# CALTEX (INDIA) LTD v. BHAGWAN DEVI MARODIA

- **Citation:** [1969] 2 S.C.R. 238
- **Court:** Supreme Court of India
- **Decided:** 1968-09-26
- **Case number:** Civil Appeal No. 2347 of 1966
- **Bench:** S. M. Sikri, R. S. Bachawat
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/caltex-india-ltd-v-bhagwan-devi-marodia-4491
- **Pages:** 6

## Headnote

Indian Contract Act (9 of 1872), s. 55-Lease of /and-Time as
essence of contract-Intention if to be clearly stated.
The respondent leased to the appellant a plot of land for a certain ·~
period and stipulated in ·the lease deed that the appellant would give
A
B
notice of renewal of the lease within a certain
time. The appellant
C
made the request for renewal of the lease 12 days after the time fixed.
The respondent asked the appellant to vacate the premises stating, that
the request being made1 out of time, was ineffective.
The appellant filed
a suit for a declaration. that he was entitled to the renewal, and stated
that the delay in making the request be excused as (a) it was due to
oversight; (b) the respondent had not altered her position for the worse
or to her detriment within the space of 12 days; (c) neither party had
treated the matter of time as being as the essence of the transaction; (d)
D
the appellaot had constructed a service station. for petroleum products of
immense utility to the public of the locality; and ( e) the appellant was
in possession of the land. The Court dismissed the suit, and this decision
was affirmed in appeal. Dismissing the appeal, this Court,
HELD : The lease fixed a time within which the application for renewal was to be made.
The time so fixed was of essence of the bargain.
The tenant Jost his ri~ht unless he made the application within the stipuE
lated time.
Equity will not relieve the tenant from the consequences of
his own neglect which could well be avoided with reasonable1 diligence. ·
At common law stipulations as to time in a contract giving an option
for renewal of a lease of land were considered to be of the essence of
the contract e:ven if the¥ were not expressed to be so and were construed
as conditions precedent. Equity followed the common. law rule in respect
'F
of such contracts and did not regard the stipulation as to time as not of
the essence of the bargain, the reason being that a renewal of a lease is
a privilege and if the tenant wishes to claim the privilege; he must do so
strictly within the time limited for the purpose, [241 D, E]
With regard to equitable relief against a failure of the tenant to
give notice of renewal within the stipulated time the relief cannot be
given in equity save under sp'ecial circumstances such as unavoidable
G
accident, fraud, surprise, ignorance, not wilful or inequitable conduct on
the part of the lessor precluding him refusing to give the renewal. [241 F]
Grounds (b) ·and (e) stated for the delay could not be regarded as
special circumstances. As to ground (d) it was not shown that the
service station was of immense public utility. The fact. that the appellant constructed a service station was an irrelevant consideration. Ground
(c) was not established.and it was not shown that the time was not the
H
essence of the bargain. As to ground (a) there was some evidence to
show that the delay in giving the notice of renewal was due to oversight. But it was not shown th.at the delay was due to any unavoidable
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CALTEX LTD. V. BHAGWAN DEVI (Bachawat, J.)
239
A
accident, excus·able ignorance, fraud or surprise.
The delay arose from
mere neglect on the part of the appellant and could have been avoided
by reasonable diligence. [242 El
B
c
D
E
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Jamshed Khodaram Irani
v.
Durjorji Dhunjihhai, L.R. 43 I.A. 26,
flare v. Nicoll, [1966] 2 Q.B. 131, 145; Eaton v. Lyon 3 Ves Jun. 690,
692; Reid & Anr. v. Grave & Ors. 9 L.J.Ch. 245, 248, Ram Lal Dubey v.
Secretary of State for India, 39 C.L.J.
314 and Maharani Hemartta
Kumari Devi v. Safatulla Biswas & Ors. 37 C.W.N. 9, referred to.

## Text

CALTEX (INDIA) LTD.
v.
BHAGWAN DEVI MARODIA
September 26, 1968
[S. M. SIKRI AND R. S. BACHAWAT, JJ.J
Indian Contract Act (9 of 1872), s. 55-Lease of /and-Time as
essence of contract-Intention if to be clearly stated.
The respondent leased to the appellant a plot of land for a certain ·~
period and stipulated in ·the lease deed that the appellant would give
A
B
notice of renewal of the lease within a certain
time. The appellant
C
made the request for renewal of the lease 12 days after the time fixed.
The respondent asked the appellant to vacate the premises stating, that
the request being made1 out of time, was ineffective.
The appellant filed
a suit for a declaration. that he was entitled to the renewal, and stated
that the delay in making the request be excused as (a) it was due to
oversight; (b) the respondent had not altered her position for the worse
or to her detriment within the space of 12 days; (c) neither party had
treated the matter of time as being as the essence of the transaction; (d)
D
the appellaot had constructed a service station. for petroleum products of
immense utility to the public of the locality; and ( e) the appellant was
in possession of the land. The Court dismissed the suit, and this decision
was affirmed in appeal. Dismissing the appeal, this Court,
HELD : The lease fixed a time within which the application for renewal was to be made.
The time so fixed was of essence of the bargain.
The tenant Jost his ri~ht unless he made the application within the stipuE
lated time.
Equity will not relieve the tenant from the consequences of
his own neglect which could well be avoided with reasonable1 diligence. ·
At common law stipulations as to time in a contract giving an option
for renewal of a lease of land were considered to be of the essence of
the contract e:ven if the¥ were not expressed to be so and were construed
as conditions precedent. Equity followed the common. law rule in respect
'F
of such contracts and did not regard the stipulation as to time as not of
the essence of the bargain, the reason being that a renewal of a lease is
a privilege and if the tenant wishes to claim the privilege; he must do so
strictly within the time limited for the purpose, [241 D, E]
With regard to equitable relief against a failure of the tenant to
give notice of renewal within the stipulated time the relief cannot be
given in equity save under sp'ecial circumstances such as unavoidable
G
accident, fraud, surprise, ignorance, not wilful or inequitable conduct on
the part of the lessor precluding him refusing to give the renewal. [241 F]
Grounds (b) ·and (e) stated for the delay could not be regarded as
special circumstances. As to ground (d) it was not shown that the
service station was of immense public utility. The fact. that the appellant constructed a service station was an irrelevant consideration. Ground
(c) was not established.and it was not shown that the time was not the
H
essence of the bargain. As to ground (a) there was some evidence to
show that the delay in giving the notice of renewal was due to oversight. But it was not shown th.at the delay was due to any unavoidable
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CALTEX LTD. V. BHAGWAN DEVI (Bachawat, J.)
239
A
accident, excus·able ignorance, fraud or surprise.
The delay arose from
mere neglect on the part of the appellant and could have been avoided
by reasonable diligence. [242 El
B
c
D
E
F
G
H
Jamshed Khodaram Irani
v.
Durjorji Dhunjihhai, L.R. 43 I.A. 26,
flare v. Nicoll, [1966] 2 Q.B. 131, 145; Eaton v. Lyon 3 Ves Jun. 690,
692; Reid & Anr. v. Grave & Ors. 9 L.J.Ch. 245, 248, Ram Lal Dubey v.
Secretary of State for India, 39 C.L.J.
314 and Maharani Hemartta
Kumari Devi v. Safatulla Biswas & Ors. 37 C.W.N. 9, referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2347 of
1966.
Appeal from the judgment and decree, dated June 3, 1966
of the Calcutta High Court in Appeal No. 251 of 1965.
M. C. Chag/a and S. N. Mukherjee, for the appellant.
S., V. Gupte, M. G. Poddar and D. N. Mukherjee, for the
respondent.
The Judgment of the Court was delivered by
Bachawat, J.
By an indenture of lease, dated February 17,
1954 the respondent leased to the appellant a plot of land at premises No. 22, Jatindra Mohan Avenue, Calcutta, for a term of
10 years commencing from February 1, 1954. Clause 3(c) of
the deed provided for a renewal of the lease and was in the following termg :-
"3 ( c). The lessor will on the written request of the
lessees made two calendar months before the expiry of
the term hereby created and if there shall not at the
time of such request be any existing breach or nonobservance of any of the covenants on the part of the
lessees hereinabove contained grant to it one renewal of
10 years from the expiry of the said term at the same
rent and conta.inin:g the like convenants and provisos as
are herein contained except that as regards the clause
for renewal for further period the rent shall be as may
be agreed between the lessor and the lessees."
On December 1, 1963, the time fixed for applying for the renewal of the lease expired. On December 13, the appellant made·
a written request for the renewal.
On December 23, 1963 the
respondent's solicitors replied stating that the request being out
of time was ineffective and asking the appellant to vacate the
land on the expiry of the lease. The appellant had erected structures on the land for the purpose of running a petrol delivery
station and was a Thika tenant within the meaning of the Calcutta
Thika Tenancy Act, 1949.
In February 1964 the respondent
filed an application before the Controller asking for eviction of
240
SUPREME COURT REPORTS
[1969] 2 S.C.R.
the appellant under ss. 3 (vi) and 5 of the Calcutta Thika
\C'enancy Act.
The Controller allowed
the
application.
An
appeal from this order was dismissed by the appellate Authority.
A revision petition against the order was dismissed by the High
Court.
While! dismissing the revision petition, the High Court
stayed the execution of the order of eviction for a month and
observed that the authorities under the Calcutta Thika Tenancy
Act had no power to decide whether the appellant was entitled
to a renewal of the lease.
Thereafter the appellant filed the
present suit on the Original Side of the Calcutta High Court
asking for a declaration that it was entitled to a renewal of the
lease, specific performance of the covenant for renewal, an
injunction restraining execution of the order of eviction passed
by the Controller and for other reliefs. In paragraphs 13 and 14
of the plaint the appellant alleged that the delay in giving notice
of renewal should be excused in view of the following special
circumstances : (a) the delay was due to oversight; (b) the res-
·pondent had not altered her position for the worse or to her
petriment within the space of 12 days; ( c) neither party had
treated the matter of time as being as the essence of the transaction; ( d) the appellant had constructed a service station for
petroleum products of immense utility to the public of the locality; ( e) the appellant was in possession of the land. The respondent contended that the application for renewal being made out
of time was ineffective and that there was no ground for excusing
the delay.
S. P. Mitra, J. accepted the respondent's contention
and dismissed the suit. An appeal under clause 15 of the Letters
Patent was dismissed by a Divisional Bench of the High Court.
Both the courts concurrently h~ld that the letter, dated December 13, 1963 was not a proper exercise of the option by the
,appellant under the lease, dated February 17, 1954 and that
there were no special circumstances for excusing the delay in
,giving the notice.
The appellant has filed the present appeal
after obtaining a certificate from the High Court under Art. 133
( 1 )(a) and (b) of the Constitution.
The appellant neglected to make the application for renewal
of the lease within the stipulated time.
Mr. Chagla has submitted that the time is not of the essence of the contract having
. regard to sec. ~5 of the Indian Contract Act, 1877 as interpreted
ln the case of JamYhed Khodaram Irani v.
Durjorji Dhunjibhai(1). Section 55 of the Indian Contract Act 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
time, and fails to do any such thing at or before the specified time,
the contract, or so much of ir as has not been performed, becomes
voidable at the o'ptiqn, of the promisee, if the intention of the
(l) LR. 43 T.A. 26.
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CALTEX LTD. v. BHAGWAN DEVI (Bachawat, J.)
2H
parties was that time should be of the essence of the contract." In
Jemshed's case(1 ) Viscount Haldane observed that the section
did not lay down any principle as regards contracts to sell land
in India different from those which obtained under the law of
England. It is well known that in the exercise of its jurisdiction
to decree specific performance of contracts the Court of Chancery
B
adopted the rule, especially in the case of contracts for the sale
. of land, that stipulations as to time were not to be regarded as of
the essence of the contract unless they were made so by express
terms or unless a clear indication of a contrary intention appeared
from the nature of the contract or the surrounding circumstances.
In his well considered judgment Viscount Haldane carefully
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refrained from saying that time was not to be regarded as of the
essence in all contracts relating to land.
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At common law stipulations as to time in a contract giving an
option for renewal of a lease of land were considered to be of the
essence of the contract even if they were not expressed to be so and
were construed as conditions precedent. Equity followed the common law rule in respect of such contracts and did not regard the
stipulation as to time as not of the essence of the bargain. As
stated in Halsbury's Laws of England, 3rd ed., vol. 3, art. 281,
p. 165 : "An option for the renewal of a lease, or for the purchase or re-purchase of property, must in all cases be exercised
strictly within the time limited for the purpose, otherwise it will
lapse."
This passage was quoted with approval by Danckwerts
L. J. in Hare v. Nicoll('). A similar statement of law is to be
found in Foa's General Law of Landlord and Tenant, 8th ed.,
Art. 453, p. 310, and in Hill and Redman's Law of Landlord and
Tenant, 14th ed., p. 54. The reason is that a renewal of a lease
is a privilege and if the tenant wishes tp claim the privilege he
must do so strictly within the time limited for the purpose.
With regard to equitable relief against the failure
of
the
tenant to give notice Of renewal within the stipulated time, the
law is accurately stated in Halsbury's Laws of England, 3rd ed.,
vol. 23, p. 626, Art. 1329, footnote (u) thus :-"Relief will not
be given in equity against failure to give notice in time, save under
special circumstances. The decided cases show that in such cases
relief is not given in equity save upon the ground of unavoidable
accident, fraud, surprise, ignorance not wilful or inequitable conduct on the part of the lessor precluding him from refusing to
give the renewal. The limits of the equitable interference in such
cases were clearly stated by the Master of the Rolls (Sir R. P.
Arden) in Eaton v. Lyon.(8 ) He observed:-
. "At law a covenant must be strictly and literally
performed; in equity it must be really and substantially
(1) L. R. 43 I. A. 26.
(2) {1966] 2 Q.B. 131, 145,
(3) 3 Ves. Jun. 690, 692-3, 695-6=30 E.R. 1223, 1224,1225-6.
242
SUPREME COURT REPORTS
[1969] 2 S.C.R.
perfonned according to the true intent. and m~aning ~f
the parties so far as circumstances will a~!Illt; !mt if
unavoidable accident, if by fraud, by surpnse or ignorance not wiliul, parties may have bee~ pr~en!ed from
executing it literally, a Court of Eqmty, Wiil mterfore;
and upon compensation being made, the party having
done everything in his power, and being prevented by
means, I have alluded to, will give relief . . . I decide
this case upon the principles on whicb, Lord Thurlow
decided (Bayley v. The Corporation of Leominster
1792, 1 Yes. 476), and I hope now, it will be known,
that it is expected, these covenants shall be literally
perfonned where it can be done; and that Equity will
interpose, and go beyond the stipulations of the covenant at law, only where a literal perfonnance has been
prevented by the means, I have mentioned,
and no
injury is done to the lessor."
We are of the opinion that the stipulation as to time in clause 3
(c) of the indenture of lease dated February 17, 1954 should be
regarded as of the essence of the contract.
The appellant not
having exercised the option of renewal within the time limited by
the 'clause is not entitled to a renewal.
The appellant claims relief against the consequences of its
·default on the grounds enumerated in paragraphs 13 and 14
of the plaint. Grounds (b) and ( e) cannot be regarded as special
circumstances. As to ground ( d), it is not shown that the service
station is of immense public utility.
The fact that the appellant
constructed a service station
is
an irrelevant consideration.
Ground ( c) is not established and it is not , shown that the time
is not of the essence of lhe bargain. As to ground (a) there is
·some evidence to show that the delay in giving the notice of
renewal was due to oversight. But it is not shown that the delay
was due to any unavoidable accident, excusable ignorance, fraud
or surprise.
The delay arose from mere neglect on the part of
the appellant and could have been avoided by reasonable diligence.
As observed 'by the Master of the Rolls in Reid & Anr. v. Grave
& Others('): "The rule is now well established, that no accident
will entitle a party to renew unless it be unavoidable.
I am of
opinion, that nothing but accident, which, could not have been
avoided by reasonable diligence, will entitle the plaintiff to a
renewal in this Court."
~
e .may add that where no time is fixed for the purpose, an
apphcation for renewal for the lease may be made within a reasonable time before the expiry of the tenn (see Foa's General Law
of Landlord & Tenant, 11th ed., article 455, pp. 311-12, Ram Lal
(l) 9 L. J. Ch. 245, 248.
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CALTEX LTD, v. BHAGWAN DEVI (Bachawat, J.)
243
A
Dubey v. Secretary of State for India (1), Maharani Hemanta
Kumari Devi v. Safatulla Biswas & Ors.( 2 ). In the preseint case,
the lease fixes a time within which the application for renewal is
to be made. The time so fixed is of the essence of the bargain.
The tenant loses his right unless he makes the application within
the stipulated time. Equity will not relieve the tenant from the
B consequences of his, own neglect which could well be avoided
with reasonable diligence.
The appeal is dismissed with costs .
Y.P.
(1) 39 C.L.J. 314 .
. (2) 37 C.W.N. 9.
Appeal dismissed .