SMT. CHAND RANI (DEAD) BY L.RS. versus SMT. KAMAL RANI (DEAD) BY L.RS.

Citation: [1992] SUPP. 3 S.C.R. 798 · Decided: 18-12-1992 · Supreme Court of India · Bench: L.M. SHARMA · Disposal: Dismissed

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Judgment (excerpt)

·A 
B 
SMT. CHAND RANI (DEAD) BY L.RS. 
v. 
SMT. KAMAL RANI (DEAD) BY L.RS. 
DECEMBER 18, 1992 
[L.M. SHARMA, C.J., S.R. PANDIAN, S. MOHAN, B.P. JEEVAN 
REDDY, AND S.P. BHARUCHA, JJ.) 
Indian Contract Ac~ 1872-Section SS-Agreement to sale of imm_ov-
able property-Whether time was the essence of contract-Whether purchaser 
C was ready and willing to perfonn contract. 
On 26.8.71, an agreement for sale was entered into between the 
parties. The agreement was entered into through the husband of the 
appellant., Under the terms of the agreement, the respondent agreed to sell 
D her house and property comprising of a free-hold plot measuring 311 sq. 
yards with a double-storeyed residential building constructed thereon 
along with fittings and fixtures for a sum of Rs. 1,78,000 in favour of the 
appellant. On the date of execution a sum of Rs. 30,000 was paid by way 
of earnest money. 
E 
It was agreed upon· between the parties that a further sum of Rs. 
98,000 was payable within 10 days of the execution of the ageement and the 
balance of Rs. 50,000 was to be paid at the time of registration of sale 
deed; that the respondent-vendor would redeem the property by paying off 
a loan of Rs. 25,000 out of a sum of Rs. 30,000 paid at the time of 
F 
execution, as the property was mortgaged with the Life Insurance Cor-
poration of India; that the vendor was also to obtain the income-tax 
clearance certificate; that the sale deed was to be executed on or before 
31.10.71; that the vendor would hand over documents pertaining to the 
property in the suit together with vacant possession of U1e first floor by 
.30.9.71 and possession of the front portion at the time of registration of 
G the sale deed; and that the amount of Rs. 30,000 would stand forl'eited in 
fa'\·our of the vendor should the vendee fail to pay the sale consideration 
and get the sale deed registered within the agreed time. 
Though the respondent was called upon to complete the sale 
H through various letters and notices, there was no response. 
798 
SMT. CHAND RANI v. SMT. KAMAL RANI 
799 
Respondent by letter dated 15.9.7~ informed the appellant that smce A 
the appellant failed to pay the sum of Rs. 98,000 within 10 days from the 
date of the agreement, namely, by 6.9.71, the agreement stood annulled 
and the sum of Rs. 30,000 stood forfeited. 
The appellant in reply asked the respondent to execute the sale deed 
offering to pay the remaining consideration at the time of the execution of B 
the sale deed. 
Since the respondent failed tj>. comply with the demand, the appel-
lant filed a suit claiming specific performance of the agreement or in the 
alternative, damages of Rs. 1,50,000 including the refund of Rs. 30,000. 
The respondent-defendant took the stand that the payment of Rs. 
98,000 within 10 days from the date of the execution of the agreement was 
c 
the essence of the contract; that as the said amount was not paid the 
respondent was entitled to treat the contract as having become null and 
void; that the appellant never tendered a sum of Rs. 98,000 but wanted D 
possession of the ground floor before payment of Rs. 98,000; that such 
demand was contrary to the terms of the agreement; and that under these 
circumstances, the suit was misconceived and liable to be dismissed. 
The Trial Court decreed the suit holding that on a reading of the 
suit agreement payment of Rs. 98,000 by 6.9.71 was not the essence of the E 
contract; and that the appellants were always ready and willing to perform 
their part of the contract and it was the respondent who was trying to 
resile from the terms of the contract. 
The Division Bench of the High Court in appeal held that the 
non-payment of Rs. 98,000 by the plaintiffs appellants on or before 6.9.71 
would entitle the defendant-respondent to treat it as a breach of contract 
and the insistence of the appellants to obtain the income-tax clearance 
certificate and redemption of the property before the payment of Rs. 
98,000 was unjustified. Setting aside the decree for specific performance, 
F 
the High Court held that the appellants were entitled to the refund of the G 
sum of Rs. 30,000. 
· 
Challenging the High Court's judgment, special leave to appeal was 
preferred to this Court by the plaintiffs. 
This Court, while granting special leave, ordered that as the position H 
800 
SUPREME COURT REPORTS [1992] SUPP. 3 S.C.R. 
A 
of law so decided in an earlier decision of this Court deserved reconsidera-
tion by this 

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