Contractual time stipulation and earnest money forfeiture: waiver needs mutual agreement, while without-prejudice relaxation does not extend the deadline.

Where time was contractually essential, the bidder could not treat a without-prejudice letter expressing willingness to consider further relaxation as a binding waiver or bilateral extension of the payment deadline. The analysis states that specific performance or refund could not be claimed on that footing, and that cancellation was not invalid for want of a fresh date. It also notes that Rule 24 of the Delhi Development Authority (Disposal of Developed Nazul Land) Rules 1981 was inapplicable because the land was not Nazul land, and that res judicata failed since the earlier writ was dismissed for non-maintainability. Earnest money forfeiture was nevertheless treated as permissible under the contract upon breach.

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Issues: (i) Whether the bidder was entitled to specific performance or refund of the earnest money on the footing that the authority had waived the original time stipulation and could not cancel the bid without fixing a fresh date for payment; (ii) Whether Rule 24 of the Delhi Development Authority (Disposal of Developed Nazul Land) Rules 1981 could justify forfeiture, and whether the plea of res judicata barred the suit.

Issue (i): Whether the bidder was entitled to specific performance or refund of the earnest money on the footing that the authority had waived the original time stipulation and could not cancel the bid without fixing a fresh date for payment?

Analysis: The auction conditions made timely payment of the balance bid amount essential, and the extension granted by the authority had expired. The later letter stating that further extension would be considered was expressly issued without prejudice and contained no commitment to grant additional time. Mere willingness to consider relaxation did not amount to a bilateral extension or a waiver of the existing contractual deadline. The authorities relied upon by the bidder were distinguished on the facts, while the principle affirmed was that, where time is of the essence, it can be altered only by mutual agreement and not by a unilateral assumption of waiver.

Conclusion: The bidder was not entitled to specific performance or refund on the basis of waiver of time, and the cancellation could not be invalidated on that ground.

Issue (ii): Whether Rule 24 of the Delhi Development Authority (Disposal of Developed Nazul Land) Rules 1981 could justify forfeiture, and whether the plea of res judicata barred the suit?

Analysis: The land was held not to be Nazul land, so the statutory rules governing Nazul land were inapplicable to support the forfeiture. The plea of res judicata also failed because the earlier writ petition had been dismissed for non-maintainability and not on merits. Even so, the appeal succeeded on the broader contractual question because forfeiture of earnest money was held permissible where the bidder was in breach of the payment obligation and the contract authorized such forfeiture, while the later resale price of the property was irrelevant to the loss assessed on the date of breach.

Conclusion: Rule 24 did not apply, and the plea of res judicata failed, but these points did not aid the bidder.

Final Conclusion: The decree in favour of the bidder was set aside, the suit was dismissed, and the authority was held entitled to retain the forfeited earnest money.

Ratio Decidendi: Where time is contractually essential, a further extension or waiver requires consensus ad idem; a without-prejudice willingness to consider relaxation does not by itself extend the contractual deadline, and earnest money may be forfeited in accordance with the contract upon breach.

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