CALTEX INDIA LIMITED Vs. BHAGWAN DEVI MARODIA

JUDGEMENT

(1.) By an indenture of lease dated February 17, 1954, the respondent leased to the appellant a plot of land at premises No. 22, Jatindra Mohan Avenue, Calcutta, for a term of 10 years commencing from February 1, 1954. Clause 3 (c) of the deed provided for a renewal of the lease and was in the following terms:

(2.) The appellant neglected to make the application for renewal of the lease within the stipulated time. Mr. Chagla has submitted that the time is not of the essence of the contract having regard to Section 55. of the Indian Contract Act, 1872 as interpreted in the case of Jamshed Khodaram Irani v. Burjorji Dhunjibhai, 43 Ind App 26 = (AIR 1915 PC 83). Section 55 of the Indian Contract Act provides that "when a party to a contract promises to do a certain thing at or before a secified 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 violable at the option of the promise, if the intention of the parties was that time should be of the essence of the contract" In Jamshed's case 43 Ind App 26 = (AIR 1915 PC 83) (supra) Viscount Haldane observed that the section did not lay down any principle as regards contracts to sell and in India different from those which obtained under the law of England. It is well known that in the exercise of its jurisdiction to decree specific performance of contracts the Court of Chancery adopted the rule, especially in the case of contracts for the sale of land, that stipulations as to time were not to be regarded as of the essence of the contract unless they were made so by express terms or unless a clear indication of a contrary intention appeared from the nature of the contract or the surrounding circumstances. In his well considered judgment Viscount Haldane carefully refrained from saying that time was not to be regarded as of the essence in all contracts relating to land.

(3.) At common law stipulation as to time in a contract living an option for renewal of a lease of land were considered to be of the essence of the contract even if they were not expressed to be so and were construed as condition precedent. Equity followed the common law rule in inspect of such contracts and did not regard the "stipulation as to time as not of the essence of the bargain. As stated in Halsbury's Laws of England, 3rd ed.. Vol. 3, Article 281, p. 165: "An option for the renewal of a lease, or for the purchase or re-purchase of property, must in all cases be exercised strictly within the time limited for the purpose, otherwise it will lapse." This passage was quoted with approval by Danckworts L. J. in Hare v. Nicoll, 1966-2 QB 130, l45. A similar statement of law is to be found in Foa's General Law of Landlord and Tenant, 8th ed., Art. 453 p. 310, and in Hill and Redman's Law of Landlord and Tenant 14th ed., p. 54. The reason is that a renewal of a lease is a privilege and if the tenant wishes to claim the privilege he must do so strictly within the time limited for the purpose.