How to appreciate evidence when the defendant pleads that time was the essence of the contract for the sale of immovable property?

From a perusal of the papers, it is seen that though the defendants had stated that the sale deed had to be executed within a period of three months from the date of the agreement, they have not taken any steps to terminate the agreement on the expiry of the period given under the agreement. The defendant have also accepted the execution of the agreement of sale and their only grievances is that the plaintiff had not come forward to complete the sale within the agreed time. Therefore according to the plaintiff time was never contemplated as essence of the contract, further, it is the admitted fact that the defendants had not obtained the sale deed from the Tamil Nadu Slum Clearance Board on the date of the agreement which once again was a requirement for having the sale deed executed in favour of the plaintiff even if there is no stipulation to this effect. The right to convey the property would accrue to the defendants only upon receiving the sale deed from the Tamil Nadu Slum Clearance Board and therefore it can be safely concluded that time was never contemplated as a stipulation for the contract.

IN THE HIGH COURT OF MADRAS

A.S. No. 915 of 2009 and M.P. No. 1 of 2012

Decided On: 13.03.2019

S. Devi  Vs. V. Anburaj and Ors.

Hon'ble Judges/Coram:

P.T. Asha, J.

Citation: AIR 2020(NOC) 30 Mad

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When time will not be essence of contract?

 The defendants, both in their pleadings as well as evidence clearly admit that there are provisions in the contract for extension of time. The only reason stated by the defendants for non extension of the time for completion was that there was no formal application from the plaintiff seeking extension of time. Such a plea backed by the evidence led by the defendants, itself suggest that the time was never intended to be essence in so far as the present contract is concerned. Besides, the contract itself provides for extension of time, levy of compensation in case of delay and such other provisions. All such provisions clearly militate against the time being of essence of contract in the present case. 

IN THE HIGH COURT OF BOMBAY AT GOA

First Appeal Nos. 60 of 2011 and 33 of 2017

Decided On: 08.02.2019

 P.B. Ibrahim Vs.  State of Goa

Hon'ble Judges/Coram:

M.S. Sonak and Prithviraj K. Chavan, JJ.

Citation: 2019(4) MHLJ 759

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When time is not essence of contract?

Learned counsel
for the appellant further argued that 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 the essence of the
contract, the court may infer that it is to be performed in a
reasonable time if the conditions are: (i) from the express terms
of the contract; (ii) from the nature of the property; and (iii) from
the surrounding circumstances, for example: the object of
making the contract and for that reliance has been placed upon
(1993) 1 Supreme Court Cases 519 Chand Rani (Smt.)
Dead) by Lrs… Appellants versus Kamal Rani (Smt.) (Dead)
by Lrs… Respondents. 
The agreement to sale (Ext. 3)
contains the terms which have been agreed upon that the
transaction of sale should be completed within six months from
the date of execution of the agreement i.e. from 28.10.1988 till
27.04.1989. In last paragraph there is term that if the vendee
fails to get the sale deed registered within the time then, amount
of only Rs. 25,000/- will be forfeited and that cannot be realized
from executant. Further it is mentioned that the land to be sold
would be measured and the payment of the price would be finally
calculated accordingly. In the case of Smt. Indira Kaur and
others (supra) and also in the case of Chand Rani (Supra) it
has been held that the law is well settled that in transaction of
sale of immovable properties time is not the essence of the
contract. The Apex Court in the case of Balasaheb Dayandeo
Naik (dead) through LRS & Ors. vs. Appasaheb Dattatraya
Pawar reported in (2008) 4 SCC Page 464 in paragraph 10,
11, 12 and 14 held that the time was not the essence of the
contract. Here also the land going to be sold is immovable
property and agricultural land and as such time was not the
essence of the contract. There is nothing on the record on behalf
of defendants to show that the defendants got measured the land
rather the plaintiff after sending the Ext. 1/A (legal notice)
requested the defendants to get the land measured and
demarcated and to get the sale deed executed. From the oral 
evidences adduced on behalf of the parties also it reveals that the
time was not the essence of the contract and it was never agreed
that the entire earnest money will be forfeited rather by way of
cost only Rs. 25,000/- was to be forfeited. No party can be
allowed to go beyond the express term contained in the
agreement to sale. Accordingly, it is held that the time was not
the essence of the contract.
IN THE HIGH COURT OF JUDICATURE AT PATNA
First Appeal No.42 of 2006

Most.Sita Devi V Mahal Sahkari Grih Nirman Samiti Ltd. Patna, 
CORAM: HONOURABLE MR. JUSTICE JITENDRA MOHAN
SHARMA
Citation:AIR 2016 Patna 191
Date: 06-09-2016

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Defendant not revoking agreement,time is not essence of contract in suit for specific performance of contract

 He further submits that in view of the provisions as provided under Section 66 of the Contract Act which reads as under:

"The rescission of a voidable contract may be communicated or revoked in the same manner, and subject to the same rules, as apply to the communication or revocation of a proposal."

40. As after expiry of the contract period, the appellants/defendants had not revoked the agreement. So, keeping in view the said facts, time is not essence of the contract and no illegality or infirmity done by the Court below in passing the decree dated 9.3.1978 for specific performance.

IN THE HIGH COURT OF ALLAHABAD (LUCKNOW BENCH)

First Appeal No. 39 of 1978

Decided On: 16.04.2014

Syed M.M. Rizvi
Vs.
 Subhash Singh

Hon'ble Judges/Coram:Anil Kumar, J.

Equivalent Citation: 2014(5)ADJ111, 2014 6 AWC5751All, 2014 124 RD679

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How to ascertain that time was essence of contract in suit for specific performance of contract?

 Another accept is to be considered in the present case is that where time is the essence of the contract, failure to stick to the time disentitles the defaulter to seek specific performance. However, the question whether time is the essence of the contract has to be decided not only with reference to the terms of the contract but also with reference to the conduct of the parties and the facts and circumstances of the case. Thus, where time is the essence of the contract is an inference from proved facts and is therefore a question of law. (Sriram Cotton Pressing Factory v. Narayanasamy, MANU/TN/0270/1965 : AIR 1965 Mad 352). Where a contract relates to sale of an immovable property, it will normally be presumed that time is not the essence of the contract. As held by the Supreme Court in the case of Gomathinayagam Pillai v. Palanisamy Nadar, MANU/SC/0067/1966 : AIR 1967 SC 868, where the fixation of period within which the contract has to be performed does not make a stipulation as to time as the essence of the contract.

whether time is essence of the contract, the said section reads as under:

"55. When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of essence of the contract.
If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.
If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance he gives notice to the promisor of his intention to do so.

71. From perusal of above section, the position which emerges out is that the above section deals with the effect of failure to perform the promise at a fixed time, in contracts in which time is essential. The question whether time is the essence of the contract, with reference to the performance of a contract, what generally may arise for consideration either with reference to the contract as a whole or with reference to a particular term or condition of the contract which is breached. In a contract relating to sale of immovable property if time is specified for payment of the sale price but not in regard to the execution of the sale-deed, time will become the essence only with reference to payment of sale price but not in regard to execution of the sale-deed. Normally in regard to contracts relating to sale of immovable properties, time is not considered to be the essence of the contract unless such an intention can be gathered either from the express terms of the contract or impliedly from the intention of the parties as expressed by the terms of the contract.

72. The legal position on the point in issue is clear from the decision of a Constitution Bench of Hon'ble the Apex Court in the case of Chand Rani v. Kamal Rani, MANU/SC/0285/1993 : (1993) 1 SCC 519, held as under:

"It is a well-accepted 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 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."

73. Hon'ble the Apex Court in the case of N. Srinivasa v. Kuttukaran Machine Tools Ltd., MANU/SC/0265/2009 : (2009) 5 SCC 182, held that in the contract relating to immovable property, time cannot be the essence of the contract", the appellant put forth the contention that in all contracts relating to sale of immovable property, time stipulated for performance, even if expressed to be the essence, has to be read as not being the essence of the contract and consequently the contract does not become voidable by the failure to perform before the specified time. A careful reading of the said decision would show that the sentence relied on (occurring in para 31) apparently was not the statement of legal position, but a conclusion on facts regarding the contract that was being considered by the Court in that case, with reference to its terms. In fact the legal position is differently stated in para 27 of the said decision:

"In a contract for sale of immovable property, normally it is presumed that time is not the essence of the contract. Even if there is an express stipulation to that effect, the said presumption can be rebutted. It is well settled that to find out whether time was the essence of the contract, it is better to refer to the terms and conditions of the contract itself."

74. Taking into consideration the earlier judgment on the point in issue, Hon'ble the Apex Court in the case of Saradamani Kandappan v. S. Rajalakshmi and others, MANU/SC/0717/2011 : (2011) SCC 18, in para 26 held as under:

"Relying upon the earlier decisions of this Court in Gomathinayagam Pillai v. Palaniswami Nadar, MANU/SC/0067/1966 : AIR 1967 SC 868 and Govind Prasad Chaturvedi v. Hari Dutt Shastri, MANU/SC/0010/1977 : (1977) 2 SCC 539, held that fixation of the period within which the contract has to be performed does not make the stipulation as to time the essence of the contract. Where the contract relates to sale of immovable property, it will normally be presumed that the time is not the essence of the contract. Thereafter, this Court held that even if time is not the essence of the contract, the Court may infer that it is to be performed in a reasonable time: (i) from the express terms of the contract; (ii) from the nature of the property; and (iii) from the surrounding circumstances as, for example, the object of making the contract. The intention to treat time as the essence of the contract may however be evidenced by circumstances which are sufficiently strong to displace the normal presumption that time is not the essence in contract for sale of land."

75. Thus, from the above said facts, that time is presumed not to be of essence of the contract relating to immovable property, but it is of essence in contracts of re-conveyance or renewal of lease. The onus to plead and prove that time was the essence of the contract was on the person alleging it, thus giving an opportunity to the other side to adduce rebuttal evidence that time was not of essence. That when the plaintiff pleads that time was not of essence and the defendant does not deny it by evidence, the Court is bound to accept the plea of the plaintiff. In cases where notice is given making time of the essence, it is duty of the Court to examine the real intention of the party giving such notice by looking at the facts and circumstances of each case. That a vendor has no right to make time of the essence, unless he is ready and willing to proceed to completion and secondly, when the vendor purports to make time of the essence, the purchaser must be guilty of such gross default as to entitle the vendor to rescind the contract.

IN THE HIGH COURT OF ALLAHABAD (LUCKNOW BENCH)

First Appeal No. 39 of 1978

Decided On: 16.04.2014

Syed M.M. Rizvi  Vs. Subhash Singh

Hon'ble Judges/Coram:Anil Kumar, J.

Equivalent Citation: 2014(5)ADJ111, 2014 6 AWC5751All, 2014 124 RD679

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Whether time is essence of contract is a matter of trial?

The learned Counsel appearing for the Appellant has cited the judgment of the Apex Court in the case of Saradmani Kandappan Vs. S.

Rajalakshmi & Ors.[(2001) 12 SCC 18] and contended that the time is always the essence of such contract and therefore there was no expressed willingness and/or steps taken by the Appellant in theme, therefore the contract itself was terminated. This facets in the present case and reasons so given by the learned Judge while rejecting the interim injunction, is only one of the facets, which cannot prevail over other reasons so recorded in the above background. The time whether essence of the contract, is again a matter of trial specially the reason behind the delay and non-compliance of the obligations by the respective parties.

Merely because the submission is made that the time was not essence of the contract, that cannot be accepted as there is no admission of other side, nor the finding at the prima facie stage can be given 

Bombay High Court

Subhash Dhanraj Sankla vs Kajkhushroo Alias Kaki Phiroze ... on 12 September, 2013

Bench: Anoop V. Mohta

Citation:2013(6) MHLJ 296 Bom

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Whether theory that time is not of essence of the contract in case of immovable properties has become outdated?

As held by a Constitution Bench of this Court in Chand Rani vs. Kamal Rani (1993) 1 SCC 519:

“....it is clear that 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 (evident?) : (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.” In other words, the court should look at all the relevant circumstances including the time-limit(s) specified in the agreement and determine whether its discretion to grant specific performance should be exercised. Now in the case of urban properties in India, it is well-known that their prices have been going up sharply over the last few decades - particularly after 1973.

“……Indeed, we are inclined to think that the rigor of the rule evolved by courts that time is not of the essence of the contract in the case of immovable properties - evolved in times when prices and values were stable and inflation was unknown - requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so…...” The aforesaid view was upheld in K. Narendra vs. Riviera Apartments (P) Ltd. (1999) 5 SCC 77.

Supreme Court of India

Rathnavathi & Anr vs Kavita Ganashamdas on 29 October, 2014

Bench: Fakkir Mohamed Kalifulla, Abhay Manohar Sapre

Citation; (2015)5SCC223,                                                                            

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If time is essence of contract, then non-performance within stipulated time makes contract as voidable at option of promisee

Equivalent Citation: AIR1995Ori207, 1995(I)OLR453

IN THE HIGH COURT OF ORISSA

First Appeal No. 60 of 1991

Decided On: 30.01.1995

Appellants: State of Orissa and Ors.
Vs.
Respondent: Durga Enterprisers, Jagatsingpur

Hon'ble Judges/Coram:
S.K. Mohanty, J.

Contract - Extension of Time - Subordinate Judge held that time was not essence of contract and thus, decreed Plaintiff's suit and directed Executive Engineer to receive shutters from Plaintiff on payment of price - Hence, this Appeal - Whether, time was essence of contract between Plaintiff and Executive Engineer - Held, it was cleared from purchase orders Exts. 1 to 5 that Executive Engineer was accepted Plaintiff's quotation and called upon him to supply shutters within 15 days and if failing offer of this order would automatically be treated as cancelled - Thus, it would be cleared that time was essence of contract for supply of shutters - However, merely sending of letters as in Exts. 6 and 7 by Plaintiff for extension of time would not be construed that time was in fact extended - Even, when Executive Engineer did not send any reply to Plaintiff before expiry of stipulated period - Therefore, without any further document of extension of time, it would not be held that time for performance of contract be extended - Hence, decree passed by Subordinate Judge was set aside - Appeal allowed. 

"If time is essence of contract, then non-performancewithin stipulated time makes contract as voidable at option of promisee."

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When time is not essence of contract?

This has been enunciated in the Law of Contract in Halsbury, Vol.9, page 481 at page 338 which lays down the settled law thus:-

The modern law, in the case of contracts of all types, may be summarised as follows. Time will not be considered to be of the essence unless : (1) the parties expressly stipulate that conditions as to time must be strictly complied with; or (2) the nature of the subject matter of the contract or the surrounding circumstances show that time should be considered to be of the essence; or (3) a party who has been subjected to unreasonable delay gives notice to the party in default making time of the essence.

Bombay High Court

Basf India Ltd vs Landcom Properties Pvt. Ltd on 30 June, 2010

Bench: R. S. Dalvi

Citation;2010(6)MHLJ681

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Whether time can be essence for performance of agreement to sell immovable property?

 In order to examine this question, it is necessary to first
see the law on the issue as to whether time can be the essence
for performance of an agreement to sell the immovable
property and if so whether plaintiff in this case performed her
part within the time so stipulated in the agreement?
 The learned Judge J.C. Shah (as His Lordship then was),
speaking for the Bench examined this issue in
Gomathinayagam Pillai and Ors. Vs. Pallaniswami Nadar,
AIR 1967 SC 868, in the light of English authorities and
Section 55 of the Contract Act and held as under:
“It is not merely because of specification of time at or
before which the thing to be done under the contract is
promised to be done and default in compliance
therewith, that the other party may avoid the contract.
Such an option arises only if it is intended by the
parties that time is of the essence of the contract.
Intention to make time of the essence, if expressed in
writing, must be in language which is unmistakable :
it may also be inferred from the nature of the property
agreed to be sold, conduct of the parties and the
surrounding circumstances at or before the contract.
Specific performance of a contract will ordinarily be
granted, notwithstanding default in carrying out the
contract within the specified period, if having regard to
the express stipulations of the parties, nature of the
property and the surrounding circumstances, it is not
inequitable to grant the relief. If the contract relates to
sale of immovable property, it would normally be
presumed that time was not of the essence of the
contract. Mere incorporation in the written agreement

of a clause imposing penalty in case of default does not
by itself evidence an intention to make time of the
essence. In Jamshed Khodaram Irani v. Burjorji
Dhunjibhai I.L.R. 40 Bom. 289 the Judicial Committee
of the Privy Council observed that the principle
underlying S. 55 of the Contract Act did not differ from
those which obtained under the law of England as
regards contracts for sale of land. The Judicial
Committee observed :
"Under that law equity, which governs the rights of the
parties in cases of specific performance of contracts to
sell real estate, looks not at the letter but at the
substance of the agreement in order to ascertain
whether the parties, notwithstanding that they named
a specific time within which completion was to take
place, really and in substance intended more than that
it should take place within a reasonable time.... Their
Lordships are of opinion that this is the doctrine which
the section of the Indian Statute adopts and embodies
in reference to sales of land. It may be stated concisely
in the language used by Lord Cairns in Tilley v.
Thomas I.L.R. (1867) Ch. 61 :-
‘The construction is, and must be, in equity the same
as in a Court of law. A Court of equity will indeed
relieve against, and enforce, specific performance,
notwithstanding a failure to keep the dates assigned
by the contract, either for completion, or for the steps
towards completion, if it can do justice between the
parties, and if (as Lord Justice Turner said in Roberts
v. Berry (1853) 3 De G.M. G. 284, there is nothing in
the 'express stipulations between the parties, the
nature of the property, or the surrounding
circumstances,' which would make it inequitable to
interfere with and modify the legal right. This is what
is meant, and all that is meant, when it is said that in
equity time is not of the essence of the contract. Of the
three grounds... mentioned by Lord Justice Turner
'express stipulations' requires no comment. The
'nature of the property' is illustrated by the case of

reversions, mines, or trades. The 'surrounding
circumstances' must depend on the facts of each
particular case."
 In Govind Prasad Chaturvedi Vs. Hari Dutt Shastri
and Anr., (1977) 2 SCC 539, this Court placing reliance on the
law laid down in Gomathinayagam Pillai (supra), reiterated
the aforesaid principle and held as under:
“…….It may also be mentioned that the language used
in the agreement is not such as to indicate in
unmistakable terms that the time is of the essence of
the contract. The intention to treat time as the essence
of the contract may be evidenced by circumstances
which are sufficiently strong to displace the normal
presumption that in a contract of sale of land
stipulation as to time is not the essence of the
contract.
Apart from the normal presumption that in the case of
an agreement of sale of immovable properly time is not
the essence of the contract and the fact that the terms
of the agreement do not unmistakably state that the
time was understood to be the essence of the contract
neither in the pleadings nor during the trial the
respondents contended that time was of the essence of
the contract.”
 Again in the case reported in Smt. Chand Rani vs. Smt.
Kamal Rani, (1993) 1 SCC 519, this Court placing reliance on
law laid down in aforementioned two cases took the same
view. Similar view was taken with more elaboration on the

issue in K.S. Vidyanadam and Ors. v. Vairavan, (1997) 3
SCC 1, wherein it was held as under:
“It has been consistently held by the courts in India,
following certain early English decisions, that in the
case of agreement of sale relating to immovable
property, time is not of the essence of the contract
unless specifically provided to that effect. The period of
limitation prescribed by the Limitation Act for filing a
suit is three years. From these two circumstances, it
does not follow that any and every suit for specific
performance of the agreement (which does not provide
specifically that time is of the essence of the contract)
should be decreed provided it is filed within the period
of limitation notwithstanding the time-limits stipulated
in the agreement for doing one or the other thing by
one or the other party. That would amount to saying
that the time-limits prescribed by the parties in the
agreement have no significance or value and that they
mean nothing. Would it be reasonable to say that
because time is not made the essence of the contract,
the time-limit (s) specified in the agreement have no
relevance and can be ignored with impunity? It would
also mean denying the discretion vested in the court
by both Sections 10 and 20. As held by a Constitution
Bench of this Court in Chand Rani vs. Kamal Rani
(1993) 1 SCC 519:
“....it is clear that 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
(evident?) : (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.”
In other words, the court should look at all the
relevant circumstances including the time-limit(s)
specified in the agreement and determine whether its
discretion to grant specific performance should be
exercised. Now in the case of urban properties in India,
it is well-known that their prices have been going up
sharply over the last few decades - particularly after
1973.
“……Indeed, we are inclined to think that the rigor of
the rule evolved by courts that time is not of the
essence of the contract in the case of immovable
properties - evolved in times when prices and values
were stable and inflation was unknown - requires to be
relaxed, if not modified, particularly in the case of
urban immovable properties. It is high time, we do
so…...”
The aforesaid view was upheld in K. Narendra vs. Riviera
Apartments (P) Ltd. (1999) 5 SCC 77.

Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELALTE JURISDICTION
CIVIL APPEAL Nos. 9949-9950 OF 2014
(Arising out of SLP (C) Nos.35800-35801 of 2011)
Rathnavathi & Another Appellant(s)
VERSUS
Kavita Ganashamdas Respondent(s)
Citation;2015 ALLSCR8
Read original judgment here;click here

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Basic principles for deciding when time will be essence of contract

This takes us to the next question as to whether suit for
specific performance was barred by limitation prescribed
under Article 54 of the Limitation Act?
In order to examine this question, it is necessary to first

see the law on the issue as to whether time can be the essence
for performance of an agreement to sell the immovable
property and if so whether plaintiff in this case performed her
part within the time so stipulated in the agreement?

The learned Judge J.C. Shah (as His Lordship then was),
speaking
for
the
Bench
examined
this
issue
in
Gomathinayagam Pillai and Ors. Vs. Pallaniswami Nadar,
AIR 1967 SC 868, in the light of English authorities and
Section 55 of the Contract Act and held as under:
“It is not merely because of specification of time at or
before which the thing to be done under the contract is
promised to be done and default in compliance
therewith, that the other party may avoid the contract.
Such an option arises only if it is intended by the
parties that time is of the essence of the contract.
Intention to make time of the essence, if expressed in
writing, must be in language which is unmistakable :
it may also be inferred from the nature of the property
agreed to be sold, conduct of the parties and the
surrounding circumstances at or before the contract.
Specific performance of a contract will ordinarily be
granted, notwithstanding default in carrying out the
contract within the specified period, if having regard to
the express stipulations of the parties, nature of the
property and the surrounding circumstances, it is not
inequitable to grant the relief. If the contract relates to
sale of immovable property, it would normally be
presumed that time was not of the essence of the
contract. Mere incorporation in the written agreement
of a clause imposing penalty in case of default does not
by itself evidence an intention to make time of the
essence. In Jamshed Khodaram Irani v. Burjorji
Dhunjibhai I.L.R. 40 Bom. 289 the Judicial Committee
of the Privy Council observed that the principle
underlying S. 55 of the Contract Act did not differ from
those which obtained under the law of England as
regards contracts for sale of land. The Judicial
Committee observed :
"Under that law equity, which governs the rights of the
parties in cases of specific performance of contracts to
sell real estate, looks not at the letter but at the
substance of the agreement in order to ascertain
whether the parties, notwithstanding that they named
a specific time within which completion was to take
place, really and in substance intended more than that
it should take place within a reasonable time.... Their
Lordships are of opinion that this is the doctrine which
the section of the Indian Statute adopts and embodies
in reference to sales of land. It may be stated concisely
in the language used by Lord Cairns in Tilley v.
Thomas I.L.R. (1867) Ch. 61 :-
‘The construction is, and must be, in equity the same
as in a Court of law. A Court of equity will indeed
relieve against, and enforce, specific performance,
notwithstanding a failure to keep the dates assigned
by the contract, either for completion, or for the steps
towards completion, if it can do justice between the
parties, and if (as Lord Justice Turner said in Roberts
v. Berry (1853) 3 De G.M. G. 284, there is nothing in
the 'express stipulations between the parties, the
nature of the property, or the surrounding
circumstances,' which would make it inequitable to
interfere with and modify the legal right. This is what
is meant, and all that is meant, when it is said that in
equity time is not of the essence of the contract. Of the
three grounds... mentioned by Lord Justice Turner
'express stipulations' requires no comment. The
'nature of the property' is illustrated by the case of

reversions, mines, or trades. The 'surrounding
circumstances' must depend on the facts of each
particular case."
In Govind Prasad Chaturvedi Vs. Hari Dutt Shastri
and Anr., (1977) 2 SCC 539, this Court placing reliance on the
law laid down in Gomathinayagam Pillai (supra), reiterated
the aforesaid principle and held as under:
“.......It may also be mentioned that the language used
in the agreement is not such as to indicate in
unmistakable terms that the time is of the essence of
the contract. The intention to treat time as the essence
of the contract may be evidenced by circumstances
which are sufficiently strong to displace the normal
presumption that in a contract of sale of land
stipulation as to time is not the essence of the
contract.
Apart from the normal presumption that in the case of
an agreement of sale of immovable properly time is not
the essence of the contract and the fact that the terms
of the agreement do not unmistakably state that the
time was understood to be the essence of the contract
neither in the pleadings nor during the trial the
respondents contended that time was of the essence of
the contract.”
Again in the case reported in Smt. Chand Rani vs. Smt.
Kamal Rani, (1993) 1 SCC 519, this Court placing reliance on
law laid down in aforementioned two cases took the same
view. Similar view was taken with more elaboration on the
issue in K.S. Vidyanadam and Ors. v. Vairavan, (1997) 3
SCC 1, wherein it was held as under:
“It has been consistently held by the courts in India,
following certain early English decisions, that in the
case of agreement of sale relating to immovable
property, time is not of the essence of the contract
unless specifically provided to that effect. The period of
limitation prescribed by the Limitation Act for filing a
suit is three years. From these two circumstances, it
does not follow that any and every suit for specific
performance of the agreement (which does not provide
specifically that time is of the essence of the contract)
should be decreed provided it is filed within the period
of limitation notwithstanding the time-limits stipulated
in the agreement for doing one or the other thing by
one or the other party. That would amount to saying
that the time-limits prescribed by the parties in the
agreement have no significance or value and that they
mean nothing. Would it be reasonable to say that
because time is not made the essence of the contract,
the time-limit (s) specified in the agreement have no
relevance and can be ignored with impunity? It would
also mean denying the discretion vested in the court
by both Sections 10 and 20. As held by a Constitution
Bench of this Court in Chand Rani vs. Kamal Rani
(1993) 1 SCC 519:
“....it is clear that 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
(evident?) : (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.”
In other words, the court should look at all the
relevant circumstances including the time-limit(s)
specified in the agreement and determine whether its
discretion to grant specific performance should be
exercised. Now in the case of urban properties in India,
it is well-known that their prices have been going up
sharply over the last few decades - particularly after
1973.
“......Indeed, we are inclined to think that the rigor of
the rule evolved by courts that time is not of the
essence of the contract in the case of immovable
properties - evolved in times when prices and values
were stable and inflation was unknown - requires to be
relaxed, if not modified, particularly in the case of
urban immovable properties. It is high time, we do
so......”
The aforesaid view was upheld in K. Narendra vs. Riviera
Apartments (P) Ltd. (1999) 5 SCC 77.

Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELALTE JURISDICTION
CIVIL APPEAL Nos. 9949-9950 OF 2014

Rathnavathi Vs  Kavita Ganashamdas

Bench: Fakkir Mohamed Kalifulla, Abhay Manohar Sapre
Citation;2015 ALLSCR8

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Whether Time is essence of contract for sale in suit for specific performance of suit?

 A correct perspective relating to the question whether time is not of the essence of the contract in contracts relating to immovable property, is given by this court in K.S. Vidyanadam and Others vs. Vairavan - (1997) 3 SCC 1 (by Jeevan Reddy J. who incidentally was a member of the Constitution Bench in Chand Rani). This Court observed:

It has been consistently held by the courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifically provided to that effect.

In the case of urban properties in India, it is well-known that their prices have been going up sharply over the last few decades - particularly after 1973. .........We cannot be oblivious to the reality and the reality is constant and continuous rise in the values of urban properties - fuelled by large scale migration of people from rural areas to urban centres and by inflation.

Indeed, we are inclined to think that the rigor of the rule evolved by courts that time is not of the essence of the contract in the case of immovable properties - evolved in times when prices and values were stable and inflation was unknown - requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so

(emphasis supplied)

Therefore there is an urgent need to revisit the principle that time is not of the essence in contracts relating to immovable properties and also explain the current position of law with regard to contracts relating to immovable property made after 1975, in view of the changed circumstances arising from inflation and steep increase in prices. We do not propose to undertake that exercise in this case, nor referring the matter to larger bench as we have held on facts in this case that time is the essence of the 30

contract, even with reference to the principles in Chand Rani and other cases. Be that as it may.

28. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S. Vidyanadam (supra) : (i) Courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored.

(ii) Courts will apply greater scrutiny and strictness when considering whether the purchaser was `ready and willing' to perform his part of the contract.

(iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time-limits stipulated in the agreement. Courts will also `frown' upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three year period is intended to assist purchasers in special cases, as for example, where the major part of the consideration has been paid to the vendor and possession has been delivered in part performance, where equity shifts in favour of the purchaser.

Supreme Court of India

Saradamani Kandappan vs S. Rajalakshmi & Ors. on 4 July, 2011

Bench: R.V. Raveendran, K.S. Panicker Radhakrishnan

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