Case Note & Summary
The dispute arose from an agreement dated December 9, 1959, between Dr. Jiwan Lal and Shri Krishan Das (appellants) and Bal Kishan Das (predecessor of appellants 3 to 8) as prospective purchasers, and Brij Mohan Mehra (respondent) as vendor, for sale of immovable property at Amritsar for Rs. 1,22,500. The purchasers paid Rs. 10,000 as earnest money. Clause 5 required the vendor to execute and register the sale deed within three months after the premises were vacated by Income-tax Authorities and intimation given by registered post. Clause 6 provided that if the premises were requisitioned by Government prior to registration of sale deed, the vendor would refund the earnest money with 6% interest. Clause 7 provided for forfeiture of earnest money if purchasers defaulted after title satisfaction. Clause 9 dealt with repairs. On January 23, 1960, the Additional District Magistrate, Amritsar requisitioned the premises. The vendor refused to execute the sale deed, claiming the contract became void under clause 6. The purchasers filed suit for specific performance, asserting that clause 6 was for their benefit only, they waived it, and they were always ready and willing to perform. The trial court (Subordinate Judge, 1st Class, Amritsar) decreed the suit on August 17, 1964, finding the contract did not become void, the vendor had manipulated requisition, and the purchasers had waived the condition. On appeal, the High Court of Punjab and Haryana reversed the decree on January 25, 1966, holding that clause 6 imposed obligations on both parties and the entire contract fell through upon requisition, and that the purchasers could not waive the condition. The Supreme Court identified five questions: whether there was a concluded contract; whether non-requisitioning was a condition precedent to seller's obligation; whether it was a condition precedent to buyer's obligation; whether buyers could waive it; and whether buyers were guilty of laches or abandonment. The Court held that the contract was concluded from inception, as clause 1 obligated sale and purchase. The non-requisitioning of premises was not a condition precedent to the seller's obligation to sell; clause 6 did not state that the contract would end on requisition. The clause was for the exclusive benefit of the vendee, not the vendor, and did not create liabilities against the vendee. Therefore, the purchasers could unilaterally waive the condition and insist on performance. On delay, the Court applied the principle that delay is material only if it amounts to waiver, abandonment, or causes prejudice. Here, the purchasers waited for the appeal against requisition to be decided, then repeatedly requested execution; there was no allegation or evidence of prejudice. Accordingly, the Supreme Court allowed the appeal, set aside the High Court judgment, restored the trial court decree, and directed execution of the sale deed.
Headnote
A) Contract Law - Formation of Contract - Concluded contract for sale of immovable property existed from inception; vendor liable to sell and purchasers liable to buy - Specific Relief Act, 1963 - Agreement dated 1959-12-09 was not made subject to non-requisitioning; clauses 1 and 5 created immediate binding obligations; Held that there was a concluded contract and seller could not claim otherwise B) Contract Law - Condition Precedent - Non-requisitioning of premises was condition precedent only to buyers' obligation to buy, not seller's obligation to sell - Specific Relief Act, 1963 - Clause 6 provided for refund of earnest money with interest if premises requisitioned but did not expressly subject seller's obligation to sell or terminate contract on requisition; Held seller could not rescind contract on requisitioning C) Contract Law - Waiver - Condition inserted for exclusive benefit of one party can be unilaterally waived by that party - Specific Relief Act, 1963 - Clause 6 was for exclusive benefit of vendee and did not create liabilities against vendee; buyers waived condition and insisted on performance; Held waiver was valid and enforceable D) Specific Relief - Delay and Laches - Delay in instituting suit for specific performance is material only if it amounts to waiver, abandonment, or causes prejudice to other party - Specific Relief Act, 1963 - Appellants waited for disposal of appeal against requisition order, then repeatedly requested execution; no allegation or evidence of prejudice; Held delay did not bar specific performance and appeal allowed
Issue of Consideration
Whether clause 6 made non-requisitioning of premises a condition precedent to seller's obligation to sell; whether buyers could unilaterally waive that condition; whether delay in filing suit for specific performance barred relief
Final Decision
Appeal allowed; judgment and decree of High Court set aside; trial court decree for specific performance restored; directions for execution of sale deed given.
Law Points
- Clause inserted for exclusive benefit of one party can be unilaterally waived by that party
- Non-requisitioning of property was condition precedent to buyer's obligation
- not seller's obligation
- Delay in specific performance suit not fatal unless waiver
- abandonment
- or prejudice
- Earnest money refund clause did not terminate contract
