R.Shanmugachandran (Deceased) vs The Chief Manager on 12 September, 2012
In A.Murali & Co. v. State Trading Corporation of India Ltd. (AIR 2001 Madras 271), Prabha Sridevan, J, was confronted with a question relating to the validity of the forfeiture of a part of the Earnest Money Deposit in proportion to the reduced off-take of material by the auction purchaser. After referring to Sections 73 and 74 of the Contract Act and various decisions of this Court, the learned Judge held that the test to find out the validity of the forfeiture is to see if the Earnest Money is a genuine pre-estimate of damages or only a stipulation in terrorem.