PRIVY COUNCIL

                      Jamshed Khodaram Irani.

                      Vs.

                      Burjorji Dhunjibhai

                         P.C.A No. 113 of 1914
(Viscount Haldane, CJ, Lords Parmoor Wrenbury, Sir John Edge

                         and Mr. Ameer Ali.JJ)

                      6.12.1915

                      JUDGMENT

Viscount Haldane CJ.

1. The question in this appeal is whether the appellant, who was the plaintiff in an
action for specific performance, is entitled to the relief he has claimed. Macleod, J.,
decided that he is so entitled, but the High Court in appeal at Bombay reversed the
decision and dismissed the action.

2. The facts may be stated briefly. The Government of Bombay, in 1898, granted to
one Mothabai Bhikaji a reclamation lease of over 2,000 acres of land near Bombay for
a term of 999 years. The lease provided that the lessee should reclaim the land and
bring it under cultivation within a period which was ultimately extended to the year
1910. He was also to maintain the reclamation throughout the term, and keep up
certain roads, and make and maintain certain waterways and boundary marks, to the
satisfaction of the local Collector. The lessee was, further, not to assign or underlet,
until the reclamation was complete, without the consent in writing of the Collector. In
case of breach of any covenant or condition or provision of the lease, the lessor had
the right to reenter and determine the lease. The lease was transferred in 1908 to the
respondent, who had purchased it from the lessee.

3. On the 8th July 1911 the respondent agreed in writing by a document in Gujarati, a
translation of which was before their Lordships, to sell the leasehold interest to the
appellant for Rs. 85,000, and the appellant paid Rs. 4,000 of this sum as a deposit or
earnest. This agreement provided, by clauses 1 and 2, that the title was to be made
marketable; that the conveyance was to be prepared and received within two months
from the date of the agreement; that on signing the document of sale Rs. 80,500 were
to be paid, and after its registration the remaining Rs. 500. The 5th clause provided
that on payment of the Rs. 81,000, as provided by clause 2, the document of sale or
conveyance was to be executed, but should the purchaser not pay the amount within
the fixed period above mentioned he was to have no right to the deposit or earnest
money of Rs. 4,000 paid on account, and any claim of his was to be void, and the
vendor was, after that date, to be at liberty to resell.

4. There was a subsidiary agreement that the respondent should buy certain land
belonging to the appellant for Rs. 30,000, to be deducted from the Rs. 81,000, but on
this nothing turns.

5. The appellant's solicitors proceeded to investigate the title, and they made
requisitions. of these requisitions some related to the rights of one Chimanlal, who had
professed to make a title as heir to his father, one of certain mortgagees of the interest
of Mothabai Bhikaji. Another of the requisitions was for a certificate or letter from the
Collector stating that all the covenants and conditions of the lease had been performed
and fulfilled. This requisition was made on the 3rd October 1911, more than two
months after the date of the contract. The respondent did not comply with these
requisitions, but on the 6th October, through his solicitors, asserted a right to put an
end to the contract on the ground that time was of its essence, and to forfeit the deposit
on the ground that the appellant had failed to complete his purchase within the date
fixed.

6. If these requisitions were made in time their Lordships are of opinion that they were
proper, and that they were not adequately answered. If time was not of the essence of
the contract it is clear that they were legitimately made, however the matter might
stand as to one or other of them if time were of the essence. This last question
therefore lies at the root of the controversy, and the answer to it is decisive of the
appeal.

7. The law applicable to the point is contained in section 55 of the Indian Contract.
Act, 1872, which provides that -

       "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 fails 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."
8. Their Lordships do not think that this section lays down any principle which differs
from those which obtain under the law of England as regards contracts to sell land.
Under that law equity, which governs the rights of the parties in cases of specific
performance of contracts to sell real estate, looks not at the letter but at the substance
of the agreement in order to ascertain whether the parties, notwithstanding that they
named a specific time within which completion was to take place, really and in
substance intended more than that it should take place within a reasonable time. The
principle is well expressed in what Lord Redesdale said in his well-known judgment
in Lennon v. Nupper1 which was adopted by Knight Bruce L. J. in Roberts v. Berry2.
The doctrine laid down in these cases was again formulated by Lord Cairns in Tilley v.
Thomas, and by the House of Lords in the recent case of Stickney v. Keeble3. Their
Lordships are of opinion that this is the doctrine which the section of the Indian
Statute adopts and embodies in reference to sales of land. It may be stated concisely in
the language used by Lord Cairns in Tilley v. Thomas4

       "The construction is, and must be, in equity the same as in a Court of law. A
       Court of equity will indeed relieve against, and enforce, specific performance,
       notwithstanding a failure to keep the dates assigned by the contract, either for
       completion, or for the steps towards completion, if it can do justice between the
       parties, and if (as Lord Justice Turner said in Roberts v. Berry there is nothing
       in the 'express stipulations between the parties, the nature of the property, or the
       surrounding circumstances,' which would make it inequitable to interfere with
       and modify the legal right. This is what is meant, and all that is meant, when it
       is said that in equity time is not of the essence of the contract. of the three
       grounds...... mentioned by Lord Justice Turnor, 'express stipulations' requires no
       comment. The 'nature of the property' is illustrated by the case of reversions,
       mines, or trades. The 'surrounding circumstances' must depend on the facts of
       each particular case."
9. Their Lordships will add to the statement just quoted these observations. The
special jurisdiction of equity to disregard the letter of the contract in ascertaining what
the parties to the contract are to be taken as having really and in substance intended as
regards the time of its performance may be excluded by any plainly expressed
stipulation. But to have this effect the language of the stipulation must show that the
intention was to make the rights of the parties depend on the observance of the time
limits prescribed in a fashion which is unmistakable. The language will have this
effect if it plainly excludes the notion that these time limits were of merely secondary
importance in the bargain, and that to disregard them would be to disregard nothing
that lay at its foundation. Prima facie, equity treats the importance of such time limits
as being subordinate to the main purpose of the parties, and it will enjoin specific
performance notwithstanding that from the point of view of a Court of Law the
contract has not been literally performed by the plaintiff as regards the time limit
specified. This is merely an illustration of the general principle of disregarding the
letter for the substance which Courts of equity apply, when, for instance, they decree
specific performance with compensation for a non-essential deficiency in subject-
matter.

10. But equity will not assist where there has been undue delay on the part of one
party to the contract, and the other has given him reasonable notice that he must
complete within a definite time. Nor will it exercise its jurisdiction when the character
of the property or other circumstances would render such exercise likely to result in
injustice. In such cases, the circumstances themselves, apart from any question of
expressed intention, exclude the jurisdiction. Equity will further infer an intention that
time should be of the essence from what has passed between the parties prior to the
signing of the contract. Tilley v. Thomas where specific performance was refused,
illustrates this class of transaction. But in such a case the intention must appear from
what has passed prior to the contract, the construction of which cannot be affected in
the contemplation of equity by what takes place after it has once been entered into.

11. Applying these principles to the agreement before them, their Lordships are of
opinion that there is nothing in its language or in the subject-matter to displace the
presumption that for the purposes of specific performance time was not of the essence
of the bargain. They do not think that the subject-matter or the character of the lease
sold were such as to take the case out of the class to which the principle of equity
applies. They are also unable to hold that the plaintiff bound himself by his
correspondence subsequent to the agreement to a new agreement that time, if it was
not originally of the essence, should be made so. As to the language of the agreement
itself, without dwelling on a possible point in the plaintiff's favour which does not
appear to have been raised in the Court below, that the only time limit mentioned
refers to his preparation and reception of the conveyance, as distinguished from
completion, they agree with Macleod J. in the view that there is nothing said in it
sufficient to exclude the equitable cannon of interpretation. and they agree in his
conclusion that the defendant had no justification in claiming in the circumstances to
treat time as of the essence. They are unable to concur in the opinion of the learned
Judges of the High Court in appeal that there was evidence that the plaintiff had not
money with which to pay the price, or that the subsequent correspondence and
dealings between the parties modified the right of the plaintiff to insist on his right to
complete the purchase.

12. These conclusions render it unnecessary to consider the other points dealt with in
the High Court and elaborately argued at their Lordships' Bar. The result is that they
think that the appeal ought to be allowed and that the judgment of Macleod, J.,
restored, and that the respondent should pay the costs of this appeal and in the Courts
below. They will humbly advise His Majesty accordingly.

Appeal allowed.

Cases Referred:

   1. [1802] 2 Schedule and Lef. 682
   2. [1853] 3 De G. M. and G. 284 : 22 L.J.Ch. 398 : 98 R.R.139 : 20 L.T.(O. S.)

       215
   3. [1915] A. C. 386
   4. [1867] 3 Ch. 61 : 6 W.R. 66 : 17 L.T. 422