Holding

Time is the essence of a re‑conveyance agreement, and the appellants failed to perform within the stipulated period, rendering the suit barred and the appeal dismissed.

Summary

The appellants, Gauri Shankar Prasad and others, needed money and mortgaged their land to the respondent, Brahma Nano Singh, executing a sale deed and a separate deed of agreement to reconvey the land upon repayment of Rs.36,600. The agreement stipulated that reconveyance must occur within three years, making time the essence of the contract. The appellants failed to pay the full consideration within the stipulated period, and the respondent did not reconvey the land. The trial court decreed in favor of the appellants, but the lower appellate court and the Jharkhand High Court set aside the decree, holding that the suit was barred by limitation and that the appellants were not ready and willing to perform. The Supreme Court affirmed the High Court’s view, emphasizing that when sale and repurchase agreements are in separate documents, they are not mortgages and time is essential; consequently, the appeal was dismissed.

Issues considered

Whether the suit is barred by the law of limitation.
Whether the appellants were ready and willing to perform their part of the contract under s.16(c) of the Specific Relief Act.
Whether time was the essence of the agreement for reconveyance.
Whether the appellants are entitled to specific performance of the contract.
Whether the lower court's judgment should be set aside.

Legislation cited

Code of Civil Procedure, 1908s. 100
Specific Relief Act, 1963s. 16(c)

Subjects

mortgagere‑conveyancespecific performancelimitation periodtime is essenceSpecific Relief Actsale deedagreement to repurchase

Judgment

[2008] 10 S.C.R. 839
~
"""
GAURI SHANKAR PRASAD AND ORS. A
II.
BRAHMA NANO SINGH
(Civil Appeal No. 1756 of 2002)
JULY 11, 2008
' ..,, B
[DR. ARIJIT PASYAT AND P. SATHASIVAM, JJ]
Specific Relief Act, 1963:
s. 16(c) - Suit alleging non-performance of agreement
to re-convey the purchased land - HELD: If sale and agree- c
ment to repurchase are embodied in separate documents, it
cannot be a case of mortgage and as regards re-conveyance
time is always essence of contract - Plaintiffs had failed to
perform their part within stipulated period - Mortgage.
-~ The plaintiff-appellants filed a suit stating that they D
were in need of Rs.15,000/- and, therefore, offered to mort-
gage the suit land to the defendant-respondent and P.W.7
with a condition to repurchase the same; that two docu-
ments were executed on 5.2.1986 - one a registered sale
deed and another a registered deed of agreement to re- E
convey the purchased land to the plaintiffs for a sum of
Rs.36,000/-; that PW7 received the consideration money
of his share, i.e. Rs. 18,300/- and executed the deed of

.. -"
sale re-conveying half of the suit land to them; that they
paid some amount to the respondent who promised to
re-convey the suit land and extended the time for execut-
F

ing the deed of re-conveyance, but when they requested
him to receive the balance consideration and to re-con-
vey the land of his share, he failed to perform his part of
the contract. The respondent contested the suit contend- G

- i!-
ing that the agreement contained a limitation of three years
to pay back the amount and since the plaintiffs were nei-
ther willing to perform their part nor did they pay the
money within the stipulated period, they lost their right of
839 H
840 SUPREME COURT REPORTS [2008] 10 S.C.R.

A re~conveyance. The trial court decreed the suit. But the
first appellate court set aside the decree. The plaintiffs
having failed· in the second appeal, filed the instant ap-
peal.
Dismissing the appeal, the Court
B
HELD: 1. It is to be noted that the evidence of PW-7,
the co-vendee, clearly shows that no payment was made
in his presence. The High Court has rightly observed that
the trial court has made a new case which was not the
c case of the parties. [para 1O and 12] [844-B & G]
2.1 This Court has in several cases held that if sale
and agreement to repurchase are embodied in separate
documents, it cannot be a case of mortgage and in such
cases relating to re-conveyance, time is always the es-
D sence of the contract. [para 13] [845-A & B] r
Chunchun Jha v. Ebadat Ali AIR 1954 SC 345; Bismil/ah ~
Begum (Smt.) v. Rahmatullah Khan (dead) by Lrs. AIR 1998
SC 970 - relied on.
E 2.2 The High Court also noticed that the claim of the
appellants that they paid the consideration amount on
10.4.1992 is also of no assistance because the period of
limitation expired on 5.2.1992 and the suit was filed on
23.5.1992. As rightly noted by the High Court, there was
F an agreement for re-conveyance and there was specific ~ ......-
stipulation for re-conveyance of the land within a period
of ·3 years which was admittedly not complied by the plain-
tiffs-appellants. [para 15] [846-B & C]
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 1756
G of 2002
From the Judgment and final Order dated 22/6/2001 of
the High Court of Jharkhand at Ranchi in Second Appeal No.
80 of 2000 (R)
H Ajay Veer Singh Jain and Goodwill lndeevar for the Appellants.
GAURI SHANKAR PRASAD & ORS. v. BRAHMA 841
.... ~ NANO SINGH [DR ARIJIT PASAYAT, J.]

Himanshu Munshi for the Respondents. A
The Judgment of the Coutt was delivered by
Dr. ARIJIT PASAYAT, J. 1. Appellants' Second appeal in
terms of Section 100 of the Code of Civil Procedure, 1908 (in
~ .., short the 'Code') having been dismissed by the Jharkhand High B
Court, this appeal has been filed. The Title Suit No.17/92-49/93
was decreed by the learned Additional Munsif, Garhwa. The
judgment and decree were upset by learned District Judge,
Palamau in Title Appeal No.10 of 1997. Second Appeal was
filed by the plaintiffs before the High Court. ·C
2. The case of the plaintiffs-appellants is that the plaintiffs
were in need of money, hence, offered to mortgage their land
detailed in Schedule D of the plaint with condition to repurchase
the same on consideration of Rs.36,600/- The defendant-re-
~--i
spondent, namely, Brahmanand Singh and one Dasrath Prasad D
Keshri were willing to purchase jointly the land of Schedule D
and, accordingly, the plaintiffs executed a registered deed of
sale dated 5.2.1986. The respondent and Dasrath Prasad
Keshri on the same day also executed a registered deed of
agreement and agreed to re-convey the purchased land to the E
plaintiffs on payment of consideration money to them. It has been
alleged that though the deed of sale was executed by the plain-

. ~
tiffs-appellants in favour of the respondent and Dasrath Prasad
Keshri, they always remained in cultivating possession of the
lands, as described in schedule D of the plaint. It is also alleged F
that the plaintiffs-appellants were in need of rs.15,000/-. The
respondent and Dasrath Prasad Keshari became ready to keep
the land in mortgage, but only after calculating the interest there-
upon at the rate of 4 per cent for three years, the price was.
accordingly fixed at Rs.36,600/-. It is further allegedthat the plain-
G
tiffs-appellants in the first week of January, 1989, repaid
/
~ Rs.5,500/-to the respondent in presence of the witnesses upon
which he pro'mised to re-convey the suit land, but even thereat-
ter he did not re-convey the land and extended time for execu-
tion of the deed of re-conveyance Ultimately on 10.4.1992,
H
842 SUPREME COURT REPORTS [2008] 10 S.C.R.
/
""'
A Dasrath Prasad Keshri received consideration money of his
share i.e. Rs.18,300/- and executed the deed of sale re-con-
veying half of the land of Schedule Din favour of the plaintiffs. It
is also claimed thatthe plaintiffs also requested the respondent
to receive his consideration money and to re-convey the sched-.
-«
B ule D land of his share but he delayed the matter, whereupon ~

the plaintiffs sent registered legal notice to defendant No.I but
even then the respondent failed to perform his part of contract
and hence, the plaintiffs filed the suit. .

3. The respondent contested the suit and filed written state-
c ment alleging therein that the deed of agreement contained a
specific terms that if the plaintiffs paid back the consideration
amount at any point of time within three years then the respon-
dent and Dasrath Prasad Keshri would re-convey the land of
Schedule 'D'. It is also claimed that the plaintiffs remained in
D possession of the land after execution of the sale deed. The r
plaintiffs-appellants had never been willing to perform their part
of contract nor they had paid money within the stipulated period
of three years as contained in the agreement. According to him,
the plaintiffs-appellants never paid any money to the defendant
E nor they had requested for extension of time nor the defendant
ever orally agreed to extend the time. He has also denied that
-on 10.4.1992 the plaintiffs tendered any consideration money
nor there had been any such occasion till date and, as such, the
plaintiffs have lost their right of re-conveyance.
F ~ ..,..._
4. Ten issues were framed by the trial court and the wit-
nesses were examined. After having heard both the parties and
considering the evidence on record, the trial court decreed the
suit in favour of the plaintiffs-appellants. The defendant-respon-
dent preferred appeal before the District Judge against the judg-
G ment and decree of the court below, who after hearing both sides
and considering the evidence on record, allowed the appeal at-
ter setting aside the judgment and decree of the court below.
~ '
t
~

5. The appellate court framed the following points for con- •
side ration:-
H
GAURI SHANKAR PRASAD & ORS. v. BRAHMA 843
NANO SINGH [DR. ARIJIT PASAYAT, J.]

I. Whether the suit of the plaintiffs is barred by law of A
Limitations?
II. Whether the plaintiffs-appellants were always ready
and willing to perform their part of contract as
envisaged u/s 16(c) of the Specific Relief Act?
~ "( B
Ill. Whether the time was essence of contract?
IV. Whether the plaintiffs-appellants are entitled to get
decree of specific performance of contract, as prayed
for?
c
V. Whether the judgment in question is fit to be set
aside?
6. The lower Appellate Court allowed the appeal by set-
ting aside the judgment and decree of the trial Court. The ques-
~i tion which was formulated by the High Court was as follows: D
"Whether the time was an essence of agreement (Ext.2)
and whether the plaintiffs/appellants were ready and willing
to perform their part of contract."
7. The lower Appellate Court considered the question as E
to whether the plaintiffs-appellants had performed or had always
been ready and willing to perform the essential terms of the
contract to be performed by him. The first Appellate Court held
that the plaintiffs never offered the consideration amount within
the period fixed by the contract. The other alleged vendee
' "" Dasrath was examined in the Court below as PW-7. The High
F

Court noted that there was no material to show that the consid-
eration amount was offered within the stipulated period of three
years. With these findings, the appeal was dismissed.
8. In support of the appeal, learned counsel for the appel- G
lants submitted that the co-vendee had accepted the money.
,....
The first Appellate Court and the High Court should not have
held that the suit was barred by time or that there was no evi-
dence for offering payment of the balance money.
H
844 SUPREME COURT REPORTS [2008) 10 S.C.R.

A 9. Learned counsel for the respondent on the other hand
supported the judgment and submitted that tile findings recorded
by the first Appellate Court were arrived at after analysing the
evidence in great detail. Therefore, the Second Appeal was
really not competent.
B 10. Coming to the facts of the case it is to be noted that
the evidence of PW-7 the co-vendee clearly shows that no pay-
ment was made in his presence. His evidence is to the follow-
ing effect:

c "After 3 years Gauri Shankar did not return the whole
amount but returned 5-7 thousand in three instalments.
How much in total he paid to me I do not rerf.lember. Like
this only he paid money to B.N. Singh but the same was
not paid in front of me. . ··
D That Gauri Shankar Bind and other failed to return the
money till the date of 5.2.1989 as per the agreement said
amount to me and B.N. Singh."
11. The evidence of PW-2 is also not of any assistance to
E the appellants. In his evidence in paras 3 and 6 it has been
stated as follows:.
"Dashrath Saav has returned the land to the petitioners
when they have returned the money. But B.N. Singh has
not returned the land to the petitioner in spite of the fact
F that they are ready to pay the money. The petitioners are
also ready today to return the money. 1.

I have knowledge about the negotiation about this land. I
have no idea about the documents which are prepared. No
talks about sale of the land were held in front of me. The
G paper are for the mortgage for the value of Rs.36,000/-"
12. The High Court has rightly observed that the trial Cdurt --+ ....
has made a new case which was not the case of the parties.
13. Learned counsel for the appellants fairly cpnceded that
H though the clinching evidence about the payment in the pres-
f '
r
I
GAURI SHANKAR PRASAD & ORS. v. BRAHMA 845
NANO SINGH [DR. ARIJIT PASAYAT, J.]

ence of the witnesses may not be there, accorqing to him the A
evidence has been wrongly analysed by the first appellate court
and the High Court. This Court has in several cases held that if
sale and agreement to repurchase are embodied in separate
documents, it cannot be a case of the mortgage and in such
cases relating to re-conveyance time is always the essence of B
~ 'i
the contract. (See Chunchun Jha v. Ebadat Ali (AIR 1954 SC
345). In Bismillah Begum (Smt.) v. Rahmatullah Khan (dead)
by Lrs. (AIR 1998 SC 970)) it was held as follows:
"We may also add that in contracts relating to re-
conveyance of property, time is always the essence of the c
contract as laid down by the Federal Court in the case of
Shanmugam Pillai v. Analakshmi Ammal (AIR 1950 FC
38) and also laid down by this Court in Caltex (India) Ltd.
V. Bhagwan Devi Marodia (AIR 1969 SC 405). The
• "l
relevant passage in the judgment of this Court in Caltex D
(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 the essence of the contract even if
they were not expressed to be so and were construed E
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. An option for the renewal of a lease,
. . --i or for the purchase or re-purchase of property must F
in all cases be exercised strictly within the time limited
for the purpose otherwise it will lapse."
14. In Chunchun's case (supra) it was observed as follows:
"If the sale and agreement to repurchase are embodied in G
separate documents, then the transaction cannot be a
---.,
.... mortgage, whether the documents, are contemporaneously
executed or not.

In the case of agreement of re-purchase, the conditions of
H
846 SUPREME COURT REPORTS [2008] 10 S.C.R.

A repurchase must be construed strictly aga·instthe original
vendor and the stipulation with regard to time of
performance of the agreement must be strictly complied
with as the time must be treated as being of the essence
of the contract in the case of an agreement of
B reconveyance."
15. The High Court also noticed that the claim of the ap-
pellants that they paid the consideration amount on 10.4.1992
is also of no assistance because the period of limitation ex-
pired on 5.2.1992 and the suit was filed on 23.5.1992. As rightly
C noted by the High Court, there was an·agreement for re-con-
veyance and there was specific stipulation for re-conveyance
of the land within a period of 3 years which was admittedly not
complied by the plaintiffs.:.appellants. It is to be noted that the
question formulated by the High Court, by no stretch of imagi-
nation, is a substantial question of law.
16. The appeal is dismissed. ,_
r-
1
)
R.P. Appeal dismissed.

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