The Food Corporation of India v. M/s.

Anupama Warehousing
Establishment
Kerala High Court
Year: 2003

Facts:
On 4th June 1977, an agreement was entered into between the plaintiff and the
defendant. Plaintiff was to construct one godown of 5000MT capacity at Pilicode
for the use of the defendant (FCI). There was a provision that the godown should
be made ready for occupation within four months of the execution of the
agreement.
Several difficulties cropped up during the process of construction and though the
time was fixed for completion of the contract, it was extended from time to time
at least on 8 occasions up to 31st July 1979. On 15th December 1979, defendant
informed the plaintiff that the proposal was not alive.
After completion of the godown, plaintiff asked defendant to occupy the godown,
but they refused to do so. The defendant suggested that they would consider
hiring it on a month to month basis at a reduced rate.
Suit was file claiming the coast of actual construction of Rs.17 lakhs with interest
on Bank advance of Rs.12.5 lakhs, rent receivable and also for damages for
mental agony.

Arguments of Plaintiff Respondent

Stand taken by the defendants is illegal and unjustifiable.
Time was not the essence of the contract. The defendant only wanted a
reduced rent; they never considered time to be the essence of the contract. Also,
the fact that they gave so many extensions shows that they did not consider time
to be the essence of the contract.
Breach of Contract was made by the defendant.

Arguments of Defendant Appellant

 The suit was bitten by section 69 of the Indian Partnership Act
Plaintiff has not performed her part of the contract. Building was not
constructed within the time stipulated and under the contract, the time was of
the essence and the plaintiff was expected to complete the building within the
time stipulated in the agreement.
Termination of the contract was valid and appellant was not liable to pay any
damages.

Issues:
1.Whether time is the essence of the contract?
2. Who breached the contract?

Judgment
It cannot be argued that merely because time is proved not to be the essence of
the contract, the contract can be performed at any time. Performance of a
contract by a promisee at a very late stage cannot be accepted, if it does not
achieve the purpose for which the contract was entered into.
In the present case, FCI wanted warehouses to store the large stock of food
grains. Agreement was entered into on 4th June 1977 and the godowns were to be
completed in four months. The respondents could not complete the work in four
months and got a sufficient number of extensions from FCI until 31 st July 1979.
When construction was STILL not complete, FCI put an end to the contract. It
was 10 months after this that the building was completed. A construction, which
was agreed to be completed in 4 months from 4th June 1977, could be executed
only by 1980.
Merely because previously time was granted does not mean that one party
would have to wait unendingly.
The Warehouses were required for a particular purpose and the purpose could
not be achieved by the construction of the warehouse at such a late stage.
Even if time is not the essence of the contract, the contract has to be performed
within a reasonable time. If it is not completed in a reasonable time, the party
affected by this is allowed to put an end to the contract.
Termination of contract by Appellant Corporation is legal.