IMPORTANT POINT
The order of remand by High Court was neither legal nor proper in the facts and circumstances of this case.

Headnote:(i) Contract for sale of immovable property-Question whether time is of essense of contract-High Court deciding in the negative (See para 5)-Without noticing (1993) 1 SCC 519-Whether proper? (No).
       Held : For the purpose of deciding the question whether or not time was the essence of the contract the appellant before the High Court relied on R.S. Vidyanadam & Ors. vs. Vairavan (1997) 3 SCC I which is a two-Judge Bench decision and a few other decided cases. On behalf of the plaintiff-respondent reliance was placed on Chandnee Widya Vati Madden vs. Dr. C.L. Katial and Ors. (1964) 2 SCR 495, which is a three-Judge Bench decision. The High Court noticed the facts of both these decisions, and having also dealt with the law laid down therein felt inclined to decide the case in the light of the law laid down in Chandnee Widya Vati s case because the decision in Chandnee Widya Vati s case was, as stated by the High Court, "the earlier larger Bench Judgment". The attention of the High Court was not invited to a Constitution Bench decision in Chand Rani (Smt.) (Dead) by LRs. vs. Kamal Rani (Smt.) (Dead) by LRs. (1993) I SCC 519 and therefore the law laid down by the Constitution Bench has escaped the attention of the High Court. The issue as to whether time is the essence of the contract
        contracts for sale of immoveable property came up for the consideration of the Constitution Bench and it was held:-
       "It is a well-settled principle that in the case of sale of immovable property, time is never regarded as the essence of the contract. In fact, there is a presumption against time being the essence of the contract. This principle is not in any way different from that obtainable in England. Under the law of equity which governs the rights of the parties in the case of specific performance of the contract to sell real estate, law looks not at the letter but at the substance of the agreement. It has to be ascertained whether under the terms of the contract the parties named a specific time within which completion was to take place, really and in substance it was intended that it should be completed within a reasonable time. An intention to make time the essence of the contract must be expressed in unequivocal language."
       xxx xxx xxx xxx
       "......in the case of sale of immovable property there is no presumption as to time being the essence of the contract. Even if it is not of the essence of the contract the Court may infer that it is to be performed in a reasonable time if the conditions are:
        1. From the express terms of the contract;
        2. from the nature of the property; and
        3. from the surrounding circumstances, for example the object of making the contract."
       Vide para 29, the Constitution Bench, on an analysis of evidence, concluded that though as a general proposition of law time is not the essence of the contract in the case of sale of immoveable property yet the parties intended to make time as the essence under clause (1) of the suit agreement. This Constitution Bench decision in Chand Rani s case was placed before and followed by the two-Judge Bench deciding Vidyanadm s case. The High Court ought to have noticed the Constitution Bench decision, while dealing with the facts and circumstances of the present case as emerging from evidence and then decided the case in the light of the law handed down by the Constitution Bench. (Para 7)
       (ii) Civil Procedure Code, 1908-Order 41 Rules 23, 23A and 27-Suit for specific performance-Decided by Trial Court-High Court making order of remand on three additional issues-Whether proper? (No) (see para 8 to 12)-Appeal allowed-Case sent to High Court for fresh disposal.
       Held : For the foregoing reasons the appeals are allowed. The impugned order of remand made by the High Court is set aside. The first appeal and the civil revision petition shall stand restored on the tile of the High Court and shall be decided afresh after affording the parties an opportunity of being beard and consistently with the observation made hereinabove. No order as to the costs. (Para 13)

JUDGMENT

R.C. Lahoti, J.-Leave granted.

2. An introductory statement of bare necessary facts would suffice for the purpose of this order. On 31-10-1987, a contract for sale of immoveable property was entered into between the parties whereby the appellant agreed to sell the suit property consisting of a building and the site on which the building stands, for a consideration of Rs. 40,25,000/-. An amount of Rs. 8,00,000/- was paid by way of advance or earnest money the balance consideration of Rs. 32,25,000/- was to be paid simultaneously with the execution and registration of sale deed. This contract was in supersession of an earlier contract dated 22-9-1986 which had lapsed. The vendor had agreed to obtain the requisite permission from the Urban Land Ceiling Authority before 30th June, 1988. The time so appointed could be estended by mutual consent of the parties. It was expressly agreed upon between the parties that if the requisite exemption or permission under the Urban Land Ceiling and Regulation Act, 1976 ( ULCRA for short) was not forthcoming by 30th June, 1988 or within such extended period as may be mutually agreed to, then the contract was to become inoperative and unenforceable in which event the only obligation surviving on the vendor was to refund the earnest money. The vendor could return the earnest money within three months thereafter and if for any reason whatsoever the amount could not be so repaid then the amount was to carry interest at the rate of 12 per cent per annum. It appears that proceedings for declaration that the suit property was within the ceiling limits as appointed by the ULCRAwere alraeady pending before the Competent Authority at a point of time when the agreement was entered into between the parties. However the decision was not forthcoming within the period of six months from the date of the agreement. On 1-12-1988 the appellant wrote a letter to respondent informing that the agreement to sell stands cancelled as per the terms of the agreement for failure of the requisite clearance from the competent authority (Urban Land Ceiling) forthcoming. With the letter the appellant tendered an amount of Rs. 2,00,000 - through two cheques enclosed with the letter, requesting for the agreement being returned duly cancelled to the vendor and assuring the payment of the balance amount of the earnest money before the end of December, 1988. This letter erupted a contlict between the parties leading to exchange of legal notices and filing by the respondent of a suit for specific performance of agreement to sell on 29-6-1992 the Trial Court decreed the suit against which the appellant filed First Appeal before the High Court. On 19-8-1999 the High Court has allowed the appeal. Set aside the judgment and decree of the Trial Court and remanded the case for holding additional trial on the three additional issues framed by the High Court and thereafter to decide the case afresh.

3. A perusal of the order of remand made by the High Court shows that on behalf of the appellants six contentions were raised: (i) that the suit was not maintainable as the pleadings did not conform to the requirements of Forms 47 and 48 of Appendix A of the Code of Civil Procedure, (ii) that there was no pleading in the plaint that the plaintiff-respondent had always been ready and willing to perform his part of the contract and continued to be so, and on the contrary the conduct of the respondent showed the absence of such readiness and willingness, (iii) that the agreement became inoperative and unenforceable on 30th June, 1988 and therefore was rendered incapable of specific performance: (iv) that the grant of relief of specific performance was discretionary, which the facts and circumstances of the case did not permit being exercised in favour of the plaintiff-respndent; (v) tht the respondent had not approached the Court with clean hands and therefore was not entitled to the discretionary and equiable relief of specific performance;

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2002 Supreme(SC) 121

IMPORTANT POINTThe order of remand by High Court was neither legal nor proper in the facts and circumstances of this case.

Cases Referred (3)

IMPORTANT POINT
The order of remand by High Court was neither legal nor proper in the facts and circumstances of this case.