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Tadepalli Kutumba Rama Sastry Vs. Seetepalli Dakshina Murthy and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAndhra Pradesh High Court
Decided On
Case NumberAppeal Suit No. 203 of 1954
Judge
Reported inAIR1960AP178
ActsIndian Contract Act, 1872 - Sections 38, 39 and 55
AppellantTadepalli Kutumba Rama Sastry
RespondentSeetepalli Dakshina Murthy and ors.
Appellant AdvocateP. Hanumantharao, ;P. Sithikanta Sastri and ;G. Venkatarama Sastry, Advs.
Respondent AdvocateSankara Sastri and ;T. Veerabhadrayya, Advs.
DispositionAppeal allowed
Excerpt:
(i) contract - essence of contract - sections 38 and 39 of contract act, 1872 - plaintiff filed suit for possession of properties and mesne profits - contract of sale of suit properties specified date before which payment is to be made - time made essence of contract - defendant failed to make payment by that date - plaintiff can avail benefit under section 55 to put end to contract. (ii) condition imposed - sections 38 and 39 of contract act, 1872 -condition alien to contract of sale imposed unilaterally - held, as section 39 party against whom such condition is imposed can put an end to contract. - - 0-12-0 per cent per mensem whenever demanded by the plaintiff 'without reference to the limitation of the sale contract and obtain a sale deed' from the plaintiff 'with proper terms as.....munikanniah, j. 1. this appeal is against the judgment and decree of the court of the principal subordinate judge, vijayawada, dismissing the suit of the plaintiff for possession of the suit properties and also for future profits. 2. the plaintiff is the brother-in-law of the defendant who is his sisters husband. the defendant resided at nagavarappadu agrahararn in gannavaram taluk of krishna district where the plaintiff had the suit lands. the defendant has 10 acres of wet land to the north of the suit lands and as the defendant had no facility and convenience for flow of water except through, the suit lands, he requested the plaintiff to sell the same to him. on 16-5-1947, a contract (exhibit a-1) was entered into between the plaintiff and the defendant whereby the suit lands wore.....
Judgment:

Munikanniah, J.

1. This appeal is against the judgment and decree of the Court of the Principal Subordinate Judge, Vijayawada, dismissing the suit of the plaintiff for possession of the suit properties and also for future profits.

2. The plaintiff is the brother-in-law of the defendant who is his sisters husband. The defendant resided at Nagavarappadu Agrahararn in Gannavaram Taluk of Krishna District where the plaintiff had the suit lands. The defendant has 10 acres of wet land to the north of the suit lands and as the defendant had no facility and convenience for flow of water except through, the suit lands, he requested the plaintiff to sell the same to him. On 16-5-1947, a contract (Exhibit A-1) was entered into between the plaintiff and the defendant whereby the suit lands wore agreed to be sold by the former to the latter for Rs. 9,263-4-0 and the plaintiff received a sum of Rs. 1,000/- as advance at the time when Exhibit A-1 was executed.

As per the terms of the contract, the entire amount of consideration had to be paid before 30-6-1947 and the defendant should obtain the deed of sale on the understanding that both the parties should bear the stamp expenses equally. The defendant made further payments of Rs. 4,000/-on 27-4-1950 and on 21-6-1950 a sum of Rs. 1,000/-. Within one week of the agreement to sell, the defendant took possession of the lands and has been enjoying the same from that time. The plaintiff has since then been demanding payment of the balance of consideration and also urging upon the defendant to take the sale deed.

On 24-6-1950 the defendant gave a hand letter (Exhibit A-2) to the plaintiff wherein it has been stated that on taking an account, the sum due under the sale agreement as on that day was Rs. 5,424-3-0 & the defendant should pay this amount with interest accruing thereon at Re. 0-12-0 per cent per mensem whenever demanded by the plaintiff 'without reference to the limitation of the sale contract and obtain a sale deed' from the plaintiff 'with proper terms as per the terms of the contract' which mentioned that the sale deed shall be executed with the proper terms (Kramamyna Sharathulu). Thereafter the defendant has been writing several letters to the plaintiff expressing difficulties in making good the amount, hut defaulted to pay the balance of consideration and take the sale deed. The plaintiff thereupon caused a registered notice (Exhibit B-5) dated 26-5-1952 to he issued by his advocate to the defendant.

After complaining about the vexatious delay, the plaintiff made it clear through that notice that the defendant should he given as a last chance a week's time for payment of the balance of Consideration and for petting the sale deed and made the defendant aware that in default a suit will be filed for recovery of possession of the land and of profits. The defendant in his reply thereto averred that the suit lands were the paternal property of the plaintiff and as the plaintiff has minor sons and has also alleged that the plaintiff, prior to the contract of sale, referred about the necessity of selling the said lands, he believed the misrepresentations made by the plaintiff in regard to the supposed debts and that subsequently the plaintiff agreed that he would if necessary get a third party to be his surety or personally furnish some other immoveahle property sufficient to the contract as security. The plaintiff caused Exhibit B-6 dated 9-6-1952 to be issued denying these allegations as false. The plaintiff in this commnnication stated definitely that as the defendant did not avail the further time granted to him, he was cancelling the contract. But the defendant insisted in Exhibit A-26 on the plaintiff furnishing proper security before receiving the sale consideration. The suit had thereupon been filed for the aforesaid reliefs.

3. The defendant inter alia contended that he offered the plaintiff the balance of the unpaid purchase money due under the contract and requerted the plaintiff to execute a sale deed with proper recitals and to furnish him with the vouchers of the discharged family debts of the plaintiff, and that it was then that the plaintiff disclosed that there were really no debts due to the family and that the plaintiff was only going to purchase immovaable properties at Ventrapragada of an equal extent of land with the moneys from the realisation of the sale and also represented that the plaintiff would either furnish the said lands as security or, in the alternative, would offer sufficient security of immoveable properties of his own. The defendant further averred that in spite of repeated demands the plaintiff failed to comply with these terms. According to the defendant, these variations in the terms of the contract are enforceable against the plaintiff and that, therefore the cancellation of the contract by the plaintiff lacks bona fides.

The defendant set up the case that the plaintiff fraudulently suppressed the facts that there were no prior debts, but made misrepresentations relating to the existence of debts. According to him, the security of immoveable property insisted upon by him is to avoid future litigation at the instance of the plaintiffs minor sons, and this condition is a 'natural and a legal variation contemplated by the parties' and that therefore the plaintiffs suit is unjust and untenable. He claimed that security could be insisted upon by him as he is entitled to have a, title free from doubt. He also denied that the plaintiff is entitled to mesne profits. The defendant also set up the case that he made improvements to the suit lands and that he is entitled to get the amount so spent for the improvement from the plaintiff.

4. The learned Subordinate Judge found, after framing the necessary issues, that the plaintiff is not entitled to succeed in the suit as he could not cancel the suit contract, and that the defendant had not failed to perform his part of the contract and did not therefore commit breach of the same. The learned Judge held that no evidence has been let in, in regard to the improvements to the suit lands and that the question relating to mesne profits did not arise in view of his findings.

5. At the outset, it may be observed that no witnesses have been examined on either side, that the trial of the suit was only with reference to the documents exhibited which consist of an agreement for sale (Exhibit A-1) and the subsequent letter of the defendant (Exhibit A-2) which specified the balance left over to be paid with interest and certain other letters written by the defendant, time and again promising to complete the affair (Vyavaharam) which obviously related to the payment of the balance of consideration and taking of the deed of sale and the registered notices which passed between the parties, as also the Bank balances in the Savings Bank Account as pointing to the readiness and willingness of the defendant to perform his part of the contract.

6. It is necessary to mention that while the appeal was pending in this Court, the defendant was adjudicated an insolvent and the Official Receiver had been brought on record on 4-11-1957. But the Official Receiver did not choose to oppose the appeal or contest the claims of the plaintiff in this appeal. Mr. Sankara Sastry who originally appeared for the respondent (defendant) had therefore helped this Court as Amicus Curiae having been permitted to do so and nave valuable assistance.

7. On behalf of the appellant, Mr. G. Venkatrama Sastry contended that as the parties are closely related to each other, there it no likelihood of any of the particulars in regard to the affairs of the plaintiff or relating to negotiations for purchase being kept away or unknown to the defendant. The plaintiff no doubt belonged to Ventrapragada in Gudivada Taluk. He had been educated, holding degrees, but had been employed and has been keeping out of the village. The lands are situate in the defendant's village and being near the lands of the defendant and useful for taking the channel to irrigate the lands of the defendant, should have been considered as best suited for being owned by the defendant rather than by the plaintiff.

There is no evidence on record to show that the plaintiff was ever indebted to anybody; nor could it be said that he approached the defendant for any accommodation to repay any debts of his. On the other hand, the tenor of the transactions clearly establishes that the defendant wanted to gain advantage for himself and possess the properties with a view to profit himself. It is not also in evidence when the three minor children of the plaintiff, for the first time mentioned in Exhibit A-24, were born. Obviously all the three minors could not have been in existence in May 1947 when, the suit contract was entered into. The defendant did not even examine himself. According to the defendant, the misrepresentation in regard to the debts was before the contract of sale and it must be remarked that the defendant has utterly failed to make this out as there is not even an iota of evidence in regard to this on record.

Tho further averment of the defendant that when vouchers for discharged debts were demanded, the plaintiff made other promises to secure a, third party surety or to personally furnish some other immovable property as security finds expression for the first time only in Exhibit A-24; but there is no whisper in regard to this in any of the letters which the defendant has written to the plaintiff. The letters written cover the period from March 1949 to January 1952. They are Exhibits A-2 to A-22, The defendant merely refers to the worry caused to the plaintiff by the delay occasioned and the defendant promises, time and again, to complete the 'business', thereby meaning the transaction relating to the contract of sale. In Exhibit A-4 he frankly confessed that his position was not stable,

Ho assures the plaintiff in Exhibit A-5 that he will not cause loss to him, and fixes the end of September 1949 in Exhibit A-6 for finishing the work; but he later on puts it off in Exhibit A-8 on the ground that his son Vonkateswara Sarma is expected for the holidays on tho 10th or 11th of October. Again he writes that the work of the plaintiff will he completed before Deepavali in the same year. To the same purpose is Exhibit A-10 also; and in Exhibit A-11 he is definite that the work of the plaintiff would be completed before his going to Bangalore.

Exhibit A-13 dated 19-11-1949 is yet another letter. The defendant states therein that his son Venkateswara Sarma left for Bombay on the 14th instant, that he himself is attending to the work of the plaintiff only, but that it is not complete, that the work will be finished within the end of that month and that it is the final promise but that days are not favourable to him and that he has 'no other evil intention.' He further states that he will see that nothing untoward happeas in the plaintiffs affair. Then on 24-11-1949 (Exhibit A-14) he makes the plaintiff aware that the latter's sister also is concerned in the affair, that she is encouraging him to finish the affair, while on 1-5-1950 in Exhibit A-16 he definitely promises to pay the money to the plaintiff and obtain tho endorsement of payment when the plaintiff goes to him on a promised visit; but that too has not obviously happened as in Exhibit B-1 written by the plaintiff to the defendant on 12-5-1950, the plaintiff says that as the due date is approaching the defendant ought not to neglect but pay the remaining amount and obtain the endorsement of payment.

It is only because of the pressure thus brought by the plaintiff on the defendant that later on the letter (Exhibit A-2) dated 24-6-1950 was executed by the defendant wherein he mentioned the figure of Rs. 5,424-3-0 as the balance due on that date under the contract which he undertook to pay with interest. It is there again stated that the defendant would obtain a sale deed from the plaintiff 'with proper terms as per the terms of the contract'. Further on 5-7-1950 in Exhibit A-17 the defendant again specifically states that the plaintiff need not be afraid and that the burden is upon him to complete the work early, and reiterates the same promise both in Exhibit A-18 dated 18-9-1950 and Exhibit A-19 dated 9-7-1951. It is significant what in the letter Exhibit A-30 written on 24-10-1951 the defendant states:

'I am anxious as regards the amount which has to be paid to you. On account of Seshu's education and family expenses I don't have the stability of mind and therefore delay is caused. It is not my intention to cause any inconvenience to you. On any day the burden is on me. You have written to Seshu. What is it he can do? The matter is known to all. Everything will take place properly, Delay is caused but it is due to difficulties. There is no other intention. Arc you not a large-hearted man?'

And the defendant finally promises in another letter written on 22-1-1952 by saying that he will be in a position to finish the business in the first week of February 1952. Obviously this word also was plighted by the defendant, and that necessitated the issue ef the registered notice (Exhibit B-5) dated 26-5-1952 by the plaintiff. The letters which are the only evidence in the case prove beyond doubt that the transaction has not fallen through by reason of the presence of the minor sons of the plaintiff or by the absence of vouchers for discharged debts of the plaintiff; nor do these letters mention anything about the promise held out by the plaintiff to furnish a third party surety or personal security of other property for any defect in title which obviously has not been even sensed by the defendant.

As has already been pointed out, it is for the first time in Exhibit A-24 that an attempt has been made by the defendant to come out with a lame excuse for the delay and for his unreadiness to perform his part of the contract by the averment that the execution of a deed of sale with proper conditions only meant the giving of security which, according to the defendant, nevertheless has been finally decided upon by a subsequent agreement between the parties. It is also noteworthy that the defendant has not even issued any notice before Exhibit A-24, which is only a reply to the notice given by the plaintiff. More so, we find the evil intention of the defendant is brought out in complete relief when it is remembered that in Exhibit A-26 and thereafter in the written statement of the defendant, he was harping that he is legally entitled to get the security bond mainly because the plaintiff agreed to execute a sale deed 'with proper conditions.' Further it is rather audacious that though the defendant alleged that after the misrepresentation in regard to the existence of debts was proved to be false, an oral agreement in regard to the execution of the security bond was arrived at. Still lie mentioned in his reply notice (Exhibit A-24) as follows:

'Only as a condition precedent that the security bond in respect of immoveable property should be executed, the original contract mentioned in your (plaintiffs) notice was entered into.'

There is no gainsaying that the defendant did nob know his mind and was not even sure when such oral contract in regard to giving of personal security was ever entered into, but was only laying the blame at the other door in order to escape his liability. In the light of these revealing circumstances to be found in the letters written by the defendant, it is not possible to gather that there ever existed any oral contract which has modified the terms of the contract of sale as evidenced by Exhibit A-1; and we are firmly of the opinion that there was no stipulation by the plaintiff to give any security bond. Nor is it legally possible for the defendant to contend that the execution of a security bond is a sine que non for the performance of the contract by the defendant. We have no doubts in regarding the story of the defendant as worthless and that it has no legs to stand, even as the other relating to the prior debts of the plaintiff had to fall to the ground.

8. It may here be considered whether the defendant was ready and willing to perform his part of the contract. Reliance is sought to be placed by the defendant on the Savings Bank account with the Andhra Bank Ltd., Vijayawada, which is marked as Exhibit B-7. The lower Court was prepared to accept this as evidence of the availability of money with the defendant with which he could have performed his part of that contract; but in our view that Court had failed to appreciate the position arising out of the statement made by the defendant in the reply registered notice (Exhibit A-24) that the plaintiff should receive the sale consideration within a week and execute a proper sale deed 'along with the security bond.'

Therefore, the insistence on the performance of a certain condition which does not form part of the terms of the contract and which was not in the contemplation of parties or the subject matter of agreement between the parties tut was unilaterally super-imposed, is undoubtedly naive way of expression by a party of his inability to straightway perform his part of the contract or refinedly repudiate the readiness to perform the contract without appearing to do so.

In any case. Exhibit A-24 in our opinion, clearly indicates that the defendant was not prepared to pay the money unless the security bond which he insisted upon without the right thereto is executed by the plaintiff. This in our view constitutes breach of the contract by the defendant, because an extraneous condition is superimposed by a party to wriggle out of an akward situation which he has created for himself. Plainly therefore even if nothing further had happened in this case, still we are firmly of the opinion that the plaintiff could have availed himself of the rights available under Section 59 of the Indian Contract Act, as in this case clearly there has been a refusal on the part of the defendant to perform his Part of the contract which consisted in the fresh proposal which is implied in the language of his registered notice (Exhibit A-26) in which the defendant writes as follows:

'Money is ready with my client. Therefore, your client may be given proper advice to furnish proper security to receive the sale consideration and to settle the matter amicably.'

This undoubtedly cannot be taken as a free and voluntary tender of money which alone could be construed as performance of obligation on the part of the defendant so as to put the plaintiff in the wrong.

9. Some stress is laid upon the use of the words 'execution of the document With proper terms contained in Exhibit A-1, the contract for sale. Any effort on the part of the defendant to make it appear that the condition contemplated under 'proper terms' as comprising not only such guarantees as are contemplated under Section 55 of the Transfer of Property Act but the providing of defences to defects in regard to title by subsequent happenings or the furnishing of security to ally in imagined afflictions are also within the purview of the phrase 'proper terms' is rather futile.

We need not attempt in this case to lay down in the abstract what the phrase 'proper terms' connotes; for, it is dependent upon the circumstances of each case having regard to the particulars agreed upon or contemplated as suited to the occasion and circumstances of the transaction. But here it is not possible even on the admissions made by the defendant, as gathered from the evidence on record and the pleadings that the question of providing a surety or the furnishing of security ever arose when the contract of sale was entered into. Nor as has been already pointed out, is there anything to show that the alienation is being effected to discharge any prior debts of the family.

The defendant knowing as well as he did the plaintiff, his brother-in-law, wanted only to have an additional advantage for enjoying his own properties at any cost. While so it is disingenious for the defendant to have trotted out the theory that the execution of a security bond constituted a precedent condition as contemplated by the contract, while the averment itself does not go beyond making it lout that this aspect of the case, even if believable, was an off-shoot of later rumination. It is made more than clear, we are firmly of this opinion -- that the alleged undertaking by the plaintiff to give security is only a figment of the defendant's brain and that really nothing of this sort existed as a fact, and that therefore this cannot be insisted upon by the defendant for insuring the untenable position which he has unreasonably taken. Further it is clear that any umbrage sought to be taken by the defendant by the use of the words 'Proper terms or proper conditions' contained in Exhibit A-1 or in Exhibit A-2 will not avail the defendant.

10. The further question whether on the facts of this case time has been made the essence of the contract may now be considered. It is argued that the transaction was in respect of sale of land and that liability for interest in default of payment of consideration is provided for. It is also pointed out that in Exhibit A-2 the delay has not been depended upon to flout the respective rights, but on the other hand, it is stated that the balance which has been worked out at Rs. 5,424-3-0 is also to carry interest has placed this aspect of the case beyond the pale of doubt. We indeed agree in regard to this only in so far as has been so stated, which means that the time has not been made the essence of the contract originally and has not been contemplated as such during the course of the above dealings in respect of the transaction upto a certain stage.

But a later stage has been reached in this case which requires to be considered with its legal implications: Exhibit B-5 which is the registered notice dated 26-5-1952 makes it clear that though the annoyance caused by reason of the unaccounted delays by the defendant would justify the cancellation of the contract, it would still be proper to give the defendant some time as a last chance, and that that notice was meant to serve that purpose. Further down in the same notice it is mentioned that if the balance of the amount is not paid within a week the contract has to be treated as cancelled. It cannot be said, having regard to the particular facts of this case -- particularly the putting off the payment of the balance of consideration for a long period of five years in spite of the insistent demands made by the plaintiff -- the grant of a week's time after the receipt of Exhibit B-5 is unreason-' able.

If the defendant version has to be believed it is not as though he was without money in which case the short time of seven days given for payment could not be said to have worked any hardship to him, Having regard to this also we find that the plaintiff had specified reasonable time within which the contract had to be performed by the defendant; and that when Exhibit B-5 makes it clear that this time is given as a last chance, we are firmly of the opinion that time has been made the essence of contract in this particular case. There is no impediment for the plaintiff to employ such a course, as law has recognised the legality thereof.

The learned Subordinate Judge, though fully aware that the decisions referred to by him do support the proposition that even if time is not the essence of the contract, after reasonable time One of the parties to a contract for sale of immoveable property, may repudiate the contract if there is inordinate delay or if the other party refuses to perform his part of the contract, has wrongly understood the instant case as one where these principles do not apply inasmuch as there has been part performance of the contract by the defendant being put in possession of the suit properties and as compensation for the delay may be thought of as an appropriate relief available to the plaintiff We, however, consider that the defendant could not secure the benefit of enjoying the properties when indeed he insisted upon having the fulfilment of the contract in altogether a different manner from what was in the contemplation of the parties; for, any recognition of such a right in the defendant would not be in the ordinary course of enforcement if a contract for sale but only in an enablement of a design of the defendant on the mere ground that he got into possession of the land and could dictate terms.

11. As for time being made the essence of contract, where immoveable property is concerned. Viscount Haldane speaking for their Lordships or the Privy Council in famshed Khodaram Irani v. Burjorji Dhunjibhai, ILR 40 Bom 289: (AIR 1915 PC 83) has succinctly dealt with the position of equity and law in dealing with Section 55 of the Indian Contract Act as follows:

'The law applicable to the point is contained in Section 55 of the Indian Contract Act, 1872, which provides that - '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 becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.'

Their Lordships do not think that this section lays down any principle which differs from those which obtain under the law of England as regards contracts to sell land. Under that law equity, which governs the rights of the parties in cases of specific performance of contracts to sell real estate, looks not at the letter but at the substance of the agreement in order to ascertain whether the parties, notwithstanding that they named a specific time within which completion was to take place, really and in substance intended more than that it should take place within a reasonable time. The principle is well expressed in what Lord Redesdale said in his well-known judgment in Lermon v. Napper, (1802) 2 Sen and Lef 684 which was adopted by Knight Brace L. J., in Roberts v. Berry, (1853) 3 De G M and G 284 at p. 289. The doctrine laid down in these cases was again formulated by Lord Cairns in Tilley v. Thomas, (1867) 3 Ch A. 61 and by the House of Lords in the recent case of Stickney v. Keeble, (1915) A. C. 386.

Their Lordships are of opinion that this is the doctrine which the section of the Indian Statute adopts and embodies in reference to sales of land. It may be stated concisely in the language used by Lord Cairns in (1867) 3 Ch. A. 61:

'The construction is, and must he, in equity the same as in a Court of law. A Court of equity will indeed 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 (1853) 3 De. G. M. and G. 284 at p. 289, 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.

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 the time of its performance may be excluded by any plainly expressed stipulation. But to have this effect the language of the stipulation must show that the intention was to make the rights of the parties depend on the observance of the time limits prescribed in a fashion which is unmistakable.

The language will have this effect if it plainly excludes the notion that these time limits were of merely secondary importance in the bargain, and that to disregard them would be to disregard nothing that lay at its foundation. Prima facie, equity treats the importance of such time limits as being subordinate to the main purpose of the parties and it will enjoin specific performance notwithstanding that from the point of view of a Court of Law the contract has not been literally performed by the plaintiff as regards the time limit specified. This is merely an illustration of the general principle of disregarding the letter for the substance which Courts of equity apply. When, for instance, they decree specific performance with compensation for a non-essential deficiency in subject-matter.

But equity will not assist where there has been undue delay on the part of one party to the contract, and the other has given him reasonable notice that he must complete within a definite time. Nor will it exercise its jurisdiction when the character of the property or other circumstances would render such exercise likely to result in injustice. In such cases, the circumstances themselves, apart from any question of expressed intention, exclude the jurisdiction Equity will further infer an intention that time should be of the essence from what has passed between the parties prior to the signing of the contract. Tilley v. Thomas ((1887) 3 Ch. A. 61), where specific performance was refused, illustrates this class of transaction. But in such a case the intention must appear from what has passed prior to the contract, the construction of which cannot be affected in the contemplation of equity by what takes place after it has once been entered into.' Adverting to the pronouncement of the Judicial Committee in ILR 40 Bom 289: (AIR 1915 PC 83) a Division Bench of the Calcutta High Court in Mahadeo Prosad Agarwala v. Narain Chandra Chakrabarti, 57 Ind Gas 121: (AIR 1920 Cal 651) have pointed out:

'The Judicial Committee repudiated this doctrine and held that there was nothing in the language or in the subject-matter of the agreement to displace the presumption that for the purposes of specific performance time was not of the essence of the bargain. They added that the subject-matter or character of the lease sold was not such as to take the case out of the class to which the principles of equity applies. In our opinion, the case before us is amply covered by the decision of the Judicial Committee and we hold accordingly that time was not of the essence of the agreement.

The next question which requires consideration is whether the purchaser has been guilty of unnecessary delay and has thereby forfeited his right to claim specific performance of the contract. It is well-settled that although in a contract for tha sale of land the time fixed for completion is not initially of the essence of the contract, either party may be guilty of such unnecessary delay as entitles the other to serve upon him a notice limiting a time at the expiration of which he will treat the contract as at an end; the responsibleness of the time so limited is determined by the Court with reference not merely to what remains to be done at the date of the notice but all the circumstances of the case, including the previous delay of the party in default and the attitude of the other side in relation to it: (1915) AC 386: 84 LJ Ch 259, McMurray v. Spicer. (1888) 5 Eq 527: 37 LJ Ch. 505; Webb v. Hughes, (1870) 10 Eq 281: 39 LJ Ch. 606: Patrick v. Milner, (1877) 2 C. P. D. 342: 46 LJ QB 537, and Nokes v. Kilmorey, (1847) 68 ER 1141.'

Though on the facts of the particular case, the Calcutta High Court held that time is not the essence of the contract, we still feel that that court has been accepting the rule that time could be made the essence of the contract in unmistakable terms as laid down by the Privy Council. This Court also had an occasion to consider this aspect of the rule which come into play also in cases 06 contracts for sale of immoveahle property. Chandra Reddy, J., (as he then was) on a difference of opinion between Subha Rao, C. T. and Umamaheswaram J., observed in Subbayya Chowdary v. Veerayya, 1955 Andh LT 713 at p. 729: ((S) AIR 1957 Andh Pra 807 at p. 328):

'I agree with Mr. Justice Umamaheswaram that it is own to one of the parties to make time of the essence of the contract by callins upon the other party who has been guilty of unreasonable delay to perform the contract within a stated time by giving him reasonable notice. This position is made clear by the following observations in ILR 40 Bombay 289: (AIR 1915 PC 83): 'But equity will not assist where there has been undue delay on the part of one party to the contract and the other has given him reasonable notice that he must complete within a definite time.''

It is not inappropriate to have to refer to the observation of Cornish J , in Pichai Moideen Rowthar v. Chathurbuja Das Kushal Das and Sons, 65 Mad LJ 491 at p. 504: (AIR 1933 Mad 736 at p. 743) in this connection which is as follows:

'Their Lordships in ILR 40 Bom 289: (AIR 1915 PC 83) have stated that Section 55 lays down no principle different to those which obtain under English Law as regards contracts for the sale of land. But in order that time shall be regarded as essential the intention must be clearly expressed In the agreement.'

We have only to see in the light of the above decisions whether in the instant case time has been made the essence of the contract and that was not altogether excluded in the agreement itself. ExhibitA-1 has no doubt stated that if on the date fixed the document is not executed and its business completed it is decided to pay He. 0-12-0 per cent per mensem from the date of defaidt but limitation as to time is also fixed. In Exhibit A-2 it is mentioned by the defendant:

'I shall pay the principal and interest accruing thereon at the rate of Re. 0-12-0 per cent per mensem to you whenever you demand the same without reference to the limitation of the sale contract and obtain a sale deed from you.....'

There it has been mentioned that the amount is payable whenever it is demanded; and as a necessary corollary it follows that the performance of the contract has to take place the moment demand for the money is made, We consider that instead of making the time for performance of the contract, Exhibit A-2 makes it immediate and depend upon the demand by the plaintiff. In such circumstances, the reristered notice (Ex. B-5) which bitterly complains of the inordinate delay and default without number by the defendant has chosen to save, time to the defendant as a last chance by calling upon him to pay the amount and have the execution of a sale deed within a week. It is therefore clear that time has been made the essence of the contract as it was also contemplated by the agreement itself, and it is therefore not open to the defendant to question the imperative nature of the operation of Section 39 of the Contract Act in the circumstances of this case.

12. From the foregoing it follows that having regard to the application of Sections 39 and 55 of the Indian Contract Act, we are firmly of the opinion that the refusal of the defendant to perform his part of the contract and the time having been made the essence of the contract also, the plaintiff is entitled to succeed in having the relief sought for in the plaint decreed to him.

13. What remains is the consideration of the nature of relief that the plaintiff will be entitled to. The plaintiff had already received a sum of Rs. 6,000/- and the defendant has been in enjoyment of the properties from a week after the execution of Exhibit A-1. The plaintiff in para 3(d) of his plaint has stated that he is ready and willing to pay the sum of Rs. 5,000/- with interest minus the value of the income together with interest received by the defendant from the year 1947 up to the date of delivery of possession of the suit property. But he claims to forfeit the earnest money of Rs. 1,000/-. But we consider that the ends of ustice will be met In the circumstances of this case by ordering that the plaintiff would be entitled to possession of the suit properties on payment of a sum of Rs. 6,000/-, and that the plaintiff is not entitled to the incomes from the suit properties while the defendant is disentitled to claim any interest on this sum in view of his enjoyment of the suit properties. The plaintiff will therefore pay their sum and recover possession of the properties in execution of the decree in this suit on payment of Rs. 6,000/-. The defendant, in our view, has not made out any case in regard to any improvements made to the suit property; and therefore w' agree with the lower Court in regard to its finding on issue No. 5 only.

14. In the result, the appeal is allowed and the suit is decreed as aforesaid with costs throughout.


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