JAGDISHPUR METAL INDUSTRIES Vs. VIJOY OIL INDUSTRIES LTD

JUDGEMENT

(1.) The only important consideration that is raised in this case is: How far an earnest money or money paid in advance in part satisfaction or the total consideration of a contract of sale of immoveable property is liable in law to be refunded by the vendor to the vendee in case that contract falls through due to default on the part of the vendee?

(2.) The subject matter of sale in the present case was the sixteen anna interest of the defendants in their business carried at Ghaghidih in the name and style of 'Jagdishpur Metal Industries' including all its immoveable assets and moveables standing thereon. It is not denied that on the 17th July, 1949, the plaintiff, a limited company, Vijoy Oil Industries Limited, which is respondent in this Court, entered into an agreement (Exhibit I) with the defendants whereunder it agreed to purchase the entire aforesaid concern or the defendants for a sum of Rs. 1,00,000/- in cash and Rs. 25,000/- worth of shares in any company. Further, it is also agreed between the parties that on the same day when the aforesaid agreement was executed, the plaintiff paid a sum of Rs. 5,000/-to the defendants and on the day following, that is, on the 18th of July, 1949, the plaintiff got exclusive possession over the entire concern. Then it is also not denied that thereafter on the 27th of July, 1949, the plaintiff made another part payment of Rs. 3,000/- towards the total consideration. So far therefore there is no controversy on facts, but the claim of the plaintiff is, which is strongly disputed, that apart from these admitted payments it had to incur some other liabilities ad well while it was in possession of the concern. That, according to it, covered a total sum of Rs. 2,000/- which was spread over the four following items: (i) Rs. 535/5/- as payment made to the workmen; (ii) Rs. 425/'- as cost of materials supplied to the concern; (iii) Rs. 500/- as payment made towards pay and costs of the Darwans; and (iv) Rs. 539/11/- as damages. Thus, according to the plaintiff, it had been in all put to a total loss of Rs. 10,000/-. Unfortunately, however, for reasons which I shall state presently, the contract fell through and On the 24th of August, 1949, the plaintiff gave a notice to the defendants, the relevant portion of which is as follows:--

(3.) Its allegation is that the contract was broken by the defendants and it was they who in spite of repeated demands made by it failed to execute the sale deed as agreed upon between the parties. Therefore, It is claimed that the plaintiff is entitled to the refund of the entire aforesaid amount of Rs. 10,000/- along with interests and costs.