Holding

The Supreme Court upheld the High Court's judgment, finding that the appellants were not ready and willing to perform and that time was indeed the essence of the contract, thus denying specific performance.

Summary

The appellants entered into a contract to purchase a trust property, agreeing to pay an advance and the balance by a stipulated date, with a clause stating that time was the essence of the contract. They later demanded that the respondents obtain clearance from the Endowment Department under the Urban Land (Ceiling and Regulation) Act, claiming this as a condition for specific performance. The trial court held the appellants were not ready and willing to perform and dismissed the suit for specific performance, ordering a refund of the earnest money; the High Court affirmed this decision and also held that time was indeed the essence of the contract. On appeal, the Supreme Court examined whether the clearance requirement was a contractual condition, whether the appellants were ready and willing, and whether time could be deemed essential in a sale of immovable property. The Court concluded that the clearance was not a condition of the contract, the appellants were not ready and willing to perform, and the contractual clauses made time the essence, thereby upholding the lower courts' dismissal of the specific performance suit. Consequently, the appeal was partly allowed, confirming the decree dismissing the suit and leaving the refund order untouched.

Issues considered

Whether the requirement to obtain clearance from the Endowment Department was a condition incorporated in the contract for the purpose of specific performance.
Whether the appellants were ready and willing to perform their obligations under the contract.
Whether the clause stating that "time is the essence of the contract" is enforceable in a sale of immovable property.
Whether the respondents were entitled to forfeit the earnest money paid by the appellants.

Legislation cited

Subjects

specific performancecontract of saletime of essencereadiness and willingnessearnest moneyTransfer of Property ActUrban Land Ceiling Actcharitable trustforfeiturecivil appeal

Judgment

476 SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R.

A collect the earnest amount. Appellant filed suit for specific
performance of the contract for sale by respondents. Trial
Court held that appellant by insisting upon the
respondents to perform additional condition were not
ready and willing to perform their part of contract and
s time was not essence of contract. It dismissed the suit
but passed a decree directing the respondent to refund
the earnest money to the appellant. High Court upheld the
decree and held that the time was the essence of the
contract. Hence the present appeal.
c Partly allowing the appeal, the Court

HELD: 1. The judgment of the High Court so far as
the suit for specific performance of the contract for sale
is concerned is upheld. [Para 19] [494-A-B]
D
2.1. From a bare perusal of clauses of the contract
for sale, it would be evident that the onus is on the
appellants to obtain clearance from the competent
..
authorities under the Urban Land (Ceiling and
E Regulation) Act, 1976. The respondents were
nevertheless bound to extend their full cooperation to the
vendees and to sign all necessary papers and
documents. In the contract, there is no such clause
where the certificate from the Endowment Department
was also to be taken for specific performance of the
F contract. The first appellant who was one of the executors
of the said contract had admitted in his evidence that the
transaction was finalized in the presence of a real estate
broker and neither he nor any of the other appellants had
asked the respondent to· get permissions from the
G Endowment Department at that juncture. The first
appellant had further deposed that he started entertaining
doubts about the motives of the sellers from 28th of May,
1970 because there were allegedly other brokers
approaching the respondent. Further PWs. 1 and 3 had
H
AK. LAKSHMIPATHY (DEAD) & ORS. v. RAI SAHEB 477
PANNALAL H. LAHOTI CHARITABLE TRUST & ORS.

affirmed at the trial court level that they had entered into A
the agreement only after having satisfied themselves of
the title of the sellers and that they were ready to go ahead
to complete the contract. [Para 10] (486-A-F]

2.2. It is generally the prerogative of the buyer to find 6
out the defects in a property before buying it and also to
make the seller rectify such defects. Section 55 of the
Transfer of Property Act, 1882 deals with rights and
liabilities of buyer and seller. Sub-section (b) of s. 55(1)
clearly says that it would be open to the buyer to ask the C
seller to produce for examination all documents of title
relating to the p·roperty which are in the possession of
the seller or buyer. A plain reading of the provision would
amply show that documents of title relating to the
property in respect of which agreement for sale was
entered into must be in the possession or power of the D
seller which should be produced to the buyer for
examination. [Paras 11 and 13] (486-G; 488-E-G]

2.3. In the instant case, sub-section (c) of s. 55 of the
T.P. Act is pertinent: A reading of the provisions u/s. 55 E
· which starts with "In the absence of a contract to the
contrary' would clearly mean thats. 55 (1) (b) and (c) of
the Act would become applicable only in the absence of
these words 'contract to the contrary'. [Para 12] [487-E-
F] F
2.4. The condition regarding the clearance or
exemption from the Endowment Department is not a
document of title relating to the property which would
benefit the buyer for examination for the purpose of
completing the agreement for sale. Sub-section (c) of s. G
55(1) also equally cannot be applicable in the facts and
circumstances of the instant case. It is evident from a
plain reading of s. 55 that this section becomes
applicable only in the absence of contract to the contrary.
H
478 SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R.

A There is admittedly a contract for sale which clearly lays { )"'"

down the terms and conditions to govern the sale
transaction. The views expressed by the High Court that
since the Head Office of the Trust is registered at Kolkata
which would be enough to show that the relevant law ~~
B applicable to a charitable trust would be that of the State
in which the Head Office of the Trust is registered, is
accepted. The respondents had fulfilled their part of the
obligation when respondent No.2 sent a reply dated 6th
of June, 1979 intimating the appellants that there was no
c need to obtain any permission from the Endowment
Department for the purpose of transferring the title in
respect of the property in question as the laws of the
West Bengal applicable in this case, were not required to
take such permission for alienation of trust property.
Therefore, there was no obligation on the part of the
D "'
respondents to get clearance of permission or exemption
from the Endowment Department of the State for the
purpose of transferring the title of the property in
question. [Para 13] [488-G-H; 489-A-F]
E State of Bihar vs. Smt. Charusila Dasi AIR 1959 SC
1002; Anant Prasad vs. State ofAndhra Pradesh AIR 1963
SC 853, Referred to.

2.5. The submission that the High Court was in error
F in not giving any due regard to all the clauses of the r.,,
contract for sale especially Clause 11 of the agreement
for sale cannot be accepted. From a mere glance through '
"
the judgment of the High Court, it would be evident that
the entire agreement was reproduced verbatim and the
High Court in the impugned order truly went in depth into
G
the discussion of the terms and conditions embodied in
,,.
the contract for sale. Its analysis wa~ impregnable. [Para
14] [489-F-H; 490-A]
.
~
3.1 The High Court rightly pointed out that there are
H many instances in the said contract where the fact that
A. K. LAKSHMIPATHY (DEAD) & ORS. v. RAI SAHEB 479
PANNALAL H. LAHOTI CHARITABLE TRUST & ORS.

time is to be of essence of the contract has been A
"'I •
specifically mentioned. Clause 10 of the Agreement of
Sale which reads: "Time will be of essence of the
contract", therefore, has been clearly mentioned in the
agreement for sale. However, time is not to be of essence
in case of sale of immoveable property. [Para 15] (490-C- 8
E]
Chand Rani vs. Kamal Rani AIR 1993 SC 1742,
Referred to

3.2. A reading of clause 3 of the agreement for sale c
would clearly show that what was the intention of the
parties to make time to be the essence of the contract. If
clause 3 and clause 10 of the agreement for sale is read
conjointly , it would be safe to conclude that the intention
; of the parties to enter into the agreement for sale D
incorporating clauses 3 and 10 in the same for the
purpose of making the time being the essence of the
contract. [Para 17] (491-C-D]

3.3. Clauses 3 and 10 of the contract for sale clearly
E
indicate that time was always meant to be of prime
importance in the contract. In fact P.W. 1, who was
examined as a witness for the appellants admitted in his
deposition that time was always the essence of the
contract and the appellants were aware of this even

, before entering into the contract. From the contract for F
sale also, it can be seen that time was repeatedly
mentioned to be of prime importance and it was stated
. quite clearly that under all circumstances, the appellants
would have to definitely deposit the balance amount of
Rs.5 lakhs by the date stipulated in the contract for sale. G
Hence, it cannot be said that the time was not the
essence of the contract. [Para 17] [492-8-0]

Swarnam Ramachandram (Smt) & Anr. v. Aravacode
Chakungal Jayapalan (2004) 8 SCC 689, Distinguished. H
480 SUPREME COURT REPORTS [2009) 15 (ADDL.) S.C.R.

A 4.1. In a suit for specific performance of a contract
i. I
for sale, it has to be proved that the plaintiff who is
seeking for a decree for specific performance of the
contract for sale must always be ready and willing to
complete the terms of the agreement for sale and that he
B has not abandoned the contract and his intention is to
keep the contract subsisting till it is executed. This
readiness and willingness on the part of the appellants
in the facts and circumstances of the case, cannot be
found in favour of the appellants. In the instant case, not
c only the trial court as well as the High Court on
concurrent findings of fact and on consideration of the
evidence on record came to the conclusion that the
appellants were not ready and willing to perform the
terms and conditions of the agreement for sale. It is
evident from the exhi~its which would show that the
0
appellants sought clarifications regarding the joining of
all trustees in execution of the sale deed, asking the
second respondent to enter into another agreement by
way of indemnifying the appellants for any loss due to
E defect in the title, etc. There is no justification to say that
the demands of the appellants were justified and
reasonable. On the other hand, this demand on the part
of the appellants was not only unjustified and
unreasonable but it was in fact imaginary. In order to
show that the appellants were all ready and willing to
F perform their part of their obligation to complete the
agreement was to bear the remaining amount of the
contract and then agitate the matter for specific
performance before the court. Therefore, the appellants
having failed to do so, they cannot be allowed to take
G advantage of their own mistake and conveniently pass
the blame to the respondents. [Para 18] [492-E-H; 493-A-
E]

4.2. The concurrent findings of fact arrived at by the
H High Court and the trial court on the question of
A.K. LAKSHMIPATHY (DEAD) & ORS. v. RAI SAHEB 481
PANNALAL H. LAHOTI CHARITABLE TRUST & ORS.

readiness and willingness of appellant to perform their A
part of obligation, to complete the agreement for sale,
cannot be interfered with. [Para 18] [493-F-G]

Chand Rani vs. Kamal Rani AIR 1993 SC 1742; K.S.
Vidyanam and Ors v. Vairavan (1997) 3 SCC 1, Relied on. B

Case Law Reference:
AIR 1959 SC 1002 Referred to. Para 13
AIR 1963 SC 853 Referred to. Para 13
AIR 1993 SC 1742 Relied on Para 15, 18 C
(2004) 8 sec 689 Distinguished. Para 17
(1997) 3 sec 1 Relied on. Para 18

CIVIL APPELLATE JURISDICTION : Civil Appeal No.
7208 of 2009. D

From the Judgment & Order dated 23.2.2005 of the High
Court of Judicature Andhra Pradesh at Hyderabad in C.C.C.A.
No. 88 of 1993.
, E
K.K. Venugopal, Suryanarayana, P.S. Narasimha, Mohan
Rao, Sridhar Potaraju, Gopal, Julius for the Appellants.

P.S. Patwalia, G. Ramakrishna Prasad, Suyodhan
.,. Byrapaneni, Siddharth Patnaik, K. Venkata Rao for the
Responden~ F

The Judgment of the Court was delivered by

TARUN CHATTERJEE, J. 1. Leave granted.

2. This appeal by way of a Special Leave Petition has G
been filed by the appellants to challenge the judgment and
decree dated 23rd of February 2002 of the High Court of
Andhra Pradesh at Hyderabad in C. C. C. A. no. 88/1993 and
AS no. 673 of 1995, which was filed by the defendants/
i H
i
482 SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R.

A respondents in so far as the direction given by the trial Court
to refund a sum of Rs.1,00,000/- to the plaintiffs/appellants, ~

which they had paid to the defendants/respondents as an
advance, was concerned.

B 3. The relevant facts leading to the filing of this appeal are:- \-

The dispute in this appeal involves a property marked no.
1-11-251 in Begumpet, Hyderabad (hereinafter referred to as
the 'property in question') which was owned by one Rai Bahadur
Saheb Pannalal Lahoti. By a Will, he bequeathed all his
c properties including the property in question and appointed
Respondent no. 2 B.M. Bhandari and one Bhima Bai as joint
executors of his Will. According to the Will of Rai Bahadur
Saheb Pannalal Lahoti, one-fourth of the fund of his estate was
to be used for hospitals and educational institutions in equal
D shares as the executors would deem fit. After the death of
Bhima Bai, who was one of the joint executors of the Will, her '"
heirs Govind Bai Vinani and Suresh Chandra Lahoti
(Respondents no. 2 and 5 respectively) came into the picture.
By a trust deed as per the wishes of the Late Rai Bahadur
....~

E Saheb Pannalcil Hiralal Lahoti, a Charitable Trust by the same
name was set up. The trust owned properties in Hyderabad,
Andhra Pradesh and Hingoli in Maharashtra. The registered
office was in Kolkata, West Bengal. Respondent no. 2 on
behalf of the trust entered into a written contract for sale with "t
F appellant no. 1 on 6th of December 1978 agreeing to sell the
property in question measuring 9400 sq. yards along with
constructions thereon. The contract contained certain terms and
conditions. The first of such condition was that Appellant no. 1
.
would advance a sum of Rs.1 lakh and the rest of the balance
amount, i.e., Rs.5 lakhs would be paid by the appellants on or i"---
G
before 5th of June 1979. Under the contract, the appellants also
agreed to obtain the necessary permission or exemption from

'
~
the competent authorities under the Urban Land (Ceiling and ~

Regulation) Act, 1976 (hereinafter referred to as "the ULC Act").
It was also alleged that the respondents shall cooperate with
H
1~
AK. LAKSHMIPATHY (DEAD) & ORS. v. RAI SAHEB PANNALAL 483
H. LAHOTI CHARITABLE TRUST & ORS.[TARUN CHATTERJEE, J.]

the appellants in getting all such necessary permissions from A
the competent authority under the ULC Act. Clause 10 of the
Contract emphatically mentioned that time was the essence of
the contract. It reads as under:

"Time will be of essence of the contract." B
4. The said contract also mentioned that in case of failure
of the appellants to pay the balance amount within the stipulated
time, the respondents would forfeit the balance amount.

5. Thereafter, the competent authority under the ULC Act c
informed the appellants of being granted exemption provided
that the land was continued to be used for the purposes of the
trust. Due to such intimation, the Appellants sought clarifications
from Respondent no. 2 regarding procurement of permissions
from the Endowment Department in a telegraphic notice on 29th D
" of May 1979. This was followed by a registered notice on 31st
,f
of May 1979. Respondent no.2 sent a reply to the appellants
on 4th of June 1979 without clarifying the doubts raised on
procurement of permission from the Endowment Department.
In response, the appellants sent a detailed communication to E
the respondent enquiring about the state of affairs on 5th of June
1979. The respondent no. 2 sent a reply on 6th of June 1979
informing the appellants that there was no requirement of
.,. obtaining permission from the Endowment Department as the
• laws of West Bengal, which were applicable in this case, did
F
not require any particular procedure for alienation of the trust
property.

6. Thereafter, the appellants sent a communication
enclosing a Photostat copy of a cheque of Rs. 5 lakhs, certified
by the banker as "good for payment", thus showing their G
readiness and willingness to complete the contract with the
"!-"' balance consideration but with the condition that the respondent
had to obtain a certificate from, the Endowment Department.
ln reply, on 7th of June 1979 the respondents sent a Photostat
H
484 SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R.

A copy of a cheque of Rs. 1 lakh towards return of the advance
amount simply terminating the agreement and threatening to
~
....
forfeit the advance amount. The written communication ,.
mentioned that Respondent no. 2 was kind enough to offer the
earnest amount back to the appellants on the condition that the
B latter would not agitate the matter further. The appellants were
directed to collect the amount within three days of the receipt
of the letter; ptherwise the earnest money would be forfeited.
The said letter mentioned that by this communication the
respondents would not be waiving any of their rights to pursue
(.
c the matter further. •
}--
~
7. The appellants then filed a suit being O.S. No. 317/1985
Jc
in the Court of The Principal Subordinate Judge, R.R. District,
Hyderabad for specific performance of the said contract for
sale by the seller-respondents. The trial court framed no less
D than 17 issues in all. After examining witnesses, hearing
~

arguments of both the parties and deliberating upon the issues,
the Trial Court, iriter alia, held that the appellants by insisting -\-
upon the trustees to perform additional conditions were not ·+
ready and willing to perform their part of the contract and also
E holding that time was hot the essence of the contract.
Accordingly, the Trial Court on 25th of August 1993 dismissed
the suit for specific performance but passed a decree directing
refund of Rs 1 Lakh of earnest money to the appellants.
•
F 8. Thereafter, the appellants, aggrieved by the decree, filed ·+
an appeal before the High Court of Andhra Pradesh at
Hyderabad being C. C. C. A. no. 88/1993 and the respondents
"'
had filed another appeal A.S. No. 673 of 1995 against the said
decree, to the extent that the Trial Court had directed the
G respondents to refund the advance .amount of Rs. 1 lakh. On
23rd of February 2003, the High Court by its judgment and
decree affirmed the decree of the Trial Court and held that time ....
...y
was the essence of the contract. Feeling aggrieved, the
appellants filed a Special Leave Petition which, on grant of

H
A.K. LAKSHMIPATHY (DEAD) & ORS. v. RAI SAHEB PANNALAL 485
H. LAHOTI CHARITABLE TRUST & ORS.(TARUN CHATTERJEE, J.]

---1-.,1 .#'. leave, was heard in presence of the learned counsel for the A
parties.

9. Having heard the learned counsel for the parties and
after examining the materials on record including the judgment
of the courts below, the following questions need to be decided B
for proper disposal of this appeal which are as follows :-

(i) Whether the insistence of the appellants to get the
~- clearance of the Endowment department of the.
State of Andhra Pradesh at Hyderabad was the
condition to be incorporated in the agreement itself c
for the purpose of a decree for specific
performance of the contract for sale ?

(ii) Whether in the facts and circumstances of the
~
present case the appellant could be found to be not D
ready and willing to perform their part of the contract
" ?
(iii) Whether in the facts and circumstances of the
present case, the High Court was in error in holding E
that time was the essence of the contract for sale?

(iv) Whether in the facts and circumstances of the
•"
present case, the respondents are entitled to forfeit
the advance amount paid by the appell13nts-
purchasers? F

10. Let us now turn to the questions at hand. The learned
counsel for the appellants argued that the appellants had shown
their willingness and readiness to perform their part of the
contract by sending a photostat copy of a cheque within the G
=£ .,.- stipulated time. Mr. P.S. Patwalia, the learned senior counsel
for the respondents, argued that the appellants were on one
hand supposedly ready with the balance amount and on the
other hand were imposing additional conditions, which is not
permissible and which is beyond the terms of the contract. To H

......_
486
SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R.

A add:ess this question, a look at the contract for sale is
......
pertinent. From a ~are perusal of clauses 4, 7, 8 and g of the ~

Contract for sale, 1t would be evident that the onus is on the
appellants to obtain clearance from the competent authorities
under the ULC Act. The respondents were nevertheless bound
B to extend their full cooperation to the vendees and to sign all
necessary papers and documents. In clauses 7 to 9 of the said
contract, the respondents agreed to obtain non-encumbrance !!>

and clearance certificates from the Income Tax Department and
..J.
also to settle all payments to be made towards Municipal taxes,
c water tax, non-agricultural land assessment tax, etc. In the
Contract, there is no such clause where the certificate from the
Endowment Department was also to be taken for specific
performance of the contract. The first appellant who was one ,...
of the executors of the said contract had admitted in his
evidence that the transaction was ,finalized in the presence of ~
D
a real estate broker and neither he nor any of the. other
appellants had asked the respondent to get permissions from ¥

the Endowment Department at that juncture. The first appellant
had further deposed that he started entertaining doubts about
the motives of the sellers from 28th of May, 1970 because there
E were allegedly other brokers approaching the respondent.
Further P. Ws. 1 and 3 had affirmed at the Trial Court level that
they had entered into the agreement only after having satisfied
,,.
themselves of the title of the sellers. The important admission -1
that was made was that they were ready to go ahead to
F complete the contract.

11. Nevertheless, it must be recognized that it is generally
the prerogative of the buyer to find out the defects in a property
before buying it and also to make the seller rectify such defects.
G The rights of the buyer to seek reasonable clarifications and
raise reasonable doubts have been statutorily recognized by
'"'·"'.ie
Section 55 of the Transfer of Property Act, 1882 (hereinafter
referred to as the T.P. Act). Section 55 runs as under:-

"Rights and liabilities of buyer and seller- In the absence
H
AK. LAKSHMIPATHY (DEAD) & ORS. v. RAI SAHEB PANNALAL 487
H. LAHOTI CHARITABLE TRUST & ORS.[TARUN CHATTERJEE, J.]

--<-I .4. of a contract to the contrary, the buyer and the seller of A
immoveable property respectively are subject to the
liabilities, and have the rights, mentioned in the rules next
following, or such of them as are applicable to the property
sold:

(1) The seller is bound-
a
(a) To disclose to the buyer any material defect in the
"'.l,.
property [or in the seller's title thereto] of which the seller
is, and the buyer is not, aware, and which the buyer could
not with ordinary care discover; 0

(b) To produce to the buyer on his request for examination
all documents of title relating to the property which are in
the seller's possession or power;
~
D
(c) To answer to the best of his information all relevant
.i-
questions put to him by the buyer in respect to the
property or the title thereto"

12. In this case, sub-section (c) of Section 55 of the T.P.
Act is pertinent. According to the appellants and keeping in E
view of sub-section (b) and (c) of Section 55 of the T.P. Act, it
was open to the appellants to seek clarifications regarding the
...
procurement of clearance or exemption from the Endowment
• Department which should be a reasonable clarification. A
reading of the provisions under Section 55 of the T.P. Act which F
starts with "In the absence of a contract to the contrary' would
clearly mean that Section 55 (1) (b) and (c) of the T. P. Act
would become applicable only in the absence of these words
'contract to the contrary'.
G
.,,... 13. Mr.K.K.V~nugopal, learned senior counsel for the
appellants relying on sub-section (b) and (c) of Section 55 (1)
of the T.P.Act sought to contend that it was open to the
appellants to seek clarifications regarding the procurement of
clearance or exemption from the Endowment Department and H
488 SUPREME COURT REPORTS [2009) 15 (ADDL.) S.C.R.
?ti-

A in view of the fact that such exemption was not taken by the ~
i...,._

respondents from the Endowment Department, the terms and
conditions of the contract entered into by the parties were not
satisfied and, therefore, the question of refusing a decree for
specific performance of the contract for sale could not arise at
B all on this ground alone. This submission of the learned senior
counsel appearing for the appellants was, however, contested
by Mr. P.S. Patwalia, learned senior counsel appearing for the
respondents. According to the learned senior counsel for the
respondents, since the clearance or exemption bf the
c Endowment Department was not a condition to be fulfilled by
the parties to execute the agreemerit for sale, it was not open
to the appellants to say that before such clearance or
exemption from the Endowment Department was not taken, the
question of executing the deed of sale in respect of the property
in question could not arise at all. We have carefully examined
D
the rival submissions of the learned senior counsel appearing
¥
for the parties on this question. Before we go into this question,
whether sub-section (b) & (c) of Section 55(1) of the T.P. Act
would be applicable in the facts and circumstances of the case,
,E it would be appropriate to refer to sub-section (b) & (c) of
Section 55(1) of the T.P. Act, as noted herein earlier. Section
55 of the T.P. Act deals with rights and liabilities of buyer and
seller. Sub-section (b) of Section 55(1) clearly says that it would
...
be open to the buyer to ask the seller to produce for ·+
examination all documents of title relating to the property which
F are in the possession of the seller or buyer. A plain reading of
this provision would amply show that documents of title relating
to the property in respect of which agreement for sale was
entered into must be in the possession or power of the seller
which should be produced to the buyer for examination. So far
G as the present case is concerned, the condition regarding the
clearance or exemption from the Endowment Department is '-'(•

not a document of title relating to the property which would
benefit the buyer for examination for the purpose of completing
the agreement for sale. Sub-section (c} of Section 55(1) of the
H
AK. LAKSHMIPATHY (DEAD) & ORS. v. RAI SAHEB PANNALAL 489
H. LAHOTI CHARITABLE TRUST & ORS.[TARUN CHATTERJEE, J.]
\
'
-~ -I T.P. Act also equally cannot be applicable in the facts and A
circumstances of the present case. That apart, it is evident from
a plain reading of Section 55 that this section becomes
applicable only in the absence of the contract to the contrary.
... In this case, there is admittedly a contract for sale which clearly
lays down the terms and conditions to govern the sale B
transaction. We are in agreement with the views expressed by
the High Court in the impugned judgment holding that since the
). Head Office of the Trust is registered at Kolkata which would
be enough to show that the relevant law applicable to a
charitable trust would be that of the state in which the Head c
Office of the Trust is registered. [See: State of Bihar & Ors. vs.
Smt. Charusila Dasi, Al R 1959 SC 1002 and Anant Prasad
vs. State of Andhra Pradesh [AIR 1963 SC 853]. In addition
to this, the respondents had fulfilled their part of the obligation
• when respondent No.2 sent a reply dated 6th of June, 1979 D
,.. intimating the appellants that there was no need to obtain any
permission from the Endowment Department for the purpose
of transferring the title in respect of the property in question as
the laws of the West Bengal applicable in this case, were not
~
required to take such permission for alienation of trust property.
E
In view of the above, we are, therefore, of the view that there
was no obligation on the part of the respondents to get

+
.. clearance of permission or exemption from the Endowment
Department of the State for the purpose of transferring the title
of the property in question.
""""' F
14. It was next contended by Mr Venugopal, learned senior
counsel appearing for the appellants, that the High Court was

-..,. in error in not giving any due regard to all the clauses of the
contract for sale especially Clause 11 of the agreement for sale .
We do not find any merit in this contention of the learned senior G
< t • counsel for the appellants. From a mere glance through the
judgment of the High Court, it would be evident that the entire
i
agreement was reproduced verbatim and the High Court in the
-( impugned order truly went in depth into the discussion of the
, terms and conditions embodied in the contract for sale. We are H
t
490 SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R.
.,
r
A in agreement with the High Court that its analysis was -~ ~.
impregnable. This submission of Mr.Venugopal, learned senior '
counsel for the appellants, cannot be said to have any merit
and is accordingly rejected.
...
B 15. It was next contended by Mr. Venugopal that although
there is a specific clause in the agreement, namely, clause 10
where one of the conditions has been embodied that "time is
the essence of the contract" even then it is well settled that in
-.£.
many instances, a mere cl~use in the agreement to be
insufficient as a sole reason to lead one to the conclusion that
c "time was to be· of essence of the contract". This submission
of Mr.Venugopal was hotly contested by _Mr.P.S.Patwalia,
learned senior counsel appearing for the respondents. In order
to decide this question, it would be relevant for us to look into
the clauses in the agreement entered into by th_e parties ~
D because they are of utmost importance. In our view, the High
Court has rightly pointed out that there are many instances in ~-

the said contract where the fact that time is to be of essence
of the contract has been specifically mentioned. Clause 10 of
the Agreement of Sale which reads : "Time will be of essence
E of the contract': therefore, has been clearly mentioned in the
agreement for sale. However, it is well settled proposition of
law by now that time is not to be of essence in case of sale of
immoveable property. In Chand Rani vs. Kamal Rani [AIR •4
1993 SC 1742], this Court clearly held that in the case of sale
F of immoveable property, there is no presumption as to time ..-
being the essence of the contract.

16. Keeping this principle in mind, we now turn to the
clauses of the contract for sale entered into by the parties.
G Clause 3 and 5, in our view, of the contract for sale are of no
inconsiderable importance. So. far as clause 10 of the
-.~
agreement for sale is concerned, we have already referred to I

the same earlier. At this juncture, we now reproduce clause 3
of the agreement for sale which reads :-
H
A.K. LAKSHMIPATHY (DEAD) & ORS. v. RAI SAHEB PANNALAL491
H. LAHOTI CHARITABLE TRUST & ORS.[TARUN CHATTERJEE, J.]

- ../.
"Payment of the balance amount of Rs. 5, 00, 0001- A
(Rupees 5 lacs only) on or before 6-6-1979 is the
essence of the agreement. If the vendees fail to pay the
balance amount in time as aforesaid for whatsoever
reason, the advance earnest amount paid today shall stand
forfeited and the vendees shall have no right whatsoever B
in the scheduled property and they shall not in any case
be entitled to ask for refund of the earnest money which
by his non payment of the balance amount as afore-said
shall irrevocably stand forfeited."

17. A reading of this clause, namely, clause 3 of the
c
agreement for sale would clearly show that what was the
intention of the parties to make time to be the essence of the
contract. If we read clause 3 and clause 10 of the agreement
for sale conjointly, it would not be unsafe for us to conclude that
~
the intention of the parties to enter into the agreement for sale D
,. incorporating clauses 3 and 10 in the same for the purpose of
making the time being the essence of the contract. Mr.
Venugopal, however, in support of his contention that "time was
not the essence of the contract" strongly relied on a decision
of this Court in the case of Swamam Ramachandram (Smt) E
& Anr. v. Aravacode Chakungal Jayapalan [(2004) 8 SCC
689] and argued that even if clause 1O clearly stipulates that
... time was the essence of the contract, then also, in the
• surrounding circumstances, it can always be held that the
agreement must be performed within a reasonable time and F
time was not the essence of the contract. In our view, this
decision of this Court would not be applicable in the facts and
circumstances of the present case. It is true that it was
conclusively held in the aforesaid decision of this Court on facts
that time was not to be of the essence of the contract except G
.j. .
in a re-conveyance or renewal of lease, the facts and
circumstances of that case were totally different from the one
at hand. In the said case, there was a specific proviso to one
of the clauses in the contract for sale which clearly stipulates
that if payment was not made in time, the appellants who were H
492 SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R.

A the vendors could extend such date. Hence, in that decision, ~ .....
this Court in the facts of that case held that time was not to be
of essence of the contract which was determined by this Court
in the said decision on the intention of the parties as well as
the written terms of the agreement. Clauses 3 and 10 of the
B contract for sale in this case clearly indicate that time was
always meant to be of prime importance in the contract. In fact
P.W. 1, V.A. Gupta who was examined as a witness for the
appellants admitted in his deposition (Annexure P9) that time
-./.
was always the essence of the contract and the appellants were
c aware of this even before entering into the contract. From the
contract for sale also, we can very well see that time was
repeatedly mentioned to be of prime importance and it was
stated quite clearly that under all circumstances, the appellants
would have to definitely deposit the balance amount of Rs.5
lakhs by the date stipulated in the contract for sale. Hence, this ~
D
submission advanced by Mr. Venugopal, that time was not the
essence of the contract cannot at all be accepted and, ~

therefore, we reject the same.

18. Next is the question whether the appellants were ready
E and 'willing to complete their part of the agreement. It is well
settled that in a· suit for specific performance of a contract for
sale, it has to be proved that the plaintiff who is seeking for a
decree for specific performance of the contract for sale must
always be ready and willing to complete the terms of the
•4

F agreement for sale and that he has not abandoned the contract
and his intention is to keep the contract subsisting till it is
executed. This readiness and willingness on the part of the
appellants in the facts and circumstances of the case, in our
view, cannot be found in favour of the appellants. In this case,
G the trial court as well as the High ·Court on concurrent findings
of fact and on consideration of the evidence on record came
to the conclusion that the appellants were not ready and willing
·-+ '

to perform the terms and conditions of the agreement for sale.
In view of our discussions made herein above and in order not
H to execute the agreement for sale on the part of the appellants,
A.K. LAKSHMIPATHY (DEAD) & ORS. v. RAI SAHEB PANNALAL 493
H. LAHOTI CHARITABLE TRUST & ORS.[TARUN CHATTERJEE, J.]

it is evident from Exts.P3, PS and P7 which would show that A
""1 --(
the appellants sought clarifications regarding the joining of all
trustees in execution of the sale deed, asking the second
respondent to enter into another agreement by way of
indemnifying the appellants for any loss due to defect in the title,
etc. We do not find any justification to say in the facts and. 8
circumstances of the case that the demands of the appellants
were justified and reasonable. On the other hand, this demand,
on the part of the appellants, in our view, was not only unjustified
and unreasonable but it was in fact imaginary as rightly pointed
out by the trial court in its judgment. In order to show that the c
appellants were all ready and willing to perform their part of their
obligation to complete the agreement was to bear the remaining
amount of the contract and then agitate the matter for specific
performance before the court. This was also the view expressed
by this Court in Chand Rani vs. Kamal Rani (supra) wherein D
this Court held that if the final ultimatum by the seller has been
• given for payment of balance amount then the best thing for the
~ purchasers is to pay the amount and then take appropriate
steps. Therefore, in our view, the appellants having failed to do
so, they cannot be allowed to take advantage of their own
E
mistake and conveniently pass the blame to the respondents.
In the case of K.S. Vidyanam and Ors v. Vairavan [(1997) 3
sec 1], it has been held that in an agreement for sale of
immoveable properties, the readiness and willingness of the
'1
~
parties to perform their part of the contract is essential. Hence,
we are of the view that the concurrent findings of fact arrived F
at by the High Court and the trial court on the question of
readiness and willingness to perform their part of obligation,
so far as the appellants are concerned, cannot at all be
interfered with. Accordingly, we are of the view that the High
Court has rightly confirmed the concurrent findings of fact G
arrived at by the courts below on the question of readiness and
->-- willingness on the part of the appellants to complete the
agreement for sale.

H
494 SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R.

A 19. For the reasons aforesaid, we affirm the judgment of
the High Court so far as the suit for specific performance of )- ~
the contract for sale is concerned. Since no appeal has been
filed by the respondent against the order regarding the forfeiJure
of the amount in question, we need not go into the question
B whether such forfeiture was proper or not.

22. For the reasons aforesaid, the appeal is allowed to the
extent indicated above. There will be no order as to costs.

N.J. Appeal partly allowed.