2006 Supreme(SC) 495

2006(4) Supreme 705
SUPREME COURT OF INDIA
(From Calcutta High Court)
S.B. Sinha & P.P. Naolekar, JJ.
Panchanan Dhara & Ors.—Appellants
versus
Monmatha Nath Maity (dead) thr. L.Rs. & Anr.—Respondents
Civil Appeal No. 5187 of 2001
Decided on 12-5-2006
Counsel for the Parties :
For the Appellants : Santosh Mishra and S.B. Upadhyay, Advocates.
For the Respondents : Gourab Banerji, Sr. Advocate, T. Memo Singh, Joydeep Mazumdar, Saurav Agrawal and Prashant Kumar, Advocates.

IMPORTANT POINT
In a given situation, the vendor may not be permitted to take advantage of his wrong in not taking steps for complying the statutory provisions and then to raise a plea of limitation in filing of suit for specific performance.

Headnote:(i) Limitation Act, 1964—Article 54 —Suit for specific performance—Period of limitation for filing of—Commencement of period from the date fixed for the performance of the contract—In suit for specific performance of contract in respect of any immovable property, time would ordinarily not be the essence of the contract—Respondent company intending to sell its property entered into an agreement for sale, wherefor a sum of Rs. 6000/- was paid to the Company by way of advance—Balance amount was to be paid within a period of fourteen months—As title of company in the said property was not clear, the company instituted a suit against some persons who were claiming title thereover—Consent decree passed in that suit on 3-5-1979—Company had all along been assuring respondent 1 that it would execute and register a sale deed in his favour—However, on 21-8-1985, the company refused to execute and register sale deed in favour of respondent 1 on plea that the same became barred by limitation—Suit for specific performance of agreement for sale dated 18-4-1971 filed in year 1985—Whether barred by limitation—(No)—Period for execution of sale deed had been extended.

       Held : A bare perusal of Article 54 of the Limitation Act would show that the period of limitation begins to run from the date on which the contract was to be specifically performed. In terms of Article 54 of the Limitation Act, the period prescribed therein shall begin from the date fixed for the performance of the contract. The contract is to be performed by both the parties to the agreement. In this case, the First Respondent was to offer the balance amount to the Company, which would be subject to its showing that it had a perfect title over the property. We have noticed hereinbefore that the courts below arrived at a finding of fact that the period of performance of the agreement has been extended. Extension of contract is not necessarily to be inferred from written document. It could be implied also. The conduct of the parties in this behalf is relevant. Once a finding of fact has been arrived at, that the time for performance of the said contract had been extended by the parties, the time to file a suit shall be deemed to start running only when the plaintiff had notice that performance had been refused. Performance of the said contract was refused by the Company only on 21.8.1985. The suit was filed soon thereafter. The submission of Mr. Mishra that the time fixed for completion of the transaction was determinable with reference to the event of perfection of title of the Second Respondent cannot be accepted. The said plea had never been raised before the courts below. Had such a plea been raised, an appropriate issue could have been framed. The parties could have adduced evidence thereupon. Such a plea for the first time before this Court cannot be allowed to be raised. Even otherwise on a bare perusal of the agreement for sale dated 18.4.1971, it does not appear that it was intended by the parties that the limitation would being to run from the date of perfection of title.(Para 22)

       Performance of a contract may be dependent upon several factors including grant of permission by the statutory authority in appropriate cases. If a certain statutory formality is required to be complied with or permission is required to be obtained, a deed of sale cannot be registered till the said requirements are complied with. In a given situation, the vendor may not be permitted to take advantage of his own wrong in not taking steps for complying the statutory provisions and then to raise a plea of limitation.(Para 27)

       In view of the aforementioned pronouncements of this Court, we are of the opinion that the plea raised by the learned counsel for the Appellant that the suit was barred by limitation cannot be accepted as all the courts have arrived at a finding of fact that the period for execution of the deed of sale had been extended.(Para 31)

       (ii) Companies Act, 1956—Sections 46 and 48—Mode of signing contract on behalf of the company—An oral agreement for sale is permissible in law—Agreement for sale of property of company entered into by three directors of the company, executed in the name of the company—Subsequent communication revealed that all the directors were aware of the said agreement—Absence of resolution—Contract would not have been held to be invalid or illegal.

       Held : Section 46 merely lays down the mode of signing contract on behalf of the company. Once a deed is executed on behalf of the company, it is company and not the persons signing can sue or be sued on the contract if the evidence is clear that the signature was only that of the company.(Para 34)

       An oral agreement for sale is permissible in law. There is furthermore no dispute that the agreement for sale was entered into by three directors of the company. The subsequent letters written on behalf of the Company clearly demonstrate that all the directors were aware of the said agreement. The company before the Trial Court never chose to file any written statement or dispute the contentions raised in the plaint. The Company, thus, never denied or disputed the correctness or otherwise of the contents of the said agreement. The Company never denied or disputed the terms of the agreement nor raised any plea that the agreement was not binding on the company or the same was illegal. In fact in the deeds executed in favour of the agreement, it had clearly been stated that the suit for specific performance of contract filed by Respondent No. 1 was pending.(Para 35)

       It is not in dispute that the contract was executed in the name of the company. It has furthermore not disputed that all the five directors executed the agreement. The company was a private limited company.(Para 37)

       Before the courts below, execution of the agreement was not denied. Thus, even in the absence of resolution the contract could not have been held to be invalid or illegal.(Para 38)

       So far as the question of putting up of the seal of the Company is concerned, it is a relic of the days when mediaeval barons, who could not read or write, used their rings to make a characteristic impress. Even in absence of a seal, the Company may still be held to be liable having regard to the nature of transaction and the authority of those who had executed it. If the act of the Directors is not ultra vires or no public policy is involved, the parties acting thereupon cannot be left at large. (Para 39)