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Suri Chetty Ranganathan Chetty and Brother Vs. Gadala Parthasarathy Chetty - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported inAIR1921Mad141; 61Ind.Cas.457; (1921)40MLJ13
AppellantSuri Chetty Ranganathan Chetty and Brother
RespondentGadala Parthasarathy Chetty
Cases ReferredStckney v. Keeble
Excerpt:
- - the defendant refused to agree to the proposal, and as the plaintiffs persisted in their attitude, after some further correspondence which it is unnecessary to set out, the defendant's vakil on the 11th february, 1918 wrote to the plaintiffs' solicitors, stating that as the plaintiffs had failed to fulfil their part of the contract the defendant was absolved from further liability under the contract, and returning the deposit of rs. l called upon the defendant to complete the contract, and on his failure to do so instituted the present suit for damages......parties to an absurdity, but also make the application of the doctrine judicurous in itself. i also gravely doubt if time can be extended to this extent without injustice to the contracting parties (see lord parker in stckney v. keeble (1915) a.c. 386) . however this might be, the appeal in my opinion, fails on the ground that the appellants repudiated the contract when they demanded in their letter, exhibit c time till the settlement of the dispute, or a guarantee from the respondents: also when, on the 7th january, 1918, they refused to pay the purchase price. that being so, the plaintiffs are not entitled to ask for damages from the defendant seeing that they themselves have in effect refused to carry out the terms of the original contract, ex. a, but instead proposed an entirely.....
Judgment:

Wallis, C.J.

1. This is a suit for damages for breach of a contract for the sale of a house by the defendant to the plaintiffs. The contract which is in the form of a receipt, states that the property is ' sold for Rs. 24,000 only subject to the approval of title etc., by your legal advisers within one month for completion of sale ten days subsequently.' The plaintiffs did not approve the title within one month and consequently the sale was not completed ten days later. In these circumstances Courts Trotter, J., has dismissed the suit on the ground that time was of the essence of the contract. If this were a suit for specific performance of the contract the recent decision of the Privy Council in Jamshed Khodaram v. Burjorji Dhumjibhai I.L.R(1915) . 40 Bom. 289 would be express, authority of the proposition that in contracts for the sale of land time is not ordinarily considered to be of the essence of the contract within the meaning of Section 55 of the Indian Contract Act, the terms of which were held not to preclude the application of the equitable rule in England to such contracts; and, if that be so, the same rule must apply to suits for damages such as this which are governed by the decision of a Full Bench of this Court in Adikesavan Naidu v. Gurunatha Chetty I.L.R(1916) . M. 338 .

2. It is therefore necessary to consider the limits of the rule. In the words of Turner, L.J. in Roberts v. Berry (1853) 3 D.M. & G. 284 which were cited with approval by Lord Cairns in a passage of his judgment in Tilley v. Thomas (1867) L.R. 8 Ch. 61 which is set out by Lord Haldane delivering the judgment of the Privy Council in the case already cited, time is not deemed to be of the essence of the contract if 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 apply the rule. There are no such express stipulations here, and there is nothing in the nature of the property or the surrounding circumstances in the present case to exclude the rule. What is meant by the surrounding circumstances is illustrated by Tilley v. Thomas (1867) L.R. 3 Ch. 61 where time was held to be of the essence of the contract, because the vendee to the knowledge of the vendor wanted the house for his own occupation. There is nothing of the kind here.

3. But assuming that time was not of the essence of the contract, I think the suit fails on another ground. On the 7th January within one month of the date of the agreement for sale, the plaintiff's solicitors in Exhibit E wrote to the defendant that in view of a threatened suit against the defendant under an alleged prior agreement, they could not pay over the balance of the purchase-money to the defendant until the disposal of the suit, and proposed to pay the defendant interest on this amount during the interval. The defendant refused to agree to the proposal, and as the plaintiffs persisted in their attitude, after some further correspondence which it is unnecessary to set out, the defendant's vakil on the 11th February, 1918 wrote to the plaintiffs' solicitors, stating that as the plaintiffs had failed to fulfil their part of the contract the defendant was absolved from further liability under the contract, and returning the deposit of Rs. 1,000 which had been paid by the plaintiffs. The plaintiffs refused to accept the money, and on 25th September, 1918 after the disposal of the suit in question, the plaintiffs' solicitors by Ex. L called upon the defendant to complete the contract, and on his failure to do so instituted the present suit for damages.

4. In my opinion the defendant was justified in putting an end to the contract by Exhibit IV under Section 39 of the Indian Contract Act: on the ground that the plaintiffs had refused to perform their part of the contract. The equitable rule of interpretation already referred to, which perhaps goes to the extreme limit of what is permissible in the interpretation of contracts, in no way warranted the plaintiffs in setting aside the terms of the contract which were for payment of the balance of the purchase-money and completion within six weeks, and for postponing such payment, not merely for any reasonable time to which they might be entitled under the rule for the investigation of the title and the completion of the sale, but until the disposal of a suit which had not yet been filed and might not be disposed of for one or more years. The plaintiffs' insistence on this new term was a clear refusal to perform their contract, and justified the defendant in putting an end to the contract as he did by Exhibit IV: On this ground the appeal fails in my opinion and must be dismissed with costs.

Odgers, J.

5. The plaintiffs are the appellants. They sued the respondent on the Original Side for damages for breach of contract to sell them certain immoveable properties.

6. The contract is dated the 15th December, 1917 and is in the form of a receipt, Exhibit A. It runs thus:

Received from Messrs Suri Chetty Ranganathan Chetty and Brothers, Madras, the sum of rupees one thousand only being the advance for the premises No. 60 and 24, Irusappa Maistry Street and Venkatachalam Lane, Madras, sold for rupees twenty four thousand only subject to the approval of title etc. by your legal advisers within one month and for completion of sale deed ten days subsequently. The advance shall be refunded if the tile is not approved by your legal advisers.

It is clear enough from this that the title was to be approved within one month and the sale to be completed ten days subsequently, that is, in about six weeks altogether. On the 18th December, 1917, the plaintiffs had notice from Messrs Venkatasubba Rao and Radha Krishnayya that the defendant had agreed to sell these very properties to some clients of the Vakils on a previous date, viz., 6th September, 1917, and that their clients ware filing a suit for specific performance of that contract. The plaintiffs-appellants therefore wrote, Exhibit C stating therein as follows:-'...We wish to know whether you would allow time till the settlement of the dispute between you and Kankipati Sriramulu Chetti and Devaki Venkatakrishna Chetti or you will hold yourself responsible if. our matter is settled and put through within the time specified in the receipt.' This is dated the 20th December, 1917; and after this, the respondents replied, by Exhibit D ' I can neither extend time nor hold myself responsible for any dispute alleged in your enclosed copy of letter from Messrs Venkatasubba Rao and Radhakrishnayya.

7. The plaintiffs then made an offer on the 7th January, 1919, to pay 7 per cent interest on the purchase money and to retain the purchase money with themselves and not to pay it to defendant. On the same day this offer was rejected by the respondent, Exhibit F, and finally on the nth February, 1918, Exhibit IV, the respondent wrote that, owing to the appellant's breach, the respondent is absolved from all liability. Further correspondence took place between the parties but finally on the 27th September, 1918, the Vakil for the respondent wrote to the appellants, ' My client states that he has already written to you through his Vakil, Mr. C.P. Ramaswami Aiyar, that the contract has been cancelled ' and the letter asks for the return of documents.

8. On those facts, the plaintiffs claimed damages for breach of contract, under the provision of the Specific Relief Act, which allows damages to be claimed in lieu of specific performance thus differing from the English Law (cf. 40 Mad. 338). It is contended on behalf of the appellants that the time is not the essence of the contract, and the equitable doctrine extending the time that has been definitely agreed to between the parties and which, at law, was invariably regarded as being of the essence has been imported into Section 55 of the Indian Contract Act. This has been definitely decided for us by the Privy Council in the case reported in Jamshed Khodaram v. Burjorji Dhumjibhai I.L.R.(1916) 40 Bom. 289 where Lord Haldane referring to this doctrine, as laid down by Lord Cairns in Tilley v. Thomas (1867) L.R. 3 Ch. 21 and by the House of Lords in the recent case of Stickney v. Keeble (1915) A.C. 386 adopts the language used by Lord Cairns in the former of these cases, which again refers to the language of Lord Justice Turner in Roberts v. Berry (1853) 3 De G.M. & G. 284 that it is a condition precedent of the application of the doctrine that ' 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'. There are no such circumstances here.

9. But assuming that the doctrine of time not being of the essence is to be applied in this case, I am strongly of opinion that equity would never have extended the doctrine to apply to a case of the sort before us, where the extension required or demanded is not a week or two or even a month or two (as is naturally the case in England where solicitors have not been able to complete their investigations into title exactly within the time stipulated) but the extension asked for is till the dispute between third parties and the vendor had been settled. The trial of this suit took nearly a year and there might be one or more appeals which would mean extension of time for years. I cannot think the equitable doctrine was intended to apply to a state of circumstances such as this, which to my mind, would not only reduce the contract purporting to fix the time between the parties to an absurdity, but also make the application of the doctrine Judicurous in itself. I also gravely doubt if time can be extended to this extent without injustice to the contracting parties (See Lord Parker in Stckney v. Keeble (1915) A.C. 386) . However this might be, the appeal in my opinion, fails on the ground that the appellants repudiated the contract when they demanded in their letter, Exhibit C time till the settlement of the dispute, or a guarantee from the respondents: also when, on the 7th January, 1918, they refused to pay the purchase price. That being so, the plaintiffs are not entitled to ask for damages from the defendant seeing that they themselves have in effect refused to carry out the terms of the original contract, Ex. A, but instead proposed an entirely new contract which the defendant did not and was not bound to accept. I agree that this appeal must be dismissed with costs.


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