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PETITIONER: HIND CONSTRUCTION CONTRACTORS

       Vs.

RESPONDENT: THE STATE OF MAHARASHTRA

DATE OF JUDGMENT30/01/1979

BENCH: TULZAPURKAR, V.D. BENCH: TULZAPURKAR, V.D. CHANDRACHUD, Y.V. ((CJ) SEN, A.P. (J)

CITATION:  1979 AIR  720            1979 SCR  (2)1147  1979 SCC  (2)  70

ACT:      Contract Act-Contract  not completed  within stipulated time. No  term in  contract  making  time,  the  essence  of contract-Tests for deciding if time was of essence.

HEADNOTE:      The  appellant   entered  into   a  contract  with  the respondent for the execution of a work the essential term of which was that the contract should be completed in 12 months from the  commencement of  the work.  On the ground that the appellant had  not completed  the work within the stipulated time the respondent rescinded the contract.      In his  suit  for  damages  for  illegal  and  wrongful recision of the contract the appellant claimed that the date for commencement  of the work was merely nominal and that in any case  time was  not of  the essence of the contract. The appellant  also   alleged  that   on  account   of   several difficulties such  as excessive  rains in  the area, lack of proper road  and means of approach to the site, rejection of materials on  improper grounds  by the  Government officers, completion of  the work  was delayed,  extension of time was wrongfully refused  by the  officers of  the Government, and that none  of these  factors had  been taken into account by the Government while refusing to give extension of time, and in ultimately rescinding the contract.      Holding that  time  was  not  of  the  essence  of  the contract the  trial Court  decreed the  suit, but disallowed certain claims of the appellant.      On  appeal  by  both  sides  the  High  Court,  without deciding the question whether time was of the essence of the contract, held  that the  recision of  the contract  was not arbitrary and unreasonable or unjustified.      On further  appeal to  this Court  it was  contended on behalf of the appellant that (i) the High Court was in error in not  deciding the  main question  whether or not time was essence of the contract; and (ii) it was not the appellant’s case that  the recision  was mala  fide and that, therefore, the High Court erred in considering that question.      Allowing the appeal, ^      HELD: The  question whether  or not  time  was  of  the

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essence of  the contract  would essentially be a question of the intention  of the  parties to be gathered from the terms of the  contract. Even  where  the  parties  have  expressly provided that  time is  of the  essence of the contract such stipulation would have to be read alongwith other provisions of  the   contract  and   such  other   provisions  may,  on construction of the contract, exclude the inference that the completion of  the work by a particular date was intended to be fundamental. For instance if the contract were to include clauses providing 1148 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 clause would be construed as rendering ineffective  the express provision relating to the time being of the essence of the contract. [1155A-B]      Halsbury’s Laws of England, Vol. 4 p. 1174 referred to.      (i) In  the instant case, having regard to the terms of the contract  particularly the  clauses  pertaining  to  the imposition of  penalty and extension of time, time was never intended by  the  parties  to  be  of  the  essence  of  the contract. The  letter by  which the  contract was  rescinded clearly waived  the stipulation  of 12  months’ period,  the contractor having  been allowed  to do  some more work after the expiry of the period. [1157B]      (ii) The  approach adopted by the respondent and upheld by the High Court was not correct. Long before the expiry of the period  of 12  months the  appellant had  requested  for extention of  the period  of completion. Even if the grounds made  out  by  the  appellant  were  not  agreeable  to  the Superintending Engineer  some reasonable  time making it the essence of  the contract ought to have been granted. Instead of making  time of  the essence  at some stage or the other, the respondent  rescinded the  contract  which  was  clearly illegal and wrongful. [1158C]      (iii) It  was never  the case of the appellant that the recision of  the contract was mala fide. The various reasons given by  the appellant for delay in executing the work were put forward  merely for  showing that  the refusal to extend time by  the Superintending  Engineer  was  unreasonable  or unjustified. The  question was  not whether  the recision of the contract  was unreasonable  and, therefore,  unjustified but whether  the recision  was wrongful and illegal. If time was not  of the essence or if the stipulation as to the time fixed for completion had, by reason of the waiver, ceased to be applicable  then the  only course  open to the respondent was to fix some time making it the essence and if within the time so fixed the appellant had failed to complete the work, the respondent could have rescinded the contract. [1157D-G]

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 483 and 1769 of 1969.      Appeal from the Judgment and Order dated 9/10-9-1968 of the Bombay  High Court  in First Appeal Nos. 844 of 1961 and 245 of 1962.      M. C.  Bhandare, J.  S. Sinha  and K.  J. John  for the Appellants.      R. H.  Dhebar, B.  V. Desai  and M.  N. Shroff  for the Respondent.      The Judgment of the Court was delivered by      TULZAPURKAR J.  These appeals by certificate of fitness

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granted by  the High  Court  of  Judicature  at  Bombay  are directed against  that Court’s  common judgment  and  decree dated September  9/10, 1968,  passed in  two  cross  appeals being First Appeal Nos. 245 of 1962 and 844 of 1961. 1149      A contract  for the  construction of an aqueduct across the Alandi  River at Mile No. 2 of the Nasik Left Bank Canal of the  total value  of Rs.  1,07,000/- was  granted to  the appellant-plaintiff (originally  a partnership  but later  a proprietary firm of contractors) by the respondent-defendant (the State  of Maharashtra)  after the  former’s tender  was accepted on  June 17,  1955. On  July 2,  1955 the Executive Engineer issued  the work  order to  the appellant-plaintiff directing  him   to  commence  the  work  by  July  5,  1955 intimating in  clear terms  that  the  stipulated  date  for starting the  work would  be reckoned from July 5, 1955. The formal regular  Contract in prescribed From B-2/1 of 1955-56 (Ex. 34)  containing the terms and conditions as well as the Schedules, specifications  etc. was  executed by the parties on July 12, 1955. A security deposit of Rs. 4,936/- was kept by the  appellant plaintiff  with the  respondent-defendant. The period  for completion  of work  was fixed  as 12 months from the  date stipulated for commencement of the work, that is to say, it was expected to be completed on or before July 4, 1956.  It appears  that on the ground that the appellant- plaintiff had  not completed the work as expected within the stipulated time  the Executive  Engineer by his letter dated August 27,  1956 (Ex.  78) rescinded  the said contract with effect from August 16, 1956. After serving a notice under s. 80 of the Civil Procedure Code the appellant-plaintiff filed a suit  (being Special  Civil Suit No. 23 of 1959) on August 28, 1959  in the  Court of  the Joint  Civil  Judge,  Senior Division, Nasik  making a  claim for  Rs.  65,000/-  in  the aggregate against the respondent-defendant alleging wrongful and illegal  recision of  the contract  on the  part of  the respondent-defendant.  The  appellant-plaintiff’s  case  was that the  initial fixation  of July  5, 1955 as the date for commencement of  the work  was nominal,  that the area where the work was to be done had usually heavy rainfall rendering it impossible  to carry  out any  work from July to November and that, therefore, it was the practice of the Public Works Department to  deduct the  period of monsoon in case of such type of  works and  that the  appellant-plaintiff  had  been orally informed  that this  period would  be deducted or not taken into  account for  calculating the period of 12 months under the  contract  and  that  on  this  assurance  he  had commenced the  work towards  the end  of December  1955. His case further  was that  in any  event time  was not  of  the essence  of   the  contract,  that  on  account  of  several difficulties, such  as excessive  rains, lack of proper road and means of approach to the site, rejection of materials on improper grounds by Government Officers, etc., over which he had no  control, the  completion of the work was delayed and that the  extension of  the time which was permissible under the contract  had been wrongfully refused by the officers of the respondent-defendant. Ac- 1150 cording to  him none  of these  factors had  been taken into account by  the Government  while refusing the extension and the contract  was wrongfully  rescinded and,  therefore, the respondent-defendant was  liable in damages. The total claim of Rs.  65,000/- comprised  six items-(1)  Rs. 4,936/- being the amount  of security  deposit wrongfully forfeited by the respondent-defendant, (2)  Rs. 10,254/- being the amount due to him  for the  actual work done by him under Bill No. 1253

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dated September  20, 1956  and which  had not been paid for, (3) Rs. 7,375/- being the value of the material collected by him on the site for work but which had been rendered useless on account  of wrongful  recision, the  4th  and  5th  items sounded in  damages, while  the last  item was interest from date of recision to the date of the suit.      The State  of Maharashtra resisted the claim contending that time  was of the essence of the contract, that the date fixed for  commencement was  real and not nominal and the 12 months period  was fixed after all aspects of the matter had been taken  into account,  it was further contended that the appellant-plaintiff knew  the situation  of the site and the so-called difficulties, that there was no excuse for him for not doing  the work  during the  months of July to November, that  the   appellant-plaintiff  failed  to  carry  out  the proportionate work  during the periods fixed in the contract and that  since the appellant-plaintiff had rendered himself incompetent to  complete the  work in  proper time it had to rescind the  contract and  the recision  was proper  and for adequate reasons;  it was  further contended  that the State was entitled to forfeit the security deposit which it did on the date  when the contract was rescinded. The several items claimed by the appellant plaintiff were denied by the State. It was  denied that the material of the value of Rs. 7,375/- remained on the site or that it was responsible for its non- removal from  the site.  Regarding items  4 and  5 the State denied  its  liability  to  pay  the  same  as  it  was  the appellant-plaintiff who  had committed  the  breach  of  the contract. As  regards the  amount due  under Bill  No.  1253 dated September  20, 1956  for the  actual work done, it was contended that the State had to deduct the amount of penalty leviable under  the  contract  and  for  the  actual  cement supplied  to   the  appellant-plaintiff   and  after  making deductions in  that behalf  only a sum of Rs. 700/- would be due to the appellant-plaintiff.      On  a   consideration  of   the  documentary   evidence including the  terms and conditions of the contract (Ex. 34) and the  oral evidence led by the parties, the learned trial Judge held  that the date July 5, 1955 fixed as the date for commencement of  the work  was not nominal but that time was not of the essence of the contract between the 1151 parties, that  the respondent-defendant  (State  Government) had wrongfully  rescinded the  contract, that the appellant- plaintiff was  entitled to  damages  but  that  he  had  not established the  two items  claimed as  damages and  he  was entitled to  a nominal  sum of  Rs.  120/-  as  damages.  He further held  that since  the recision  of the  contract was wrongful the  State was not entitled to forfeit the security deposit nor  levy any  penalty. He  accordingly decreed  the appellant-plaintiff’s claim in respect of refund of security deposits and  as regards  the amount  of Bill No. 1253 dated September 20,  1956 for  actual work done he held that a sum of Rs.  5,845/- only would be due to him after giving credit for Rs.  4,409/- due  from the  appellant-plaintiff  to  the State. He accordingly decreed the appellant-plaintiff’s suit to the  extent of  Rs. 10,901/-  with interest thereon at 6% per annum  from the  date of  recision till date of suit and allowed proportionate costs to him.      Two appeals were preferred against the aforesaid decree of the  trial  court,  one  by  the  appellant-plaintiff  in respect of the claims that had been disallowed (First Appeal No. 245  of 1962)  and the  other by the State in respect of the claims  allowed against  it (First  Appeal  No.  844  of 1961). Curiously  enough the  High Court  did not decide the

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main issue  that arose  between the parties, namely, whether time was of the essence of the contract, as it took the view that a  decision on that question was really unnecessary for disposal of  the appeals. It proceeded to decide the appeals on the  assumption that  time was  not of the essence of the contract by considering the question whether the recision of the contract  by the State could be regarded as mala fide or so unreasonable that it must in the place of the judgment of the officers  concerned substitute its own judgment and hold that the recision was wrongful. The High Court observed that even the  appellant-plaintiff had  not alleged any mala fide on the  part of  any of  the officers  of the  State but had pressed  into   service  five   or  six   factors  the  non- consideration whereof  by the  respondent-defendant rendered the recision  of the  contract arbitrary,  unreasonable and, therefore, unjustified.  After discussing  each one of those five or  six factors  the High  Court held that some of them had not  been proved by the appellant-plaintiff while others did not  head to  the inference  that the  recision  of  the contract was  arbitrary,  unreasonable  or  unjustified.  It found that  by about  July 21,  1956  (vide  Ex.  Engineer’s letter Ex.  74) the  appellant-plaintiff had done only 1/3rd of the   contract  work and  that in  the circumstances  the appellant-plaintiff could  not have  completed the work even within  the   next  three   months   and,   therefore,   the respondent’s officers  had rightly  rescinded  the  contract and, therefore,  it was  the appellant-plaintiff and not the respondent-defendant who  had  committed  a  breach  of  the contract. However, the High Court took the 1152 view that  for such  breach on  the part  of the  appellant- plaintiff, the  respondent-defendant, on  a reading  of  the cls. 2 and 3 of the Conditions of Contract, was not entitled both to  levy compensation  and also to forfeit the security deposit. Accordingly,  the High  Court upheld the forfeiture of the security deposit made by the respondent-defendant and while modifying  the trial  court’s decree  it confirmed  it only to  the extent  of Rs. 5,845/-, being the amount due to the appellant-plaintiff  for the  work actually  done by him under Bill  No. 1253  and which  had not  been paid.  In the result, the  appellant-plaintiff’s appeal  was dismissed and that of  the State was partly allowed with appropriate order of proportionate costs.      In support  of  the  present  appeal  counsel  for  the appellant-plaintiff raised  two or three contentions. In the first place he contended that the High Court was in error in not deciding  the main  issue whether  the time  was of  the essence of  the contract  or not  ? He  urged that  the said issue could  not be  avoided in  the manner done by the High Court, for,  if time  was not of the essence of the contract then just  before the  expiry of  the 12  months’ period  or immediately after  its expiry  it was  up to the respondent- defendant to  grant some  reasonable time  to the appellant- plaintiff for  completing the  work undertaken  and make the same the  essence of  the contract  and only if the work was not completed  by the  appellant-plaintiff within  that time the contract  could have  been rescinded  on the ground that the  appellant-plaintiff   had  committed   a  breach  of  a contract. According to him such course of action on the part of the respondent-defendant was obligatory, when the initial period of  12 months was not of the essence, especially when the request of the appellant-plaintiff for extension of time was pending  before the concerned officers of the Government since before  the expiry of the initial period. He contended that  instead   of  adopting   the  aforesaid   course   the

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respondent-defendant had  without making time of the essence of the  contract rescinded  the same with effect from August 16, 1956  by a  letter dated August 27, 1956 (Ex. 78), which recision must  be regarded as wrongful and illegal. Secondly counsel contended  that the  High  Court  further  erred  in considering  the   question  whether  the  recision  of  the contract by  the  State  was  either  mala  fide  or  wholly unreasonable and,  therefore, unjustified. He pointed out it was not the appellant-plaintiff’s case that the recision was mala fide  and, according  to  him,  the  question  was  not whether the  recision of  the contract  on the  part of  the respondent-defendant  was   unreasonable,  and,   therefore, unjustified  but   whether  the   respondent-defendant   was entitled in  law to  rescind the contract in the manner done when time was not of the essence of the contract. He further urged that the High Court had clearly erred in assuming that the appellant-plaintiff 1153 could not have completed the work even within the next three months and, therefore, the contract was rightly rescinded by the respondent  defendant. He,  however, fairly  stated that even if  this Court held in his favour that the recision was wrongful  and,   therefore,  the   respondent-defendant  had committed a breach he would merely press for the restoration of the  decree passed  by the  trial Court and not press any other item  forming the subject-matter of the original claim in the  suit. On the other hand, counsel for the respondant- defendant sought  to support  the judgment and decree of the High Court  on both  the grounds  first that time was of the essence  of  the  contract  having  regard  to  the  express provision  contained  in  cl.  (2)  of  the  "Conditions  of Contract" and,  therefore, on  appellant-plaintiff’s failure to complete the same within the stipulated time the recision of the  contract was  legal and justified and secondly, that even if  time was not of the essence of the contract, having regard to  the circumstances  the High Court rightly came to the conclusion  that the  recision of  the contract  by  the respondent-defendant could  not be  regarded as unreasonable or unjustified  and that, therefore, the appellant-plaintiff being in  breach  the  security  deposit  had  been  rightly forfeited.      The first  question that  arises for our consideration, therefore, is  whether  time  was  of  the  essence  of  the contract that  was executed  between the parties on July 12, 1955 (Ex.  34). It  cannot be disputed that question whether or not  time was  of  the  essence  of  the  contract  would essentially be a question of the intention of the parties to be gathered  from the terms of the contract. The contract in the instant  case is  for the  construction of  an  aqueduct across the Alandi River at Mile No. 2 of the Nasik Left Bank Canal and  unquestionably 12  months’ period commencing from the date  of the commencement of the work had been specified within which  the construction  had to  be completed  by the appellant-plaintiff. Indisputably,  in the  work order dated July  2,  1955  the  Executive  Engineer  had  directed  the appellant-plaintiff to  commence the  work by  July 5,  1955 intimating in  clear terms  that  the  stipulated  date  for starting the  work would be reckoned from July 5, 1955. Both the trial  court as  well as  the High Court have found that mentioning of July 5, 1955 as the date for starting the work was not  nominal but was real date intended to be acted upon by the  parties. It  is, therefore,  clear that  12  months’ period mentioned  for the  completion of  the  work  was  to expire on  July 4, 1956. The question is whether this period of 12 months so specified in the contract was of the essence

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of the  contract or  not ?  On the one hand, counsel for the appellant-plaintiff  contended   that  the   contract  being analogous to  a building  contract the  period of  12 months would not 1154 ordinarily be of the essence of the contract as the subject- matter there  of was  not such as to make completion to time essential,  that   an  agreement   to  complete   it  within reasonable time  would be  implied and  that reasonable time for completion  would be  allowed. On the other hand counsel for the  respondent-defendant contended  that time  had been expressly made  of the  essence of  the contract and in that behalf reliance  was placed  upon cl. (2) of the "Conditions of Contract"  where not  only time  was stated  to be of the essence of  the contract  on the  part of the contractor but even for  completion of proportionate works specific periods had been specified and, therefore, the appellant-plaintiff’s failure to  complete the  work within  the stipulated period entitled the  respondent-defendant to  rescind  it.  In  the latest 4th  edn. of  Halsbury’s Laws of England in regard to building and  engineering contracts  the statement of law is to be found in Vol. 4, Para 1179, which runs thus:-           "1179.  Where  time  is  of  the  essence  of  the      contract. The  expression time  is of the essence means      that a  breach of  the condition  as to  the  time  for      performance will entitle the innocent party to consider      the  breach   as  a   repudiation  of   the   contract.      Exceptionally,  the   completion  of   the  work  by  a      specified date  may be  a condition  precedent  to  the      contractor’s right  to claim  payment. The  parties may      expressly provide  that time  is of  the essence of the      contract and  where there  is power  to  determine  the      contract on  a failure  to complete  by  the  specified      date, the  stipulation as  to time will be fundamental.      Other  provisions   of  the   contract  may,   on   the      construction of the contract, exclude an inference that      the completion  of the  works by  a particular  date is      fundamental, time  is not of the essence where a sum is      payable for  each week that the work remains incomplete      after the date fixed, nor where the parties contemplate      a postponement of completion.           Where time has not been made of the essence of the      contract or,  by reason  of waiver,  the time fixed has      ceased to be applicable, the employer may by notice fix      a reasonable  time for  the completion  of the work and      dismiss the  contractor on a failure to complete by the      date so fixed."                                          (Emphasis supplied)      It will  be clear  from the  aforesaid statement of law that even  where the  parties have  expressly provided  that time is  of the  essence of  the contract such a stipulation will have to be read along with other 1155 provisions of the contract and such other provisions may, on construction of the contract, exclude the inference that the completion of  the work by a particular date was intended to be fundamental,  for  instance,  if  the  contract  were  to include causes  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  the  essence  of contract. The  emphasised portion of the aforesaid statement of law  is based  on Lamprell  v. Billericay  Union, Webb v.

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Hughes and  Charles Rickards  Ltd. v.  Oppenheim. It  is  in light of  the aforesaid position in law that we will have to consider the  several clauses  of the contract Ex. 34 in the case. The  material clauses  in this behalf are cls. 2 and 6 of the "Conditions of Contract" which run as follows:           "Clause 2:-The  time allowed  for carrying out the      work  as  entered  in  the  tender  shall  be  strictly      observed by  the contractor  and shall be reckoned from      the date  on which  the order to commence work is given      to  the  contractor.  The  work  shall  throughout  the      stipulated period  of the  contract be  proceeded with,      with all  due diligence (time being deemed to be of the      essence of  the contract on the part of the contractor)      and the  contractor shall pay as compensation an amount      equal to  one per  cent or  such smaller  amount as the      Superintending  Engineer  (whose  decision  in  writing      shall be  final) may  decide,  of  the  amount  of  the      estimated cost of the whole work as shown by the tender      for every  day that  the work  remains uncommenced,  or      unfinished, after  the proper  dates.  And  further  to      ensure good  progress during the execution of the work,      the contractor  shall be  bound, in  all cases in which      the time  allowed for  any work  exceeds one  month, to      complete.           1/4 of the work in 1/4 of the time           1/2 of the work in 1/2 of the time           3/4 of the work in 3/4 of the time".           "Clause  6:-If  the  contractor  shall  desire  an      extension of the time for completion of the work on the      ground of  his having  been unavoidably hindered in its      execution or 1156      on any  other ground,  he shall apply in writing to the      Executive  Engineer   before  the   expiry  of   period      stipulated in  the tender  or before  expiry of 30 days      from the  date on which he was hindered as aforesaid or      on which  the cause  for asking for extension occurred,      whichever is earlier and the Executive Engineer, may if      in  his   opinion  there  are  reasonable  grounds  for      granting an  extension,  grant  such  extension  as  he      thinks  necessary   or  proper.  The  decision  of  the      Executive Engineer in this matter shall be final." Two aspects  emerge very  clearly  from  the  aforesaid  two clause. In  the first  place under cl. 6 power was conferred upon the  Executive Engineer  to grant extension of time for completion  of   the  work   on  reasonable  grounds  on  an application  being   made  by   the  contractor  (appellant- plaintiff) in  that  behalf;  in  other  words,  in  certain contingencies parties  had contemplated  that  extension  of time would  be available to the contractor. Such a provision would clearly  be inconsistent  with  parties  intending  to treat the  stipulated period  of  12  months  in  cl.  2  as fundamental. Similarly,  in cl.  2 itself provision was made for levying  and recovering  penalty/compensation  from  the appellant-plaintiff at specified rates during the period the work shall  remain unfinished  after the expiry of the fixed date. Such  provision also  excludes the inference that time (12 months  period) was intended to be of the essence of the contract. Further with regard to the provision that is to be found in  cl. 2 whereunder a time schedule for proportionate work had been set out (namely, 1/4 of the work in 1/4 of the time, 1/2 of the work in 1/2 of the time and 3/4 of the work in 3/4  of the  time), the  evidence of  the  Superintending Engineer Pandit (D.W. 1) is very eloquent. In para 13 of his deposition this is what he has stated:

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         "In the  agreement (Ex.  3.1) the  rate of work is      based on the valuation 1/4th time mentioned means 1/4th      in 12  months. The suit contract is for Rs. 1,07,000/-.      1/4th work  means the work of about Rs. 27,000/-. It is      not possible  to do  the work  of Rs. 27,000/- in 1/4th      time as the days were rainy. This was not reasonable." The witness  in para 12 of his deposition has also given the following admission:-           "It is not specifically mentioned in the agreement      (Ex. 34), that the suit work was urgent and that it was      to be  completed within  12 months.  In this  agreement      (Ex. 34) 1157      there  are  the  clauses  of  imposing  a  penalty  and      extension of time."      Having regard  to the  aforesaid  material  on  record, particularly the  clauses in  the  agreement  pertaining  to imposition of  penalty and  extension of time it seems to us clear that time (12 months period) was never intended by the parties to  be of  the essence of the contract. Further from the correspondence  on the  record, particularly, the letter (Ex. 78)  by which the contract was rescinded it does appear that the  stipulation of  12 months’  period was waived, the contractor having  been allowed  to do  some more work after the expiry  of the period, albeit at his risk, by making the recision effective from August 16, 1956.      Once either  of the aforesaid conclusions is reached it would be  difficult to  accept the High Court’s finding that the recision  of the contract on the part of the respondent- defendant was  proper and  justified on  the basis  that the same was  neither shown to be mala fide nor unreasonable. It must  be  observed  that  it  was  never  the  case  of  the appellant-plaintiff that the recision of the contract on the part of  the respondent-defendant was mala fide. Counsel for the appellant-plaintiff  further pointed  out  and,  in  our view, rightly  that the five or six factors, namely, (1) the contract having been given at the thresh old of monsoon, the period  of  monsoon  (4  months)  ought  not  to  have  been reckoned, (2)  absence of  proper road  and approach  to the work site  during the  rainy season  and a  couple of months thereafter, (3)  unreasonable rejection  by  the  Government Officers of material brought on the site, which material was later on  allowed to  be used,  (4) difficulty  in procuring labour due  to malarious  climate at  the site, (5) delay in issuing quarry  permit and  (6) extra  time taken  for doing extra work  that was entrusted ought to have been taken into account-were put  forward by  the appellant-plaintiff merely for the  purpose of  showing that  the refusal to extend the time by  the Superintending Engineer although recommended by the S.D.O.  and Executive  Engineer was unreasonable and not for  showing   that  the   recision  of   the  contract  was unreasonable or unjustified. In our view, the question would not be whether the recision of the contract was unreasonable and, therefore,  unjustified but whether the recision of the contract in  the circumstances  of the case was wrongful and illegal. If  time was  not of the essence of the contract or if the  stipulation as to the time fixed for completion had, by reason  of waiver,  ceased to be applicable then the only course open to the respondent-defendant was to fix some time making it  the essence  and if  within the time so fixed the appellant-plaintiff had failed to complete the 1158 work  the  respondent-defendant  could  have  rescinded  the contract. The  High  Court  has  taken  the  view  that  the contract was  rightly rescinded  by the respondent-defendant

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because by  about July  21, 1956  (vide letter  Ex. 74)  the appellant-plaintiff had  done  work  of  the  value  of  Rs. 35,000/- as against the tender value of Rs. 1,07,000/-, that is to  say, only  1/3rd of the total work had been completed and, therefore,  even though  time was not of the essence of the contract, the appellant-plaintiff, in the circumstances, could not have completed the work even within the next three months.  In   our  view,   this  approach   adopted  by  the respondent-defendant and  upheld by  the High  Court is  not correct. Long  before the  expiry of the period of 12 months the appellant-plaintiff had by his letter dated June 6, 1956 (Ex. 68)  requested for extension of period of completion up to the  end of  December, 1956; this request was repeated by another letter  dated June  23, 1956  (Ex. 69).  May be  the reasons or  grounds on  which the  request was  made may not have  appealed  to  the  Superintending  Engineer  but  some reasonable time  making it  the essence  ought to  have been granted. In  this behalf it may be stated that the S.D.O. by his letter  (Ex. 69) had recommended extension upto December 1956 as  sought while by his letter dated June 23, 1956 (Ex. 70) addressed  to the Superintending Engineer, the Executive Engineer had  recommended  that  extension  of  time  up  to October 30,  1956 may  be granted to the appellant-plaintiff with clear intimation that if he failed to complete the work by then,  the maximum penalty allowable under cl. 2, namely, 10% of  the cost  of the  work will be inflicted on him, but the  recommendation   did  not   receive  approval   of  the Superintending Engineer.  It  appears  that  the  appellant- plaintiff had  an interview with the Superintending Engineer on August  24, 1956  when a  written representation (Ex. 99) was handed  over and  the whole  position was  sought to  be explained to  the Superintending  Engineer but  within three days of  the interview  by the  letter dated August 27, 1956 (Ex. 78)  the contract  was rescinded  and the full security deposit was  forfeited to  Government. It  will thus  appear clear that  though time  was  not  of  the  essence  of  the contract, the  respondent-defendant did  not fix any further period making  time the  essence  directing  the  appellant- plaintiff to  complete the  work within such period; instead it rescinded  the  contract  straightaway  by  letter  dated August  27,   1956.  Such   recision  on  the  part  of  the respondent-defendant was  clearly illegal  and wrongful  and thereby  the  respondent-defendant  committed  a  breach  of contract, with  the result that there could be no forfeiture of the  security deposit.  In our view, therefore, the trial court was  right  in  coming  to  the  conclusion  that  the appellant-plaintiff was  entitled to  a refund of their full security deposit of Rs. 4,936/- as also 1159 to Rs. 5845/- being the balance of their Bill No. 1253 dated September 20,  1956 for  work actually  done by them and not paid for  and nominal  damages of  Rs. 120/-. The appellant- plaintiff was  also entitled  to interest  on the  aforesaid sums and costs of suit as directed by the trial court.      In the result we allow the appeal, set aside the common judgment and  decree in  F.A. No.  844 of 1961 passed by the High  Court  and  restore  that  of  the  trial  court.  The appellant-plaintiff will  get costs  of this  appeal as also costs of  F.A. No.  844 of  1961. The  High  Court’s  decree dismissing F.A. No. 245 of 1962 is confirmed. P.B.R.                                       Appeal allowed. 1160