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1 - 10 of 28 (0.41 seconds)Section 74 in The Indian Contract Act, 1872 [Entire Act]
The Code of Civil Procedure, 1908
Satish Batra vs Sudhir Rawal on 18 October, 2012
Insofar as the judgment in the case of Satish Batra
(supra) is concerned, the clause providing for "forfeiture of
earnest money deposit" cannot be said to be one-sided. [...]
Fateh Chand vs Balkishan Das on 15 January, 1963
82. Ordinarily, a forfeiture clause in the strict sense will not
be a penal clause, if its consequence is intended not as a
sanction for breach of obligation but rather as security for
performance of the obligation. This is why Fateh Chand
[Fateh Chand v. Balkishan Dass, 1963 SCC OnLine SC 49 :
Maula Bux vs Union Of India on 19 August, 1969
AIR 1963 SC 1405] Maula Bux [Maula Bux v. Union of
India, (1969) 2 SCC 554] and Satish Batra [Satish Batra v.
Sudhir Rawal, (2013) 1 SCC 345 : (2013) 1 SCC (Civ) 483]
held that forfeiture of earnest money deposit is not a penal
clause, as the deposit of earnest money is intended to signify
assent of the purchaser to the contract, and its forfeiture is
envisaged as a deterrent to ensure performance of the
obligation."
V. Lakshmanan vs B.R. Mangalagiri & Ors on 13 December, 1994
49. This Court expounded on the question of loss in Lakshmanan v.
B.R. Mangalagiri, 1995 Supp (2) SCC 33, holding that when the
contract falls through due to the default on part of the appellant-
purchaser, and the resulting loss suffered by the respondent-
vendors exceeds the amount forfeited under the contract, the
forfeiture cannot, by any measure, be seen as unjustified. The
relevant observations are extracted below:
Smt. Chand Rani (Dead) By Lrs. vs Smt. Kamal Rani (Dead) By Lrs. on 18 December, 1992
38. We consider it apposite at this juncture to take note of the
conditions that make time the essence of a contract. Such
conditions were precisely outlined by this Court in Chand Rani v.
Kamal Rani, (1993) 1 SCC 519, which are reproduced hereunder:
Roshan Lal vs The Delhi Cloth And General Mills ... on 10 August, 1910
(1926) 23 LW 172] ; Roshan Lal v. Delhi Cloth & General
Mills Co. Ltd. [Roshan Lal v. Delhi Cloth & General Mills
Co. Ltd., 1910 SCC OnLine All 98 : ILR (1911) 33 All 166] ;
Muhammad Habib-Ullah vs Muhammad Shafi on 8 January, 1919
Mohd. Habib-Ullah v. Mohd. Shafi [Mohd. Habib-Ullah v.
Mohd. Shafi, 1919 SCC OnLine All 87 : ILR (1919) 41 All
324] ; Bishan Chand v. Radha Kishan Das [Bishan Chand v.
Radha Kishan Das, 1897 SCC OnLine All 52 : ILR (1897) 19
All 489 : 1897 AWN 123]. These cases are easily explained,
for forfeiture of reasonable amount paid as earnest money
does not amount to imposing a penalty. But if forfeiture is
of the nature of penalty, Section 74 applies. Where under
the terms of the contract the party in breach has undertaken
to pay a sum of money or to forfeit a sum of money which
he has already paid to the party complaining of a breach of
contract, the undertaking is of the nature of a penalty."