Facts
- The petitioner, who owned 48 kanals 11 marlas of agricultural land in Village Panjetha, Tehsil and District Patiala, entered into a contract for sale of that land with the respondent on 20−5−1988 @ Rs 24,000 per acre.
- At the time of the execution of the agreement, an amount of Rs 77,000 was paid to the petitioner as earnest money
- Since the petitioner did not execute the sale deed in favour of the respondent in terms of the agreement although the respondent was ready and willing to perform his part of the contract, the latter, namely, the respondent filed the suit for specific performance against the petitioner which was decreed by the trial court
Law Points
- Trial court
The decree was modified in appeal by the Additional Distirct Judge who was of the opinion that the parties to the agreement, namely, the petitioner and respondent both suffered from a mistake of fact as to the area of the land which was proposed to be sold as also the price (sale consideration) whether it was to be paid at the rate of per—bigha” or per —kanal”.
- The lower appellate court also found that the respondent was not ready and willing to perform his part of the contract.
- Consequently, the decree for specific performance was not passed but a decree for refund of the earnest money of Rs. 77,000 was passed against the petitioner.
- This was upheld by the High Court Appellant
There was a stipulation in the agreement that if the respondent failed to pay the balance amount of sale consideration, the earnest money shall stand forfeited.
Judgement
- But, as pointed out above, we are dealing only with a matter in which one party had received an advantage under an agreement which was —discovered to be void” on account of Section 20 of the Act. It is to this limited extent that we say that, on the principle contained in Section 65 of the Act, the petitioner having received Rs. 77,000 as earnest money from the respondent in pursuance of that agreement, is bound to refund the said amount to the respondent.
- Section 20 − agreement void where both parties are under mistake as to matter of fact.
- Section 65 − obligation of person who has received advantage under void agreement, or contract that becomes void − any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he receive it.
- Section 13 − two or more persons are said to consent when they agree upon the same thing in same sense
