JUDGMENT - A.A. DESAI, J.:---By this appeal the original defendants have challenged the judgement and decree dated 18th of July, 1983, ordering them to execute a sale deed, pursuant to the agreement of safe dated 11th of October, 1978 in favour of the respondent/original plaintiff. This appeal amongst other requires us to ascertain, on construction of the agreement, as to whether the intention of the parties was to make the time as the essence of the contract.

2. The appellants/defendants since having various shares, are the joint owners of the suit property known as Laxmi Talkies, Sitabuldi, Nagpur. The respondent/plaintiff, a private limited company deals in exhibition of films and also owns cinema theatres. The parties after negotiations for a considerable period settled the terms and conditions of the agreement of sale. The defendants on 5th of October, 1978 received Rs. 1,00,000/- as an earnest money. The parties thereafter on 11th of October, 1978 recorded (Exh. 90) an agreement of sale. Accordingly, the plaintiff agreed to purchase the suit property for a total consideration of Rs. 15,00,000/- (Rs. 12,00,000/- for Talkies and Rs. 3,00,000/- for moveables, fixtures etc.). The balance consideration of Rs. 14,00,000/- was to be paid on or before 15th of March, 1979 at the time of execution and registration of a sale deed.

3. According to the plaintiff, for execution of a deed of sale, the defendants were required to obtain permission from the Income Tax Department, clearance from Reserve Bank of India for payment of consideration to some of the non-residents-defendants and also permission for sale from the competent authority under the Urban Ceiling Act. The defendants, however, failed to obtain the requisite permissions and clearance before 15th of March, 1979. The defendants by a letter 17th of February, 1979 sought extension upto 22nd of March, 1979 for executing the sale deed. They have by another letter dated 6th March, 1979 asked the plaintiff to indemnify them to the extent of Rs. 5,75,000/- against the contemplated liability of Income Tax on the capital gain. However, by a telegram dated 16th of March, 1979 they have informed that since the sale deed could not be executed before 15th of March, 1979 the agreement had come to an end. The plaintiff by a letter dated 25th of March, 1979 had shown their willingness to get the sale deed executed. However, the defendants did not reply. The plaintiff has, therefore, filed the suit claiming specific performance of the agreement dated 11th October, 1978.

4. The defendants by their written statement resisted the claim. According to them, the sale deed was to be executed on or before 15th of March, 1979, i.e. the period stipulated under the agreement. According to them, the period of Finance Act, 1978 was to expire by 31st of March, 1979. The period from 16th of March, 1979 to 31st of March, 1979 was required so as to enable them to invest sale-proceeds in securities as provided under section 54(E) of the Income Tax Act, 1961. They would have then saved payment of tax on the capital gain estimated at about 5.75 lakhs. It was further stated that the plaintiff has committed defaults by not furnishing the Bank guarantee and by not paying Rs. 4,00,000/- in terms of the agreement. The defendants asserted that as per Clause 6, the agreement failed since the sale-deed was not executed on or before 15th of March, 1979 for whatever reason. According to the defendants the time was made the essence of the contract.

5. The parties after the agreement, have exchanged correspondence through their lawyers which they have filed on record. Parties have also examined the P.W. 1 Kamalkishore Rathi who is a Director of the plaintiff Company. P.W. 2 Mohan an employee of the Punjab National Bank, P.W. 3 P.P. Deo Advocate who represented the plaintiff, D.W. 1 Shri Sane the defendant, D.W. 2 Shri Joshi, Tax Consultant of the defendant, D.W. 3 Advocate Padhye who represented the defendant and D.W. 4 Tamb

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