is well settled right from the decision of the constitution

     Bench of Supreme Court in case of Fatehchand Vs. Balkishan Das

     AIR 1963 SC 1485 that even in case of breach of Agreement to Sell of

     immovable property by a buyer, a seller cannot forfeit the entire earnest

     amount unless it is pleaded and proved by the seller that in fact loss has

     been caused to him on account of fall in the value of the property. I put

     to the learned counsel for the appellant as to whether such a case was

     ever laid out before the trial Court by the appellant that the

     appellant/defendant suffered a loss on account of breach of contract by

     the respondent/plaintiff, assuming that the respondent/plaintiff was

     indeed guilty of breach of contract, to which the counsel for appellant


RFA No.218/2001                                                  Page 2 of 3
      fairly conceded that there are no such pleadings or evidence before the

     trial court to show a fall in the value of the property. At best the

     appellant would therefore have been entitled to a forfeiture only of a

     nominal amount, in terms of the judgment in the case of Fateh Chand

     (Supra), however, the counsel states that he does not seek such relief.


4.    In view of the above, there is no scope for interference with the

      impugned judgment and decree. The appeal is therefore dismissed,

      leaving the parties to bear their own costs. Interim orders are vacated.

      Trial court record be sent back.




February 07, 2011                               VALMIKI J. MEHTA, J.

vld