Agreement for sale does not create charge on property; specific performance suit barred by limitation extinguishes refund claim absent statutory charge.

(Judgment of the Court was delivered by C.V.Karthikeyan J.)

The plaintiff in O.S.No.34 of 2010 on the file of the Additional District Court / Fast Track Court – II, Cuddalore is the appellant herein. They had instituted a Suit seeking specific performance of an agreement dated 12.09.1997 entered into with the respondents herein.

2.The 1^st and 2^nd respondents are sisters and the 3^rd and 4^th respondents are legal representatives of yet another sister. All the three sisters were holding totally 99 acres of land. They had entered into an agreement of sale with the appellant herein on 12.09.1997. At the time of the agreement of sale, an advance of Rs.12,50,000/- had been paid. This would indicate that the share of each one of the three sisters would be around Rs.4,16,000/-.

3.It is contended on behalf of the appellant herein that the 3^rd and 4^th respondents had sold their undivided share of the land to the appellant under Ex.A7. It had also been stated that the 2^nd respondent had also sold her share of the land to the appellant. The share of the 1^st respondent alone is now under question.

4.It is contended that though the agreement was dated 12.09.1997, there was a supplemental agreement dated 20.02.2001 which is disputed by the learned Senior Counsel on behalf of the respondents, which had not been signed by the respondents herein and therefore would not bind the respondents. The suit notice was issued on 18.06.2007 and the suit was filed on 03.03.2010.

Holding that the suit was barred by limitation, the suit came to be dismissed.

5.The learned counsel for the appellant placed an alternate argument that the relief of refund of advance amount paid would not extinguish and therefore, sought a direction that the said amount to be paid and that the appellant may be permitted to file necessary application to seek refund of the advance amount.

6.In this connection, the learned counsel placed reliance on Section 55(6)

(b) of the Transfer of Property Act, 1882 which is as follows: 55(6)(b). Unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him to the extent of the seller's interest in the property, for the amount of any purchase- money properly paid by the buyer in anticipation of the delivery and for interest on such amount; and, when he properly declines to accept the delivery, also for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission.

An omission to make such disclosures as are mentioned in this section, paragraph (1), clause (a), and paragraph (5), clause (a), is fraudulent.

7.He therefore contended that a charge could be created on the property for refund of the advance amount.

8.The learned Senior Counsel for the respondents pointed out that no specific relief was sought in the plaint seeking refund of the advance amount paid and stated that seeking such a relief after nearly two decades would be unfair and would affect the rights of the respondents herein.

9.We also had the benefit of hearing Mr.P.Valliappan, learned Senior Counsel, who came forward to assist the Court on this issue. The learned Senior Counsel pointed out Section 54 of the Transfer of Property Act, 1882, particularly, relating to Contract of Sale, which is as follows:

54.“Sale” defined.—

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Contract for sale.—A contract for the sale of immoveable property is a contract that a sale of such property shall take place on terms settled between the parties.

It does not, of itself, create any inte