2023 Supreme(Del) 1671

IN THE HIGH COURT OF DELHI AT NEW DELHI
Neena Bansal Krishna, J.
Shridhar Bajaj S/o Late Shri Baij Nath Bajaj – Appellant
Versus
Gyanesh Chaudhary S/o Shri. Desh Raj Chaudhary – Respondent
CS(OS) 2248 of 2008 & I.A. 13053 of 2008
Decided On : 10-04-2023

Time can be the essence of a contract for the sale of immovable property, especially in cases where there has been a steep rise in the price of the property within the stipulated time.

Headnote:

SPECIFIC PERFORMANCE OF AGREEMENT TO SELL - IRREVOCABLE AGREEMENT - CONTINGENT CONTRACT - TIME AS ESSENCE OF CONTRACT - READINESS AND WILLINGNESS - CONDUCT OF PARTIES - DELAY - SPECIFIC RELIEF ACT, 1963, SECTIONS 16(C), 20, 21, 22, 23.

Fact of the Case:

Plaintiff sought specific performance of an agreement to sell dated 09.02.2006 in respect of a property and permanent injunction restraining the defendant from creating third-party rights in the suit property. The agreement provided that the balance amount of Rs. 1,00,00,000/- would be paid by the plaintiff within 15 days of the registration of the Conveyance Deed in favor of the defendant by D.S.I.D.C. and the defendant shall deliver the vacant physical possession of the suit property to the plaintiff thereof. The Conveyance Deed was not received from D.S.I.D.C by 30.04.2006, and the parties mutually consented to extend the Agreement upto 30.06.2006. The defendant, however, interpreted the Agreement incorrectly and wrote a letter dated 06.07.2006 stating that since the Conveyance Deed has not been received on 30.04.2006 and thereafter till 30.06.2006, the Agreement has come to an end in terms of Clause 7 of the Agreement and the amount of Rs. 24,00,000/- was returned by way of Bank Pay Order. The plaintiff claimed that the defendant has taken a false plea of D.S.I.D.C. not having given any Conveyance Deed; rather the defendant has become dishonest as he wants more money. The defendant asserted that the Agreement has come to an end as no Conveyance Deed has been received from D.S.I.D.C.

Finding of the Court:

1. The plaintiff was neither willing nor ready for the execution of the Agreement to Sell, and for this reason, he did not seek any extension of the Contract beyond 30.06.2006 which disentitles him from seeking specific performance of the Agreement to Sell. 2. Though time in given cases may not be an essence of Agreement to Sell, but herein the present case, since it was linked to getting a Conveyance Deed by 30.06.2006 which actually did not happen, and further considering that the defendant cancelled the Agreement to Sell vide his Letter dated 06.07.2006/ Ex. P3 and also returned the amount of Rs.24,00,000/- by way of Pay Orders which were not repudiated by the plaintiff, except that he sent a Legal Notice dated 12.07.2006 Ex. P4 claiming specific performance, but he remained silent about cancellation or return of money received by him by way of Pay Orders, clearly reflects that the time was treated as an essence in the Agreement to Sell which was cancelled on expiry of the stipulated time. Accordingly, the plaintiff was not entitled to seek extension of time beyond 30.06.2006. 3. Clause 9 of the Agreement to Sell did not make the Contract irrevocable under all circumstances. 4. The Agreement between the parties was not a contingent contract and its performance was not dependent on the receipt of the offer by the defendant from D.S.I.D.C by 30.06.2006. 5. The plaintiff failed to seek the relief of declaration that the termination of the cancellation of Agreement to Sell by the defendant was illegal and non-est. In the absence of any such prayer, the Suit filed by the plaintiff for grant of Decree of Specific Performance is not maintainable in law.

Issues: 1. Whether the plaintiff proves that he was ready and willing to perform his part of the contract and continues to be so (to perform his part of the contract) dated 09.02.2006? 2. Whether by reason of clause-9 of the agreement to sell dated 09.02.2006, the contract is irrevocable? 3. Whether time was the essence to the contract, as claimed by the defendant? 4. Whether the contract between the parties cannot be enforced, as claimed for the reason that it was a contingent contract? 5. Whether the plaintiff is disentitled to any relief as he did not seek extension of the contract beyond the extended period i.e., 30.06.2006; 6. Is the plaintiff entitled to a decree for specific performance of the agreement to sell dated 09.02.2006?

Ratio Decidendi: 1. The plaintiff failed to prove his readiness and willingness to perform his part of the contract as required under Section 16(c) of the Specific Relief Act, 1963. He did not have the financial capacity to pay the balance consideration amount and his conduct after the termination of the Agreement on 30.06.2006 showed that he had no intention to continue with the Agreement. 2. Clause 9 of the Agreement to Sell did not make the Contract irrevocable under all circumstances. It was circumscribed by Clause 7 of the said Agreement which clearly provided that in case offer from D.S.I.D.C was not received by the first party by 30.04.2006, the Agreement shall be treated as cancelled. 3. Time was the essence of the Contract in this case as the plaintiff did not take steps to complete the sale within the stipulated period and the defendant was not responsible for any delay. The fact that there has been a steep rise in the price within the stipulated time would be a circumstance which may make it inequitable to grant the relief of specific performance. 4. The Agreement between the parties was not a contingent contract and its performance was not dependent on the receipt of the offer by the defendant from D.S.I.D.C by 30.06.2006. The offer of letter had already been received and it was the defendant who had to do the needful. 5. The plaintiff was disentitled to any relief as he did not seek extension of the contract beyond the extended period i.e., 30.06.2006. The conduct of the plaintiff after termination of the Contract further reinforces that the "time" in this particular case became an essence of the Contract since the plaintiff had no further intention of extension of the time. 6. The plaintiff failed to seek the relief of declaration that the termination of the cancellation of Agreement to Sell by the defendant was illegal and non-est. In the absence of any such prayer, the Suit filed by the plaintiff for grant of Decree of Specific Performance is not maintainable in law.

Final Decision: The plaintiff's suit for specific performance of the agreement to sell dated 09.02.2006 was dismissed.