N. PALANICHAMI NADAR Vs. GOMATHINAYAGAM PILLAI AND ORS.

JUDGEMENT

(1.) THIS appeal turns on the question whether time is of the essence of an agreement to sell Immovable property. The court below has found it was, and, on a further finding that the appellant defaulted, dismissed his suit for specific performance.

(2.) RESPONDENTS 1 and 2 together owned a land of a total extent of Ac. 3 -21 cents comprised in S. No. 1155/2 B in Thiruthangal village. Their predecessor -in -title, one Ulagammal the late wife of the first respondent, mortgaged it on 15 -9 -1952 to the third respondent securing repayment of Rs. 6000. On 5 -3 -1959, respondents 1 and 2 entered into an agreement, not reduced to writing, to sell the land to the appellant for Rs. 15106. A sum of Rs. 1006 was paid to them as advance No. Time for execution of sale was specified though, according to respondents 1 and 2, it was to be within two or three weeks, and, according to the appellant, within a reasonable time. On 4 -4 -1959, the appellant paid a further sum of Rs. 2000 to respondents 1 and 2 and on that day an agreement in writing was executed stipulating that the sale was to be executed before 15 -4 -1959. The agreement contained a default clause providing that if the appellant defaulted, he should forfeit the sum of Rs. 3006, but if, on the other hand, the default was on the part of respondents 1 and 2, they should be liable to pay the appellant Rs. 3000, evidently by way of damages. The sale not having been executed in the meantime, the parties concluded a further agreement on 15 -4 -1959, extending the time upto 30 -4 -1959, but adopting the rest of the terms of the earlier agreement to continue.

(3.) BEFORE us Mr. K. S. Desikan for the appellant made no attempt to canvass the finding that his client had defaulted in the sense that on 30 -4 -1959, or before that date the appellant was not ready with the necessary funds to go through the sale. But learned counsel urged that the court below was wrong in its view that time was of the essence of the agreement. Before we deal with the merits of this question, we must notice the principles that govern interpretation of agreements to sell Immovable property in the context of whether time is of the essence. These principles are not in doubt and are very well -settled. Equity will look, not at the letter, but the substance of the transaction in ascertaining the intention of the parties to the agreement, and that, notwithstanding an express stipulation for execution of sale within a specified time, it would in substance regard the intention of the parties as that the agreement should be performed within a reasonable time. That was laid down by Lord Cairns in Tilley v. Thomas,, (1867) 3 Ch A 61 and the principle was held in Jamshed Kodaram v. Burjorji Dhunjibai,, ILR 40 Bom 289:, AIR 1915 PC 83 to be the same in this country as well and that S. 55 of the Indian Contract Act, 1872 in no way differed from it. Lord Cairns in that case stated the law: