Even when time is not stipulated in a contract, the time period cannot be completely ignored

Cause Title : Yassh Deep Builders Llp vs Sushil Kumar Singh & Anr., Delhi High Court, 

Date of Judgment/Order : 14/3/2023

Corum : Hon’ble Mr. Justice Chandra Dhari Singh

Citied: Saradamani Kandappan vs S. Rajalakshmi & Ors ; (2011) 12 SCC 18

Background

On 15th May, 2018, the petitioner entered into a Collaboration Agreement with the respondent no. 1 for the development of some land belonging to the respondent at its own costs and expenses. Under the terms of the Collaboration Agreement, the petitioner was, inter alia, obliged to apply for licence/ approvals/ permits/ certification etc. for the development of the property in a timely and orderly manner. The Collaboration Agreement stood terminated by the respondent No.1 by way of a letter dated 29th September, 2021 which apparently was never received by the petitioner. 

It is the petitioner's case that on 14.12.2022 on receipt of a phone call regarding the said property for being put for sale, the petitioner made enquiry on 15.12.2022, when it was confronted with the Second Supplementary Collaboration Agreement which is a forged document. The petitioner argued that it has fulfilled its obligations under the Collaboration Agreement. Even otherwise, the petitioner has always been ready and willing to perform its part under the Collaboration Agreement and has been taking all necessary steps to obtain the required licence. Therefore, the petitioner is before this Court seeking interim protection qua the Collaboration Property submitting to the effect that there is a serious and genuine apprehension that the respondent No.1 and 2 would create third party rights in the Collaboration Property to defeat the rights of the petitioner.

The respondent argued that as per Clause 2.14 of the Second Supplementary Collaboration Agreement dated 17th August 2020, the petitioner was to obtain license of the project to be developed on the Collaboration Property by 15th December 2020, however, the petitioner failed to do so. It is further submitted that the petitioner even failed to obtain the required license for the project for almost 40 months, i.e., till the termination of the Collaboration Agreement. It is also submitted that there were consistent defaults on the part of the petitioner submitting to the effect that after execution of the petitioner failed to pay towards the part payment of the security amount as ITS cheque was dishonoured due to “ Insufficient Funds” .

Judgment

On the issue of specific performance, the court held that is trite law that continuous readiness and willingness on the part of the petitioner is a condition precedent for the grant of relief of Specific Performance. It is the bounden duty of the petitioner to prove its readiness and willingness by way of adducing evidence. The crucial facet has to be determined by considering all the circumstances including availability of funds and mere statements or averment in the present petition of readiness and willingness would not suffice. Under Section 16(c) of the Specific Relief Act, a distinction can be drawn between readiness and willingness to perform the contract. Both ingredients are necessary to be established for the grant of relief of the specific performance.

While readiness means the capacity of the petitioner to perform the contract, willingness relates to the conduct of the petitioner. 

It is not disputed that under the Collaboration Agreement (amended by the First Supplementary Agreement), the petitioner was required to get a licence from DTCP in a timely manner which it failed to get even after 5 years. Though this Court knows that the contract did not stipulate a particular time period within which this licence was to be obtained, it ought to have been obtained within a reasonable time period. Thus, the time period cannot be completely ignored. Also. cheques issued by the petitioner towards the part payment of the security amount were dishonoured due to “ Insufficient Funds” .

Capacity of the petitioner to execute the contract was always in doubt. It is not disputed that the petitioner was unable to make payment towards the earnest money as was initially agreed between the parties, which was one of the crucial factors while executing the First Supplementary Agreement.

Further, the petitioner had only paid an amount of Rs.4.21 Crores as earnest money while the price of the land is about at INR 120 Crores. Having paid an amount insignificant in comparison to the value of the property, the petitioner is not entitled to discretionary equitable relief of specific performance.