In agreement of sale if the permission was not obtained within 75 days, the purchaser shall be entitled to get back his advance money paid after 75 days

The Appeal challenges the judgment dated 17th October 2008 passed by the High Court of Andhra Pradesh. The defendant is the owner of the suit property and effected an agreement of sale in favor of the plaintiff. 

The total consideration is Rs.45,315/-. The plaintiff paid an amount of Rs.15,000/- in form of a Demand Draft dated 7th July 1978 as advance payment. The defendant addressed a letter to the plaintiff on 13th October 1978 stating therein that, she was ready to execute the sale deed.

The plaintiff responded to it by requesting to confirm whether the necessary permission from the Competent Authority (hereinafter referred to as the "ULC Authorities") under the Urban Land (Ceiling and Regulation) Act, 1976 to sell the suit property had been obtained or not. Further defendant on 8th December 1978, applied to the Secretary to Government of Andhra Pradesh, Revenue Department for granting exemption under Section 20 of the ULC Act for selling the suit property. 

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On 12th April 1982, the defendant addressed a communication to the plaintiff informing them the necessary permission from the ULC Authorities could not be obtained, and therefore, she cancelled the agreement of sale dated 29th July 1978. 

The defendant enclosed a Demand Draft of Rs. 15,000/- to refund the advance amount. The plaintiff replied to the defendant the contract was binding and returned the said Demand Draft. It was also opposed to him that because of the price rise, the defendant was going back on the promise. The defendant, on 2nd June 1982 addressed a letter to the plaintiff, stating therein that, she was forfeiting the advance payment of Rs.15,000/- since the plaintiff had not claimed the refund within 90 days from the date of the agreement of sale. 

The plaintiff filed a suit before the trial court seeking specific performance of the agreement of sale. The trial court came down to the conclusion directing the defendant to execute the sale deed within 2 months from the date of the judgment and decree. Being aggrieved the defendant filed an appeal. 

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The learned Single Judge of the High Court allowed the appeal and dismissed the suit of the plaintiff. Then the plaintiff filed another appeal the learned Division Bench denied the relief to the plaintiff for specific performance but held that the plaintiff was entitled to get the refund for the advance payment of Rs.15,000 along with the accrued interest or a sum of Rs.3,00,000 in all. The learned Single Judge while reversing the judgment and decree passed by the trial court relied on Clauses 3 and 5 of the agreement of sale dated 29th July 1978. 

As per the interpretation of the aforesaid clauses, the Court concluded that a reading of the said clauses made it clear that the parties intended that the permission should be obtained by the defendant within 75 days.  It held that the required permission wasn’t obtained by the defendant within the period. Thus, the plaintiff was entitled to get money. in the event the permission was not obtained by the defendant within the stipulated time, the plaintiff was entitled to get back his advance money.

 As per the facts, the defendant terminated the agreement on 12th April 1982 stating that permission could not be obtained, sale agreement was cancelled. Only after the ULC permission was granted on 7th February 1984, the plaintiff issued a legal notice to the defendant on 19th February 1984.

The agreement of sale provided that in the event the permission was not obtained within 75 days, the purchaser shall be entitled to get back his advance money paid after 75 days but not later than 90 days under any circumstances. The Supreme Court agreed upon the view taken by the learned single judge and division bench and directed that defendants pay an amount of Rs.15,00,000 to the appellants. The said amount shall be paid within a period of 3 months from the date of this judgment. 
 

Cited: KOLLI SATYANARAYANA (DEAD) BY LRS. vs. VALURIPALLI KESAVA RAO CHOWDARY (DEAD) THR. LRS. AND OTHERS: Decided On, 17 October 2008