Important pointWhere no time for performance of an agreement for sale was fixed, to adjudicate issue of limitation, Court had to find the date on which plaintiff had notice that performance was refused and on finding that date to see whether suit was filed within three years thereof.

Headnote:Specific Relief Act, 1963—Sections 16 and 20—Limitation Act, 1963—Article 54—Suit for specific performance of agreement filed on 4-4-1994—Registered agreement to sell suit property was executed on 18-12-1964—On 5-10-1968 a subsequent agreement was executed where by possession of suit property was transferred to plaintiff in pursuance of agreement for sale—Perpetual injunction was also prayed to interfere in possession—Issue of limitation was tried as preliminary issue—Trial Court held suit barred by limitation and dismissed suit—Order was upheld by 1st appellate Court and by High Court in second appeal—Appeal—No date for performance was fixed in the agreement then for limitation Court had to find out date on which plaintiff had notice that performance was refused—Question of limitation could be decided only after taking evidence—Prayer for perpetual injunction in given facts could not have been held to be not maintainable—Aspect of delay will have relevance while considering whether plaintiff would be entitled to discretionary relief of specific performance—Impugned judgment holding suit barred by limitation was liable to be set aside and matter needed to be remanded to trial Court.
       Held : We may straightaway say that the manner in which the question of limitation has been dealt with by the courts below is highly unsatisfactory. It was rightly noticed that the suit was governed by Article 54 of the Limitation Act, 1963. Then, the enquiry should have been, first, whether any time was fixed for performance in the agreement for sale, and if it was so fixed, to hold that a suit filed beyond three years of the date was barred by limitation unless any case of extension was pleaded and established. But in a case where no time for performance was fixed, the court had to find the date on which the plaintiff had notice that the performance was refused and on finding that date, to see whether the suit was filed within three years thereof. We have explained the position in the recent decision in R.K. Parvatharaj Gupta Vs. K.C. Jayadeva Reddy [2006 (2) Scale 156]. In the case on hand, there is no dispute that no date for performance is fixed in the agreement and if so, the suit could be held to be barred by limitation only on a finding that the plaintiffs had notice that the defendants were refusing performance of the agreement. In a case of that nature normally, the question of limitation could be decided only after taking evidence and recording a finding as to the date on which the plaintiff had such notice. We are not unmindful of the fact that a statement appears to have been filed on behalf of the plaintiffs that they do not want to lead any evidence. The defendants, of course, took the stand that they also did not want to lead any evidence. As we see it, the trial court should have insisted on the parties leading evidence, on this question or the court ought to have postponed the consideration of the issue of limitation along with the other issues arising in the suit, after a trial. (Para 7)
       The question as to how long a plaintiff, even if he had performed the whole of his obligations under an agreement for sale, in which a time for performance is not fixed, could keep alive his right to specific performance and to come to court after 29 years seeking to enforce the agreement, may have also to be considered by the court especially in the context of the fact that the relief of specific performance is discretionary and is governed by the relevant provisions of the Specific Relief Act. But again, these questions cannot be decided as preliminary issues and they are not questions on the basis of which the suit could be dismissed as barred by limitation. The question of limitation has to be decided only on the basis of Article 54 of the Limitation Act and when the case is not covered by the first limb of that Article, normally, the question of limitation could be dealt with only after evidence is taken and not as a preliminary issue unless, of course, it is admitted in the plaint that the plaintiffs had notice that performance was refused by the defendants and it is seen that the plaintiffs approached the court beyond three years of the date of notice. Such is not the case here. (Para 11)
       We have already indicated that the suit insofar as it relates to the prayer for a perpetual injunction restraining the defendants from interfering with the possession of the plaintiffs cannot be held to be barred by limitation. Whether the plaintiffs are able to prove that they are in possession of the suit property as on the date of suit and establish that they are entitled to the injunction prayed for, is a different matter. There is also the question whether the relief of injunction can be treated as being only a relief consequential to the relief of specific performance and the denial of one would automatically lead to the denial of the other, or whether it is an independent relief in itself and even if the plaintiffs are not entitled to a decree for specific performance they would still be entitled to a decree for injunction, a relief the grant of which is, of course, in the discretion of the court. It may be noticed that a suit for injunction would be governed by the residuary article, Article 113 of the Limitation Act and the cause of action for the said relief arises when the right to sue accrues. That would depend upon the court deciding when the right accrued, on the pleadings and the evidence in the case. Therefore, the suit insofar as it relates to the prayer for a decree for perpetual injunction cannot be held to be barred by limitation at this preliminary stage. (Para 13)

Judgement Key Points

Key Points: - The test court should determine the date on which the plaintiff had notice that performance was refused and then assess if the suit was filed within three years of that date (!) . - A suit for specific performance cannot be dismissed as barred by limitation merely on preliminary objections without taking evidence on the date of notice of refusal (!) (!) . - Prayer for perpetual injunction is a separate relief and cannot be held barred by limitation at a preliminary stage (!) . - Delay and its relevance to discretionary relief under specific Relief Act can only be assessed after evidence is taken (!) . - The suit cannot be dismissed at the preliminary stage; all issues including limitation must be decided after evidence is adduced (!) . - The appeal is allowed and the case is remanded to the trial court for a fresh trial on all issues (!) .

What is the correct procedure for determining limitations when no performance date is fixed in a contract for sale?

How to determine the commencement date for the limitation period when performance is refused in a contract for sale?

Whether a suit for specific Performance can be barred by limitation at a preliminary stage without evidence.

Judgment

P.K. Balasubramanyan, J.—Leave granted.

1. This appeal is by the plaintiffs. Their predecessor-in-interest along with another entered into an agreement dated 18.12.1964 for purchase of the plaint scheduled property. The agreement was registered. The agreement was to be performed by the predecessor-in-interest of defendants 1 to 3, the other party to the agreement, within three months of the date of getting due permission for such sale, presumably from other co-owners. On 5.10.1968, a subsequent agreement was executed. It was stated that possession was transferred to the predecessor of the plaintiffs, in pursuance of the agreement for sale. An intending purchaser from the plaintiffs issued a public notice on 7.11.1993 inviting objections, if any, to the purchase to be made by him. Defendants 1 to 3 objected. In the light of this objection dated 19.11.1993, the plaintiffs filed the suit on 4.4.1994 for specific performance of the agreement dated 18.12.1964 and for a perpetual injunction restraining the defendants from interfering with their possession of the suit property. It may be noted that defendant No.1 claims to have sold the property and the same has subsequently been purchased by defendant No.4 from that vendee.

2. It was averred in the plaint that pursuant to the agreement for sale, the predecessor-in-interest of the plaintiffs, had paid the entire consideration in terms of the agreement and he was in possession of the property. The plaint implied that there remained nothing to be performed on the part of the plaintiffs on the terms of the agreement for sale and since on 19.11.1993, the plaintiffs came to know that the defendants were refusing to perform their part of the agreement, the suit was being filed. Defendant No.1 resisted the suit. She did not admit the agreement. She put the plaintiffs to proof of the fact that the entire amount due as consideration and as per the agreement, has been paid towards the purchase price. She denied the averment to that effect in the plaint. She pleaded that she had transferred the title and possession to another and that other had sold the property to defendant No.4. The pecuniary jurisdiction of the trial court was questioned. A plea was also raised that the suit was barred by limitation. Defendant No.4, the assignee, also reiterated those contentions.

3. Two other facts to be noted are that according to the plaint, the father, predecessor of the plaintiffs, died in the year 1972 and according to defendants 1 to 3 their predecessor, the other party to the agreement, died in the year 1965.

4. The defendants sought a trial of the issue relating to jurisdiction as a preliminary issue in terms of Section 9A as introduced in Maharashtra and Order XIV Rule 2 of the Code of Civil Procedure. The trial court allowed that prayer. But before that issue was tried preliminary, the defendants pleaded that the issue of limitation also be tried as a preliminary issue. Though the plaintiffs opposed the same submitting that evidence was needed for deciding the question of limitation, the trial court acceded to the plea of the defendants to try the issue of limitation also as a preliminary issue. It is seen that both the parties informed the trial court by filing statements in writing in that behalf, that they do not want to lead any evidence on the issues to be tried as preliminary issues. The court therefore proceeded to decide those issues on the pleadings and the documents filed.

5. The trial court held that it had jurisdiction to entertain the suit. In fact, that aspect was not projected before us and, therefore, it is not necessary to refer to that aspect any further. The trial court held that the suit for specific performance of the agreement dated 18.12.1964, filed only on 4.4.1994, more than 29 years after the agreement, was barred by limitation. It, therefore, dismissed the suit on the ground of limitation. The plaintiffs filed an appeal before the lower appellate court. That court, a

Click Here to Read the rest of this document