Failure to fulfil conditions precedent does not automatically terminate a contract.

The dispute arose from a Development Rights Agreement dated 12 October 2010, under which the developer paid ₹3.50 crore to the landowners, subject to fulfilment of conditions precedent by the Closing Date of 15 November 2010.

The conditions were not fulfilled. The developer sought performance or refund, with interest and damages; the landowners contended that the agreement had been superseded and that the claim was time-barred.

The arbitrator held the claim time-barred because the cause of action arose in 2010 and no extension or continuing negotiations had been established.

In its Section 34 petition, the developer relied, among other things, on payment completed in 2013, an email from 2017, agreements to sell executed in 2018 and 2020, and a payment received in connection with one transaction.

1. Whether the arbitrator’s conclusion that the refund claim became time-barred on 15 November 2010 was sustainable on the material before the tribunal

2. Whether the arbitrator failed to consider documentary evidence relevant to accrual of the cause of action and the continued subsistence of the contractual relationship

Section 34 of the Arbitration and Conciliation Act, 1996 provides a limited basis for setting aside an arbitral award; the court does not ordinarily reappreciate evidence as an appellate court.

Under Section 55 of the Indian Contract Act, 1872, failure to perform by a stipulated date may render a contract voidable at the promisee’s option rather than automatically terminate it.

Section 63 of the Contract Act permits a promisee to extend time, and Kailash Nath Associates v. DDA, (2015) 4 SCC 136, recognises that an extension may, depending on the contract, be established through conduct or forbearance and need not necessarily be in writing.

Clause 5.2 gave the developer a right to terminate if the conditions precedent were not fulfilled; it did not provide for automatic termination on the Closing Date.

Likewise, Clause 5.1 did not expressly require an extension to be in writing, although the developer still had to prove that it exercised its discretion to extend time.

The later documents relied on by the developer were capable of bearing on whether the parties continued to treat the agreement as subsisting, and therefore could not be dismissed as mere post-expiry reminders or treated as irrelevant to limitation.

The Court did not determine when the cause of action accrued; it held only that the award’s conclusion could not stand insofar as it treated 15 November 2010 as an automatic and conclusive accrual date without adequate consideration of the relevant material.

The award was set aside only insofar as it rejected Claim No. 2—the claim for refund of ₹3.50 crore—solely on the basis that the cause of action necessarily accrued on 15 November 2010 without adequate consideration of the subsequent documentary material.

The issue was restored for fresh adjudication, including determination of the legal effect of the Closing Date under the agreement; there was no order as to costs.