1998CLC21 (PLP)

when the plaintiff has notice that performance is refused." Reading of the aforesaid Article seems to show that it contemplates two situations i.e. one when the time for performance of the agreement is fixed in agreement itself and the other when the agreement does not specify any time. In the former case starting point of limitation is three years from the date of the agreement but in the latter the aforesaid period starts running from the date when specific performance is refused by the defendant.

4. Mr. Abassi has inter alia relied upon the observations of Ajmal Mian, J. (as his Lordship then was), in the case of Mst. Kalsoom and others v. Mrs. Marium and others (1988 CLC 870) to the following effect:‑ "We are also inclined to hold that it is a well‑settled position in relation to Article 113 of the First Schedule to the Limited Act that if the date for performance of a sale agreement of an immovable property is specified therein, the period of three years shall commence from the specified date, but where no date for performance is mentioned in the sale agreement, the three years period will commence from the date of refusal to perform. "

5. Mr. Mohanlal learned counsel for the respondents on the other hand urged that the first part of Article 113 would apply only where time was of the essence of the agreement and when it was not so only the second part would be applicable and limitation would start running from the date when specific performance was refused.

6. Mr. Moohanlal argued that merely by providing a specific date for performance of obligations under a contract for sale of land, time does not become of the essence of the contract. This question depends upon the intention of the parties, which can be gathered not only from the term of the contract, but also from conduct of the parties and other attending circumstances. The proposition of law is indeed an exceptionable. He further submitted that in contract of sale of immovable property as distinguished from contract of sale of goods, time is generally presumed not to be essence of the contract, unless a clear intention of the parties to the contrary can be found. He relied upon several reported decisions in this context, but is not necessary to refer to them as there can be no cavil with this proposition of law. However, before considering the application of these legal principles to the facts of the present case it may be necessary to refer to the relevant provisions of the agreement which are reproduced below:‑‑ "That the vender has agreed to ‑ sell and the vendee has agreed to purchase the said land 5‑26 acres at the rate of Rs.3,600 per jareb total being 40,680 (forty thousand six hundred and eighty only) out of which sum of Rs.2,000 (two thousand only) is this day paid by the vendee and as for the residue, the vendee shall be bound to the vendor half shall be paid on or before 15th day of February, 1978 and the remaining half on or before 15th day of February 1979 when the vendor shall be bound to effectuate the sale by completing the registration of the said land in favour of the vendee for which necessary sale certificate shall be got and produced by the vendor himself; the last payment of 1979 is to be made before the Registrar at the time of presentation of the sale‑deed but if the vendee is not prepared, to have the sale‑deed completed, the vendee shall be bound to complete clear account payment to the vendor and when he desires the vendor will complete registration in his favour and till the final payment is completed, the vendee, who is the Hari of the land under sale, shall be bound to give full Zamindari share to the vendor as usual; Subject to the above conditions, the transaction is absolute and unconditionally outright, but if the vendee fails to make the payments in time, the vendor reserves the right to cancel the sale. "

7. Mr. Mohanlal contended that though the agreement mentioned specific dates when payments were to be made, the aforesaid stipulations were not absolute and only qualified in terms indicating that the parties never intended to make time of the essence of the agreement. He particularly referred to the stipulation giving such certain latitude to the vendee in that he could seek registration in his favour even after the expiry of the agreed date and would continue to pay Zamindari share to the vendor as usual. He further mentioned that neither of the parties gave notice to the other party as to the time for performance having expired and the consequences arising there from which show that time was not meant to be of the essence of the contract.

8. I regret, I find little force in these contentions. A careful reading of the terms of the agreement as a whole indicate that while the vendee was given the option to get registration of sale‑deed effected even after the stipulated date such option was made available only subject to the strict condition of his performing covenants i.e. cleared all payments on or before the stipulated date. In any event the stipulation that the vendor reserved the right to cancel the sale in the event of the vendees failure to make payment on time clearly leads to the inference that parties had intended to make time the essence of the agreement. At this juncture it may be pertinent to mention that findings of the learned Courts below to the effect that the date stipulated in the agreement was not final and the cause of action remained available to the vendee because he was till giving Harapa share to the vendor, is patently unsustainable. The obligation to pay such share existed and continues to exist irrespective of the agreement. Apparently, it was mentioned in the agreement only to show that the vendee would be absolved from paying such share upon payment of full price to the vendor even if the registered sale‑deed had not been executed.

9. I am also not impressed by the contention that failure on the part of the vendor to notify the vendee that the time for payment had expired would per se show that time was never intended to be of the essence. The conduct of the parties may indeed shed some light on their intention, but it has to be seen what the parties intended at the time of making the agreement and their conduct after the expiry of the time for performance may not always to be of much significance. Moreover section 55 of the Contract clearly shows that even where time is of the essence of the contract the contract does not come to an end Q immediately upon the expiry of the agreed time and only the non‑breaching patty acquires an option to put it to end which he may or may not exercise.

10. Nevertheless, even if time to be assumed as not being of the essence of the contract in question, I do not think that Mr. Mohanlal can bring his case within the second part of Article 113 of the Limitation Act. Indeed the second limb of the arguments was that in such cases the time mentioned in the agreement becomes in‑significant and limitation can only be reckoned from the date specific performance is refused. He squarely relied upon a judgment of this Court in the case of Munawar Bibi v. Maheen Quddusi (1986 CLC 1887) rendered by Nasir Aslam Zahid, J. (as his Lordships then was). In this case the vendor was required to complete necessary requirements (taking permission from Ministry of Works, obtaining Income Tax clearance certificate etc.) within 45 clays of the signing of the agreement in 1973. After completion of such requisites the vendor was required to inform tile vendee about the date and time for registration of sale‑deed in the latter's favour. A suit for specific performance was filed in 1978 by the vendee and it was contended in defence that the suit was time‑barred as it was filed long after the expiration of 45 days time limit prescribed in the agreement. It was in this context that his' Lordship found time not to be essence of the agreement. As to the question of limitation it was found:‑‑ "Further the period of 45 days was given to the defendant to obtain the requisite clearance certificate and thereafter, the defendant was required to inform the plaintiff about the date and time of registration and the evidence on record shows that at no point of time the defendant had informed the plaintiff that she had completed the requisites necessary for the registration. Only after the defendant had informed plaintiff that requisite clearance certificate had been obtained and also informed the plaintiff about the date and time of registration, could there be any obligation upon the plaintiff to complete the transaction. In the circumstances, the period of 45 days mentioned in the agreement is to be completely ignored and cannot be sent up by the defendant as a plea that the suit is barred by limitation."

11. The above decision in my humble view does not support the respondents, inasmuch as his Lordship found that as a matter of fact that the 45 days stipulation did not relate to the performance of the agreement but only for obtaining requisite permissions on the part of the vendor. She never informed the vendee of having obtained the permissions etc. and in the absence of such notice only the second part of Article 113 could be held applicable. The decision does not lay down a general proposition to the effect that whenever time is found not be of the essence, a specific provision in the agreement mentioning the date of performance is to be altogether ignored for the purpose of limitation. 12 Section 55 of the Contract Act laid down "

55. When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and failed to do any such thing at or before the specified time, the contract, or so much of it as has not been performed. becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract. If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time, but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure. "

13. The above statutory provisions clearly show that it is a fallacy to assume that when time is not to be essence of the contract any stipulation as to time of the performance is totally inconsequential. It is evident that the only C difference between time being of the essence and not being essence is that while in the former case the promisee acquired the option to avoid the contract, in the latter cases his remedy only confined to claiming compensation for non performance within stipulated time. In either case the promisor is required to suffer the consequences of his breach.

14. Evidently, the expression 'time being essence of the contract" has been used in the Contract Act not as a term of art but for connoting situation relating to remedies available to the non breaching parties. The limitation Act was enacted in 1908 i.e. long after the Contract Act, 1872 had been enforced and the legislature is presumed to know the existing state of law. Nevertheless, the legislature in its own wisdom did not provide that limitation in the first part of Article 113 would apply only when time of the essence of the contract and stipulated that whenever a contract was required to be performed on a specified date limitation had to be reckoned from that date. I, therefore, find no force in the submissions that the first part would be attracted only when time was of the essence of the agreement and not otherwise.

15. In view of the above, I am constrained to hold that the respondent's suit was barred by the limitation and the learned Courts below exercise their p jurisdiction with material irregularity. I would, therefore, allow this revision application and set aside the decree of the Court below. There shall be no order as to costs. A.A./M‑209/K Revision accepted.