Chandka 1 APPL-647-10 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL (L) NO. 647 OF 2010 IN NOTICE OF MOTION NO. 2655 OF 2009 IN SUIT NO. 1936 OF 2009 Jayant Shah & Anr. ..Appellants versus Dipti Umesh Barai & Ors. ..Respondents Mr. I. M. Chagla, Sr. Advocate with Mr. Mukesh M. Vashi and Mr. Sean Wassoodew for Appellants. Mr. P. K. Dhakephalkar, Sr. Advocate with Mr. V. N. Bodke and Ms. Madhu Hiraskar i/b. Chitnis Vaithy & Co. for Respondent Nos. 1 to 4. CORAM : DR. D. Y. CHANDRACHUD & ANOOP V. MOHTA, JJ. 31 January 2011. P.C. : This Appeal is from an Order of a learned Single Judge by which the Motion for interim relief was dismissed. The Appellants are the Plaintiffs in a suit instituted before this Court seeking interalia a declaration that the Appellants have fulfilled their obligations under a Share Purchase Chandka 2 APPL-647-10 Agreement dated 15 April 2005. The Agreement in question was for the transfer of 4000 shares representing the entire capital of the Fourth Respondent at and for a consideration of Rupees Two Crores. Clause 3.1 of the Agreement stipulated that the transferors (the First, Second and Third Respondents) would deposit with an escrow agent the shares together with the instruments of transfer. Simultaneously with the deposit of the shares the Appellants were to initially deposit Rs.80,00,000/- towards the total purchase consideration. This amount was paid. Clause 3.2 stipulated that the balance of the purchase consideration of Rs.1.20 crores would be deposited with the escrow agent in equal installments of Rs.40,00,000/- each on or before 1 September and 1 December 2005 and 1 March 2006, Clause 4.2 stipulated that time was to be of the essence of the Agreement. 2. There was a default on the part of the Appellants in paying the installments of Rs.80,00,000/- under Clause 3.2. By a letter dated 28 December 2005 time to do so was extended until 10 February 2006 and the Appellants were informed that in the event of their failure to do so, the escrow agent would be entitled to return the original share certificates together with the transfer deeds to the transferors and the monies paid by the Appellants would stand forfeited. The Appellants failed to pay the balance by the extended date. The transferors terminated the Agreement by notice to Chandka 3 APPL-647-10 the escrow agent dated 6 July 2006. A copy of the notice was forwarded by the escrow agent to the Appellants and to which the Appellants then submitted a reply. It is after the termination of the Agreement on 6 July 2006 that the Appellants tendered payment on 6 September 2006. 3. The learned Single Judge held that the Appellants were in default of their obligations under the Share Purchase Agreement. The Motion for interim relief was thus dismissed. 4. On behalf of the Appellants it has been submitted that though under Clause 4.2 of the Agreement, time was expressly made the essence of the agreement, that provision was waived by the transferors when they agreed to extend time for the payment of installments of Rs.80,00,000/-, by their letter dated 28 December 2005. 5. There is no merit in the submission that the letter dated 28 December 2005 constitutes a waiver of Clause 4.2 of the Agreement under which time was made the essence. As a matter of fact while extending time until 10 February 2006 the transferors had specifically stated as follows: “Further to this, I would like to draw your kind attention to the fact that in case of failure in making payment of the said two installments from your side and under such circumstances, as per clause 3.2(a), on page 8 of the Chandka 4 APPL-647-10 Share Purchase Agreement, executed on 15-04-2005, the Escrow Agent is entitled to return the original share certificate along with the duty transfer deeds to us and all the monies paid by you shall stand forfeited with the said agreement, without any further reference to you.” The Agreement was for the sale and purchase of shares. Having regard to the nature of the transaction and the letter of the transferors dated 28 December 2005, it is evident that the Appellants themselves were in default of their obligations to pay the balance consideration. The finding of the learned Single Judge that the Appellants were in breach is borne from the record. Hence, no case had been made out in the Appeal. The Appeal is accordingly dismissed. (Dr. D. Y. Chandrachud, J.) (Anoop V. Mohta, J.)