SMT. SARITA DOKANIA AND ANR.ETC.versusSMT. KRISHNA DEY AND ANR.

                   [2013] 5 S.C.R. 1089


         SMT. SARITA DOKANIA AND ANR.ETC.                     A
                             v.
              SMT. KRISHNA DEY AND ANR.
          (Civil Appeal Nos. 4547-4548 of 2013)
                      MAY 06, 2013
                                                              B
            [SURINDER SINGH NIJJAR AND
             PINAKI CHANDRA GHOSE, JJ.]

     Interest - On earnest money - Suits for specific
performance of agreement - Decreed by trial court - Decree C
modified by High Court declining the relief of specific
performance and granting the alternative relief of refund of
earnest money - On appeal to Supreme Court notice issued
limited on the question of interest on earnest money - Plea
of vendor that vendee was not entitled to interest because the D
vendor had immediately after the agreement had offered to
refund the earnest money - Held: Vendor was liable to pay
interest on the earnest money from the date of its receipt -
The vendors in order to avoid the liability to pay interest,
should have deposited the earnest money with the trial court, E
instead of utilizing the same - Direction to vendor to refund
the earnest money alongwith interest at the rate of 9% from
the date of receipt of earnest money, till the date of its
payment.

    CIVIL APPELLATE JURISDICTION : Civil Appeal No.           F
4547-4548 of 2013.

    From the Judgment & Order dated 04.01.2011 of the High
Court of Patna in FA No. 5 and 8 of 2008.
                                                              G
    phruv Mehta, A.K. Das, Bankey Bihari, Sameer for the
Appe'llants.

    Neeraj Shekhar for the Respondents.

                            1089                              H
    1090     SUPREME COURT REPORTS                [2013] 5 S.C.R.


A       The following Order of the Court was delivered

                             ORDER
        1. We have heard learned counsel for the parties.

B       2. Leave granted.

        3. The appellants impugn the judgments dated 4th January,
  2011 rendered by the Patna High Court in First Appeal No. 5
  of 2008 and First Appeal No. 8 of 2008. The appellants have
C filed two suits against the respondents for specific performance
  of agreements dated 25th July, 1999 and 27th July, 1999. The
  suits were contested by the respondents on legal issues as well
  as on facts. It was the specific plea of the respondents that
  notice dated 4th September, 1999 was sent to the appellants
  with a request to receive back the earnest money as the legal
0
  representatives of the sister were not agreeing to the
  performance of the Agreement executed by the respondents.
  The appellants, however, did not accept the aforesaid offer and
  filed the suit for specific performance.

E        4. The Trial Court decreed the two suits for specific
    performance. The respondents challenged the judgment and
    decree passed by the Trial Court in First Appeal Nos. 5 of 2008
    and 8 of 2008.

F       5. The High Court upheld all the findings recorded by the
  Trial Court but declined the relief of specific performance and
  granted the alternative relief for refund of the earnest money
  deposited by the appellants. The relief of specific performance
  was denied to the appellants on the ground that specific
  performance of the contract would cause undue hardship to the
G respondents. However, on admission that the respondents had
  received the earnest money, a direction was issued to refund
  the same. The judgment and decrees passed by the Trial Court
  was modified accordingly.

H       6. In the present two appeals, the appellants claim that the
         SARITA DOKANIA v. KRISHNA DEY                      1091


High Court having upheld on facts the agreements entered into        A
between the parties and noticing that the respondents had
received the earnest money, wrongly declined to grant relief of
specific performance to the appellants.

      7. We are not inclined to examine the issue on merits at
                                                                     B
this stage, even though Mr. Dhruv Mehta, learned senior counsel
appearing for the appellants has tried to persuade us to decide
the issue on merits. This Court while issuing notice on
9.12.2011 restricted the same as to why the appellants be not
granted interest on the earnest money admittedly received by
the respondents. Faced with this situation, Mr. Mehta submits        C
that the appellants are entitied to receive interest from the date
the respondents received the amount till date. On the other hand,
Mr. Neeraj Shekhar, learned counsel for the respondents
submits that the appellants had been asked to receive back
the earnest money on 27th July, 1999. Therefore, the appellants      D
cannot now, rightly, claim any interest.

     8. We have considered the submissions made by the
learned counsel for the parties. We are of the opinion that the
claim made by the appellants with regard to interest deserves        E
to be accepted. It is not disputed that the respondents had
offered to pay back the earnest money. However, the offer was
rejected by the appellants and the necessary relief was sought
by bringing the two Civil Suits. We are not inclined to accept
the submission made by the learned counsel for the
                                                                     F
respondents that as soon as the respondents had made an
offer to return the earnest money, the appellants cannot claim
interest on the amount of earnest money, which has still not
been returned to the appellants. Undoubtedly, the respondents
had shown their bonafide to return the money. However, since         G
the refund was not accepted, the respondents ought to have
deposited the earnest money in the Trial Court, where the two
suits were pending. There was no impediment in the
respondents adopting such a course to avoid the liabilities to
pay interest. The net result is that the respondents have utilised
                                                                     H
    1092     SUPREME COURT REPORTS                  [2013] 5 S.C.R.


A   the earnest money ever since it had been received by them.
    Consequently, in our opinion, the appellants would be entitled
    to interest on refund of the earnest money.

         9. In view of the above, we allow the appeals to this limited
    extent. The respondents are directed to refund to the appellants
8
    the amount of earnest money, which have been indicated by
    the High Court in paragraph 20(vii) of the judgment, together
    with interest at the rate of 9% from the date of receipt of the
    earnest money till payment. Let the amount be paid within three
    months from the date of receipt of copy of this order.
c
    K.K.T.                                  Appeals partly allowed.