SMT. SWARNAM RAMACHANDRAN AND ANR. versus ARAVACODE CHAKUNGAL JAYAPALAN

Citation: [2004] SUPP. 3 S.C.R. 806 · Decided: 25-08-2004 · Supreme Court of India · Bench: ASHOK BHAN · Disposal: Dismissed

Judgment (excerpt)

A 
SMT. SWARNAM RAMACHANDRAN AND ANR. 
v. 
ARAVACODECHAKUNGALJAYAPALAN 
AUGUST 25, 2004 
B 
(ASHOK BHAN AND S.H. KAPADIA, JJ.j 
Indian Contract Act, 1872/Specific Relief Act, 1963 : 
Agreement for sale of land-Payment of consideration amount in 
C instalments withinfv:ed period of time-Delay in payment of an instalment-
Termination of the agreement by Vendors on ground of delay in payment 
when time was the essence-Petition filed by Vendee-Allowed by High 
Court-On appeal, Held : Onus to prove that time was essence of the 
contract lies on the party alleging it in order to provide an opportunity 
D to other side to adduce rebuttal evidence to the contrary-Real intention 
of the party has to be examined by the Courts-Vendor has no right to make 
time of the essence unless he is ready and willing to fulfil his part of the 
obligation and the vendee must be proved to be guilty of such gross default 
in performing his part of obligation-No evidence adduced by the vendors 
E in support of the a/legations-However, time was extended by them-No 
unreasonable delay in payment of consideration amount by Vendee-
Vendee was ready and willing to perform his part of the obligation-
Hence, there was no justification to make time of the essence to rescind 
the agreement. 
F 
Appellant-vendors entered into an agreement for sale of a piece 
of land with a bungalow built thereon. Vendee-resondent paid certain 
amount as earnest money and had agreed to pay balance of consideration 
amount in instalments by the prescribed date subject to the provision 
of extension of time in the agreement. Respondent could not make 
G payment of the instalments in time. Though respondent was called 
upon by the appellants to make the payment at the earliest yet time 
for making the consideration amount was extended by the appellants. 
Later they rescinded the contract on the ground that time was essence 
of the contract and that respondent had defaulted in making payment 
H of consideration amount in time, and also forfeited the amount paid 
806 
SWARNAM RAMACHANDRAN v. A.C. JAYAPALAN 
807 
by the respondent. Aggrieved, respondent filed a suit in the High A 
Court, which was allowed by it. Hence the present appeal. 
It was contended for the appellants that parties intended to make 
time as the essence of the contract since the agreement stipulated 
specific dates for the payment of the purchase price; that since part B 
of the purchase price was not paid on or bdore the stipulated time, 
the appellants were justified in terminating the agreement; that in the 
facts and circumstances of the case, any delay on the part of the 
respondent disentitled him form the relief of specific performance; and 
that the respondent was not ready and willing to perform his obligation. C 
Dismissing the appeal, the Court 
HELD : 1.1. Notwithstanding that a specific date was mentioned 
in the agreement, one has not only to look at the letter but also at the 
substance of the contract. Whether time is of essence is a question of D 
fact and the real test is intention of the parties. It depends upon facts 
and circumstances of !!ach case. [813-F] 
1.2. The onus to plead and prove that time was the essence of the 
contract was on the person alleging it, thus giving an opportunity to E 
the other side to adduce rebuttal evidence that time was not of essence. 
When the plaintiff pleads that time was not of essence and the 
defendant does not deny it by evidence, the Court is bound h accept 
the plea of the plaintiff. In cases where notice is given making time of 
the essence, it is the duty of the Court to examine the real intention F 
of the party giving such notice by looking at the facts and circumstances 
of each case. Vendor has no right to make time of the essence, unless 
he is ready and willing to proceed to completion and secondly, when 
the vendor purports to make time the essence, the purchaser be guilty 
of such gross default as to entitle the vendor to rescind the contract. 
In the light of these principles to the facts to the present case, there G 
was no justification in claiming in the circumstances to treat time as 
of the essence. [814-B-C-D] 
Indian Contract & Specific Relief Acts, (2001) by Pollock and Mulla, 
12th Edition, page 1086, referred to. 
H 
808 
SUPREME COURT REPORTS [2004] SUPP. 3 S.C.R. 
A 
1.4. There is nothing in the express stipulation in the agreement 
between the parties to show that the intention was to make the rights 
of the parties dep

Excerpt shown. Read the full judgment & AI analysis in Lexace.