{"id":148121,"date":"2017-08-05T14:25:18","date_gmt":"2017-08-05T08:55:18","guid":{"rendered":"http:\/\/www.scconline.com\/blog\/?p=148121"},"modified":"2017-08-18T15:23:15","modified_gmt":"2017-08-18T09:53:15","slug":"earnest-money-and-performance-guarantee-amount-can-be-forfeited-upon-rescinding-a-contract","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2017\/08\/05\/earnest-money-and-performance-guarantee-amount-can-be-forfeited-upon-rescinding-a-contract\/","title":{"rendered":"Earnest money and performance guarantee amount can be forfeited upon rescinding a contract"},"content":{"rendered":"<p style=\"text-align: justify;\"><strong>Delhi High Court:<\/strong> A Single Judge Bench comprising of Valmiki J. Mehta, J, dismissed an appeal before it setting aside an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996.<\/p>\n<p style=\"text-align: justify;\">The facts of the case were that a contract was entered into between the appellant and the respondent for a sum of Rs. 67.62 lakhs. The performance was to begin from 04.12.2012, the contract was for removal of obstructions in the drainage system and construction of protection work on both banks of the drain on Mall Road Bridge.<\/p>\n<p style=\"text-align: justify;\">The work was started but had to be abandoned on account of heavy seepage which could not be overcome despite dewatering operations being carried. The appellant claimed impossibility of performance. The respondent then, rescinded the contract vide letter dated 15.06.2013, which was after the six month period allowed in the contract. The respondent forfeited the earnest money and the performance guarantee amount. The appellant argued that the earnest money and performance guarantee could not be forfeited unless losses were proved by the respondent as required under Section 74 of the Contract Act, 1872.<\/p>\n<p style=\"text-align: justify;\">The Court noted that there was no provision for extension of time of the contract and that the appellant was found to have abandoned the contract. As for losses, the Court held that such conditions have to be looked into depending upon the nature of the contract. If nature of losses cannot be proved then there is no requirement of losses having to be proved. \u00a0[M\/S Moni Traders v. Govt. of NCT of Delhi,<a href=\"http:\/\/www.scconline.com\/LoginForDocumentLink\/r9X72Ze4\"> 2017 SCC OnLine Del 9526,<\/a> decided on 01.08.2017]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Delhi High Court: A Single Judge Bench comprising of Valmiki J. Mehta, J, dismissed an appeal before it setting aside an arbitral <\/p>\n","protected":false},"author":91,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,10],"tags":[],"class_list":["post-148121","post","type-post","status-publish","format-standard","hentry","category-casebriefs","category-highcourts"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.4 (Yoast SEO v26.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Earnest money and performance guarantee amount can be forfeited upon rescinding a contract | SCC Times<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.scconline.com\/blog\/post\/2017\/08\/05\/earnest-money-and-performance-guarantee-amount-can-be-forfeited-upon-rescinding-a-contract\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Earnest money and performance guarantee amount can be forfeited upon rescinding a contract\" \/>\n<meta property=\"og:description\" content=\"Delhi High Court: A Single Judge Bench comprising of Valmiki J. 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Reversing the concurrent orders of the Courts below, the Court held that the Respondent Plaintiff may have been willing to perform his\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/MicrosoftTeams-image-52-1-1.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/MicrosoftTeams-image-52-1-1.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/MicrosoftTeams-image-52-1-1.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/MicrosoftTeams-image-52-1-1.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/09\/MicrosoftTeams-image-52-1-1.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":213377,"url":"https:\/\/www.scconline.com\/blog\/post\/2019\/04\/08\/bom-hc-not-unlawful-for-an-advocate-to-enter-into-a-contingent-contract-while-appearing-in-capacity-of-a-counsel-in-arbitration-proceedings\/","url_meta":{"origin":148121,"position":1},"title":"Bom HC | Not unlawful for an Advocate to enter into a &#8220;contingent contract&#8221; while appearing in capacity of a &#8220;counsel&#8221; in arbitration proceedings","author":"Bhumika Indulia","date":"April 8, 2019","format":false,"excerpt":"Bombay High Court: A.S. Chandurkar, J., clarified that a contract whereby an advocate asks for the fee based on the outcome of the arbitration proceedings, wherein he acted in the capacity of a \"counsel\" for the party and did not appear as an \"advocate\", is valid. It is pertinent to\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/09\/Bombay-HC.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/09\/Bombay-HC.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/09\/Bombay-HC.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/09\/Bombay-HC.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2016\/09\/Bombay-HC.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":348554,"url":"https:\/\/www.scconline.com\/blog\/post\/2025\/05\/22\/unstamped-and-unregistered-but-still-permitted-as-proof-for-oral-agreement-of-sale-supreme-court-legal-news\/","url_meta":{"origin":148121,"position":2},"title":"Unregistered document affecting immovable property can be an admissible evidence of contract in a suit for specific performance: Supreme Court","author":"Sucheta","date":"May 22, 2025","format":false,"excerpt":"In S. Kaladevi v. V.R. Somasundaram, (2010) 5 SCC 401, the Supreme Court had held that an unregistered document may be received as evidence of a contract in a suit seeking specific performance.","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"unregistered document","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/05\/unregistered-document.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/05\/unregistered-document.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/05\/unregistered-document.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/05\/unregistered-document.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":281059,"url":"https:\/\/www.scconline.com\/blog\/post\/2023\/01\/05\/loss-of-profits-awarded-by-arbitral-tribunal-disallowed-by-commercial-court-sikkim-high-court-set-aside-order-passed-by-commercial-courts-restored-award-passed-by-tribunal-legal-news-legal-research-up\/","url_meta":{"origin":148121,"position":3},"title":"Can Courts re-appreciate evidence under Section 34 of the Arbitration Act and treat High Courts as regular first Court of Appeal? Sikkim High Court answers in Negative","author":"Editor","date":"January 5, 2023","format":false,"excerpt":"The Court observed that the Tribunal after holding that there was a fundamental breach of contract, factored in the contributory delay caused by the appellant and fairly awarded \u2018Loss of Profit\u2019 by slashing it to 50% of the original claim put forth by the appellant.","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Sikkim High Court","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/12\/MicrosoftTeams-image104.jpg?resize=350%2C200&ssl=1","width":350,"height":200},"classes":[]},{"id":241930,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/01\/07\/can-a-contract-be-considered-concluded-if-the-acceptor-adds-a-new-condition-while-accepting-an-offer-supreme-court-answers\/","url_meta":{"origin":148121,"position":4},"title":"Can a conditional acceptance of an offer be considered a concluded contract? Supreme Court answers","author":"Editor","date":"January 7, 2021","format":false,"excerpt":"\u201cWith the greatest of respect, the High Court has cursorily dealt with the contentions of the Appellant and has not even discussed the cases that had been cited on behalf of the Appellant.\u201d","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2017\/09\/Supreme-Court_Colour.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":323878,"url":"https:\/\/www.scconline.com\/blog\/post\/2024\/06\/07\/second-appeal-fails-sikkim-hc-held-partys-willingness-to-perform-contractual-obligations-required\/","url_meta":{"origin":148121,"position":5},"title":"[Specific Performance of Contract] | Sikkim HC finds party\u2019s unwillingness for performance on their part; Discusses scope of Second Appeal under S.100 CPC","author":"Editor","date":"June 7, 2024","format":false,"excerpt":"Relying on UN Krishnamurthy v. AM Krishnamurthy, the Court stated that the appellant failed to indicate willingness to perform their part of the transaction, as they neither showed nor proved the availability of sufficient funds required to make the payments per the contract","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Sikkim High Court","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/04\/Sikkim-High-Court.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/04\/Sikkim-High-Court.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/04\/Sikkim-High-Court.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/04\/Sikkim-High-Court.webp?resize=700%2C400&ssl=1 2x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/148121","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/91"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=148121"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/148121\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=148121"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=148121"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=148121"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}