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Bismillah Begum (Smt) Dead By Lrs. v. Rahmatullah Khan (Dead) By Lrs.
Factual and Procedural Background
The original plaintiff, now represented by the present appellants, sold a house property in Kanpur to the defendant by a registered sale deed dated 8-2-1955 for Rs 2,000. On the same day the defendant executed a registered agreement to re-convey the property if the vendor repaid the sale consideration together with specified expenses within three years. The plaintiff filed a suit on 7-2-1958—one day before expiry of the three-year period—seeking specific performance of that reconveyance agreement.
The trial court and the first appellate court held that (i) time was of the essence of the reconveyance contract and (ii) the plaintiff had neither pleaded nor proved readiness and willingness to pay the stipulated amount within the period. Consequently the suit was dismissed. The High Court, in second appeal, affirmed those findings and dismissed the appeal. The matter came up before the Supreme Court in the present appeal by the plaintiff’s legal representatives.
Legal Issues Presented
- Whether, in a contract granting an option to repurchase immovable property (i.e., a reconveyance agreement), time is of the essence.
- Whether the plaintiff had pleaded and proved continuous readiness and willingness to perform her part of the contract within the stipulated three-year period.
Arguments of the Parties
Appellants' Arguments
- Invoked Ardeshir H. Mama v. Flora Sassoon, AIR 1928 PC 208, to contend that generally time is not of the essence in contracts for sale of immovable property.
- Submitted that it was unnecessary to tender or deposit the consideration unless directed by the court, relying on the principle now embodied in Section 16(c) of the Specific Relief Act, 1963.
- Cited Nanik Lal Karmarkar v. Shankar Lal Shah, AIR 1962 Cal 103, asserting that delay attributable to the defendant should not defeat specific performance.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Ardeshir H. Mama v. Flora Sassoon, AIR 1928 PC 208 | Time is generally not of the essence in contracts for sale of immovable property. | Distinguished; court held the principle does not apply to options for reconveyance where time is inherently of the essence. |
| Nanik Lal Karmarkar v. Shankar Lal Shah, AIR 1962 Cal 103 | Delay in payment caused by the defendant’s conduct does not bar specific performance. | Found inapplicable because no evidence showed that the defendant’s conduct caused the plaintiff’s delay. |
| Shanmugam Pillai v. Annalakshmi Ammal, AIR 1950 FC 38; 1949 FCR 537 | In reconveyance contracts, time is the essence. | Relied upon to affirm that the plaintiff’s option had lapsed once the time period expired without payment. |
| Caltex (India) Ltd. v. Bhagwan Devi Marodia, AIR 1969 SC 405; (1969) 2 SCR 238 | Options to purchase or repurchase property must be exercised strictly within the stipulated time; otherwise they lapse. | Adopted as binding authority; formed the cornerstone of the decision that the plaintiff’s right stood extinguished. |
| Hare v. Nicoll, (1966) 2 QB 130 | Reaffirms that renewal or repurchase options must be exercised within the fixed time. | Cited illustratively within the Caltex extract to reinforce the strict-timing rule. |
Court's Reasoning and Analysis
The Supreme Court began by accepting the concurrent findings of fact that the plaintiff made no genuine effort to pay the consideration within three years and had not pleaded continuous readiness and willingness. These findings are binding in second appeal.
On the legal question, the Court distinguished general principles applicable to ordinary sales of immovable property from those governing options of renewal or repurchase. Citing Shanmugam Pillai and Caltex, the Court held that in reconveyance contracts time is inherently of the essence because the option constitutes a privilege that must be strictly exercised. Consequently, the Privy Council dictum in Ardeshir H. Mama does not apply.
The appellant’s reliance on Nanik Lal was rejected because the record revealed no obstinacy or obstruction by the defendant that prevented payment. As the stipulated period expired without payment of the consideration, the contractual option “lapsed,” extinguishing the plaintiff’s right to specific performance.
Holding and Implications
APPEAL DISMISSED.
The decision affirms that in contracts conferring an option to reconvey immovable property, time is strictly of the essence; failure to pay within the specified period extinguishes the option. The ruling reinforces existing precedent without creating new legal doctrine, but it serves as a clear reminder that vendors seeking specific performance of reconveyance must strictly comply with timing requirements.
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.
2. The brief facts of the case are that the appellants' predecessor-in-interest who owned the suit house property in Kanpur executed a registered sale deed dated 8-2-1955 for Rs 2000 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 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 abovesaid agreement of reconveyance that the seller filed the present suit on 7-2-1958.
3. In the courts below the questions as to whether time was the essence of the contract and whether the plaintiff was ready and willing to perform her part 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 been 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 appellant-vendor relying upon a decision in the case of Ardeshir 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 had spoken to the defendant orally several times to receive the stipulated amount and execute 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 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 abovesaid 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 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.
4. In this appeal, learned counsel for the appellants has contended that time is not the essence of the contract in relation to contracts of immovable property and that it is also not necessary to tender the amount 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 the 1963 Act. Learned counsel for the appellants also relied upon a decision of the Calcutta High Court in Nanik Lal Karmarkar v. Shankar Lal Shah AIR 1962 Cal 103 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 performance if such delay had occurred on account of the defendant's attitude.
5. Even assuming that the abovesaid decision of the Calcutta High Court would support the point canvassed by learned counsel for the appellant it will be noticed that the finding in the abovesaid 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 plaintiff not being able to pay the amount to the defendant. As already stated, 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.
6. We may also add that in contracts relating to reconveyance of property time is always the essence of the contract as laid down by the Federal Court in the case of Shanmugam Pillai v. Annalakshmi Ammal AIR 1950 FC 38, 1949 FCR 537, (1950) 1 MLJ 683 and also laid down by this Court in Caltex (India) Ltd. v. Bhagwan Devi Marodia AIR 1969 SC 405, (1969) 2 SCR 238. The relevant passage in the judgment of this Court in Caltex (India) Ltd. AIR 1969 SC 405, (1969) 2 SCR 238 at p. 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 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 Laws of England, 3rd Edn., Vol. 3, Article 281, p. 165:
‘An option for the renewal of a lease, or for the purchase or re-purchase of property, 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 Danckwerts L.J in Hare v. Nicoll (1966) 2 QB 130, (1966) 1 All ER 285, (1966) 2 WLR 441. QB at p. 145. A similar statement of law is to be found in Foa's General Law of Landlord and Tenant, 8th Edn., Art. 453, p. 310, and in Hill and Redman's Law of Landlord and Tenant, 14th Edn., 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.”
(emphasis supplied)
7. 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 becomes the 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 the essence of the contract in contracts relating to immovable property — does not apply. It is in fact, so observed in Caltex (India) Ltd. case AIR 1969 SC 405, (1969) 2 SCR 238. In view of the abovesaid 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.
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