While authoring the judgment for the bench of Justice BR Gavai and CT Ravikumar the former held that time limit specified in the agreement cananot be ignored altogether by the court while exercising discretion to grant decree of specific performance. The Court held that the court should bear in mind that while exercising discretion, when the parties prescribe certain limit(s) for taking steps by one to the other party, it must have some significance and the said time limit(s) cannot be ignored altogether on the ground that time is not the essence of the contract."

The Supreme Court considered the judgment of K.S. Vidyanadam and Others v. Vairavan reported in  (1997) 3 SCC 1 and held that "this Court has held that the court should look at all the relevant circumstances including the time limit(s) specified in the agreement and determine whether its discretion to grant specific performance should be exercised."

Discussing the facts of the case, the Supreme Court observed that "The defendant is the owner of the suit property. The defendant executed an agreement of sale in favour of the plaintiff for sale of the suit property. The total consideration was fixed at Rs.45,315/-. The plaintiff paid an amount of Rs.15,000/- by way of Demand Draft dated 7th July 1978 as advance payment. The defendant addressed a letter to the plaintiff on 13th October 1978 stating therein that, she was ready to execute the sale deed and that she was coming to Hyderabad the week thereafter for the said purpose. The said communication was responded to by the plaintiff on 20th October 1978, requesting to confirm whether the necessary permission from the Competent Authority (hereinafter referred to as the “ULC Authorities”) under the Urban Land (Ceiling and Regulation) Act, 1976 (for short “ULC Act”) to sell the suit property had been obtained or not. Immediately thereafter, the plaintiff purchased stamp papers on 23rd October 1978. On 8th December 1978, the defendant applied to the Secretary to Government of Andhra Pradesh, Revenue Department for granting exemption under Section 20 of the ULC Act for selling the suit property. Another communication was addressed by the plaintiff on 30th December 1978, requesting the defendant to inform him as soon as the requisite permission under the ULC Act has been obtained. On 3rd March 1980, the defendant addressed a communication to the plaintiff stating therein that the concerned official had promised her to do the needful."

"The defendant, on 2nd June 1982 addressed a letter to the plaintiff, stating therein that, she was forfeiting the advance payment of Rs.15,000/- since the plaintiff had not claimed the refund within 90 days from the date of the agreement of sale." 

While dismissing the petition Supreme Court modified the judgment in the terms that "However, taking into consideration the facts and circumstances and an undisputed position that the defendant had, in fact, received an amount of Rs.15,000/- as early as 1978, we direct the respondents-defendants to pay an amount of Rs.15,00,000/-to the appellants-plaintiffs."