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Kalidas Ghosh Vs. Mugneeram Bangur and Co. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtKolkata High Court
Decided On
Case NumberA.F.O.D. No. 139 of 1948
Judge
Reported inAIR1955Cal298
ActsContract Act, 1872 - Section 55
AppellantKalidas Ghosh
RespondentMugneeram Bangur and Co.
Appellant AdvocateJitendra Kumar Sen Gupta and ;Arabinda Guha, Advs.
Respondent AdvocateAtul Chandra Gupta and ;Nani Coomar Chakravarti, Advs.
DispositionAppeal allowed
Cases ReferredJamshed Khodaram v. Burjorji Dhunjibhai
Excerpt:
- .....must be completed within one month from date of payment of the balance of the consideration money, time being deemed as the essence of the contract. in case of default, his agreement will be considered as cancelled with forfeiture of earnest money. one-third of the value of the land will be paid, at the time of registration and the balance within 6 years bearing 6 per cent, interest per annum.' 11. there is, therefore, an express stipulation in the contract that the time should be deemed to be of the essence of the contract, and that if the contract was not performed within one month from the date of the receipt, the agreement would be considered as cancelled with forfeiture of the earnest money. the receipt was given in a printed form.the mere mentioning of the fact that time.....
Judgment:

Renupada Mukherjee, J.

1. This is an appeal by the plaintiff and is directed against a judgment and decree passed by the Additional Subordinate Judge, Fourth Court, 24-Parganas in Title Suit No. 12/1948/171/1946 of his Court.

2. The suit was instituted by the plaintiff for a declaration that a, certain contract between himself, and the respondent was subsisting at the date of the suit, and he was entitled to get a decree for specific performance of it by having a conveyance from the respondent. It will be seen later that although the suit was brought as a declaratory suit the substantial relief which could be given to the plaintiff in this case is a decree for specific performance of the alleged contract.

3. The suit was contested by the respondent and it was dismissed by the trial Court on the ground that in this case time was of the essence of the contract, and the, defendant was justified in avoiding the contract because of the failure of the plaintiff to perform his part of the contract witnin the time stipulated in it. The plaintiff has preferred this appeal against the above judgment and decree.

4. The points requiring decision in this appeal are:

(1) Was time of the essence of the contract in this particular case?

(2) Is the plaintiff-appellant entitled to havethe contract specifically enforced?

(5) Both the above points are intermixed & they may be conveniently taken together for decision.

6. The undisputed facts of this case may thus be set out shortly. The respondent company started a scheme for development and sale of land for residential purposes known as Lake Colony Scheme No. 1, within Police Station Tollygunje. Even before the land was completely developed if was parcelled out into plots, and these plots were offered to the public for sale. Appellant Kalidas . Ghosh made an application to the company on 15-4-1943, proposing to purchase plot No. 186 of the scheme at a price of Rs. 1800/- per cotta, and he also deposited Rs. 101/- with the company on the same day by way of earnest money. This application was marked Ext. 4 in the trial Court.

On the same day the company granted a receipt to the appellant acknowledging receipt of the earnest money and calling upon him to have the conveyance completed within a month from that date on payment of the balance of the consideration money (Vide receipt, Ex. 5). Admittedly, neither party did anything towards the performance of the contract within the above period or even after the expiry of that period until on 20-6-1944, that is, fourteen months after the date of the agreement the appellant wrote a registered letter to the respondent enquiring when the roads and drains were going to be constructed and arrangement for water supply made and also when he should be called upon to pay the purchase price (Vide letter, Ex. 3). It is, however, admitted that the Government was in the meanwhile requisitioning the land covered by the scheme bit by bit for war purposes making it impossible for the company to develop the land fully. The evidence of respondent's manager and sole witness Kanailal Muchhal on this point which is not challenged by the appellant would show that such requisition started from November 1941, and ended in November 1944, by which time the entire land, covered by the scheme was requisitioned by the Government, The letter written by the appellant to the respondent and referred to above remained unanswered, and so also another registered letter to the same tune bearing date, 20-8-1945, (Vide Ex. 3(a)).

On 22-10-1945, appellant's pleader Sri Harendra Nath Chatterjee wrote a letter to the respondent demanding the completion of the conveyance on behalf of his client. To this the 'respondent replied on 24-1-1946, to say that the contract stood cancelled and the earnest money was forfeited because the appellant had not completed the transaction within the period stipulated in the contract by payment of the balance of the consideration money (Vide letter, Ex. C).

7. Upon the above facts which are not disputed the question arises whether time was of the essence of the contract in this particular case and whether the appellant can reasonably ask the Court for specific performance of the contract.

8. Mr. Sen Gupta appearing on behalf of the appellant contended that the application made by his client on 15-4-1943, and the receipt given to him on the same date together constituted the contract between the parties, and the lower Court was wrong in holding that the contract was embodied Only in the receipt. The application (Ex. 4) no doubt shows that the appellant undertook to complete the transaction within one month of the completion of the roads and drains.

This is, however, a proposal of the appellantwhich was not accepted by the company becausein the receipt granted to the appellant by the company on the same day the above term is conspicuous by its absence, and it is expressly provided thatthe conveyance must be completed within onemonth from 15-4-1943, on payment of the balanceof the consideration money. In my judgment thelower Court is justified in holding that the termsof the entire contract are embodied in the receiptmarked Ex. 5. It is also my view that no referencecan be made to the application of the appellantfor the purpose of deducing the terms of the contract.

9. Mr. Sen Gupta next contended on behalf of the appellant that the respondent's manager gave a verbal assurance to his client that the conveyance would be executed upon completion of roads and drains. The manager denies that he ever gave such an assurance, and there being oath 'versus' oath, I hold that the case of the appellant that there was a modification of the original contract by the verbal assurance of the manager has not been made out. The rights of the parties must be governed by the contract as embodied in the receipt marked Ex. 5.

10. I now come to the real crux of the problem, viz., whether time should be regarded to be of the essence of the contract contained in Ex. 5. Paragraph 1 of this document which relates to the price of the land offered for sale and the receipt of the earnest money of Rs. 101/- by the company is not relevant for our purpose. The next two paragraphs which are very important for out purpose are quoted here:

'The conveyance must be completed within one month from date of payment of the balance of the consideration money, time being deemed as the essence of the contract. In case of default, his agreement will be considered as cancelled with forfeiture of earnest money.

One-third of the value of the land will be paid, at the time of registration and the balance within 6 years bearing 6 per cent, interest per annum.'

11. There is, therefore, an express stipulation in the contract that the time should be deemed to be of the essence of the contract, and that if the contract was not performed within one month from the date of the receipt, the agreement would be considered as cancelled with forfeiture of the earnest money. The receipt was given in a printed form.

The mere mentioning of the fact that time should be deemed to be of the essence of the contract does not make it voidable at the instance of one of the contracting parties. Under Section 55, Contract Act, the contract becomes voidable after the lapse of the specified time if the intention of the parties was that time should be of the essence of the contract. Vide in this connection the case reported in --'Bhudar Chandra v. C. R. S. Betts', AIR 1916 Cal 901 (A). This 'intention should be ascertained not only from the written words of the contract, but the nature of the property which is the subject-matter of the contract, the nature of the contract itself and also from the surrounding circumstances.

In the present case the learned Subordinate Judge was wholly and solely influenced by the express stipulations between the parties which were, according to him, 'absolutely clear and iron-clad.' He has cited the Privy Council case reported in --'Jamshed Khodaram v. Burjorji Dhunjibhai', AIR 1915 PC 83 (B), in support of his conclusion. In my opinion, the learned Subordinate Judge has misappreciated the principles of law enunciated in that case. The following observations contained at p. 84 of the report may be quoted in this connection:

'The law applicable to the point is contained in Section 55, 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 twines 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 promise, 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 incases 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 no more than that it should take place within a reasonable time.'

12. The present contract has not been examined by the learned Subordinate Judge in the light of the above observations. It is true that in para. 2 of the contract (Ex. 5) a time limit of one month was set up for performance of his part of the contract by the appellant by payment of the balance of consideration money amounting to Rs. 14,400/-minus Rs. 101/-, that is, Rs. 14299/-. But in the very next paragraph it is stated that one-third of the value of the land would be paid at the tune of registration and the balance within six years bearing interest at six per cent, per annum.

So after all the whole consideration was not to be paid within a month from 15-4-1943, as was stipulated in the paragraph containing the time limit. Then again it was within the knowledge of both parties that a substantial portion of the land covered by the scheme had already come under requisition at the time of the contract, and it was not possible for the respondent company to develop the land fully by constructing roads and drains until the requisition was withdrawn. The appellant could also possibly construct any building on the land soon after the contract. In these circumstances, it is patent that neither side was keen on the completion of the contract within the stipulated time, and the time limit was a matter of secondary importance having no material connection with, or bearing on the main terms of the contract.

13. The subsequent conduct of the parties would also throw some light on the original intention of the parties regarding the stipulated time limit of the agreement. The respondent is a company and not a private individual, yet it did not think it proper or necessary to give any notice to the appellant on the expiry of the time limit intimating that the contract was avoided or that it stood cancelled.

What is more surprising is that although the appellant himself wrote two registered letters to the company, one on 20-6-1944 (Ex.3) and another on 26-8-1945 (Ex. 3(a)) enquiring what was the position with regard to his plot and when he might expect to be called upon to complete the conveyance, the respondent never replied to those letters and never took up the position that the contract had already come to an end.

14. Mr, Sen Gupta appearing on behalf of the appellant at one stage of his argument submitted that the silence of the company over these two letters amounted to a waiver of its right to rescind the contract. To this Mr. Gupta on behalf of the respondent rightly pointed out that there could be no waiver if the contract had already come to an end automatically by the force of its own terms. In my judgment the omission of the company to answer the above letters would not constitute a waiver on its part, but it is a significant piece of conduct which would tend to show that the company had never intended that the contract would automatically come to an end if it was not performed within a month from 15-4-1943. It was not until 24-1-1946 that the respondent intimated to the appellant by a letter (marked Ex. C) that the contract had stood cancelled on account of appellant's laches to perform his share of it. This letter was written in answer to appellant's letter, dated 22-10-1945, demanding specific performance of the contract (Ex. 6).

15. On a careful examination of the contract between the parties, the circumstances in which the property was placed at the time of the contract and the subsequent conduct of the parties in relation to the contract, I am clearly of opinion that time was never intended to be of the essence of the contract although such a clause was put in the contract, and so the appellant who has not violated any of the material terms of the contract is entitled both in law and in equity to get specific performance of it.

16. Now, from the prayer portion of the plaint it would be found that the relief asked for by the plaintiff mainly consists of two declarations, viz,, that the contract was still subsisting and that the plaintiff was entitled to get a conveyance executed and registered in his favour by the defndant company on payment of the stipulated price. There is also a general prayer to the effect that The plaintiff might be given such further or other reliefs as the Court might think proper. I think that the mere granting of the two declarations mentioned in the plaint would not give any substantial relief to the plaintiff, and neither would it completely set at rest the real controversy between the parties. Even if the declarations asked for be granted that would have no binding effect upon the respondent to execute and register any conveyance in favour of the appellant.

In order that complete and final justice may be done between the parties, I am of opinion that the appellant should be given a decree for specific performance of the contract as well, & I think that the court is empowered to grant such a relief in the circumstances of the case in pursuance of the general prayer made by the appellant for such further and other reliefs as to the court may seem fit and proper. The only difficulty which stands in the way of granting such a relief is that neither the plaint in the trial Court nor the memorandum of appeal presented in this Court was stamped with ad valorem Court-fees which would be necessary if the relief mentioned above was to be granted.

17. Mr. Sen Gupta appearing on behalf of the appellant informs us that his client is prepared to pay ad valorem Court-fees both for the plaint in the trial Court and the memorandum of appeal in this Court. In these circumstances time is allowed till 15-4-1954, for payment of requisite ad valorem Court-fees for the plaint and the memorandum of appeal less Court-fees already paid upon them Final orders in the appeal will be passed on that date.

R.P. Mookerjee, J.

18. I agree.

Renupada Mukherjee, J.

19. The Stamp Reporter reports that requisite ad valoram Court-fees have been put in by the appellant both on the plaint in the Trial Court and the memorandum of appeal in this Court in compliance with the directions given by this Court on 24-3-1954. The appeal will, therefore, be allowed. The appellant must, however, deposit the balance of the consideration money amounting to Rs. 14,299/- before the kobala is executed in his favour. The respondent Company is not entitled to get interest on this amount because the kobala remained unexecuted for all these years not on account of any negligence or laches on the part of appellant, but on account of the unreasonable attitude taken by the respondent.

20. This appeal is accordingly allowed and the judgment and decree of the Trial Court are hereby set aside. The appellant must deposit Rs. 14,299/-in the Trial Court to the credit of the respondent by 31-5-1954, & on such deposit being made the respondent Company must execute and register proper conveyance in favour of the appellant at the appellant's cost in respect of the disputed land within six weeks of the deposit of the money. If the respondent fails to execute and register the kobala within the above time, the appellant will be entitled to get the kobala executed and registered on behalf of the respondent by the Court. The appellant will get the costs of this Court and of the Trial Court from the respondent if he deposits the money as directed within the period mentioned above. If however, the appellant fails to deposit Rs. 14,299/- by 31-5-1954, this appeal will stand dismissed with costs.

R.P. Mookerjee, J.

21. I agree.


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