Default clause in sale-linked lease enforced; waiver not established, and specific performance was denied by the majority.

A bilateral agreement for sale linked to a lease was treated by the majority as creating mutual rights and obligations, not a mere privilege or option. The default clause cancelling resale rights on failure to pay instalments was enforced according to its terms, and acceptance of later overdue payments was held not to amount to waiver or revival of the agreement for resale. Because the stipulated payments were not completed by the contractual deadline, specific performance was refused. Mukherjea J. dissented, treating the default clause as penal, finding waiver from acceptance of overdue instalments and related conduct, and favouring relief against forfeiture and specific performance.

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Issues: Whether the stipulation cancelling the agreement for resale on default in payment of lease instalments was a strictly enforceable condition attached to a privilege, or a penal and forfeiture clause from which relief could be granted, and whether acceptance of overdue payments amounted to waiver so as to preserve the right to specific performance.

Analysis: The majority treated the transaction as a concluded bilateral agreement for sale, coupled with a lease and a default clause designed to secure punctual payment. It held that the appellant was not given a mere option or concession in the nature of a privilege; rather, the agreement created mutual rights and obligations. On that view, the clause providing for cancellation on default in payment of instalments was enforced according to its terms, and the surrounding conduct did not amount to a waiver restoring the contractual right. Acceptance of later payments after notice of cancellation was treated as consistent with recovery of amounts due under the lease and not as conduct necessarily reviving the agreement for resale. The majority also held that the appellant had not satisfied the stipulated payments in full by the contractual deadline and therefore could not obtain specific performance.

Conclusion: The default clause was enforced, waiver was not established, and the claim for specific performance failed.

Dissenting Opinion: Mukherjea J. held that the agreement was an ordinary bilateral contract and that the default clause was penal in character. He considered that acceptance of overdue instalments, together with the surrounding notices and accounting, amounted to waiver, and in any event that equitable relief against forfeiture should be granted. On that view, specific performance ought to have been decreed.

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