Smt. M. Prabhavathamma v. H. Anwar Khan, 1997 (3) ALT 95 (AP HC)
1. Background of the Case
Agreement of Sale dated 09-02-1988 for ₹67,500/- consideration.
Purchaser (plaintiff) paid ₹4,500/- advance.
Later discovered vendor (defendant) had no valid title — property belonged to her daughter (a minor).
Daughter subsequently sold the property to others.
Purchaser rescinded agreement and filed a suit for refund of advance (₹4,500/-) + damages (₹3,500/-).
2. Defence by Vendor
Defendant admitted execution and receipt of advance.
Alleged that plaintiff himself defaulted and was not ready & willing.
Contended that refund suit = specific performance suit, not maintainable in Small Causes Court.
3. Trial Court Findings
Held plaintiff entitled to refund of advance ₹4,500/-, but not damages.
Found the suit maintainable in Small Causes Court.
4. Revision before AP High Court
Two issues framed:
Is the suit cognizable by Small Causes Court?
Is plaintiff entitled to refund?
5. High Court Reasoning
(a) Nature of Suit
Suit was not for specific performance, nor for rescission under Article 15 of Provincial Small Cause Courts Act.
Plaintiff had already rescinded the contract on his own when discovering vendor’s lack of title.
Suit was only for refund of advance paid under agreement.
Hence, it was a money suit, cognizable by Small Causes Court.
(b) Entitlement to Refund
Vendor had no valid title and her daughter sold the property to third parties.
Agreement thus became incapable of performance.
Once agreement fails, purchaser is entitled to refund of whatever amount paid.
Plaintiff rightly opted for refund instead of seeking SP.
(c) Distinction from other precedents cited by vendor
Madras HC (Penchalamma v. Subbaramaiah) & Bombay HC (Pandurang v. Kaluram) cases were distinguishable because in those cases, the plaintiff was still relying on the agreement and effectively seeking enforcement.
Here, plaintiff had cancelled the agreement and sued only for refund → maintainable.
6. Final Holding
Suit for refund of advance money after rescinding an agreement of sale is maintainable.
It does not fall under the bar of Article 15.
Plaintiff entitled to refund (₹4,500/-), decree confirmed.
Defendant’s revision petition dismissed with costs.
7. Legal Principles Evolved
1.Refund = Independent Remedy
Once contract is rescinded, refund of money paid is an independent right.
Such a suit is not equivalent to specific performance.
Rescission Need Not Be Court-Ordered
Party can rescind contract unilaterally upon breach/fraud.
Court recognizes refund claim if rescission already done.
Title Defect → Automatic Right of Refund
If vendor has no title or sells property to others, purchaser can treat contract as void and demand refund.
Suit Nature
A suit for refund is a money recovery suit, not one for enforcement of agreement terms.
