C NAZEER AHMED Vs. S JAHAN ARA

JUDGEMENT

(1.) THIS is a defendant's appeal against the judgment and decree passed by the court of civil judge, chickmagalur in a suit for specific performance filed by the respondent. The controversy arises in the following circumstances:- by an agreement dated 3rd of December 1982, the defendant in the suit and appellant herein agreed to sell in favour of the plaintiff- respondent certain immovable property described in the schedule to the agreement for a total consideration of rs. 3,25,000/ -. A sum of Rs. 20,000/- was received by the defendants-seller at the time of execution of the agreement while a further amount of Rs. 30,000/ was to be paid by the purchaser within 45 days thereafter. The agreement provided that the remaining consideration of Rs. 2,76,000/- shall be paid to the seller at the time of registration of the sale deed within six months from the date the additional amount of Rs. 30,000/- was paid. It is not disputed that the appellant-seller received a sum of more than Rs. 50,000/- in instalments at different points of time. the amount so received was sought to be forfeited by the seller in terms of a notice dated 7th of September 1983 sent to plaintiff-purchaser, in which the seller accused the purchaser of failure to pay the balance amount and to have the sale deed executed in her favour. The purchaser promptly sent a reply to the said notice, in which the allegation that she had failed to pay the balance amount and have the sale deed executed in her favour was denied. It was also alleged that the execution of the sale deed and the making of the final payment were postponed till the end of March 1994 at the request of the seller for the reason that he had not till 5th of may 1983 when he received a sum of Rs. 15,000/ succeeded in getting the tenanted portion of the suit property vacated from the tenants in occupation. This position was denied by the seller, who asserted in a rejoinder sent on 21st of September 1983 that there were no tenants in occupation of the property and that the same being in his possession could be vacated within one week from the date a demand to that effect was made by the purchaser. Suffice it to say that the" positions which the parties took made as s'uit for special performance inevitable. In the written statement filed by the appellant- seller several contentions were raised besides a challenge to the agreement executed between the parties on the ground that it required the seller to perform an act impossible of performance viz. , evicting his tenants within six months. The trial court framed seven issues in all. While deciding issue no. 1, it held that the plaintiff was at all times ready and willing to perform her part of the contract. Issue No. 2 was also decided in favour of the plaintiff-purchaser with the finding that the defendant had agreed to receive the final payment before the end of March 1994. While deciding issues nos. 3 to 6 the court below held that the defendant-seller had agreed to evict the tenants before the registration of the sale deeds and that the plaintiff was entitled to a decree for specific performance. The additional issue relating to the validity of the agreement between the parties, was also decided against the defendant-seller and the suit decreed, aggrieved whereof, the seller-appellant has preferred the present appeal as already noticed earlier appearing for the appellant Sri amaresh strenuously argued that the agreement that time was the essence of the agreement executed between the parties. He laid considerable stress on the terms incorporated in the agreement especially para-10 thereof, which according to him did not envisage any extension for payment of the balance money and consequent registration of the sale deed beyond seven months from the date fixed for payment of the sum of Rs. 30,000/- under para-3 of the agreement. He argued that the failure of the purchaser to arrange the payment of the balance amount would result in an automatic cancellation of the agreement, which was, according to the learned counsel, a clear enough indication that time was the essence of the agreement. Payment of the balance amount not having been made within the period stipulated under para-10 of the agreement, the suit filed by the purchaser could not have been decreed. The finding recorded by the court below in regard to issue no. 2 was also assailed on the ground that the same was not supported by any evidence. The legal position as regards time being the essence of contract for transfer of immovable property is fairly well settled. The initial presumption is that time is not the essence of such contracts. The mere fixation of a period within which the contract may have to be performed also does not make any such stipulation as the essence of the contract. The intention to treat time as the essence of the contract may however be evidenced by circumstances that are strong enough to displace the initial presumption. Even a stipulation in the agreement that time is the essence of the contract has to be read along with other Provisions of the contract to determine whether the completion of the transaction within the time specified was intended to be a fundamental requirement. In Jamshed Khodaram Irani VS. Burjori hunjibhai, the judicial committee of the privy council was examining the Provisions of Section 55 of the Contract Act in the context of the law of equity prevalent in england as regards contracts to sell immovable property. Their lordships declared that equity which governs the rights of the parties in case of specific performance of contracts to sale their estate, looks to the substance of the agreement and not its letter in order to ascertain whether the parties really intended more than, that the transaction should be completed within a reasonable time. The court declared that equity treated the importance of time limits for performance of contracts as being subordinate to the main purpose of the parties and specific performance could be enjoined notwithstanding that from the point of view of a court of law the contract had not been literally performed by the plaintiff as regards the time limit specified. The following passage is in this regard instructive:- "section 55 does not lay 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 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. Prima facie, equity treats the importance of such time limits as being subordinary 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 limits specified," following the above decision, the Supreme Court in Fomathinayagam Pillai and others VS. Palaniswami Nadar, declared that fixation of the period within which contract is to be performed does not make time as the essence of the contract nor could the default clause in the contract evidence the intention of the parties to make time as the essence. Circumstances sufficiently strong could however displace the ordinary presumption that in any contract for sale of land a stipulation as to time, is not of. Essence. To the same effect is the decision of the Supreme Court in Govind Prasad Chaturvedi VS. Hari Dutt Shastri and another, where the court observed :-