Contract

Claiming time of essence in property sale? Prove it!

Mohammed Abdul Azeem and anr. v. M/s South India Prime Tannery Pvt. Ltd.

16.02.2016

Bangalore High Court set a high threshold for claims that time was of the essence in a contract for sale of immovable property. Onus, however, was placed on both parties: adducing evidence to prove time was of the essence on the claimant and the opposite party showing its readiness to perform the contract.

The court noted legal precedent that there was no presumption in sale of immovable property that time was of the essence. It held that in the absence of explicit contractual terms that purport as much, it falls upon the party claiming the same to demonstrate it. Be it by adjacent contractual terms, intent at the time of contract or extenuating circumstances that warranted urgency in performance, the court must be shown that indeed time of essence was envisaged as part of the contract.

A party performing the contract, and counter-claiming, however, is not unencumbered from timeliness. The court delved into a study of the meaning behind “reasonable” to understand “reasonable time” within which a contract should be performance, when time is not of the essence. Its metric of choice, in the instant case, was whether the party purchasing the property was “ready and able” to proceed with specific performance - particularly in light of delay in executing sale.

In the instant, the court rejected Defendant’s submissions that time was of the essence. Its submission that sale consideration was required for pressing financial needs failed to evince for not being proved tangibly; medical, educational or other expenses were not mentioned in the contract nor were evidenced before court.

The Plaintiff on the other hand demonstrated that throughout the wait between initial payment at the time of entering into contract and commencement of legal proceedings by Defendant, it was in possession of the requisite amounts to complete the sale. Its arguments that Defendant failed to evict tenants and obtain an Income Tax Clearance Certificate proved suasive.

Relevant

Nannapaneni Subayya Chowdary and Anr. v. Garikapati Veeraya and Anr. MANU/AP/0316/1955
Gomathinayagam Pillai and Ors. v. Pallaniswami Nadar MANU/SC/0067/1966

Tags : reasonable time of essence immovable property sale income tax clearance

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