IMPORTANT POINT
Rigor of the rule evolved by courts that time is not of the essence of contract in an agreement for sale of immovable properties, requires to be relaxed, if not modified, particularly in case of urban immovable properties.

JUDGMENT

B.P. Jeevan Reddy, J.-Defendants 1 to 4 are the appellants. The respondent s suit for specific performance has been decreed in appeal by the Madras High Court. The Trial Court had denied specific performance but had directed refund of the earnest money paid by the plaintiff. The fourth defendant is the purchaser of the suit property from Defendants 1 to 3 after the decree of the Trial Court. He was impleaded as a respondent in the appeal.

2. On 15th December, 1978, an agreement of sale was entered into between Defendants 1 to 3 and the plaintiff whereunder they agreed to sell and purchase the suit house for a consideration of Rs. 60,000/-. The relevant recitals of the agreement read as follows :

".....has been agreed to be sold by the first party in favour of the second party for the sale consideration of Rs. 60000 (Rupees Sixty Thousand only) within a period of six months from this date and in this regard from and out of the aforesaid sale amount a portion of the same being Rs. 5000/- has been obtained this day as advance amount with interest, by the first party from the second party. Further it had been stipulated that within the aforesaid period of six months the second party should purchase the stamp papers at his own expense and after adjusting the aforesaid advance amount should pay the balance amount either in person or in the presence of the Registrar and the first party should affix his signature and execute the same in favour of the second party; that further prior to Registration of the aforesaid sale deed, the first party should vacate and deliver possession in favour of the second party together with the keys and if the second party fails to complete the purchase as aforesaid the advance amount without interest and paid to the first party should not be demanded to be returned and likewise, if the second party were to be ready to complete the purchase and the first party fails to execute the aforesaid sale, the first party will be liable to pay the aforesaid advance amount of Rs. 5000/- together with compensation of Rs. 5000/- in all totalling Rs. 10,000/- to the second party, without resorting to any litigation and with the aforesaid condition both the parties have wholeheartedly executed this sale agreement with consent...."

3. On July 11, 1981, i.e., more than 2½ years later, the plaintiff issued a notice through his advocate to Defendants 1 to 3 stating that he has always been ready and willing to perform his part of the contract, that he is sufficiently rich and is able to pay the amount of Rs. 50,000/-as and when required. He alleged further : "(4) Though as per the agreement of sale, six months time had been stated, as you know time was not agreed as the essence of the contract. In fact tenant is in occupation of the property agreed to be sold to my client. Whenever my client was approaching one or other of you, you have been stating that the tenant had not vacated and was asking for time and that as soon as the tenant vacates you would execute the sale deed. Days are passing by". The plaintiff then stated that though as per agreement of sale, the defendants were under an obligation to deliver vacant possession but because the tenant has not so far vacated the building, the plaintiff is prepared to purchase the building with the tenant. Accordingly, the plaintiff called upon Defendants 1 to 3 to execute the sale deed on an agreed date.

4. To this notice, Defendants 1 to 3 sent a reply stating that time was the essence of the contract, that the prices of the property are sharply increasing day-by-day, that the tenant is their relation who is always willing and ready to vacate the property and that it was the plaintiff who was not ready and willing to complete the transaction. Only when the plaintiff noticed that the prices in the locality have gone up three times, has he come forward with the suit notice. The defendants stated that the plaintiff never approached them for anything and that they never mad