http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

CASE NO.: Appeal (civil)  647 of 2008

PETITIONER: Balasaheb Dayandeo Naik (Dead)through LRs & Ors

RESPONDENT: Appasaheb Dattatraya Pawar

DATE OF JUDGMENT: 24/01/2008

BENCH: Dr. Arijit Pasayat & P. Sathasivam

JUDGMENT: JUDGMENT (Arising out of SLP (C) No. 16694 OF 2005) P. Sathasivam, J.

1)      Leave granted.  

2)      This appeal is directed against the judgment and order  dated 11.01.2005 passed by the High Court of Judicature at  Bombay in First Appeal No. 743 of 1993 in and by which the  High Court set aside the decree for specific performance  granted by the trial Court and consequently dismissed the suit  of the plaintiffs.  3)      Brief facts in a nutshell are: The appellants/plaintiffs in special civil suit No. 320 of 1988  filed the same for specific performance of agreement dated  31.07.1985.  According to the plaintiffs, the respondent  herein/defendant is the owner of land Block No. 208 and  Block No. 209 respectively admeasuring Area H. 0.60 R and H.  0.40 R of Village Nagaon in Hatkanangale Tahsil.  The  defendant had entered into an agreement for sale of the said  lands to the plaintiffs for a consideration of Rs.85,000/- per  acre.  The agreement was reduced into writing and according  to the terms of the agreement, the sale deed was to be  executed by the defendant within a period of six months.  It  was agreed that possession of the lands was to be delivered at  the time of execution of sale deed.  The defendant has also  undertaken the responsibility of obtaining necessary  permission for sale of the lands, if required.  On the date of  execution of the agreement, an amount of Rs.20,000/- was  paid by the plaintiffs to the defendant as earnest money and  balance amount of the consideration was to be paid at the  time of execution of the sale deed.  The plaintiffs were always  ready and willing to perform their part of the contract but the  defendant avoided to receive the balance amount of  consideration and neglected to execute the sale deed.  The  plaintiffs sent a legal notice on 16.07.1988 to the defendant  through their advocate calling upon him to perform his part of  the obligation under the contract.  In spite of the notice, the  defendant did not comply with the requirements which  necessitated the plaintiffs to file the suit for specific  performance or in the alternative refund of earnest money with  interest thereon @ 15% per annum.  

4)      The defendant filed a written statement wherein he  denied the plaintiffs claim.  It was further stated that though  agreement for sale of the suit lands was entered into between  him and the plaintiffs on 31.07.1985, the sale deed was to be  executed within a period of six months from the date of  contract as he was in dire need of money for construction of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

his house and, therefore, the time was the essence of the  contract.  He had called upon the plaintiffs to pay the balance  amount of consideration and get the sale deed executed.  But  the plaintiffs were not in a position to arrange the balance  amount of consideration and complete the contract.  As the  market price of the agricultural lands have now gone up, the  plaintiffs by purchasing the suit lands are intending to dispose  of the same to others at a higher price.  In view of the same,  the plaintiffs are not entitled to discretionary relief of specific  performance of contract.  

5)      The learned Civil Judge (Senior Division), on 23.02.1993,  after finding that the defendant has failed to prove that time    was the essence of contract and the plaintiffs were and are  ready and willing to perform their part of contract decreed the  suit as prayed for.  Aggrieved by the aforesaid judgment of the  trial Court, the defendant filed First Appeal No. 743 of 1993  before the High Court of Judicature at Bombay.  The learned  Single Judge of the High Court not in agreement with the  conclusion of the trial Court and finding that plaintiffs failed to  substantiate their plea allowed the appeal of the defendant  and dismissed the suit. Questioning the judgment and order of  the High Court, the plaintiffs have filed the present appeal by  way of special leave.  During the pendency of the appeal before  this Court, Balasaheb Dayandeo Naik/first plaintiff died and  his legal representatives were brought on record as per order  dated 19.09.2006 in I.A. No. 3 of 2005.  

6)      We heard Mr. Makarand D. Adkar, learned counsel  appearing for the appellants and Mr. V.N. Ganpule, learned  senior counsel appearing for the respondent, perused the  entire annexures and other relevant materials filed before this  Court.   

7)      Having regard to the terms of agreement of sale dated  31.07.1985, reasonings of the trial Court as well as the High  Court and submissions before this Court, only two points arise  for consideration of this Court, namely, (a) whether time is the  essence of the contract? and (b) whether the plaintiffs were  ready and willing to perform the contract?

8)      In order to find an answer to the above questions, it  would be useful to refer the relevant recitals from the  agreement of sale.  Para 3 of the agreement specifically  mentions the details of the land sought to be sold such as  extent and boundaries.  It also refers the easement rights and  the period in which the sale has to be completed.  The recital  reads as under:- \023From the total consideration I have received Rs.20,000/- as  an earnest money of which no independent receipt is  necessary.  Rest of the amount is to be paid by you at the  time of sale deed of the said lands.  It is agreed between the  parties that the sale deed is to be executed within 6 months  from today.  Possession of the land is to be handed over at  the time of sale deed.\024            It is also relevant to mention the default clause which  reads as under:- \023For completion of the sale deed the permission is required  to be obtained by me.  If I fail to execute the said deed within  stipulated period then you have to get it executed on the  basis of this agreement.  On the contrary if you fail to get  execute the sale deed then this agreement is supposed to be  cancelled and the earnest amount will be forfeited.  The land  is free from all sorts of encumbrances.  This agreement is

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

binding on myself and my legal heirs etc. dated 31/7/1985.\024   

       The above-mentioned details in the agreement of sale  clearly show a) that the subject-matter of the property is an  agricultural land/immoveable properties b) the sale deed is to  be executed within six months from the date of sale agreement  i.e. 31.07.1985. c) possession of the land to be handed over at  the time of execution of sale deed d) failure to get execute the  sale deed, the earnest money will be forfeited.  With these  factual details, let us consider the legal principles enunciated  by this Court.   

9)      In Chand Rani (Smt.) (dead) by LRs. Vs. Kamal Rani  (Smt.) (dead) by LRs, (1993) 1 SCC 519, a Constitution Bench  of this Court has held that in the sale of immoveable property,  time is not the essence of the contract.  It is worthwhile to  refer the following conclusion: \02319. It is a well-accepted principle that in the case of sale of  immovable property, time is never regarded as the essence of  the contract. In fact, there is a presumption against time  being the essence of the contract. This principle is not in any  way different from that obtainable in England. Under the law  of equity which governs the rights of the parties in the case  of specific performance of contract to sell real estate, law  looks not at the letter but at the substance of the agreement.  It has to be ascertained whether under the terms of the  contract the parties named a specific time within which  completion was to take place, really and in substance it was  intended that it should be completed within a reasonable  time. An intention to make time the essence of the contract  must be expressed in unequivocal language.\024     \02321. In Govind Prasad Chaturvedi v. Hari Dutt Shastri (1977)  2 SCC 539 following the above ruling it was held at pages  543-544: (SCC para 5)  \023... It is settled law that the fixation of the period within which  the contract has to be performed does not make the stipulation  as to time the essence of the contract. When a contract relates  to sale of immovable property it will normally be presumed  that the time is not the essence of the contract. [Vide  Gomathinayagam Pillai v. Pallaniswami Nadar 1 (at p. 233).]  It may also be mentioned that the language used in the  agreement is not such as to indicate in unmistakable terms  that the time is of the essence of the contract. The intention  to treat time as the essence of the contract may be evidenced  by circumstances which are sufficiently strong to displace  the normal presumption that in a contract of sale of land  stipulation as to time is not the essence of the contract.\024      \02323. In Indira Kaur (Smt) v. Sheo Lal Kapoor (1988) 2 SCC  488 in paragraph 6 it was held as under:  \023... The law is well-settled that in transactions of sale of  immovable properties, time is not the essence of the  contract.\024  10)     It is clear that in the case of sale of immoveable property,  there is no presumption as to time being the essence of the  contract.  Even where the parties have expressly provided that  time is the essence of the contract, such a stipulation will have  to be read along with other provisions of the contract.  For  instance, if the contract was to include clauses providing for  extension of time in certain contingencies or for payment of  fine or penalty for every day or week, the work undertaken  remains unfinished on the expiry of the time provided in the  contract, such clauses would be construed as rendering  ineffective the express provision relating to the time being of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

the essence of contract.  In the case on hand, though the  parties agreed that the sale deed is to be executed within six  months, in the last paragraph they made it clear that in the  event of failure to execute the sale deed, the earnest money  will be forfeited.  In such circumstances, the above-mentioned  clauses in the last three paragraphs of the agreement of sale  would render ineffective the specific provision relating to the  time being the essence of contract.  

11)     This Court in Swarnam Ramachandran (Smt.) and  Another vs. Aravacode Chakungal Jayapalan, (2004) 8  SCC 689 has once again reiterated that time is not the essence  of contract relating to immoveable property.  The following  statement of law in para 12 are rightly applicable to the case  on hand:   \02312. That time is presumed not to be of essence of the  contract relating to immovable property, but it is of essence  in contracts of reconveyance or renewal of lease. The onus to  plead and prove that time was the essence of the contract is  on the person alleging it, thus giving an opportunity to the  other side to adduce rebuttal evidence that time was not of  essence. That when the plaintiff pleads that time was not of  essence and the defendant does not deny it by evidence, the  court is bound to accept the plea of the plaintiff. In cases  where notice is given making time of the essence, it is duty of  the court to examine the real intention of the party giving  such notice by looking at the facts and circumstances of  each case. That a vendor has no right to make time of the  essence, unless he is ready and willing to proceed to  completion and secondly, when the vendor purports to make  time of the essence, the purchaser must be guilty of such  gross default as to entitle the vendor to rescind the contract.\024  

12)     As observed in the said decision, in the case on hand the  appellants/plaintiffs clearly established their claim to secure  specific performance of the agreement by leading cogent  evidence whereas the respondent/defendant having pleaded  that time was the essence of the contract neither entered the  witness box nor led any evidence whatsoever.  The High Court  lost sight of the above material aspect and the conduct of the  defendant in not strengthening his plea by placing acceptable  evidence. In such circumstances, as rightly argued by learned  counsel for the appellants, the High Court should have  confirmed the decree of specific performance granted by the  trial Court.  On the other hand, the High Court wrongly placed  reliance on the decision of this Court in K.S. Vidyanadam  and Others vs. Vairavan, (1997) 3 SCC 1 as in the facts of  that case, this Court found that granting for specific  performance was inequitable, however such aspect of the  matter was totally absent in the case on hand.  Even  otherwise, para 11 of the judgment shows that the subject  matter of the property was an urban immoveable property and  in such special circumstance relaxed the general rule that  time is not the essence of the contract in the case of  immoveable properties.  In the case on hand, the details  furnished in the agreement clearly show that the subject- matter of the property is an agricultural land situated in  Kolhapur Dist., Maharastra.  In such circumstances, the  decision in K.S. Vidyanadam and Ors. (supra) is not applicable  to the facts on hand.  In the facts of the present case, which  we have already adverted to, neither the terms of agreement  nor the intention of the parties indicate that the time is an  essence of the agreement.  We have already pointed that  having raised such a plea the respondent even did not bother  to lead any evidence.  

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

13)     It is true that the defendant in his written statement has  made a bald claim that the time was the essence of contract.   Even if we accept the recital in the agreement of sale (Exh. 18)  that the sale deed has to be executed within a period of six  months, there is an express provision in the agreement itself  that failure to adhere the time, the earnest money will be  forfeited.  In such circumstances and in view of recital  pertaining to forfeiture of the earnest money makes it clear  that time was never intended by the parties to be of essence.   The Constitution Bench decision in Chand Rani vs. Kamal  Rani (supra) also makes it clear that mere fixation of time  within which contract is to be performed does not make the  stipulation as to the time as the essence of contract.  Further,  we have already pointed out that the defendant has not  bothered to prove his claim on oath before the Court to the  effect that it was the plaintiffs who avoided performing their  part of contract.  All the above-mentioned material aspects  were correctly appreciated by the trial Court and unfortunately  the High Court failed to adhere to the well known principles  and the conduct of the defendant.  When the third plaintiff  deposed before the Court explaining their case with reference  to the recitals in the agreement of sale including the reference  to the legal notice to the defendant, in the absence of contra  evidence on the side of the defendant, we are unable to agree  with the conclusion arrived at by the High Court in non- suiting the plaintiff.  The High Court commented the conduct  of the plaintiffs in praying for refund of the earnest money,  namely, Rs.20,000/- paid as advance.  As rightly pointed out,  the claim for refund of earnest money is only their alternative  claim.  It is not in dispute that in all suits for specific  performance, the plaintiff is entitled to seek alternative relief in  the event the decree for specific performance cannot be  granted for any reason, hence there is no infirmity in the  alternative plea of refund.  

14)     In the light of what has been stated above, we set aside  the judgment and decree of the High Court and confirm the  decree granted by the trial Court.  In view of the said  conclusion, the appellants/plaintiffs are directed to deposit  the balance amount of sale consideration i.e., Rs.1,92,500/- in  the trial Court within a period of eight weeks whereupon the  respondent/defendant shall execute the sale deed of the suit  lands Block No. 208 admeasuring 0.60 R and Block No. 209  admeasuring 0.40 R of Village Nagaon, Tahsil Hatkanangale as  per the agreement dated 31.07.1985.  In case of failure of the  defendant to execute the sale deed, the plaintiffs shall be  entitled to get the sale deed executed through Court.   

15)     The civil appeal is allowed on the above terms.  However,  in the facts and circumstances of the case, there shall be no  order as to costs.