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HIGH COURT OF CALCUTTA
R. P. Mookerjee, Renupada Mukherjee
KALIDAS GHOSH - Appellant
Versus
MUGNEERAM BANGUR AND CO. - Respondent
A. F. O. D. 139 Of 1948
Decided On : MARCH 24, 1954
CONTRACT - SPECIFIC PERFORMANCE - TIME OF ESSENCE - CONSTRUCTION OF CONTRACT - INTENTION OF PARTIES - CONDUCT OF PARTIES - WAIVER - RELIEF - AD VALOREM COURT-FEES.
Fact of the Case:
Plaintiff-appellant entered into a contract with the respondent company to purchase a plot of land. The contract contained a clause stating that time was of the essence of the contract and that if the appellant failed to complete the transaction within one month from the date of the contract, the agreement would be considered as cancelled with forfeiture of earnest money. The appellant failed to complete the transaction within the stipulated time, but the respondent company did not take any action to cancel the contract. The appellant subsequently wrote to the respondent company enquiring about the status of the contract, but the respondent company did not respond. The appellant then filed a suit for a declaration that the contract was still subsisting and that he was entitled to get a conveyance executed and registered in his favour by the respondent company.
Finding of the Court:
The court held that time was not of the essence of the contract in this case. The court considered the circumstances in which the property was placed at the time of the contract, the subsequent conduct of the parties in relation to the contract, and the fact that the respondent company had not taken any action to cancel the contract after the appellant had failed to complete the transaction within the stipulated time. The court also held that the appellant was entitled to specific performance of the contract, and that the respondent company was not entitled to interest on the balance of the consideration money because the kobala remained unexecuted for all these years not on account of any negligence or laches on the part of appellant, but on account of the unreasonable attitude taken by the respondent.
Issues: 1. Was time of the essence of the contract in this particular case? 2. Is the plaintiff-appellant entitled to have the contract specifically enforced?
Ratio Decidendi: 1. The court held that time was not of the essence of the contract in this case because: a. The contract contained a clause stating that time was of the essence of the contract, but the court found that this clause was not intended to be of the essence of the contract. b. The circumstances in which the property was placed at the time of the contract, the subsequent conduct of the parties in relation to the contract, and the fact that the respondent company had not taken any action to cancel the contract after the appellant had failed to complete the transaction within the stipulated time, all indicated that time was not of the essence of the contract. 2. The court held that the appellant was entitled to specific performance of the contract because: a. The appellant had not violated any of the material terms of the contract. b. The respondent company had not taken any action to cancel the contract after the appellant had failed to complete the transaction within the stipulated time. c. The appellant was prepared to pay the balance of the consideration money.
Final Decision: The appeal was allowed and the judgment and decree of the Trial Court were set aside. The appellant was directed to deposit Rs. 14,299/- in the Trial Court to the credit of the respondent by 31-5-1954, and on such deposit being made the respondent Company must execute and register proper conveyance in favour of the appellant at the appellant's cost in respect of the disputed land within six weeks of the deposit of the money.
( 1 ) THIS is an appeal by the plaintiff and is directed against a judgment and decree passed by the Additional Subordinate Judge, Fourth Court, 24-Parganas in Title Suit No. 12/1948/171/1946 of his Court.
( 2 ) THE suit was instituted by the plaintiff for a declaration that a, certain contract between himself, and the respondent was subsisting at the date of the suit, and he was entitled to get a decree for specific performance of it by having a conveyance from the respondent. It will be seen later that although the suit was brought as a declaratory suit the substantial relief which could be given to the plaintiff in this case is a decree for specific performance of the alleged contract.
( 3 ) THE suit was contested by the respondent and it was dismissed by the trial Court on the ground that in this case time was of the essence of the contract, and the, defendant was justified in avoiding the contract because of the failure of the plaintiff to perform his part of the contract witnin the time stipulated in it. The plaintiff has preferred this appeal against the above judgment and decree.
( 4 ) THE points requiring decision in this appeal are: (1) Was time of the essence of the contract in this particular case? (2) Is the plaintiff-appellant entitled to have the contract specifically enforced? (5) Both the above points are intermixed and they may be conveniently taken together for decision.
( 5 ) THE undisputed facts of this case may thus be set out shortly. The respondent company started a scheme for development and sale of land for residential purposes known as Lake Colony Scheme No. 1, within Police Station Tollygunje. Even before the land was completely developed if was parcelled out into plots, and these plots were offered to the public for sale. Appellant Kalidas. Ghosh made an application to the company on 15-4-1943, proposing to purchase plot No. 186 of the scheme at a price of Rs. 1800/- per cotta, and he also deposited Rs. 101/- with the company on the same day by way of earnest money. This application was marked Ext. 4 in the trial Court. On the same day the company granted a receipt to the appellant acknowledging receipt of the earnest money and calling upon him to have the conveyance completed within a month from that date on payment of the balance of the consideration money (Vide receipt, Ex. 5 ). Admittedly, neither party did anything towards the performance of the contract within the above period or even after the expiry of that period until on 20-6-1944, that is, fourteen months after the date of the agreement the appellant wrote a registered letter to the respondent enquiring when the roads and drains were going to be constructed and arrangement for water supply made and also when he should be called upon to pay the purchase price (Vide letter, Ex. 3 ). It is, however, admitted that the Government was in the meanwhile requisitioning the land covered by the scheme bit by bit for war purposes making it impossible for the company to develop the land fully. The evidence of respondent's manager and sole witness Kanailal Muchhal on this point which is not challenged by the appellant would show that such requisition started from November 1941, and ended in November 1944, by which time the entire land, covered by the scheme was requisitioned by the Government, The letter written by the appellant to the respondent and referred to above remained unanswered, and so also another registered letter to the same tune bearing date, 20-8-1945, (Vide Ex. 3 (a) ). On 22-10-1945, appellant's pleader Sri Harendra Nath Chatterjee wrote a letter to the respondent demanding the completion of the conveyance on behalf of his client. To this the "respondent replied on 24-1-1946, to say that the contract stood cancelled and the earnest money was forfeited because the appellant had not completed the transaction within the period stipulated in the contract by payment of the balance of the consideration money (Vid
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