Point of Law : An agreement for sale of immovable property purchaser can no longer take shelter under the principle that time is not of essence in performance of contracts relating to immovable property when he does not take steps to complete sale within agreed period.

JUDGMENT :

Shekhar B. Saraf, J.

Facts:

1. The plaintiff/petitioner has instituted the present suit being CS No. 165 of 2021, inter-alia, for specific performance of a registered development agreement entered into with the defendant/respondent on August 17, 2015 in respect of premises no. 1, Upper Wood Street, Kolkata, pursuant to which a Power of Attorney was given in favour of the Petitioner’s nominee Mahesh Kumar Agarwal (now deceased) on the same day i.e. August 17, 2015 for obtaining necessary sanctions and approvals from the KMC as well as other authorities for the purpose of carrying out the development work. This interlocutory application being G.A. No. 1 of 2021 has been filed for seeking a new Power of Attorney in favour of new Nominee of the plaintiff company and some other reliefs.

2. The petitioner incurred Rs. 5,70,33,888.90/- on account of the development work of the subject premises along with a sum of Rs. 5,00,00,000/- towards the security deposit against the said development agreement between the parties. As per accounts of the petitioner, only in the financial year 2018-2019 a cost of around Rs. 1,79,00,000/- was incurred by the petitioner towards construction of the said premises. The work was being performed by the petitioner till the demise of its nominee and/or director Mr. Mahesh Kumar Agarwal on April 3, 2020. Sanction plan for the development of the premises was granted on November 18, 2016 and the same was due to expire on November 17, 2021. Taking this into consideration the petitioner was allowed an ad-interim order restraining the respondent from creating any third party rights in respect of the subject premises on November 16, 2021 and the same has been extended from time to time, lastly extended till December 31, 2021.

Arguments:

3. Mr. Ranjan Bachawat, Senior Advocate appearing for the plaintiff argues that defendant is contractually obligated for specific performance of a registered development agreement dated August 17, 2015. It is the case of the petitioner that despite repeated reminders to the respondents/defendant to issue a fresh power of attorney in favour of the petitioner’s nominee, the respondent has failed and/or neglected to carry out its reciprocal obligation under the terms of the contract. It is further argued by the counsel for the petitioner that the Agreement for Development dated August 17, 2015 (hereinafter referred to as “the development agreement”) was never terminated. He further submits that the conduct of the parties shows that the contract still continues.

4. The petitioner avers that time is never the essence of contract in case of immovable property unless expressly provided by the parties to a contract. The petitioner places reliance on M/s. Hind Construction Contractors –v-State of Maharashtra reported in (1979) 2 SCC 70 to contend that the question whether or not time was of the essence of the contract would essentially be a question of the intention of the parties to be gathered from the terms of the contract. Thereafter, the petitioner states that the intention of the parties was to not make time the essence of the contract. Thus, the principle as laid down in the case of Hind Construction (supra) squarely applies.

5. Further, Mr. Bachawat, argues that specific performance in respect of contracts is no longer discretionary post the amendment of Specific Relief Act, 1963 and the same is governed by the new amended provisions of the Specific Relief Act, 1963. He relies on B. Santoshshamma and Another –v-D. Sarala and Another decided on September 18, 2020 in Civil Appeal Nos. 3574-3577 of 2009 to contend that the power of the Court to direct specific performance of an agreement may have been discretionary earlier but such power could not be arbitrary and it has to be exercised in accordance with sound and reasonable judicial principles. Another submission made by the petitioner is with regard to share in the contractual building i.e. 35% which he is entitled to as per Cla