Bhoop Singh v. Vijender Singh And Others
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+ @15. The law is, therefore, clear that to justify the forfeiture of advance money being part of "earnest money" the terms of the contract should be clear and explicit. Earnest money is paid or given at the time when the contract is entered into and, as a pledge for its due performance by the depositor to be forfeited in case of non"performance by the depositor. There can be converse situation also that if the seller fails to perform the contract the purchaser can also get double the amount, if it is so stipulated. It is also the law that part" payment of purchase price cannot be forfeited unless it is a guarantee for the due performance of the contract. In other words, if the payment is made only towards part" payment of consideration and not intended as earnest money then the forfeiture clause will not apply.
16. When we examine the clauses in the instant case, it is amply clear that the clause extracted hereinabove was included in the contract at the moment at which the contract was entered into. It represents the guarantee that the contract would be fulfilled. In other words, "earnest" is given to bind the contract, which is a part of the purchase price when the transaction is carried out and it will be forfeited when the transaction falls through by reason of the default or failure of the purchaser. There is no other clause that militates against the clauses extracted in the agreement dated 29"11"2011" "(
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+ @18. Clause 4 of the agreement to sell in the present case is clear and specific. The earnest money can be forfeited in case the indended purchaser fails to perform his part of the contract. There is no distinction in the agreement to sell and there is no stipulation that out of Rs.60,00,000/" how much is the earnest money and how much is the part payment. Earnest money is a payment made towards part of the price of the property and it represents a guarantee that the contract will be fulfilled."
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