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TMI Blog1992 (12) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... idential building constructed thereon along with fittings and fixtures for a sum of ₹ 1,78,000 in favour of Chand Rani. On the date of execution a sum of ₹ 30,000 was paid by way of earnest money. The agreement stipulated that a further sum of ₹ 98,000 was payable within 10 days of the execution of the agreement. The balance of ₹ 50,000 was to be paid at the time of registration of sale deed. It was agreed between the parties that Kamal Rani, the vendor would redeem the property by paying off a loan of ₹ 25,000 out of a sum of ₹ 30,000 paid at the time of execution. The property was mortgaged with the Life Insurance Corporation of India. The vendor was also to obtain the income-tax clearance certificate. The sale deed was to be executed on or before 31.10.71. 3. At the time of this agreement the first floor of the house had been let out to tenants. It was stipulated in the agreement that the vendor would hand over documents pertaining to the property in the suit together with vacant possession of the first floor by 30.9.71 and possession of the front portion at the time of registration of the sale deed. It was further agreed that the amount of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suit is misconceived and is liable to be dismissed. The sum of ₹ 30,000 stood rightly forfeited against her. 6. Two important points came up for consideration to the trial court. (1) Whether time was the essence of the contract? (2) Whether the plaintiffs were ready and willing to perform their part of the contract? 7. On trial, the learned Single Judge held that on a reading of the suit agreement payment of ₹ 98,000 by 6.9.71 was not the essence of the contract. He further concluded that the plaintiffs were always ready and willing to perform their part of the contract and it was the defendant who was trying to resile from the terms of the contract. In view of this, he decreed the suit. 8. Aggrieved by the same, the matter was taken up in appeal under R.F.A. (O.S) No. 15/75. The Division Bench of the High Court on an elaborate consideration of the oral and documentary evidence held that the non-payment of ₹ 98,000 by the plaintiffs on or before 6.9.71 would entitle the defendant to treat it as a breach of contract. The insistence of the plaintiffs to obtain the income-tax clearance certificate and redemption of the property before the payment of ₹ 98,000 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es were issued supported by telegrams, calling upon the defendant to complete the sale. Even latterly, notice was issued through advocate that the plaintiff never refused to make the payment and was ready to make the payment. Again, by 24th September, 1977, this stand was reasserted through advocate's notice. Delivery of possession was insisted upon because that was a part of the agreement that such possession must be handed over by 30th of September, 1971. The suit agreement must be read as a whole and the sequence of events ought to have been ascertained properly and as laid down in Nathulal v. Phoolchand [1970] 2 SCR 854 . 14. Mr. B.S. Masodkar, learned Counsel for the defendant, in opposition, would urge that as a general proposition of law, in the case of sale of immovable property time is not the essence of the contract. To this, there cannot be any demur. However, in this case having regard to the terms of the contract it is clear that there was an obligation to pay a sum of ₹ 98,000 within 10 days from the date of the execution of the contract. Failure to do so would render the contract vitiated. From this point of view the authorities cited above will have no rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of the contract. This principle is not in any way different from that obtainable in England. Under the law of equity which governs the rights of the parties in the case of specific performance of contract to sell real estate, law looks not at the letter but at the substance of the agreement. It has to be ascertained whether under the terms of the contract the parties named a specific time within which completion was to take place, really and in substance it was intended that it should be completed within a reasonable time. An intention to make time the essence of the contract must be expressed in unequivocal language. 19. We will now refer to the decisions of this Court. In Gomathinayagam Pillai's case (supra) it was held at pages 231 to 233: Section 55 of the Contract Act which deals with the consequences of failure to perform an executory contract at or before the stipulated time provides by the first paragraph: When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or-before the specified time, the contract, or so much of it as has not been performed, beco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relieve against, and enforce, specific performance, notwithstanding a failure to keep the dates assigned by the contract, either for completion, or for the steps towards completion, if it can do justice between the parties, and if (as Lord Justice Turner said in Roberts v. Berry (1853) 3 De G.M. 284, there is nothing in the 'express stipulations between the parties, the nature of the property, or the surrounding circumstances' which would make it inequitable to interfere with and modify the legal right. This is what is meant, and all that is meant, when it is said that in equity time is not of the essence of the contract. Of the three grounds...mentioned by Lord Justice Turner 'express stipulation' requires no comment. The 'nature of the property' is illustrated by the case of reversions, mines, or trades. The 'surrounding circumstances' must depend on the facts of each particular case. Their Lordships will add to the statement just quoted these observations. The special jurisdiction of equity to disregard the letter of the contract in ascertaining what the parties to the contract are to be taken as having really and in substance intended as regards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tractor's right to claim payment. The parties may expressly provide that time is of the essence of the contract and where there is power to determine the contract on a failure to complete by the specified date, the stipulation as to time will be fundamental. Other provisions of the contract may, on the construction of the contract, exclude an inference that the completion of the works by a particular date is fundamental, time is not of the essence where a sum is payable for each week that the work remains incomplete after the date fixed, nor where the parties contemplate a postponement of completion. Where time has not been made of the essence of the contract or, by reason of waiver, the time fixed has ceased to be applicable, the employer may by notice fa a reasonable time for the completion of the work and dismiss the contractor on a failure to complete by the date so fixed. (Emphasis supplied) It will be clear from the aforesaid statement of law that even where the parties have expressly provided that time of the essence of the contract such a stipulation will have to be read along with other provisions of the contract and such other provisions may, on construction of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the 1st party shall take necessary steps for immediate redemption of the said property from the said mortgagee and shall inform the second party in writing about the completion of the said redemption. 3. That the 1st party shall apply immediately for the permission to sell to the income-tax authorities and after getting the permission to sell by getting an Income-tax Clearance Certificate in respect of the said property the sale deed of the same shall be executed by the 1st party in favour of the second party or her nominee/nominees on or before 31.10.1971. 4. That in case 1st party fails to execute and get the sale deed registered within the period stipulated in para 3 above, the 2nd party shall have the right to get this agreement enforced by specific performance through the court of law. 5. That if the second party fails to pay the balance sale consideration and get the sale deed executed and registered within the specific period mentioned in para 3 above, the earnest money of ₹ 30,000 (rupees thirty thousand only) shall stand forfeited to the 1st party and this agreement deemed null and void. 6. That the 1st party shall pay all taxes, rates municipal taxes upto the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the essence of the contract in the case of a sale of immovable property yet the parties intended to make time as the essence under Clause (1) of the suit agreement. From this point of view, we are unable to see how the case in Nathulal (supra) could have any application to the facts of this case. 29. The next question is whether the plaintiff was ready and willing? The notices which were exchanged between the parties have to be looked into in determining readiness and willingness. On 10.9.71 the plaintiff would say through the registered notice that ready money was available for purchase of the property which was followed up by a telegram. The stand is taken by the defendant that within 10 days from 26.8.71, the sum of ₹ 98,000 was not paid; hence, the sum of ₹ 30,000 stood forfeited. The redemption of the mortgage would be done and the income-tax clearance also would be obtained after the purchase of stamp paper. Where, therefore, the plaintiff was put on notice as to the stand of the defendant with regard to payment of ₹ 98,000 which again was reiterated in the notice dated 16.9.73, nothing would have been easier for the plaintiff than to pay the said sam. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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