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PETITIONER: CALTEX (INDIA) LTD.

       Vs.

RESPONDENT: BHAGWAN DEVI MARODIA

DATE OF JUDGMENT: 26/09/1968

BENCH: BACHAWAT, R.S. BENCH: BACHAWAT, R.S. SIKRI, S.M.

CITATION:  1969 AIR  405            1969 SCR  (2) 238

ACT:      Indian  Contract  Act (9 of 1872),   s.   55--Lease  of land--Time  as  essence  of  contract--Intention  if  to  be clearly stated.

HEADNOTE:     The  respondent leased to the appellant a plot  of  land for  a certain period and stipulated in the lease deed  that the  appellant  would give notice of renewal  of  the  lease within a certain  time.  The  appellant made the request for renewal  of  the  lease 12 days after the  time  fixed.  The respondent  asked  the  appellant  to  vacate  the  premises stating,  that  the  request being made  out  of  time,  was ineffective.   The appellant flied a suit for a  declaration that  he  was entitled to the renewal, and stated  that  the delay in making the request he excused as (a) it was due  to oversight;  (b) the respondent had not altered her  position for  the  worse or to her detriment within the space  of  12 days;  (c) neither party had treated the matter of  time  as being  as the essence of the transaction; (d) the  appellant had constructed a service station for petroleum products  of immense  utility to the public of the locality; and (e)  the appellant  was  in  possession  of  the  land.   The   Court dismissed  the  suit,  and this  decision  was  affirmed  in appeal.  Dismissing the appeal, this Court,             .     HELD:   The  lease  fixed  a  time  within   which   the application  for renewal was to be made.  The time so  fixed was  of essence of the bargain. The  tenant lost  his  right unless he made the ’application within the stipulated  time. Equity will not relieve the tenant from the consequences  of his own neglect which could well be avoided with  reasonable diligence.     At  common  law stipulations as to time  in  a  contract giving  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 conditions  precedent.  Equity followed the common law  rule in  respect  of  such  contracts  and  did  not  regard  the stipulation as to time as not of the essence of the bargain, the  reason being 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. [241 D,

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E]     With  regard to equitable relief against a  failure   of the  tenant  to give notice of renewal within the stipulated time  the  relief   cannot  be given in  equity  save  under special  circumstances such as unavoidable accident,  fraud, surprise,  ignorance,, not wilful or inequitable conduct  on the  part of the lessor precluding him refusing to give  the renewal. [241 F]     Grounds  (b) *and (e) stated for the delay could not  be regarded as special circumstances.  As to ground (d) it  was not  shown  that the service station was of  immense  public utility.  The fact that the appellant constructed a  service station was an irrelevant consideration. Ground      (c)  was not established and it was not shown that  the time  was not the essence of the bargain.  As to ground  (a) there was  some  evidence  to show that the delay in  giving the notice of renewal was due to oversight.  But it was  not shown that the delay was due to any unavoidable 239 accident, excusable ignorance, fraud or surprise.  The delay arose  from  mere neglect on-the part of the  appellant  and could have been avoided by reasonable diligence. [242 E]     Jamshed Khodaram Irani  v.  Durjorji Dhunjibhai, L.R. 43 I.A. 26,   PIrate v. Nicoll [1966] 2 Q.B. 131, 145; Eaton v. Lyon  3  Ves  Jun. 690,692; Reid & Anr. v. Grave  &  Ors.  9 LJ.Ch.  24-5, 248, Ram Lal Dubey v. Secretary of  State  for India,,   39 C.L.J.  314  and  Maharani Hemanta Kumari  Devi v. Safatulla Biswas & Ors. 37 C.W.N. 9, referred to.

JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2347 of 1966. Appeal  from the judgment and decree, dated June 3, 1966  of the Calcutta High Court in Appeal No. 251 of 1965. M.C. Chagla and S.N. Mukherjee, for the appellant. S.  V.  Gupte,  M.G.  Poddar and  D.N.  Mukherjee,  for  the respondent.    The Judgment of the Court was delivered by    Bachawat,  ;I.  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 :--                  "3  (c).  The lessor will  on  the  written               request  of  the  lessees  made  two  calendar               months  before the expiry of  the term  hereby               created and if there shall not at the time  of               such  request be any existing breach   or  non               observance of any of the covenants on the part               of the lessees hereinabove contained grant  to               it one renewal of 10 years from the expiry  of               the said term at the same rent and  containing               the like convenants and provisos as are herein               contained  except that as regards  the  clause               for renewal for further period the rent  shall               be as may be agreed between the lessor and the               lessees."   On  December 1, 1963, the time fixed for applying for  the renewal of the lease expired.  On December 13, the appellant made  a  written request for the renewal.  On  December  23, 1963  the respondent’s solicitors replied stating  that  the request  being  out of time was ineffective and  asking  the

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appellant  to, vacate the land on the expiry of  the  lease. The  appellant  had erected structures on the land  for  the purpose  of  running a  petrol  delivery station and  was  a Thika  tenant  within  the meaning  of  the  Calcutta  Thika Tenancy Act, 1949.  In February 1964 the respondent filed an application before the Controller asking for eviction of 240 the appellant under ss. 3(vi) and  5  of the  Calcutta Thika ,,Tenancy  Act.  The Controller allowed   the   application. An  appeal  from this order was dismissed by  the  appellate Authority.  A  revision  petition  against  the  order   was dismissed by the High Court.  While dismissing the  revision petition,  the High Court stayed the execution of the  order of  eviction for a month and observed that  the  authorities under the Calcutta Thika Tenancy Act had no power to  decide whether  the  appellant  was entitled to a  renewal  of  the lease.   Thereafter the appellant filed the present suit  on the  Original Side of the Calcutta High Court asking  for  a declaration that it was entitled to a renewal of the  lease, specific  performance  of  the  covenant  for  renewal,   an injunction  restraining execution of the order  of  eviction passed  by  the  Controller  and  for  other  reliefs.    In paragraphs  13  and 14 of the plaint the  appellant  alleged that the delay in giving notice of renewal should be excused in  view of the  following  special circumstances:  (a)  the delay  was  due  to oversight; (b) the  respondent  had  not altered  her  position  for the worse or  to  her  detriment within the space of 12 days; (c) neither  party  had treated the  matter  of  time  as  being  as  the  essence  of   the transaction;  (d) the appellant had constructed  a   service station   for petroleum products of immense utility  to  the public of the locality; (e) the appellant was in  possession of the land.  The respondent contended that the  application for renewal being made out of time was ineffective and  that there was no ground for excusing the delay.  S.P. Mitra,  J. accepted  the  respondent’s  contention  and  dismissed  the suit.   An appeal under clause 15 of the Letters Patent  was dismissed by a Divisional Bench of the High Court. Both  the courts  concurrently held that the letter,  dated   December 13,  1963 was not a proper exercise of the  option  by   the ,appellant under the lease, dated February 17, 1954 and that there  were no special circumstances for excusing the  delay in ,giving the notice.  The appellant has filed the  present appeal  after  obtaining a certificate from the  High  Court under Art. 133 ( 1 ) (a) and (b) of the Constitution.     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 sec. 55 of the  Indian  Contract Act,  1877  as interpreted in the case of  Jamshed  Khodaram Irani  v.  Durjorji  Dhunjibhai(1). 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  specified time,  or  certain things at or before specified  time,  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  promisee,  if  the intention  of  the (1) L.R. 43 I.A. 26. 241 parties  was  that  time should be of  the  essence  of  the contract."  In Jemshed’s case(1) Viscount  Haldane  observed that the section did not lay down any  principle as  regards contracts  to sell land in India different from those  which obtained under the law of England.  It is well known that in

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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.     At  common  law stipulations as to time  in  a  contract giving  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 conditions precedent. Equity followed the common law rule in respect 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, art.  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 Danckwerts L.J. in Hare v. Nicoll(2). A  similar statement   of law is to  be found in Foa’s General  Law  of Landlord and  Tenant,  8th 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.   With regard  to  equitable relief against the  failure   of   the tenant to give notice of renewal within the stipulated time. the law is accurately stated in Halsbury’s Laws of  England, 3rd  ed.,vol.  23,  p. 626, Art.  1329,  footnote  (u)  thus :--"Relief  will not be given in equity against  failure  to give notice in time, save under special circumstances.   The decided cases show that in such cases relief is not given in equity save upon the ground of unavoidable accident,  fraud, surprise, ignorance not wilful or inequitable conduct on the part of the lessor precluding him from refusing to give  the renewal.   The limits of the equitable interference in  such cases  were clearly stated by the Master of the  Rolls  (Sir R.P.Arden) in Eaton v. Lyon.(3) He observed :- "At law a covenant must be strictly and literally performed; in equity it must be really and substantially (1) L.R.43 I.A.26 (2) [1966] 2 Q.B. 131. 145. (3) 3 Ves. Jun: 690, 692-3=695-6--30 E.R. 1223, 1224,1225-6. 242               performed  according  to the true  intent  and               meaning of the parties so far as circumstances               will admit; but if unavoidable accident, if by               fraud,  by surprise or ignorance  not  wilful,               parties may have been prevented from executing               it   literally,  a  Court  of   Equity,   will                             interfere;  and upon compensation  bei ng  made,               the party having done everything in his power,               and  being prevented by means, I have  alluded               to,  will give relief ... I decide  this  case               upon  the  principles on which,  Lord  Thurlow               decided   (Bayley   v.  The   Corporation   of               Leominster 1792, 1 Ves. 476), and I hope  now,               it  will be known, that it is expected,  these               covenants  shall be literally performed  where

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             it   can  be  done;  and  that   Equity   will               interpose,  and go beyond the stipulations  of               the  covenant  at law, only  where  a  literal               performance has been prevented by the means,-I               have mentioned,  and  no injury is done to the               lessor?’ We  are  of the opinion that the stipulation as to  time  in clause  3 (c) of .the indenture of lease dated February  17, 1954 should be regarded as of the essence of the  contract." The  appellant not ’having exercised the option  of  renewal within the time limited by the ’clause is not entitled to  a renewal.     The appellant claims relief against the consequences  of its  default on the grounds enumerated in paragraphs 13  and 14 of the plaint. Grounds (b) and (e) cannot be regarded  as special circumstances.  As. to ground (d), it is. not  shown that the service station is of immense public utility.   The fact  that the appellant constructed a service  station   is an  irrelevant  consideration. Ground (c) is not established and it is not ’shown that the time is not of the essence  of the  bargain.   As to ground (a) there is some  evidence  to show  that the delay in giving the  notice  of  renewal  was due  to oversight.  But it is not shown that the  delay  was due to any unavoidable accident, excusable ignorance,  fraud or surprise.  The delay arose from mere neglect on the  part of  the appellant and could have been avoided by  reasonable diligence. As observed ’by the Master of the Rolls in Reid & Anr.   v.  Grave  &  Others(1):  "The  rule  is   now   well established, that no accident will entitle a party to  renew unless it be unavoidable.  I am of opinion, that nothing but accident,  which, could not have been avoided by  reasonable diligence,  will  entitle the  plaintiff  to  a  renewal  in this Court."     We may add that where no time is fixed for the  purpose, an application for renewal for the lease may be made  within a  reasonable time before the expiry of the term (see  Foa’s General Law of Landlord & Tenant, 8th ed., article 455,  pp. 311-12, Ram Lal (1) 9 L.J. Ch, 245, 248. 243 Dubey v. Secretary of State for India (1), Maharani  Hemanta Kumari  Devi v. Safatulla Biswas & Ors.(2). In  the  present case,  the lease fixes a time within which  the  application for  renewal  is to be made.  The time so fixed  is  of  the essence of the bargain. The tenant loses his right unless he makes  the  application within the stipulated  time.  Equity will  not relieve the tenant from the   consequences of  his own  neglect  which could well be  avoided  with  reasonable diligence. The appeal is dismissed with costs. Y.P                                       Appeal dismissed. 244