IMPORTANT POINT
When a contract sets up a time for discharge of obligations of the parties then merely because it is made extendable by mutual consent but for a fixed time and no more, it cannot be said that time is not of essence of the contract.

Headnote:(a) Contract – Time as essence of contract – MOU, condition (iii) – Respondent to make payment within a maximum period of 150 days from the date of execution of the MOU, i.e., upto or before 09th July 2005 – Period of 150 days extendable by another 10 to 20 days but not more – High Court falling into error by concluding that since the time was extendable, it could not be made the essence of contract – Time, thus, being essence of the contract respondent had to make payment within time, at the most extendable time, with consent of appellant – Respondent failed to do so. (Para 27, 28, 29)
       (b) Contract – Time was the essence of the MOU – Respondent averring that he had always been ready and willing to perform his part of contract – Not making payment within time – Later sending Photostat copies of pay orders – Originals never tendered to appellant – a Of no use – Upon execution of MOU mere show of readiness and willingness would not discharge the obligation of the party concerned – Willingness and readiness should be real and genuine – Held, had not been ready and willing to perform his part of the contract – MOU entered into between the parties cannot be given effect to. (Para 30, 31, 34)
       (2001) 3 SCC 351; (2004) 1 SCC 252 – Relied upon
       Facts of the case:
       A piece of plot admeasuring 3149.75 sq. yds. allotted to the partnership firm, viz., M/s. Narinder Kumar Malik & Surinder Kumar Malik at D-2, Udyog Nagar, Rohtak Road, New Delhi.
       On account of differences having arisen between the parties, the present appellant-Narinder Kumar Malik filed a suit claiming 1/2 share in the aforesaid piece of land allotted to the partnership firm.
       The respondent filed a written statement and took an objection that the property was owned by a partnership firm and thus the suit for partition was not maintainable and rather a suit for dissolution of partnership firm ought to have been filed.
       During the pendency of the proceedings of the suit, the defendant filed an application under O.VII R. 11, CPC for dismissing the suit on the ground that it did not disclose any cause of action as the property was owned by a partnership firm, whereas the appellant herein filed an application under O.XII R 6, CPC praying therein that on account of admission having been made by the respondent, judgment and decree on the said admission be passed.
       Trial court dismissed the application filed by the respondent under O.VII R. 11, CPC. The application filed by the appellant herein under O.XII R.6 CPC was allowed and a preliminary decree of partition was passed
       Respondent herein, viz., Surinder Kumar Mail filed appeal in the High Court of Delhi reiterating the grounds taken in the written statement and in the application filed by him under O.VII Rule 11 of CPC.
       The High Court finally disposed of the appeal with directions.
       Finding of the Court:
       MOU entered into between the parties cannot be given effect to.
       Result:
       Appeal allowed.

Judgment :-

Deepak Verma, J.

1. Leave granted.

2. Parties to the litigation are real brothers having spent their childhood with cheer and joy in the courtyard, are here, now fighting tooth and nail for their respective shares in a piece of plot admeasuring 3149.75 sq. yds. allotted to the partnership firm, viz., M/s. Narinder Kumar Malik & Surinder Kumar Malik at D-2, Udyog Nagar, Rohtak Road, New Delhi.

3. Even though the partnership business could never commence but the plot in question continued to be owned by both of them as partners of the firm to the extent of 50% each. On account of differences having arisen between the parties, the present appellant-Narinder Kumar Malik was constrained to file a suit bearing No. 779 of 1997 before the High Court of Delhi, later transferred to the Court of Additional District Judge, Tis Hazari, Delhi and was numbered as 289 of 2004, claiming 1/2 share in the aforesaid piece of land allotted to the partnership firm.

4. The respondent filed a written statement and took an objection that the property was owned by a partnership firm and thus the suit for partition was not maintainable and rather a suit for dissolution of partnership firm ought to have been filed.

5. During the pendency of the proceedings of the suit, the defendant (respondent herein) filed an application under O.VII R. 11 of the Code of Civil Procedure (for short, `CPC) for dismissing the suit on the ground that it did not disclose any cause of action as the property was owned by a partnership firm, whereas the appellant herein filed an application under O.XII R 6, CPC praying therein that on account of admission having been made by the respondent, judgment and decree on the said admission be passed.

6. Both the applications came to be considered by the learned trial Judge on 04th November 2004. By the said order, the application filed by the respondent under O.VII R. 11, CPC came to be dismissed. However, the application filed by the appellant herein under O.XII R.6 CPC came to be allowed and a preliminary decree of partition was passed in the following terms:-

"12. In view of my above discussion, the application of the defendant under order 7 rule 11 CPC is hereby dismissed and application under order 12 rule 6 CPC is hereby allowed. A preliminary decree of partition is passed with the direction to the parties to decide the means of partitioning the plot in question and in case they failed to partition the plot by themselves, a Local Commissioner may be appointed by the court for suggesting the means.

13. The case is now adjourned for 8.12.2004 for further proceedings."

7. Feeling aggrieved and dissatisfied with the said order respondent herein, viz., Surinder Kumar Mail was constrained to file appeal in the High Court of Delhi at New Delhi registered as R.F.A. No. 649 of 2004 reiterating the grounds taken in the written statement and in the application filed by him under O.VII Rule 11 of CPC.

8. It appears, during the pendency of the said appeal in the High Court, good sense prevailed upon the two brothers and they arrived at a settlement and pursuant thereto "Memorandum of Understanding" (hereinafter referred to as `MOU) came to be executed between themselves on 09th February 2005 at Delhi.

9. It is pertinent to mention here that this MOU was arrived at also on account of the strong belief of the Division Bench of the High Court that the parties being real brothers should settle the matter among themselves through mediation. Accordingly, on 17th December 2004 an order was passed, with the consent of the parties, that both the brothers would appear before Mr. M.L. Mehta, Addl. District Judge, Delhi who was requested to be a mediator. On 17th March 2005 it was noted by the High Court that parties have entered into a settlement as MOU was already entered into between the parties on 09th February 2005. However, despite settling the matter outside the Court on their own terms and conditions, it appears that the dispute between

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2009 Supreme(SC) 1392

Supreme Court of India THE HONOURABLE MR. JUSTICE S.B. SINHA & THE HONOURABLE MR. JUSTICE DEEPAK VERMA Narinder Kumar Malik Versus Surinder Kumar Malik Appeal (civil) 5087-5088 of 2009Decided on : 04-08-2009

IMPORTANT POINTWhen a contract sets up a time for discharge of obligations of the parties then merely because it is made extendable by mutual consent but for a fixed time and no more, it cannot be said that time is not of essence of the contract.

Supreme Court of India
THE HONOURABLE MR. JUSTICE S.B. SINHA & THE HONOURABLE MR. JUSTICE DEEPAK VERMA
Narinder Kumar Malik
Versus
Surinder Kumar Malik
Appeal (civil) 5087-5088 of 2009
Decided on : 04-08-2009

IMPORTANT POINT
When a contract sets up a time for discharge of obligations of the parties then merely because it is made extendable by mutual consent but for a fixed time and no more, it cannot be said that time is not of essence of the contract.