Agreement for sale – time specified for payment of sale price

In an agreement for sale relating to immovable property if time is specified for Payment of sale price but not in regard to execution of sale-deed, it will become essence only with reference to payment of sale price but not in regard to execution of sale deed. Ordinarily in relation to agreements to sale of immovable properties, time is not considered to be the essence of contract unless such an intention can be gathered either from express terms of contract or by necessary implication, if it is or can be borne out from the terms of the contract as to what is the intention of the parties.
A constitution bench of the Hon’ble Apex Court in Chand Rani v. Kamal Rani, (1993) 1 SCC 519 explained this principle as under:
“It is well accepted principle that in the case of immovable property, time is never regarded as the essence of the contract. In fact, there is a presumption against time being the essence of the contract. This principle is not in any way different from that obtainable in England. Under the law of equity which governs the rights of the parties in the case of specific performance of contract to sell real estate, law looks not at the letter but at the substance of the agreement. It has to be ascertained whether under the terms of the contract the parties named a specific time within which completion was to take place, really and in substance it was intended that it should be completed within a reasonable time. An intention to make time the essence of the contract must be expressed in unequivocal language.”
In Saradamani Kandappan v. S. Rajalakshmi and others, (2011) 12 SCC 18, it was held as under:
“The intention to make time stipulated for payment of balance consideration will be considered to be essence of the contract where such intention is evident from the express terms or the circumstances necessitating the sale, set out in the agreement….Even if the urgent need for the money within the specified time is not set out, if the words used clearly show an intention of the parties to make time the essence of the contract, with reference to payment , time will be held to be the essence of the contract.” Narayan Sharma v. Devendra Kumar Sharma, 2013 (121) RD 365.

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