{"id":46597,"date":"2004-08-25T00:00:00","date_gmt":"2004-08-24T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/smt-swarnam-ramachandran-vs-aravacode-chakungal-jayapalan-on-25-august-2004"},"modified":"2016-11-09T04:11:40","modified_gmt":"2016-11-08T22:41:40","slug":"smt-swarnam-ramachandran-vs-aravacode-chakungal-jayapalan-on-25-august-2004","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/smt-swarnam-ramachandran-vs-aravacode-chakungal-jayapalan-on-25-august-2004","title":{"rendered":"Smt. Swarnam Ramachandran & … vs Aravacode Chakungal Jayapalan on 25 August, 2004"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Smt. Swarnam Ramachandran & … vs Aravacode Chakungal Jayapalan on 25 August, 2004<\/div>\n
Author: Kapadia<\/div>\n
Bench: Ashok Bhan, S.H. Kapadia<\/div>\n
           CASE NO.:\nAppeal (civil)  4527 of 2000\n\nPETITIONER:\nSMT. SWARNAM RAMACHANDRAN & ANOTHER       \t\n\nRESPONDENT:\nARAVACODE CHAKUNGAL JAYAPALAN\t\t\t\n\nDATE OF JUDGMENT: 25\/08\/2004\n\nBENCH:\nASHOK BHAN & S.H. KAPADIA \n\nJUDGMENT:\n<\/pre>\n
J U D G M E N T<\/p>\n
KAPADIA, J.\n<\/p>\n
\tBeing aggrieved by the suit for specific performance
\nbeing decreed, the defendants-vendors have filed this appeal by
\nspecial leave against judgment and order passed by the Division
\nBench of the Bombay High Court dated 17.6.2000 in Appeal
\nNo.813 of 1994 confirming the judgment of the learned Single
\nJudge dated 3.10.1994.\n<\/p>\n
\tThe facts giving rise to this civil appeal, briefly, are as
\nfollows:
\n\tBy an agreement for sale dated 18.2.1981 entered into
\nbetween appellants as vendors and respondent as purchaser, the
\nappellants agreed to sell all that piece or parcel of land
\nadmeasuring 481.25 square metres bearing plot no.423-C out of
\nthe larger piece of land bearing City Survey No.1285 (Part) of
\nSuburban Scheme-III of Chembur with bungalow bearing
\nMunicipal No.1137 (2) standing thereon. (hereinafter for the
\nsake of brevity referred to as “the suit property”) for lump sum
\nconsideration of Rs.10,00,000\/-.  Prior to the execution of the
\nagreement, the respondent paid Rs.1,00,000\/- as earnest money.
\nUnder clause (1) of the said agreement, a sum of Rs.1,25,000\/-
\nwas to be paid by the respondent within two months from the
\ndate of the agreement i.e. by 18.4.1981 and the balance of
\nRs.7.75,000\/- was payable by him on completion of the sale i.e.
\nby 31.8.1981.  Under clause (8) of the agreement, the sale was
\nto be completed on or before 31.8.1981.  However, there was a
\nproviso to clause (8) under which an option was given to the
\nappellants to extend the date of sale up to 31.12.1981.
\n\tOn 31.3.1981, the respondent herein paid Rs.50,000\/- by
\ncheque to the appellants.  By letter dated 3.9.1981, addressed
\nby the appellants, it was alleged that Rs.1,25,000\/- was payable
\nby the respondent on or before 18.4.1981; that the full amount
\nwas not paid; that the respondent was, therefore, called upon to
\nmake the balance payment of Rs.75,000\/- within three days
\nfrom the date of receipt of the said letter.  However, by the said
\nletter, time to complete the sale was extended by the appellants
\nunder clause (8) up to 31.12.1981.  In reply, the respondent
\nstated that out of Rs.1,25,000\/-, a sum of Rs.50,000\/- had been
\npaid on 31.3.1981, when it was agreed by and between the
\nparties that the balance amount of Rs.75,000\/- would be paid by
\n30.9.1981.  By letter dated 12.9.1981, the appellants denied
\nhaving agreed to receive the balance amount of Rs.75,000\/-,
\npayable on or before 18.4.1981, by 30.9.1981.  At the same
\ntime, by the same letter dated 12.9.1981, the appellants agreed
\nto accept the amount of Rs.75,000\/- on or before 30.9.1981 and
\npurported to make time the essence for such payment.  On
\n30.9.1981, the respondent’s advocate forwarded two cheques to
\nthe appellants i.e. cheque dated 29.9.1981 for Rs.30,000\/- and
\nanother cheque dated 15.10.1981 for Rs.45,000\/- (post-dated
\ncheque).  In the said letter, it was pointed out that the cheque
\nfor Rs.45,000\/- was post-dated as the respondent would be
\nrealizing the effects of certain cheques deposited by him in his
\naccount.  By letter dated 3.10.1981, the appellants alleged that
\ntime to pay balance amount of Rs.75,000\/- by 30.9.1981 was
\nmade the essence of the contract; that since the respondent had
\nfailed to pay the said amount, the agreement for sale stood
\nterminated.  Consequently, the appellants forfeited the amounts
\npaid by the respondent under the agreement.  By letter dated
\n17.10.1981, respondent herein contended that time was not the
\nessence of the agreement; that the agreement had been
\nterminated with malafide intentions; that the respondent had
\ncomplied with all his obligations and that he was ready and
\nwilling to perform his obligations under the said agreement.\n<\/p>\n
\tIn the circumstances, on 2.12.1981, the respondent herein
\ninstituted suit no.1985 of 1981 on the original side of the
\nBombay High Court.  In the suit, the respondent alleged that
\nsometime in the last week of March, 1981, he was informed
\nthat the appellants desired to extend the date of completion of
\nsale till 31.12.1981, to which he agreed; that on that occasion
\nhe paid Rs.50,000\/-; that it was agreed that in view of the
\npostponement of the sale, the part payment of Rs.75,000\/- be
\nmade by 30.9.1981.  That, in terms of the said arrangement, on
\n30.9.1981, the respondent forwarded his two cheques for
\nRs.30,000\/- and Rs.45,000\/-;  that cheque for Rs.45,000\/- was
\npost dated as respondent would be realizing the effects of
\ncertain cheques deposited by him by 15.10.1981.  That contrary
\nto the said arrangement, the appellants vide notice dated
\n3.10.1981 illegally terminated the agreement alleging that time
\nto pay the balance amount by 30.9.1981 was the essence of the
\ncontract as indicated by the letter dated 12.9.1981; that
\nrespondent was always ready and willing to perform his part of
\nthe contract and in the circumstances, he was entitled to the
\ndecree for specific performance.\n<\/p>\n
\tIn the written statement, the appellants pleaded that there
\nwas delay in payment of Rs.1,25,000\/- on or before 18.4.1981;
\nthat although time was the essence of the contract and the same
\nwas communicated to the respondent, he committed default
\nand, therefore, the appellants were entitled to terminate the
\nagreement for sale and that the respondent was neither entitled
\nto the specific performance of the contract nor damages, as
\nprayed for.\n<\/p>\n
\tOn examination of the evidence on record, both
\ndocumentary and oral, the High Court found that on the plain
\nreading of the agreement, the same did not provide for time to
\nbe the essence; that circumstances did not exist enabling the
\nappellants herein to make time the essence of the contract.  That
\nthere was no ground, whatsoever, made out in the
\ncorrespondence or in the written statement to suggest that the
\nbehaviour of the respondent was such as to prompt the
\nappellants to make time the essence of the contract.  That if
\ncausing delay was the grievance, how could the appellants
\njustify their behaviour of extending the time for completion of
\nthe sale till 31.12.1981 vide clause (8) of the agreement.  That
\nthe very letter dated 12.9.1981, which made time the essence
\nfor payment of Rs.75,000\/- by 30.9.1981, extended time for
\ncompletion to 31.12.1981.  That the appellants had failed to
\nprove that the respondent was guilty of such grave defaults
\nentitling the appellants to make time of the essence.  That
\nalthough several suggestions were made to the respondent,
\nduring his cross-examination, as to the oral agreement between
\nthe parties, about time being made the essence of the contract,
\nno evidence was led by the appellants.  The appellants failed to
\nrebut the assertion of the respondent of the circumstances under
\nwhich Rs.50,000\/- was paid and the oral arrangement to extend
\nthe time for payment of Rs.75,000\/- up to 30.9.1981.  In the
\ncircumstances, it was held that time was not made the essence
\nof the contract; that the appellants were not justified in making
\ntime of the essence in the matter of payment of Rs.75,000\/-.\n<\/p>\n
\tBefore the learned Single Judge, it was argued that the
\nrespondent has failed to prove, though he has so pleaded, that
\nhe was ready and willing to perform his part of the contract.  In
\nthis connection, it was urged that the respondent had sent a post
\ndated cheque for Rs.45,000\/- dated 15.10.1981 which indicated
\nthat he had no funds on the due date i.e. on 30.9.1981 and,
\ntherefore, he had failed to prove that he was ready and willing
\nto perform his part of the contract.  This plea of the appellants
\nwas rejected as the High Court found on evidence that time to
\npay Rs.1,25,000\/- was extended to 30.9.1981; that it cannot be
\nargued that there was non-compliance on the part of the
\nrespondent when the appellants themselves extended the
\ncompletion date to 31.12.1981.  The learned Single Judge found
\nthat taking into account the overall conduct of the respondent, it
\ncan be said that the respondent was ready and willing to
\nperform his part of the contract; that the agreement was
\nwrongly terminated on 3.10.1981 and the present suit was filed
\non 2.12.1981, which indicates that the respondent was eager to
\ncomplete the transaction.  In the above circumstances, the suit
\nwas decreed.\n<\/p>\n
\tAggrieved, the appellants herein instituted LPA No.813
\nof 1994, which was dismissed by the impugned judgment.
\nHence, this civil appeal.\n<\/p>\n
\tMr. T.L. Viswanatha Iyer, learned senior counsel for the
\nappellants contended that parties intended to make time the
\nessence of the contract, since the agreement stipulated specific
\ndates for the payment of the purchase price.  That the appellants
\nhad validly made time the essence of the contract on 12.9.1981
\nand since part of the purchase price was not paid on or before
\n30.9.1981, the appellants were justified in terminating the
\nagreement dated 18.2.1981.  That the property in question
\nconsisted of a house in an urban area whose price rose
\ncontinuously, which fact was relevant and which has not been
\ntaken into account by the High Court.  It was urged that in the
\naforestated circumstances, any delay on the part of the
\nrespondent disentitled him from the relief of specific
\nperformance.  In this connection, reliance was placed on the
\njudgment of this Court in the case of K. S. Vidyanadam &
\nothers  v. Vairavan<\/a> reported in [(1997) 3 SCC 1].  It was urged
\nthat the appellants had made time essence of the payment of
\nRs.75,000\/- on or before 30.9.1981 of which the respondent
\nwas made aware and, therefore, on failure to pay the said
\namount on due date, the respondent herein had committed
\nbreach for which the appellants were entitled to terminate the
\nagreement.  Learned counsel further submitted that the
\nrespondent, on his own evidence, was aware that he had to pay
\nRs.75,000\/- on or before 30.9.1981 and yet on that day, the
\nrespondent forwards two cheques for Rs.30,000\/- dated
\n29.9.1981 and the other for Rs.45,000\/- dated 15.10.1981 which
\nshowed that respondent agreed to the term of payment of
\nRs.75,000\/- on or before 30.9.1981 and at the same time, he
\nwas not ready and willing to perform his obligation.  It was
\nfurther urged that in his evidence, the respondent herein had
\nconceded that he did not have funds to pay Rs.75,000\/- on
\n30.9.1981 which indicated that he was not continuous ready and
\nwilling to fulfil his obligations.  It was further urged that under
\nthe agreement, an amount of Rs.1,25,000\/- had to be paid by
\n18.4.1981; that the said amount was not paid and that this lapse
\nwas sufficient ground for the appellants to make the time the
\nessence of the contract.  In the circumstances, it was urged that
\nthe High Court had erred in decreeing the suit for specific
\nperformance.\n<\/p>\n
\tThe key issue which is to be decided in this civil appeal
\nis : whether time was the essence for payment of Rs.75,000\/- on
\nor before 30.9.1981 and whether the said term was breached.
\nThis question does not depend only upon express stipulation
\nmade by the parties, but it also depends upon the intention of
\nthe parties.  Notwithstanding that a specific date was mentioned
\nin the agreement, one has not only to look at the letter but also
\nat the substance of the contract.  Whether time is of essence is a
\nquestion of fact and the real test is intention of the parties.  It
\ndepends upon facts and circumstances of each case.\n<\/p>\n
\tAccording to Pollock & Mulla’s Indian Contract &
\nSpecific Relief Acts  [(2001) 12th Edition page 1086], the
\nintention can be ascertained from:\n<\/p>\n
i)\tthe express words used in the contract;\n<\/p>\n
ii)\tthe nature of the property which forms the
\nsubject matter of the contract;\n<\/p>\n
iii)\tthe nature of the contract; and\n<\/p>\n
iv)\tthe surrounding circumstances.\n<\/p>\n
\tThat time is presumed not to be of essence of the contract
\nrelating to immovable property, but it is of essence in contracts
\nof reconveyance or renewal of lease.  The onus to plead and
\nprove that time was the essence of the contract was on the
\nperson alleging it, thus giving an opportunity to the other side
\nto adduce rebuttal evidence that time was not of essence.  That
\nwhen the plaintiff pleads that time was not of essence and the
\ndefendant does not deny it by evidence, the Court is bound to
\naccept the plea of the plaintiff.  In cases where notice is given
\nmaking time of the essence, it is duty of the Court to examine
\nthe real intention of the party giving such notice by looking at
\nthe facts and circumstances of each case.  That a vendor has no
\nright to make time of the essence, unless he is ready and willing
\nto proceed to completion and secondly, when the vendor
\npurports to make time of the essence, the purchaser must be
\nguilty of such gross default as to entitle the vendor to rescind
\nthe contract.\n<\/p>\n
\tApplying the above principles to the facts of the present
\ncase, we find that there was no justification in claiming, in the
\ncircumstances, to treat time as of the essence.  At the outset,
\nreferring to the original agreement dated 18.2.1981, there is
\nnothing in the express stipulation between the parties to show
\nthat the intention was to make the rights of the parties
\ndependant upon the observance of the time limits.  Prima facie,
\nequity treats the importance of such time limits as being
\nsubordinate to the main purpose of the parties. [See: Jamshed
\nKhodaram Irani v. Burjorji Dhunjibhai reported in [AIR 1915
\nPC 83].\n<\/p>\n
\tIn the present case, it was submitted on behalf of the
\nappellants that time to pay Rs.75,000\/- on or before 30.9.1981
\nwas made the essence of the contract by notice dated 12.9.1981
\nas the respondent was a chronic defaulter.  We do not find any
\nmerit in this argument.  In his evidence, the respondent asserted
\nthat when he paid Rs.50,000\/- on 31.3.1981, the appellants
\norally agreed to extend the time for payment of Rs.75,000\/-
\nfrom 18.4.1981 to 30.9.1981; that at that time there was no
\nagreement to make time the essence of the contract.  This
\nassertion has not been rebutted by the appellants.  No evidence
\nin rebuttal has been led by the appellants.  Further, as rightly
\nheld by the Courts below, the conduct of the respondent was
\nnot a gross conduct so as to justify giving of notice making time
\nof the essence of the contract.  That on the contrary, time was
\nextended by the appellants in furtherance of clause (8) of the
\nagreement up to 31.12.1981.  In the circumstances, we are in
\nagreement with the conclusion that time was not of the essence.\n<\/p>\n
\tMr. Iyer, learned counsel for the appellants placed
\nreliance on the judgment of this Court in V. Pechimuthu v.
\nGowrammal<\/a> reported in [(2001) 7 SCC 617] in support of his
\nabove contention that time was the essence of the contract.  We
\ndo not find merit in this argument.  Firstly, as stated above,
\nwhether time is the essence of the contract would depend upon
\nfacts and circumstances of each case.  It would depend on
\nintention of the parties.  Secondly, the facts of the above
\njudgment show that the matter dealt with an agreement for
\nreconveyance, which as stated above, presumes that time is of
\nessence.  We have referred to Contract Law by Mulla
\nhereinabove, which states that in cases of reconveyance or
\nrenewal of lease, time is of essence as a matter of presumption
\nwhich is rebutable.  Lastly, in the case of  V. Pechimuthu
\n(supra), it has been held that rise in price of land agreed to be
\nconveyed may be a relevant factor in denying relief of specific
\nperformance when Court is considering whether to grant decree
\nfor the first time.  That it is not a relevant factor, however,
\nbefore the Supreme Court of India at SLP stage where all the
\nCourts below have granted decree.  It was, therefore, held that
\njudgment of this Court in K. S. Vidyanadam (supra) was
\ninapplicable.  In the present case, the appellants, in any event,
\nhave not stepped into the witness box nor have they led
\nevidence on any of their allegations.  In the circumstances, we
\ndo not wish to burden this judgment by citing various
\nauthorities.\n<\/p>\n
\tMr. Iyer, learned counsel for the appellants next
\ncontended that the respondent has failed to prove that he was
\nalways and that he continued to be ready and willing to fulfil
\nhis obligations under the agreement as required by section 16 of
\nthe Specific Relief Act.  It was urged that on 30.9.1981, the
\nrespondent herein offered two cheques to the appellants for
\nRs.30,000\/- dated 29.9.1981 and a post dated cheque  for
\nRs.45,000\/- dated 15.10.1981.  That in his evidence, the
\nrespondent had conceded that he had no funds on 30.9.1981.
\nThat under section 16, the burden is on the respondent to show
\nthat he was always ready and willing to comply with his
\nobligations.  Hence, it was urged that the Courts below erred in
\ngranting specific performance to the respondent.\n<\/p>\n
\tWe do not find any merit in the above arguments.  The
\nCourts below have examined the evidence on record and have
\nrecorded a finding of fact that the respondent was in a position
\nto raise the wherewithal for implementing the contract.
\nHowever, on facts, it is clear that time to complete the sale was
\nextended up to 31.12.1981.  That notice terminating the
\ncontract was given by the appellants on 3.10.1981 and the
\nrespondent had instituted the suit on 2.12.1981 which indicates
\nthat respondent was eager to fulfil his part of the contract.  That
\nit is nobody’s case that post dated cheque had bounced.  That
\nthere was no unreasonable delay in payment of consideration
\nand, therefore, it cannot be said that the respondent was not
\nready and willing to perform his part of the contract.\n<\/p>\n
\tIn the case of Nannapaneni Subayya Chowdary &
\nanother v. Garikapati Veeraya & another reported in [AIR
\n1957 AP 307] it has been held, after examining various
\nauthorities, that in the suit for specific performance, all that is
\nnecessary for the purchaser to show is that he was ready and
\nwilling to fulfil the terms of the agreement; that he had not
\nabandoned the contract; that he had kept the contract subsisting.
\nApplying the above tests to the facts of the present case, we are
\nof the view that the Courts below were right in their conclusion;
\nthat the respondent was always ready and willing to comply
\nwith his obligations under the contract.  In the circumstances,
\nthe Courts below were right in decreeing the suit for specific
\nperformance.\n<\/p>\n
\tBefore concluding, it may be pointed out that under the
\nimpugned judgment, the respondent was ordered to deposit
\nRs.75,000\/- payable under the second installment within eight
\nweeks from 17.6.2000.  If the aforestated amount has been so
\ndeposited, the appellants herein would be entitled to withdraw
\nthe same with interest, if any.\n<\/p>\n
\tFor the aforesaid reasons, we do not find any merit in this
\ncivil appeal, which is, accordingly, dismissed, with no order as
\nto costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Smt. Swarnam Ramachandran & … vs Aravacode Chakungal Jayapalan on 25 August, 2004 Author: Kapadia Bench: Ashok Bhan, S.H. Kapadia CASE NO.: Appeal (civil) 4527 of 2000 PETITIONER: SMT. SWARNAM RAMACHANDRAN & ANOTHER RESPONDENT: ARAVACODE CHAKUNGAL JAYAPALAN DATE OF JUDGMENT: 25\/08\/2004 BENCH: ASHOK BHAN & S.H. KAPADIA JUDGMENT: J U D […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-46597","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nSmt. 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