PLD 2024 Supreme Court 663
S . 12 --- Suit for specific performance of an agreement to sell immoveable property --- Dismissal of suit --- Earnest money paid , recovery of --- Suitable amendments proposed by the Supreme Court in the Specific Relief Act , 1877 for refund of earnest money --- In the present case the sale agreement was executed on 20th of July , 2005 --- After that , a suit for specific performance was instituted --- Case continued until it was dismissed on 18th of November , 2013 , after eight years of litigation --- On 13th of February , 2014 , the second round of litigation was brought by the plaintiff to recover earnest money , to which the cause of action arose after the dismissal of the first suit for specific performance , and has reached the Supreme Court in appeal 18 years after the agreement --- In total , these two rounds of litigation , starting with the same agreement , had almost completed 19 years of litigation --- Supreme Court observed that amendments to the Specific Relief Act , 1877 , be made so as to based on empirical study it is advisable to suggest that suitable do away with such litigations and reduce the burden on the for a provision by which any person suing for the specific courts and on parties ; that proposed amendments should provide performance of a contract for the transfer of immovable property , in appropriate cases , may ask for ( i ) possession or partition and separate possession , of the property in addition to such performance ; or ( ii ) any other relief to which he is entitled , including the refund of any earnest money or deposit paid or made by him , in case his claim for specific performance is refused
PLD 2024 SUPREME COURT 663
Agreement to sell immoveable property , cancellation of --- Earnest money paid , recovery of --- First suit for specific performance of agreement to sell filed by plaintiff ( vendee ) was withdrawn --- Plaintiff filed second suit for recovery of earnest money paid - Whether Article 97 or 181 of the Limitation Act , 1908 applied in the case of the second suit ? --- Held , that the only Article which could have been applied , in the given circumstances of the present case , was Article 97 of the Limitation Act , 1908 --- This Article deals with a suit " for money paid upon an existing consideration which afterwards fails " ... Plain reading of said Article dictates three ingredients for its applicability : firstly , the suit must be for money ; secondly , such money must have been paid upon a consideration which was in existence at the time of the payment ; and lastly , the said consideration must I have afterwards failed --- If all these ingredients are established , the application of Article 97 cannot be resisted , and the starting point of limitation of three years under it would not be the date when the money was paid but when the consideration fails --- All these three ingredients were fulfilled in this case --- Payment of earnest money under the agreement to sell dated 20th of July , 2005 , would fall within the meaning of the phrase " for money paid - Money paid under the agreement was paid for " existing consideration --- Lastly facts stated by the plaintiff in the second suit show that the transaction did not fructify in a completed sale and thus the inevitable conclusion is that the consideration for which the money was paid was extinguished Thus , all the three requirements of Article 97 were fully met in the present case , and , that being so , the limitation for the plaintiff's second suit would rightly start from the date of failure of the consideration , and the second suit would be within time having been brought within three years of the date of the failure of the consideration , which in this case could be said to have failed only when the first suit was dismissed as withdrawn --- Appeal was allowed , and Trial Court was directed to decide the second suit of plaintiff on merits .
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