HIND CONSTRUCTION CONTRACTORS versus THE STATE OF MAHARASHTRA

Citation: [1979] 2 S.C.R. 1147 · Decided: 30-01-1979 · Supreme Court of India · Bench: Y.V. CHANDRACHUD · Disposal: Appeal(s) allowed

Judgment (excerpt)

• 
' 
HIND CONSTRUCTION CONTRACTORS 
v. 
THE STATE OF MAHARASHTRA 
/{]Jluary 30, 1979 
1147 
[Y. V. CHANDRACHUD, C. J., V. 0. TuLZAPURKAR AND A. P. SEN, 
JJ.] 
Contract Act-Contract not completed within stipulated time. No term in 
contract making tin1e, the essence of contract-Tests for deciding if tin1e was 
of essence. 
A 
B 
The appellant entered into a contract with the respondent for the execution 
of a work the essential term of which was that the contract should be com-
C 
pleted in 12 months from the commencement of the work. On the ground that 
the appellant had not completed the work within the stipulated time the res-
pondent rescinded the contract. 
In his suit for damages for illegal and wrongful recision of the contract the 
appellant claimed that the date for commencement of the 
work was merely 
nominal and that in any case time was not of the essence of the contract. The 
D 
appellant also alleged that on account of several difficulties such as exce.ssive 
rains in the area, lack of proper road and means of approach to the site, rejec~ 
tion of materials on improper grounds by the Government officers, completion 
of the work was delayed, extension of time was 
wrongfully. refused by the 
officers of the Government, and that none of these factors 
had been taken 
into account by the Government while refusing to give extension of time, and 
in ultimately rescinding the contract. 
E 
Holding that time was not of the essence of the contract the trial Court 
de.creed the suit, but disallowed certain claims of the appellant. 
On appeal by both sides the High Court, without deciding the question 
whether time was of the essence of the contract, held thnt the recision of the 
contract was not arbitrary and unreasonable or unjustified. 
F 
On further appeal to this Court it was contended on behalf of the appellant 
that (i) the High Court was in error in not deciding the main question whether 
or not time was essence of the contract; and (ii) it was not the appellant's 
case that the recision was mala fide and that, therefore, the High Court erred 
in considering that question. 
Allowing the appeal, 
G 
HELD : The question whether or not time was of the essence of the con-
tract would essentially be a question of the 
intention of the parties to be 
gathered from the terms of the contract. Even where 
the 
parties he.ve ex-
pressly provided that time is of the essence of the 
contract such stipulation 
would have to be read alongwith other provisions of the contract and such 
other provisions may, on construction of the contract, exclude 
the inference 
H 
that the completion of the work by a particular date was 
intended 
to be 
fundamental. 
For instance if the contract were to include clauses providing 
1148 
SUPREME COURT REPORTS 
[1979] 2 s.c.R. 
A 
for extension of time in certain contingencies or for payment of fine or penalty 
for every day or week the work undertaken remains unfinished on the expiry 
of the time provided in the contract such clause would be construed as render-
ing inefftctivc the express provision relating to the time being of the essence 
of the cont1act. 
fl155A-B] 
8 
c 
D 
Halsbury', Laws of England, Vol. 4 p. 1174 referred to. 
(1) In the instant case, having regard to the terms of the car.tract particu-
larly the clauses pertaining to the imposition of penalty and extension of time~ 
time was never intended by the parties to be of the essence of the contract 
The letter by which the contract was rescinded clearly waived the stipulation 
of 12 months' period, the contractor having been allo,ved to do some more 
work after th< expiry of the period. [1157B] 
(ii) The approach adopted by the respondent and upheld by the High Court 
WM not correct Long before the expiry of the period of 12 months the appel-
lant bad requested for extension of the period 
of completion. 
Even if the 
grounds made out by the appellant were not agreeable to the 
Superintending 
Engineer some reasonable time making it the essence of the contract ought to 
have been granted. 
Instead of making time of the essence at some stage or 
the other, the respondent rescinded the contract which was clearly illegal and 
wrongful. 
[ 11 ~SC] 
(iii) It was never the case of the appellant that the recision of the contract 
was mala fide. 
The various reasons given by the appellant for delay in execut-
ing the work were put forward merely for showing that the refusal to extend 
time by the Superintending Engineer 
wa

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