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Saurabh (Sr Consultant)     21 December 2016

Time limit for builder when time not mentioned in contract

Dear Experts,

Can you please tell me if time limit is not specifically mentioned in contract with builder, what is the default time assumed for completion of work?

I had read some where that it is 2 years. Is that true? Can you please help me with citations?

Regards,

Saurabh.



Learning

 2 Replies

Ms.Usha Kapoor (CEO)     22 December 2016

Time limit where time is not mentioned  in building contract 3years is the time limit of the building contract which is theperiod of limitation for specific performance of the contract./ IN a second appeal , A Madras High  cour tJudgment in Rajaendran andNanjappan vsSV Naga Rajan, Ponnammal, prakash and Sreenivasan delivered by Justice Raja Suria in 2013 It was  held regarding time limt for construction contracts with a builder in a second appeal.

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41. A correct prospective relating to the question whether time is not of the essence of the contract in contracts relating to immovable property, is given by this court in K.S.Vidyanadam v. Vairavan (by Jeevan Reddy,J.,) who incidentally was a member of the Constitution Bench in Chand Rani. This Court observed:

"10. It has been consistently held by the courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifically provided to that effect ...............in the case of urban properties in India, it is well-known that their prices have been going up sharply over the last few decades  particularly after 1973*.

11.We cannot be oblivious to the reality  and the reality is constant and continuous rise in the values of urban properties  fuelled by large-scale migration of people from rural areas to urban centres and by inflation. ...........Indeed, we are inclined to think that the rigor of the rule evolved by courts that time is not of the essence of the contract in the case of immovable properties  evolved in times when prices and values were stable and inflation was unknown  requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so."

42. Therefore, there is an urgent need to revisit the principle that time is not of the essence of the contracts relating to immovable properties and also explain the current position of law with regard to contracts relating to immovable property made after 1975, in view of the changed circumstances arising from inflation and steep increase in prices. We do not propose to undertake that exercise in this case, nor referring the matter to a larger Bench as we have held on facts in this case that time is the essence of the contract, even with reference to the principles in Chand Rani and others cases. Be that as it may.

43. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S.Vidyanadam.

(i) The Courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored.

(ii) The courts will apply greater scrutiny and strictness when considering whether the purchaser was "ready and willing" to perform his part of the contract.

(iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time-limits stipulated in the agreement. The courts will also "frown" upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean that a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three-year period is intended to assist the purchasers in special cases, as for example, where the major part of the consideration has been paid to the vendor and possession has been delivered in part-performance, where equity shifts in favour of the purchaser.

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Kumar Doab (FIN)     22 December 2016

GO thru:

THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 NO. 16 OF 2016 [25th March, 2016.]

https://www.indiacode.nic.in/acts-in-pdf/2016/201616.pdf


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