Case No. | 1969 SCC (3) 522 |
Date of judgement | 28.10.1969 |
Court | Supreme Court of India. |
Petitioner | Shree Hanuman Cotton Mills & others |
Respondent | Tata Air Craft Ltd. |
Bench | Vaidyialingam, C.A. Shelat, J.M. Dua. |
Introduction: –
This case deals with the breaching of contract under which the provision of Indian Contract Act, 1872, section 74 which states about the Earnest money plays a major role. It states that the term earnest money means that the money which is defined as a token money is paid by the buyer who shows a genuine interest in a property. The relevant section under this case is section 9 and section 74 of the Indian contract Act, 1872.
Facts of the case: –
- The Tata AirCraft Ltd. (hereinafter referred as respondent) deals with the Shree Hanuman Cotton Mills & others (hereinafter referred as Petitioner) agreed to sell some aero-scraps under rupees 10,00,000/- to the petitioner.
- After that, the petitioner paid the 2,50,000/- amount of money on the fixed date of contract, this amount value is referred to as token money or earnest money. And
- After this, they decided the rest of the amount can be paid under two instalments.
- The terms and conditions under which they are performing the contract is decided by the respondent.
- The petitioner asked for the refund money and denied to pay the rest of the remaining amount under the contract and they breached the contract but the respondent refused to pay the refund money which was submitted by the petitioner in the form of an earnest amount.
Issues raised: –
- Whether the amount of rupees 2,50,000/- paid by the petitioner can be considered as part of part payment or earnest deposit.
- Whether the respondent is entitled to refund the said amount paid by the petitioner.
Contention: –
- The petitioner said that there is no concluded agreement between the parties and it also states that before entering under the final agreement the petitioner withdraw from negotiations by reasoning that respondent is not willing to perform the part of contract.
- The petitioner also argued that respondent made a false representation regarding the Quantity of scrap material available.
- The respondent stated that the parties entered into the final agreement by showing the two letters dated 18th November and 20th November 1946.
- The respondents also made it clear that no false representation is done by them but the petitioner withdrew the contract without giving reasoning.
- The statement presented by the respondents states that they are always willing to do a contract but the petitioner repudiated the contract without reason.
- So, based on the above statement the respondent further claimed that to pay the amount of rupees 42,499/- for the loss and damages sustained by them.
Judgement of the case: –
The supreme court held that, by applying the section 74 of Indian Contract Act,1872 which stated that if the amount of compensation is fixed then in case of breach of contract it will not become a part of issue because it is already being fixed by the parties itself but if somehow compensation is not fixed in case of breach of contract the reasonable amount can be paid by the party who breach a contract. So that in this case after considering the contentions of both the parties the court denied for the refund of amount 2,50,000/- and fixed compensation of rupees 42,499/- for the loss.
Conclusion: –
To be conclude here, this case basically deals under the breach of contract under which the parties are claiming refund or compensation but the court clearly stated that the fixed amount of compensation is not a part of the issue but if in case not fixed it becomes a part of reasonably paid.
Reference: –
https://lawplanet.in/shri-hanuman-cotton-mills-vs-tata-aircraft-ltd-case-summary-1969-sc/
This Case Analysis is written by SOMYA RAJAWAT student of Maharani Laxmi Bai Arts and Commerce College, Gwalior, Madhya Pradesh.
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