Appeal No 696 of 1971
Appeal from the Judgment and Decree dated the 20 4 1970 of the Allahabad High Court in First Appeal No15 of 1966
AK Sen ST Desai and PP Juneja for the Appellant
SVGupte and MV Goswami for Respondents
The Judgment of the Court was delivered by KAILASAM J
This appeal is filed by the plaintiff against the judgment of the Allahabad High Court on a cer tificate dismissing the suit for specific performance of a contract of sale dated 24th March 1964
878 The facts of the case are briefly as follows  The suit property was owned by one Shri Aditya Narain and the plaintiffappellant became a tenant of the suit property under Aditya Narain in the year 1942
On 2nd January 1961 the respondents the two defendants in the suit purchased the suit property for Rs 19000 from Aditya Narain and the appellant became tenant of the respondents
Soon after the purchase of the property by the respondents they sought to evict the appellant by filing a petition under section 3 of the UP Rent and Eviction Act
The appellant resisted and the Rent Control and Eviction Officer rejected the petition holding that the respondents  require ment of the premises was not genuine
On the mediation of Sri Chand Doneria the parties entered into the suit agree ment on 24th March 1964
In pursuance of the agreement the appellant handed over Rs 4000 as earnest money to the respondents
The terms of the agreement will be set out in due course but suffice it at this stage to state that it provided that the appellant should get the sale deed execut ed within two months ie upto 24th May 1964 and in case the appellant did not get the sale registered within two months the earnest money of Rs 4000 shall stand forfeited
From the 5th May 1964 letters and telegrams were exchanged between the parties but the sale deed was not executed on or before the 24th or on the 25th May as the parties had agreed
The appellant filed a suit Civil Suit No 122 of 1964 in the court of Civil Judge Agra on 2nd September 1964 alleging that the appellant has always been ready and willing to perform his part of the contract and he did all that he was bound to do under the agreement but the respond ents failed to execute the sale deed as agreed and therefore committed breach of the contract
The plaintiff prayed for a decree of specific performance of the contract of sale dated 24th March 1964 against the respondents and for direction to the respondents to execute the sale deed of the property and get it registered and in default the sale deed may be executed by the court according to law
The respond ents filed a written statement denying the various allega tions made in the plaint and pleaded that the appellant did not perform his part of the contract within the stipulated time and the contract thereafter did not subsist and there fore the suit was misconceived
On these pleadings the trial court framed five issues of which it is relevant to note only two which are issues 1 and 3
They are as under  Issue No 3
Whether the contract did not subsist on the date the to perform his part of the contract as alleged in the plaint  Issue No 3
Whether the contract did not subsist on the
date the suit was field  The trial court found that it was proved beyond a shadow of any doubt that the appellant was always ready and willing to perform his pan of the contract and the respondents were not at all anxious to execute the sale deed in his favour and that the respondents were guilty of breach of contract
On issue No 3 it found that even though the time for getting the sale deed executed expired after the 24th May 1964 the 879 appellant would not be disentitled to the relief of specific performance of the contract for sale on the
ground of delay as the respondents themselves were responsible for it
The respondents preferred an appeal to the Allahabad High Court and a Bench of the court on the arguments set out two points for determination in the appeal
They are  1 whether the appellant or the respondents committed the breach of con tract entered into between the parties on 24th March 1964 and 2 whether the time was of the essence of the contract
If not its effect
The High Court found that the respond ents were always ready and willing to perform their part of the contract in terms of the agreement dated 24th March 1964 and it was the appellant who committed the breach of the contract by not getting the sale deed executed by 25th May 1964 in terms of the agreement dated 24th March 1964
The High Court on the issue as to whether time was of the essence of the contract held that in the circumstances of the ease and in view of the conduct of the parties of serv ing on each other notices counter notices and telegrams they expressed their intention to treat time as of the essence of the contract and that once the time is held to be the essence of the
contract the appellant s suit for spe cific performance must fail
The High Court also held that even if time is not held to be of the essence of the con tract it was of the opinion that the appellant is not enti tled to a decree for specific performance as he had failed to prove that he was ready to perform his part of the con tract
The appellant applied for a certificate and the High Court by its order dated 22nd February 1971 granted the certificate under clause a of Article 1331 of the Con stitution
In this appeal before us the learned counsel for the appellant submitted that the High Court was in error in holding that the time was of the essence of the contract and that the High Court s finding that the appellant was not ready and willing to perform his part of the contract while the respondents were always ready to perform their part of the contract is opposed to oral and documentary evidence and the probabilities of the case
The first question that arises for consideration is whether time is of the essence of the contract
In order to
determine this question it is necessary to set out the suit agreement which is marked as exhibit 23 at page 137 of the papers
It runs as follows  Dear Pandit Govind Prasad Ji Chaturvedi Sir A litigation has been going on between you and us with respect to the Kothi of Bima Nagar of which you are a tenant on behalf of us
The said dispute has been decided today through the mediation of Sri Shri Chand Done riya on the terms and conditions given below which shall be
fully binding on you as well as us
That you are agreeable to purchase our Kothi of which you are a tenant and a transaction between you and 880 us has been finally settled today at Rs 24000 rupees twenty four thousand with respect to the said Kothi
2That you are paying us at present a sum of Rs 4000 in cash as earnest money the receipt whereof has been acknowledged by us by affixing a revenue stamp at the foot of this letter and that the remaining sum of Rs 20000 shall be paid by you to us at the time of registration
That the expenses relating registra tion and cost of stamps etc
shall be borne by you and we shall be entitled to get a sum of Rs 24000 rupees twenty four thousand net
That you must get the sale deed executed within two months ie upto 24th May 1964 and in case you do not get the sale deed registered within two months then the earnest money amounting to rupees four thousand paid by you shall stand forfeited without serving any notice
But in cane we in some way evade the execution of the sale deed then you will be entitled to compel us to execute
the sale deed legally and we shall be liable to pay the costs and damages incurred by you
That we shall furnish you a guarantee of good title in respect of the property which is free and immune from all sorts of disputes
That you shall be liable to pay the rent till the date you get the sale deed registered and you shall clear off all amount due to us before registration
That both the parties shall withdraw their respective cases or get the same dis missed and shall bear their own costs
That neither party shall take any fresh legal steps during this period of two months by which any hindrance may be caused in execution of our sale deed
In confirmation of the agreement which has been made between you and me through this letter you too have affixed your signature on this letter
Your s Signature of Hari Dutt Shastri 24 3 1964 Signature of Bhavbhooti Sharma 24 3 1964 X X X X X The relevant clause is clause 4 which provides that the appellant must get the sale deed executed within two months ie upto 24th May 1964 and in case the appellant did not get the sale deed registered within 881 two months then the earnest money amounting to Rs 4000 paid by the appellant shall stand forfeited without serving any notice
The clause further provides that in case the re spondents in some way evade the execution of the sale deed then the appellant will be entitled to compel them to exe cute the sale deed legally and the respondents shall be liable to pay the costs and damages incurred by the appel lant
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 immoveable property it will normally be presumed that the time is not the essence of the contract
vide Gomathinayagam Pillai  Ors
vs Palaniswami Nadar1
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 suffi ciently 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
Apart from the normal presumption that in the case of an agreement of sale of immovable property time is not the essence of the contract  and the fact that the terms of the agreement do not unmiStakably state that the time was under stood to be the essence of the contract neither in the pleadings nor during the trial the respondents contended that time was of the essence of the contract
In the plaint the allegation was that the appellant has always been ready and willing to perform his part of the contract and he did all that he was bound to do under the agreement while the respondents committed breach of the contract
The respond ents did not set up the plea that the time was of the es sence of the contract
In paragraph 32 of the Written Statement all that was stated was that the appellant did not perform his part of the contract within the stipulated time and that the contract thereafter did not
subsist and the suit is consequently misconceived
The parties did not go to trial on the basis that time was of the essence of the contract for no issue was framed regarding time being the essence of the contract
Neither is there any discussion in the judgment of the trial court regarding this point
The trial court after considering the evidence came to the conclusion that appellant was always ready and willing to perform his part of the contract while the respondents were not in the circumstances therefore the High Court was in error setting as one of the points for determination wheth er time was of the essence of the contract
The High Court after referring to the agreement was of the view that the agreement was entered into between the parties during the course of a litigation between the appellant and the re spondents and in pursuance of the agreement the parties were directed to withdraw their cases and were directed further not to take fresh legal steps during the period of two
months within which the sale deed was to be executed
On taking 1   233 882 into account the circumstances of the case and the con duct of the parties of serving on each other notices coun ter notices and telegrams the High Court inferred an inten tion on the part of the parties to treat the time as of essence of the contract
We will refer to the terms of the contract and the correspondence between the parties in due course but at this stage it is sufficient to state that neither the terms of the agreement nor the correspondence would indicate that the parties treated time as of essence of the contract
In fact according to the agreement the sale deed ought to have been executed by the 24th May but it is the admitted case that both the parties consented to have the document registered on the 25th May
On the question whether the time is of the essence of the contract or not we are satisfied that the High Court was in error in allowing the respondents to raise this question in the absence of specific pleadings or issues raised before the trial court and when the case of time being the essence of the contract was not put forward by the respondents in the trial court
Apart from the absence of pleadings we do not find any basis for the plea of the respondents that the time was of the essence of the contract
The decision on this issue would be sufficient to allow this appeal and to grant the appellant the decree for spe cific performance which he has prayed for but as on the question whether the appellant was always ready and willing to perform his part of the contract the courts below have given contrary finding and the High Court has recorded a finding that the appellant was not ready and willing to
perform his part of the contract while the respondents were always ready and willing with which finding we are unable to agree we will discuss the evidence at some length
The background to the suit agreement dated 24th March 1964 is that there was litigation between the parties
The appellant was a tenant under the previous owner Aditya Narain from 1942
The respondents purchased the property in 1961 and in 1963 filed
a petition to evict the appel lant
That petition was resisted and the Rent Control and Eviction Officer dismissed the petition of the respondents
While the matters stood thus the compromise was entered into
The appellant having been a tenant of the premises from 1942 would have been naturally anxious to continue in possession while the respondents who had purchased the property in 1961 were anxious to
get into possession
As they wanted to settle their dispute the respondents agreed to
sell the property for which the appellant was willing and
which they had purchased on 2 1 1961 for Rs 19000 to the appellant for Rs 24000
Of this Rs 24000 the tenant paid Rs 4000 in cash as earnest money
This would indicate that the tenant was keen on purchasing the property in which he was living since 1942
The agreement provided that the appellant must get the sale deed executed within two months after 24th March 1964 and if the appellant failed to get the sale deed registered within two months the earnest money of Rs 4000 shall stand forfeited
Normally one would not expect the appellant to
forfeit his earnest money
As the period stipulated was 24th May 1964 the appellant started prepara 883 tions for getting the sale deed executed
According to the appellant he wrote exhibit 24 on 5th
May 1964 calling upon the respondents to come to Agra on the 18th May 1964 for exe cuting and making registration in pursuance of the contract and to complete the sale deed
According to the appellant no reply was received to this letter and he sent a notice through his advocate exhibit 35 on 13th May 1964 in which he stated that he was ready to pay the balance of the consider ation of Rs 24000 along with the entire arrears of rent and requested the respondents to
execute the sale deed by 18th May and latest by 24th May 1964
The lawyer s notice iso
referred to the letter of the 5th May Another lawyer s notice
was sent exhibit 36 on 20th May 1964 by registered post complaining that the respondents had not replied to his letter dated 5th May 1964 and to his law yer s notice dated 13th May 1964 and called upon them to
get the sale deed registered by 25th May 1964 as 24th May is Sunday
Along with the lawyer s notice a draft sale deed was endorsed
These three letters were followed by tele grams which were sent by the appellant to both the respond ents on 20th May On the 22nd
May the appel lant attended the office of the Sub Registrar Agra and presented an application to the Registrar to the effect that he was at the Registrar s office between the hours 3 and 4 pm on that day
On 22nd May 1964 the appellant received a reply from the respondents acknowledging the registered notices given on 13th and 20th May by the appellant s coun sel
According to the reply by the advocate on behalf of the respondents the two letters of the 13th and 20th May were received by the respondents only on the 22nil May 1964
In this reply of 22nd May 1964 the advocate of the respondents denied the allegation in the notice dated 20th May 1964 of the
appellant that the draft sale deed has been put in the cover
It also complained that the draft sale deed has not been sent
The respondents stated that they were ready to execute the sale deed but the appellant was wanting postponement for reasons best known to him
It may be noted that the two complaints that are made in the advocate s notice on behalf of the respondents
do not bear scrutiny
The notice complains that the draft sale deed has not been enclosed
It has been proved that in one of the notices sent to the son and which was opened in the court the draft sale deed was found enclosed
Further without the cooperation of the respondents it is difficult to prepare a draft sale deed as the dateof sale by Aditya Narain in favour of the respondents would not have been available to
the appellant
In fact Mr Gupte the learned counsel for the respondents submitted that the letter stating that a copy of the draft sale deed was enclosed cannot be true as the appellant could not have got particulars about the earlier document of title of the respondents
The respond ents  plea that the draft sale deed was not received does not show that they were willing or cooperating in the execu tion of the sale deed
We are unable to give any weight to the contention of the learned counsel that their plea that they sent a draft sale deed cannot be true as they could not have been in possession of particulars about the title deed of the respondents
In fact no question was asked of the appellant when he was in the box as to how they got information as to the sale deed by Aditya Narain in favour of the respondents
The letter of the 884 5th May the receipt of which was not denied by the reply of the advocate for the respondents and the lawyer s notices on behalf of the appellant exhibit P 35 and P 36 dated 13th May and 22nd May 1964 would show great anxiety on the part of the appellant to complete the sale deed
There can be no doubt that they had basis for suspecting that the respond ents were not willing to perform their part of the contract
A considerable volume of evidence has been let in on behalf of the appellant as well as the respondents regarding as to what took place in the Sub Registrar s office on 25th May 1964
It is sufficient to state that both the parties let in oral evidence as well as acknowledgment by the Sub Registrar to prove their presence
Though both the parties would assert their presence it is common ground that they did not meet each other
It is difficult for us to
comprehend as to how if both the parties were present at the Sub Registrar s office they did not meet each other
It is obvious therefore that the parties were keen on creating evidence in support of the ensuing litigation
But on the facts the conclusion is irresistible that it was the appel lant who was anxious to get through the sale deed he having paid Rs 4000 as the earnest money and living in the prem ises for over 25 years
It is not necessary for us to refer to the subsequent letters and telegrams exchanged between the parties as that would not alter the position in any event
On a consideration of the letters and telegrams that passed between the parties the trial court held that it was proved beyond a shadow of doubt that the appellant was always ready and willing to perform his part of the contract and that the respondents were not anxious to execute the sale deed
The trial court accepted the evidence on behalf of the appellant that the appellant was possessed of suffi cient funds and in fact he withdrew a sum of Rs 20500 from the Central Bank of India Ltd As the appellant had paid the respondents Rs 4000 he had to pay them only Rs 20000 towards the balance of sale consideration
The arrears of Rs 956 due towards rent and a sum of Rs 2000 was to be spent on getting the sale deed executed
In all a sum of Rs 22956 was required
He had withdrawn Rs 20500 from the Central Bank of India Ltd The trial court accepted the evidence adduced by the appellant
The trial court also accepted the evidence that the appellant had Rs 5000 with him at home and about Rs 30000 in deposit with a firm
This part of the testimony on behalf of the appellant was proved by the evidence of Kailash Nath PW2 Manira of Ms Chhitar Mal Ram Dayal and the trial court accepted the evidence and found that the appellant had sufficient funds for getting the sale deed executed
This conclusion which we consider is irresistible was not accepted by the High Court
The High Court while ac cepting the evidence that the appellant had a sum of Rs4500 in deposit in the bank upto 20th May 1964 and subsequently on 21st May 1964 he deposited a sum of Rs14000 and again a sum of Rs 2500 on 22nd May 885 1964 and that thus the appellant had Rs 21000 in bank on 22nd May 1964 found the case of the appellant unworthy of credit
The High Court further observed that after the appellant had raised his deposit in the bank to Rs 21000 he did not deposit any further amount and therefore the amount fell short of the needed amount by Rs 2000
Con scious of the weakness in his story the appellant asserted in his statement that he had Rs 7000 or 8000 with him at his house
We are at a loss to follow the reasoning of the High Court
The appellant stated that he deposited the money which was with him in the house in the bank on advice for the purpose of proving that he had money with him
The Court does not suspect that he did not have Rs 20500
The shortage at the most is of Rs 2000 and it cannot be said that the evidence of the appellant that he had necessary money for expenses of registration is unacceptable
Further the appellant examined Kailash Nath PW2 of Ms Chhitar Mal Ram Dayal who stated that a sum of Rs30000 belonging to the appellant was lying in deposit with them
We are unable to accept the conclusion of the High Court that the appellant did not have enough funds for getting the sale deed executed the High Court while not disbelieving the fact that various letters and telegrams were sent by the appellant has remarked that the appellant did not take the course of personally going to the respondents and asking for the sale deed
In our view the parties were suspecting each other and nothing would have been achieved by the appellant by going in person and requesting the respondents to execute the sale deed
In fact the respondents set up
a story that the appellant approached the respondents and stated that he was not able to perform his part of the contract within the Stipulated time
This evidence cannot be accepted taking into account the relationship between the parties
We have carefully considered the evidence and the correspondence between the parties and we have no hesitation in accepting the conclusion reached by the trial Judge that the appellant was always ready and willing to perform his part of the contract and that the respondents were evading their responsibility
The finding on this issue by the High Court is not supported by evidence or on the probabilities of the case
In the result we allow the appeal on the ground that the respondents have failed to establish that the time is of the essence
of the contract and that the appellant has succeed ed in establishing that he was always ready and willing to perform his part of the contract and the respondents evaded their responsibility
The judgment of the High Court is set aside and that of the trial court is restored The appeal is allowed with costs
The appellant will deposit Rs20000and the sale documents in the court of the Civil Judge Agra within six weeks from today and the parties will take further direction in the matter from the Civil Judge Agra
M P
Appeal allowed


Summary:
The appellants entered into an agreement with the re spondents on March 24 1964 for purchasing the suit proper ty belonging to the latter
The terms of the agreement provided that the appellant would get the sale deed executed upto May 24 1964 and in case of his failure to do so the earnest money paid by him to the respondent would stand forfeited
The sale deed was not executed within the pre scribed time and the appellant filed a suit against the respondents for breach of contract
The trial court granted him the relief of specific performance of the contract
The respondents succeeded in an appeal before the High Court on the ground that time was of the essence of the contract and therefore the relief of  specific performance could not be granted and also that the appellant had not been ready to perform his part of the contract
Allowing the appeal by certificate the Court HELD 1 Fixation of the period within which the con tract has to be performed does not make the stipulation as to time the essence of the contract
When a contract re lates to sale of immovable property it will normally be presumed that the time is not the essence of the contract
The intention to treat time as the essence may be evidenced by circumstances which are sufficiently strong to displace the normal presumption
881 A C Gomathinarayana Pillai  Ors
vs Palaniswamy Nadar   233 applied
2 In the absence of specific pleadings or issues raised before the trial court the question whether the time is of the essence of the contract or not
cannot be raised before the High Court in appeal
882 B C 3 A careful consideration of the evidence and the correspondence between the parties shows that the appellant was always ready to perform his part of the contract and that the respondents were evading their responsibilities
885F G