Conduct Of Defendants Showed Time Was Not Of Essence; Waiver Established By Successive Notices: Punjab & Haryana High Court Upholds Decree Of Specific Performance

Punjab and Haryana High Court dismissed a second appeal filed by the defendants challenging the decree of specific performance of an agreement to sell dated 25.08.1990. The Hon’ble Justice Virinder Aggarwal held that “mere stipulation of time for payment does not make time the essence of the contract in transactions involving immovable property”, and found that the defendants, by issuing successive notices, had in fact “waived the original schedule and kept the contract alive.” The Court emphasized that specific performance was rightly granted, as the plaintiff was ready and willing, and the defendants were attempting to back out due to escalated market rates.

“Vendors Entertained Delayed Performance; Cannot Later Plead Time Was Of Essence”

The High Court began by affirming the settled principle under Section 55 of the Indian Contract Act, 1872, that time is not ordinarily of the essence in contracts for the sale of immovable property, unless clearly expressed or implied by circumstances. The agreement to sell dated 25.08.1990 stipulated that an additional ₹25,000 was to be paid “by October 1990” after an initial advance of ₹25,000. However, the Court noted that “nowhere does the agreement make this timeline sacrosanct or declare default to be fatal”.

The key legal turning point came from the defendants’ own actions—two notices dated 23.02.1991 and 26.03.1991 issued to the plaintiff extended time for payment and permitted cheque or draft payment. The Court ruled this conduct to be “a clear waiver of any strict insistence on the original date”, and observed:

“Had time been truly essential, the defendants would have rescinded the contract immediately after October 1990 instead of inviting performance in March 1991.”

Relying on Supreme Court precedents, Chand Rani v. Kamal Rani [(1993) 1 SCC 519] and Gomathinayagam Pillai v. Palaniswami Nadar [AIR 1967 SC 868], the Court reiterated that intention to treat time as essential must be unmistakable, and a mere time clause does not render a contract void on delay.

“Defendants Sought To Evade Performance Due To Market Escalation” – Plaintiff Proven Ready And Willing

Justice Aggarwal gave considerable weight to the evidence of the plaintiff’s readiness and willingness under Section 16(c) of the Specific Relief Act, 1963. The plaintiff produced:

• His own affidavit indicating his presence at the Sub-Registrar’s office on 31.10.1990,

• A bank statement showing availability of funds,

• A cheque for ₹25,000 sent on 09.04.1991 in response to the defendants’ notice.

Despite this, the defendants refused to execute the sale deed. During cross-examination, DW-1 (Parminder Singh) admitted that the vendors were willing to execute the sale deed only at current market prices, thereby admitting to an attempt to renegotiate due to property value escalation.

The Court, rejecting the appellants' contention that the cheque came too late, held:

“The plaintiff possessed both the capacity and the uninterrupted intention to perform his part of the contract… The refusal stemmed from commercial opportunism, not breach by the plaintiff.”

Equity Favours Specific Performance: No Grounds To Deny Relief

Noting the discretionary nature of relief under the Specific Relief Act, the Court found that the First Appellate Court had exercised judicial discretion correctly. The plaintiff had filed the suit promptly in 1992, and the evidence showed that the defendants were seeking to “resile from a concluded bargain purely due to rising market rates.”

The Trial Court had erroneously viewed time as the essence of the contract and denied specific performance, but the First Appellate Court rightly reversed it, holding that:

“The conduct of the defendants in extending time and refusing the sale deed solely due to price rise indicates a clear attempt to evade the contract; the plaintiff acted diligently throughout.”

Thus, the High Court found no perversity or legal error in the appellate judgment.

Dismissing the second appeal, the Punjab and Haryana High Court concluded that the agreement dated 25.08.1990 was enforceable in law. The defendants, by extending the time through repeated notices and failing to prove that time was intended to be essential, could not defeat the plaintiff’s claim. The plaintiff had fulfilled the legal requirement of continuous readiness and willingness, and the Court saw no reason to deny equitable relief.

The decree of specific performance granted by the Additional District Judge on 5.5.1997 was affirmed, and the judgment of the Sub Judge dismissing the suit was set aside.

Date of Decision: 14.11.2025