Written By: Priya Darshini.
Edited By: Rushank Shah.
INTRODUCTION:
In contemporary society, owing to the booming corporate culture, contracts have become an essential way of assurance and protection of personal and civil laws. A contract is a legally binding agreement drafted between two or more parties. A legal contract is a way of ensuring various rights and duties among the parties. A contract, in simple terms, is a promise made by a party in exchange for any materialistic or non-materialistic object.
It is also the prime duty of the parties involved to respect the terms and conditions agreed to in the contract and abide by them. Any breach in the contract, which had been agreed to mutually by the parties involved, can be challenged in the court and the court is bound to provide legal aid and remedy for the particular breach. It is the court’s duty to study and understand in detail all the terms and conditions which have been agreed in the contract and suggest fair and apt remedies for the injured party in case of a breach in the contract. Relief in terms of damages or specific relief can be provided by the courts as compensation for the breach. It is solely the court’s decision to decide whether to provide damages or to provide specific relief to the injured party. For the court to provide either of these two, it is necessary that the contract is proven to be a valid contract. In the cases of voidable contracts, the court has the authority to deny the damages or specific relief to be provided. The court, while deciding on the validity of the mentioned contract, also assesses the reason as to which the contract was breached and if the reason provided is a valid reason, denies the power of the appellant to sue the defendant for the breach of the contract. In this article, the case of the Hind Construction Contractors’ Vs. The State of Maharashtra is discussed in detail.
CASE HISTORY:
In the case of Hind Construction Contractors’ Vs. The State of Maharashtra, which was heard by the Hon’ble Supreme Court in the year of 1979, the concept of the breach of a contract incurred when the conditions mentioned in the contract are not fulfilled in time was discussed and clarified in detail. The case was heard by a three judged bench, which was headed by then Chief Justice Y V Chandrachud and consisted of Justice V D Tulzapurkar and Justice A P Sen. In this particular case, various tests and references were undertaken to decide if time was the essence in the making and upholding of a contract.
Hind Construction Consultants entered into a contract with the State government of Maharashtra for the execution of construction work. The timeline specified in the contract for the completion of the entire work was a total of 12 months. It was promised by Hind Construction Consultants’ that they would have finished and would wind up the entire project by 12 months from the date of signing the contract. But since the appellant had failed to complete the specified work within that time frame, the respondent, who was the State government of Maharashtra, declared the entire contract to be void and denied to acknowledge its existence. Hind constructions filed a civil suit against them in the Bombay High Court demanding for compensation and damages to be paid and justified their demand by stating that the date and time frame mentioned in the contract was merely for nominal purposes and emphasized that time was not an essence which was mentioned in the specific contract. They also found it unfair that the entire contract was rescinded since the reason for the delay in completion of the work was due to the excessive rains and lack of proper roads to reach the site of construction. The government officials had also earlier rejected the materials required for the construction without any basis and when requested for an extension to be granted to complete the work, it was wrongfully rejected without taking into consideration of all the natural factors which resulted in a delay.
JUDGEMENT OF THE COURTS:
Both the respondent and the appellant preferred for an appeal. The Bombay High Court took into consideration of the facts the contractor cited for the declaration of void for unlawful and wrongful reasons by the state government. But it passed on the declaration that reasons and factors stated by Hind Construction Contractors did not lead to the wrongful termination of the contract and held that the government was right and justified on its part to rescind the contract. The Bombay High Court disregarded the question of whether time was an essence in the contract or not. Hind Constructions challenged this declaration in the Supreme Court of India and argued that the High Court did not take into consideration of the fact that time was not an essence in the particular contract. The appellant compared the nature of the contract signed with that of a building contract and emphasized that time is not considered to be an essence in either of these two circumstances. The Hon’ble Supreme Court considered the statements given by the appellant and referred to the Halsbury's Laws of England in its judgement. The Supreme Court said that the High Court was mistaken and the State government of Maharashtra made an illegal move by terminating the entire contract without precedence. It emphasized that the appellant had requested for an extension even before the contract crossed its dead line. The fact that the government officer denied the request was wrong and time extension was valid to be granted to Hind Constructions when requested. By the granting of an extension, time would have been made an essence in this contract but since the request was denied, the Supreme Court declared that time was not considered to be an essence in the specific contract and ruled in favour of the appellant.
CONCLUSION:
The Supreme court’s decision on this case is considered to be a landmark judgement in the field of Contract formation and deliberation. This judgement is mentioned in various cases as references and is quoted by numerous judges and law makers in various contract related disputes. The Supreme Court’s decision to declare that time is not an essence in this specific contract definitely reinstated the faith people have in the judicial system.
References:
[1] Hind Constructions Contractors vs. State of Maharashtra, 1979 AIR 720.
[1] INDIA KANOON, https://indiankanoon.org/doc/1533730/ (13/10/2021).