Grover, J. - (1.) This is an appeal by special leave from a decree of the Punjab High Court (Circuit Bench, Delhi) .
(2.) On July 18, 1955, the appellants entered into an agreement with the respondents for the purchase of plot No. 8 measuring 1500 Sq. Yds in Jangpura B. New Delhi for Rs. 22,500/-. The contract was evidenced by receipt Exhibit P 6 which was in the following terms; "Received with thanks from Messrs. Ramesh Chandra Chandiok and Kailash Chander Chandiok the sum of Rs. 7,500/- (Rupees Seven thousand and five hundred only) as earnest money of the purchase money of Rs. 22,500/- (Rupees Twenty two thousand and five hundred) for the sale of Plot No. 8 measuring 1500 sq. yds. in Jangpura B. purchased from the Rehabilitation Ministry and owned by us. The balance of Rs. 15,000 (Rupees Fifteen Thousand only) shall be paid to us by them within one month of the execution of this receipt on the execution of the sale deed by us in their favour." It is common ground that the aforesaid plot had been allotted by the Rehabilitation Ministry to the respondents and that its possession was to be delivered after payment of rent of lease money up-to-date and after execution of the lease deed. The lease deed was actually executed in favour of the respondents on April 21, 1956. Meanwhile on August 11, 1955 the respondents wrote a letter to the appellants as follows: "With reference to the receipt dated 18-7-1955 executed by us in your favour, acknowledging receipt of Rs. 7,500/- as earnest money for the sale of Plot No. 8 measuring 1500 sq. yds in Jungpura B. owned by us and agreed to be sold to you by us, since it will take about a month more to obtain sanction of the Rehabilitation Ministry, the execution of the sale deed by us cannot be complete without the said sanction, it is hereby mutually agreed between us or orally that the period for execution of the sale deed shall remain extended till the time of the receipt of the said sanction and we hereby confirm the said oral agreement. We will inform you as soon as the said sanction is received and within a week thereof, we will execute the necessary sale deed in your favour and get the same registered against payment of the Balance money. Please sign the duplicate of this letter in confirmation of the said oral arrangement." A notice dated June 15, 1956 was served by counsel for the respondents on the appellants saying that the balance of consideration according to the terms of the agreement dated July 18, 1955 was to be paid by the appellants and the sale deed was to be got registered within one month of 18-7-1955. It was further stated that extension had been given as desired by the appellants but the balance amount had not been paid. In para 3 it was stated "my clients are not prepared to wait indefinitely and therefore cancel your agreement for want of certainty and hereby give you an offer, without prejudice to their legal rights, to receive back the sum of Rs. 7500/- paid by you as earnest money less the amount of loss suffered by them on account of lease and interest etc. within one week of the receipt of this letter, failing which my clients would be entitled to forfeit the earnest money and treat the agreement cancelled."
(3.) A reply dated June 22, 1956 was sent by counsel for the appellants in which reference was made to the letter dated August 11, 1955 and it was pointed out that no information had been sent by the respondents about the sanction having been obtained from the Rehabilitation Ministry. The respondents were called upon to obtain the requisite sanction and to execute the sale deed against receipt of balance of purchase money. On July 4, 1956 counsel for the respondents sent a reply saying that sanction had not been granted till then and inquiries made by respondents revealed that it might not be forthcoming for an indefinite period and that it was absolutely uncertain as to when it would be granted. It was claimed that the agreement had become void on account of uncertainty and without prejudice to their legal rights the respondents were prepared "ex gratia" to have the sale deed registered on payment of the balance within a week of the receipt of the letter without waiting sanction of the Rehabilitation Ministry. On November 11, 1956 the respondents are stated to have applied for sanction for transfer of the plot and it was granted on November 20, 1956. The appellants had themselves made inquiries from the Housing and Rent Officer on Augst 9, 1956 to ascertain whether sanction had been granted and how much time it would take to accord the sanction. By a letter dated 27/ 29th November 1956 the aforesaid officer informed the appellants that permission to transfer had been given on November 20,1956. The appellants had also taken steps to inform other prospective buyers about the existence of the agreement as they apprehended that the respondents intended transferring the same to some other party. On July 29, 1956 an advertisement was published by them in the 'Times of India' declaring the existence of the agreement entered into between the appellants and the respondents with regard to the sale of the aforesaid plot. On December 4, 1956 the suit out of which the present appeal has arisen was filed by the appellants claiming specific performance of the contract dated July 18, 1955 and in the alternative for refund of Rs. 7500/- being the amount of eamest money and Rs. 15000/- as damages together with interest.;