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2025 Supreme(Online)(Guj) 5755
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Biren Vaishnav, Nisha M. Thakore, JJ
Shrinath Co Operative Housing Society Ltd. – Appellant
Versus
Legal Heirs of Deceased Mathurji Jesangji Thakor – Respondent
R/FIRST APPEAL NO. 690 of 2017 | CIVIL APPLICATION (FOR INTERIM RELIEF) NO. 2 of 2017 In R/FIRST APPEAL NO. 690 of 2017
For the Appellants/Petitioners: Salil Thakore, Nisarg N Trivedi
For the Respondents: Khushi P Jadav, Viral K Shah
Headnote:
(A) Code of Civil Procedure, 1908 - Order VII Rule 11 (a) and (d) - Rejection of plaint - Scope of power - Courts must assume the averments in the plaint to be true and find out whether they disclose a cause of action or a triable issue - The stand of the defendant in the written statement or in the application for rejection is irrelevant - The plaint must be construed as it stands, without addition or subtraction of words. (Paras 6.1, 20.1, 20.2)
(B) Limitation Act, 1963 - Article 54 - Suit for specific performance - Period of limitation is three years from the date fixed for performance, or, if no such date is fixed, when the plaintiff has notice that performance is refused - Where time was fixed for performance, the suit filed beyond three years from that date is barred by limitation - A subsequent event of execution of a sale deed cannot extend the period of limitation which had already expired - The question of limitation in such cases is normally a mixed question of facts and law. (Paras 6.2.3, 22.1, 22.2, 22.5)
(C) Limitation Act, 1963 - Article 58 - Suit for cancellation of sale deed - Period of limitation is three years from the date when the right to sue first accrues - A suit filed within one year of the execution of the sale deed is within the prescribed period of limitation. (Para 22.10)
(D) Transfer of Property Act, 1882 - Section 53A - Part performance - The defence of part performance is available to a prospective purchaser in possession to protect his possession, even if the suit for specific performance is barred by limitation - The provision can be used as a shield, not as a sword - It can be used by a plaintiff to enforce the bar against a transferor seeking to disturb his possession - The prerequisite conditions for invoking Section 53A include a written contract signed by the transferor, the transferee taking possession in part performance, and the transferee doing some act in furtherance of the contract and being willing to perform his part. (Paras 23.1, 23.2, 24.2)
(E) Gujarat Cooperative Societies Act, 1961 - Section 37 - Capacity to contract - A cooperative society becomes a legal person only after its registration - It is only after registration that it acquires the authority to enter into contracts, acquire, hold, and dispose of property - An agreement entered into by a non-existent (unregistered) society is a nullity and does not confer any right, title, or interest - Such an agreement is not a valid contract enforceable in law. (Paras 26.3, 27.7, 27.9)
(F) Indian Contract Act, 1872 - Sections 2(e), 2(g), 11 - Competency to contract and void agreements - For an agreement to be a valid contract, parties must be competent to contract - An agreement not enforceable by law is void - An agreement with an unregistered society, which lacks the capacity to contract under its specific statute, is a nullity. (Paras 26.1, 26.2)
(G) Specific Relief Act, 1963 - Sections 11, 14, 16 - Specific performance of a contract is confined to a valid and enforceable contract - A contract which is a nullity for want of capacity cannot be specifically enforced. (Para 27.9)
(H) Gujarat Tenancy and Agricultural Lands Act, 1948 - Sections 43 and 63 - Transfer of new tenure agricultural land - An agreement to sell executed prior to the amendment inserting these bars is not hit by the said provisions, and necessary permissions were granted subsequently. (Paras 8.1, 25.1)
Facts of the case:
The appellants (original plaintiffs) filed a suit for specific performance of an agreement to sell an agricultural land, executed in 1974, and for cancellation of a subsequent registered sale deed from 2010. The defendant no. 3-10 filed an application under Order VII Rule 11 of the CPC to reject the plaint, arguing it was barred by limitation and that the agreement was void as it was entered into by a proposed (unregistered) cooperative society and violated the Tenancy Act. The trial court allowed the application, rejecting the plaint. The plaintiffs appealed.
Findings of Court:
The High Court upheld the rejection of the plaint to the extent of the suit for specific performance. It found that the suit for specific performance was barred by limitation under Article 54, as time was fixed for performance and the suit was filed well beyond three years from that date. However, the court noted that the suit could be maintained for the other reliefs (cancellation of sale deed and injunction) as they were not barred by limitation. The court also held that the agreement to sell was a nullity because the appellant-plaintiff society was not registered under the Gujarat Cooperative Societies Act at the time of the agreement, and thus lacked the legal capacity to enter into a contract.
Issues:
The main issues were whether the plaint was liable to be rejected under Order VII Rule 11 CPC on the grounds of (i) being barred by limitation under Article 54 of the Limitation Act, and (ii) being based on an agreement that is a nullity due to the unregistered status of the plaintiff society.
Ratio Decidendi:
The Court reasoned that a cooperative society under the Gujarat Cooperative Societies Act becomes a legal person only upon registration and cannot enter into a contract before that. An agreement with such an unregistered body is a nullity and cannot be enforced. Furthermore, the suit for specific performance of the agreement was filed beyond the period of three years from the date fixed for performance, as per Article 54 of the Limitation Act, and was therefore barred. The appeal was dismissed, but the court clarified that the plaint is not liable to be rejected in its entirety on the ground of limitation alone, as the reliefs for cancellation of the sale deed and injunction may still be maintainable.
Result: Appeal dismissed. The impugned order rejecting the plaint for the suit for specific performance was upheld. The connected Civil Application also stands dismissed. (Para 28)
| Table of Content |
|---|
| 1. factual background and plaint allegations (Para 1 , 2 , 3 , 4 , 19) |
| 2. appellant's arguments on appeal (Para 5 , 6 , 7 , 8 , 9 , 10) |
| 3. respondents' arguments in opposition (Para 11 , 12 , 13 , 14 , 15 , 16 , 17) |
| 4. court's analysis and reasoning on issues (Para 18 , 20 , 21 , 22 , 23 , 24 , 25 , 26) |
| 5. final decision and order of the court (Para 28) |
CAV JUDGMENT
(PER : HONOURABLE MS. JUSTICE NISHA M. THAKORE)
| Approved for Reporting | Yes | No |
1. The appellants- original plaintiffs have preferred present appeal under Section 96 of the Code of Civil Procedure, 1908 (hereinafter referred to as the “Code”) being aggrieved and dissatisfied with the impugned judgment and order dated 17.11.2016 passed below Exh.13 in Special Civil Suit No.923 of 2011 by the learned 4th Additional Senior Civil Judge, Ahmedabad (Rural), Ahmedabad. By the said impugned order, the learned Judge has allowed the aforesaid application preferred by the original defendant nos. 3 to 10 under Order VII Rule 11 of the Code leading to rejection of the plaint and consequently dismissal of the suit.
2. The case of the appellants – original plaintiffs as pleaded in the plaint is summarized as under:
2.1. The dispute pertains to an agricultural land bearing survey Block No.63 old revenue survey no.68 admeasuring 2 acres 26 gunthas of mouje Jagatpur, Tauka : Dascroi, District : Ahmedabad (hereinafter referred to as the “suit land”). The aforesaid land was a new tenure land subject to restriction imposed under Section 43 of the Gujarat Tenancy and Agricultural Land Act, 1948 (hereinafter referred to as the “Tenancy Act, 1948”).
2.2. The suit land was originally owned by the forefathers of the defendant nos. 1.A to 1.E and 2.A to 2.E. On 09.08.1974 a notarized agreement to sell was executed by them in favour of proposed society viz. Shrinath Cooperative Housing Society Limited. The aforesaid agreement to sell was executed by the respondent nos. 1 and 2 in their individual capacity as well as Karta of the respective Hindu undivided family. The terms and conditions set out in the said agreement to sell as translated in English and relevant for the adjudication of the dispute raised are reproduced herein under:
"(1) That the vendors have decided to sell the said land at a price which may be arrived at by calculating it at the rate of Rs. 4,000/- per Bigha of 23 Gunthas.
(2). That out of the said sale consideration, the vendors have accepted an amount of Rs. 1,851/- towards earnest money and a further amount of Rs. 7,150/- towards sale consideration, aggregating to Rs. 9,001/- on the date of execution of the said agreement in cash.
(3). That vacant and physical possession of the said land has been handed over by the vendors to the purchaser on the date of execution of the said agreement.
(4). That the said new tenure land was required to be got converted into old tenure by the vendors.
(5). That the permission to sell the said land was required to be obtained by the vendors; and the title to the said land was required to be got made clear and marketable by the vendors.
(6). That the term of the said agreement was decided to be of 12 months from the date the title to the said land was made clear and marketable after the land was converted into old tenure and the permission to sell was received."
2.3. It is the case of the plaintiffs that the aforesaid sellers were under obligation to obtain relevant permission from the competent authority, however since the formalities could not be completed for a period of about four years from the date of execution of the said agreement to sell, an irrevocable general power of attorney was also executed by them before the Executive Magistrate in favour of one Natvarlal Umiyashankar Dave on 29.1.1976, who had in turn executed a power of attorney in favour of one Harish Ramanlal Trivedi on 3.2.2003 which was notarized on the same day. The appellant society had instructed their advocates to investigate into title of the suit land
