Holding

In contracts of reconveyance of immovable property, time is always of the essence; failure to pay within the agreed period causes the option to lapse.

Summary

The appellants, legal representatives of the deceased plaintiff, had sold a property to the deceased defendant on 8 February 1955 and simultaneously obtained an agreement of reconveyance that allowed the plaintiff to regain the property if she repaid the consideration within three years. A suit for specific performance of the reconveyance was filed on 7 February 1958, but the lower courts dismissed it on the ground that the plaintiff had not paid the amount within the stipulated period and that time was the essence of the contract. On appeal, the Supreme Court examined whether time is essential in reconveyance contracts of immovable property. Relying on precedents such as Shanmugam Pillai & Ors. v. Annalakshmi Ammal & Ors. and Caltex (India) Ltd. v. Bhagwan Devi Marodia, the Court held that time is always of the essence in such contracts; consequently, the plaintiff’s failure to pay within three years caused the option to lapse. The appeal was therefore dismissed.

Issues considered

Whether time is of the essence in a contract of reconveyance of immovable property.
Whether the plaintiff’s failure to pay the consideration within the stipulated period bars specific performance of the reconveyance.
Whether the absence of a statutory provision (e.g., S.R. Act Sec. 16(c)) affects the essential nature of time in such contracts.

Legislation cited

Specific Relief Act, 1963s. 16(c)

Subjects

reconveyancespecific performancetime of essenceimmovable propertycontractsale deedSpecific Relief Actlapse of option

Judgment

A SMT. BJSMILLAH BEGUM (DEAD) BY LRS
v.
RAHMA TULLAH KHAN (DEAD) BY LRS

JANUARY 21, 1998
B
'.S.B. MAJMUDAR AND M. JAGANNADHA RAO, JJ.]

Specific Relief Act, 1963-Sec, 16(C)-Execution of sale deed-
Agreement of reconveyance-Jf consideration amount repaid with three years,
C plaintiff entitled to get back property-Suit for reconveyance-Dismissed on
the ground that plaintiff failed to repay within the stipulated period-On
appeal-Held, Time is essence of contract relating to reconveyance of
immovable property-Amount not paid within the stipulated period-Option
of reconveyance lapsed
D The appellants were legal representatives of the deceased plaintiff, who
had executed a sale deed in favour of deceased defendant for certain J..
consideration. Simultaneously an agreement of reconveyance was obtained
from the defendant stipulating that in case the plaintiff repays the consideration
amount within a period of three years, he could be entitled to get back the
E property. A suit for reconveyance was filed by the plaintiff. The said suit was
dismissed on the ground that the plaintiff was not ready and willing to
pi;rform her part of contract within the period stipulated in the reco!lveyance
agreement. The appeal before the High Court was also dismissed. Hence the
present appeal.

F The contention of the appellant was that time was not the essence of
contract in relation to contracts of immovable property.

Dismissing the appeal, this Court

HELD : 1. In contracts relating to reconveyance of immovable property'
G time is always the essence of the contract. Thus as the amount was not paid
within the stipulated time, option of reconveyance in favour of the plaintiff
must be deemed to have lapsed. 1287-G)

Shanmugam Pillai & Ors. v. Annalakashmi Ammal & Ors., AIR (1950)
FC 38 and Caltex (India) Ltd v. Bhagwan Davi Marodia, AIR (1969) SC-
H 405, relied on.
284
B. BEGUM v. RAHMA TULLAH KHAN [M. JAGANNADHA RAO, J.] 285
A.H. Mama v. Flora Sassoon AIR, (1928) PC 208, held inapplicable. A
J- 2. In the instant case there is no proof that any attitude of the
defendant towards the plaintiff was the cause for the plaintiff not being able
to pay the amount to the defendant. The findings of fact arrived at by the
Courts below that no effort has been made by the Plaintiff to pay the sale
consideration to the defendant are findings of fact, binding in second appeal. B
[286-H, 287-AJ

Manik Lal v. Shankar Lal AIR, (1962) Cal. 103 distinguished.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2010 of 1980.

From the.Judgment and Order dated 17.9.79 of the Allahabad High Court C
in Second Appeal No. 2376/69.

J.M. Khanna for the appellant.

Atul Sharma, K.C.Jain and E.C. Agrawala for the respondents.
D
The Judgment of the Court was delivered by

M. JAGANNADHA RAO, J. The appellants are the legal representatives
of the deceased plaintiff. The suit was filed on 7.2.1958 seeking specific
performance of a contract of reconveyance dated 8.2. 1955.

The brief facts of the case are that the appellants' predecessor in
E
interest who owned the suit house property in Kanpur executed a registered
sale deed dated 8.2.1955 for Rs. 2.000 in favour of the sole defendant (who
has also since died) and also simultaneously obtained an agreement of
reconveyance from the defendant on the same day. It appears that the said
agreement for reconveyance stipulated that in case the seller was able to pay
back the consideration within a period of three years and certain expenses F
and other monies expended by the purchaser towards repairs, the seller would
..., be entitled to get back the property. It is on the basis of the above said
agreement of reconveyance that the seller filed the present suit on 7.2.1958.

In the courts below the questions as to whether time was the essence
of contract and whether the plaintiff was ready and willing to perform her part G
of the contract were debated. The courts below held that the plaintiff was not
,,_. ready and willing to perform the contract by way of offering to repay - what
has quoted in the reconveyance agreement -within the period stipulated
therein. It was also held that time was the essence of the contract. When the
matter came up in Second appeal to the High Court it was argued for the H
286 SUPREME COURT REPORTS [1998] 1 S.C.R.

A appellant - vendor relying upon a decision in the case of A.H.Mama v. Flora
Sassoon, AIR (1928) PC 208, that time was not the essence of the contract
in contracts of sale regarding immovable property. However, the High Court
held that a close scrutiny of the plaint did not reveal that there was any
averment on the part of the plaintiff that she was ready and willing to perform
her part of the contract. It was no doubt averred in the plaint that the vendor
B had spoken to the defendant orally several times to receive the stipulated
amount and :xecute the reconveyance deed and get it registered, but no dates
on which the vendor allegedly spoke to the defendant were mentioned. In fact
the plaintiff relied only on a notice by telegram dated 6.2.1958 which was
referred to in the plaint and on the paragraph relating to cause of action,
C proposing to repay. Apart from the said notice there was no other documentary
evidence to show that any effort was made within the period of three years
for repayment of the consideration for the purpose of obtaining reconveyance.
The High Court has also observed that the above said notice dated 6.2.1958
issued by the vendor to the defendant purchaser was not addressed to his
proper address and in fact it never reached the defendant. Under such
D circumstances, the High Court dismissed the Second Appeal holding that
there was neither any plea nor proof of readiness and willingness on the part
of the plaintiff to perform her part of the contract.

In this appeal, learned counsel for the appellants had contended that
time is not the essence of the contract in relation to contracts of immovable
E property ana that it is also not necessary to tender the am?unt or to deposit
the consideration amount in court except when directed by the Court. It will
be noticed that a provision to that effect has now been incorporated in
Section 16(c) of the Specific Relief Act, 1963 but there was no such statutory
provision before 1963 Act. Learned counsel for the appellants also relied
p upon a decision of the Calcutta High Court in Manik Lal v. Shankar Lal, AIR
(1962) Cal. I 03 for the proposition that delay in payment of the sale
consideration even in the case of reconveyance contract would disentitle the
plaintiff to obtain specific perfonnance if such delay had occurred on account
of the defendant's attitude.

G Even assuming that the above said decision of the Calcutta High Court
would support the point convassed by learned counsel for the appellant it
will be noticed that the finding in the above said Calcutta case was that the
plaintiff was unable to perform his part of the contract because of the
defendant's attitude. But in the present case before us there is no proof that
any attitude of the defendant towards the plaintiff was the cause for the
H plaintiff not being able to pay the amount to the defendant. As already stated,
B. BEGUM v. RAHMATULLAH KHAN [M. JAGANNADHA RAO, J.] 287
the findings of fact arrived at by the courts below that no effort has been A
made by the plaintiff to pay the sale consideration to the defendant are
findings of fact, binding in Second appeal.

We may also add that in contracts relating to reconveyance of property
time is always essence of the contract as laid down by the Federal Court in
the case of Shanmugam Pillai & Ors. v. Annalakshmi Ammal & Ors., AIR B
(1950) FC 38 and also laid down by this Court in Caltex India Ltd. v. Bhagwan
Devi Marodia, AIR (1969) SC 405. The relevant passage in the judgment of
this Court in Caltex (India) Ltd. at page 407 in para 3 reads as follows:

"At common law stipulations as to time in a contract giving an option
for renewal of a lease of land were considered to be of the essence C
of the contract even if they were not expressed to be so and were
construed as conditions precedent. Equity followed the common law
rule in respect of such contracts and did not regard the stipulation as
to time as not of the essence of the bargain. As stated in Halsbury's
La\vs of England, 3rd edn .. Vol. 3, Article 281. p. 165: "An option for D
the renewal of a lease, or for the purchase or re-purchase ofproperty,
must in all cases be exercised strictly within the time limited for the
purpose, otherwise it will lapse." This passage was quoted with
approval by Danckworts L.J, in Hare v. Nicoll, (1966-2) QB 130, 145.
A similar statement of law is to be found in Foa's General Law of
Landlord and Tenant, 8th ed., Art. 453 p. 310 and in Hill and Redman's E
Law of Landlord and Tenant, 14th ed., p. 54. The reason is that a
renewal of a lease is a privilege and if the tenant wishes to claim the
privilege he must do so strictly within the time limited for the purpose."

The above passage refers both to options for renewal and options to
repurchase where, in regard to immovable property, as a matter of law time F
~ becomes essence of the contract. Therefore in regard to contracts of
• reconveyance relating to immovable property, the principle laid down in A.H.
Mama v. Flora Sassoon, AIR ( 1928) PC 208 - that time is not normally essence
of the contract in contracts relating to immovable property - does not apply.
It is in fact, so observed in Caltex (India) Ltd. case. In view of the abovesaid G
decision of this Court relating to contract of reconveyance, and inasmuch as
the amount was not paid within the stipulated time, the said option in favour
of the plaintiff must be deemed to have "lapsed". For the aforesaid reasons,
the appeal fails and is dismissed. No costs.

S.V.K. Appeal dismissed. H