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1964 Supreme(Mad) 490

Madras High Court
VEERASWAMI,KUNHAMED KUTTI
N.Palanichami Nadar - Appellant
Versus
Gomathinayagam Pillai - Respondent
Decided On : 12/17/1964

Advocates:
K.S. Desikan and K. Raman, for Appellant; R. Gopalaswami Iyengar, C.S. Sunderaraja Iyengar, G. Ramanujam and V. Meenakshisundaram, for Respondent.

Time is not of the essence of an agreement to sell immovable property unless there is a plain language to displace the presumption.

Headnote:

SPECIFIC PERFORMANCE - AGREEMENT TO SELL IMMOVABLE PROPERTY - TIME OF THE ESSENCE - PRESUMPTION - DISPLACEMENT - UNDUE DELAY - REASONABLE NOTICE - DISCRETION OF COURT.

Fact of the Case:

The appellant and respondents 1 and 2 entered into an agreement to sell a piece of land. The agreement was not reduced to writing, but a sum of Rs. 1006 was paid as advance. Subsequently, two written agreements were executed, stipulating a definite date for execution of sale and containing a default clause. The appellant failed to pay the balance amount and execute the sale deed on the stipulated date. Respondents 1 and 2 sent a notice to the appellant terminating the agreement and forfeiting the advance amount. They then entered into an agreement with respondent 4 to sell the land to him. The appellant filed a suit for specific performance of the agreement.

Finding of the Court:

The court held that time was not of the essence of the agreement. It found that the appellant was in default, but that the delay was not undue and that respondents 1 and 2 had not given him reasonable notice to complete the agreement within a stated time. The court also found that the appellant had not waived or abandoned his rights under the agreement.

Issues: 1. Whether time was of the essence of the agreement to sell the land? 2. Whether the appellant was in default? 3. Whether the delay on the part of the appellant was undue? 4. Whether respondents 1 and 2 had given the appellant reasonable notice to complete the agreement within a stated time? 5. Whether the appellant had waived or abandoned his rights under the agreement?

Ratio Decidendi: 1. Time is not of the essence of an agreement to sell immovable property unless there is a plain language to displace the presumption. The presumption arises from the nature of the property and the justice of the circumstances. 2. The mere stipulation of a definite time for execution of sale or the inclusion of a default clause does not necessarily displace the presumption. 3. Subsequent conduct of the parties is irrelevant in determining whether time was of the essence of the agreement. 4. Undue delay on the part of the defaulting party may disentitle him from getting a decree for specific performance. 5. Reasonable notice must be given to the defaulting party to complete the agreement within a stated time before the other party can terminate the agreement.

Final Decision: The appeal was allowed and the suit was decreed as prayed for. The appellant was directed to deposit the balance amount in court within a specified time, and the sale was to be completed within two weeks of the receipt of the decree by the trial court.

Judgement

VEERASWAMI, J. : This appeal turns on the question whether time is of the essence of an agreement to sell immoveable property. The court below has found it was, and, on a further finding that the appellant defaulted, dismissed his suit for specific performance.

2. Respondents 1 and 2 together owned a land of a total extent of Ac. 3-21 cents comprised in S. No. 1155/2 B in Thiruthangal village. Then predecessor-in-title, one Ulagammal the late wife of the first respondent, mortgaged it on 15-9-1952 in the third respondent securing repayment of Rs. 6000. On 5-3-1959, respondents 1 and 2 entered into an agreement, not reduced to writing, to sell the land to the appellant for Rs. 15106. A sum of Rs. 1006 was paid to them as advance. No time for execution of sale was specified though, according to respondents 1 and 2, it was to be within two or three weeks, and, according to the appellant, within a reasonable time. On 4-4-1959, the appellant paid a further sum of Rs. 2000 to respondents 1 and 2 and on that day an agreement in writing was executed stipulating that the sale was to be executed, before 15-4-1959. The agreement contained a default clause providing that if the appellant defaulted, he should forfeit the sum of Rs. 3006, but it, on the other hand, the default was on the part of respondents 1 and 2, they should be liable to pay the appellant Rs. 3000, evidently by way of damages. The sale not having been executed in the meantime, the parties concluded a further agreement on 15-4-1959, entrenching the time upto 30-4-1959, but adopting the rest of the terms of the earlier agreement to continue.

On 30-7-1969, respondents 1 and 2 sent a notice to the appellant complaining of breach of contract on his part and intimating him that the agreement to sell, therefore, stood cancelled and that he had forfeited the advance amount of Rs. 3006. Next day, respondents 1 and 2 entered into an agreement with respondent 4 to sell the land to him for Rs. 15000. On receipt of the notice, the appellant replied to them denying that time was of the essence of the agreement and asserting that the default was on their part. He called upon respondents 1 and 2 to execute the sale deed within 3 days of the receipt of the reply. Eventually, the appellant brought the suit on 21-3-1960, out of which this appeal arises. We may add that on 21-8-1959, the appellant had deposited in a bank, as he claimed, Rs, 13906, towards the balance and execution of sale and apprised the fact to respondents 1 and 2.

3. In the pleadings the parties differed as to whether time was of the essence of the agreement with the appellant and as to whether he or respondents 1 and 2 had defaulted and those were the main issues tried at the trial. In support of his view, that time was of the essence of the agreement with the appellant, the learned Subordinate Judge relied on the following : (1) Though there was no time specified in the first oral agreement, the second and third agreements stipulated for a definite date before which the sale was to be executed; (ii) the second and third agreements contained default clauses and (iii) the circumstances of the case showed that respondents 3 and 2 were in urgent need of money and that it was to meet the urgency they desired to effect a sale of the property. The trial Judge, mainly on the basis of the oral evidence, also found that the appellant, as a matter of fact, was never eager, prompt or desirous or willing to take a sale deed in pursuance of the second and third agreements, and, therefore, committed default. For refusing a decree for specific performance, the court below added that the conduct of the appellant between April 30 and July 30, 1959, showed an abandonment or waiver on his purl of his rights under the agreements to sell, and, further, rights of third parties had intervened, namely, respondents 1 and 2 have entered into an agreement with respondent 4 in sell the property to him.

4. Before us Mr. K.S. Desikan for the ap



















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