SUPREME COURT OBSERVES THAT THE LIMITATION PERIOD FOR FILING SUIT FOR SPECIFIC PERFORMANCE IS THREE YEARS FROM THE DATE FIXED FOR PERFORMANCE OR FROM THE DATE WHEN THE PARTY HAD NOTICE OF REFUSAL OF PERFORMANCE BY THE OTHER PARTY

A two Judge Bench of the Supreme Court comprising of Justice Sanjiv Khanna and Justice Bela M. Trivedi passed a Judgment dated 12.09.2023, in A. Valliammai v. K.P. Murali And Others, Civil Appeal No. 5342 of 2023, and observed that the limitation period for filing a suit for specific performance is three years under the Limitation Act 1963, which may be computed from the date fixed for performance or from the date when the party had notice of the refusal of such performance by the other party.

Facts

(i) In the present case, one, A. Valliammai, the Appellant herein inherited 11 acres of land situated at the west end of Survey Numbers 55/2B1 and 55/2B2 in 58, Agaram Village, Tiruverambur sub-District, Trichi district, Madras (Suit Property), from her Husband, late Ayyamperumal Konar (Deceased), as his second wife.

(ii) The Appellant had entered into an Agreement to Sell dated 26.05.1988, with one, K. Sriram, (Land Purchaser) for the sale of the Suit Property at the rate of Rs. 2,95,000/- per acre. K. Sriram made an advance payment to the Appellant of Rs. 1,00,000/- and the deadline for payment of remaining sale consideration of Rs. 31,45,000/- was fixed for one year later i.e. on or before 26.05.1989. But by Endorsement dated 26.05.1989, the deadline for paying the remaining sale consideration and signing the sale deed was extended by six months, or until 26.11.1989.

(ii) The following 2 Important Clauses of the Agreement to Sell dated 26.05.1988 have been reproduced below:

(a) “The under mentioned 4.40 acres in survey number 55/2B 1 which is in my name which is located in the sale property east to west shift to the east end, north to south in favour of Ayyarmalai trust and after shifting it pass through survey numbers 55/2B 1 and 2B 2 and then sell the properties to you so the 11 acres properties which I sell to you shift to the west end into the above two survey numbers and ensure that the lone properties which I sell to you would come within the limit.”

(b) “I assure that there is encumbrance or dispute over the under described property except the original suit number 737/85 in the sub court. If any encumbrance or dispute is found later on, I assure that I will settle those encumbrances and disputes at my responsibility.”

(iii) Prior to the Agreement to Sell, a Partition Suit in S. No. 787 of 1985, (Partition Suit) was pending in Tiruchi Sub Court, which was filed by one, Rajamani Ammal, first wife of the Deceased. However, the Partition Suit was dismissed for default vide Order dated 04.07.1991.

(iv) Thereafter, the Appellant had demanded Rs. 3,00,000/- on 14.04.1991 as a part of the sale consideration payable by the Land Purchaser.

(v) Upon the Appellant’s demand, the Land Purchaser offered Rs. 3,00,000/- on 07.07.1991. The Appellant turned down the said offer and additionally, indicated that she was willing to sell only half of the Suit Property, and that also for an increased price of Rs. 4,17,000/- per acre.

(vi) Thereafter, the Land Purchaser had issued a Legal Notice dated 11.07.1991 through his advocate, to the Appellant to accept the balance sale consideration and execute the sale deed within one month from the date of the Notice.

(vii) The Appellant sent a Reply dated 09.08.1991 through her Advocate, and denied having requested payment of Rs. 3,00,000/-. In contrast, she claimed that the Land Purchaser was unable to fulfill and abide by the Agreement to Sell within the deadline. Further, the allegations made by the Land Purchaser were cooked up to postpone the execution of the sale deed.

(viii) Thereafter, the Land Purchaser responded to the Reply Notice, vide Rejoinder dated 31.08.1991, stating that the allegations made by the Appellant were incorrect and that she wanted to extricate herself from the Agreement to Sell. In fact, the Land Purchaser was always ready and willing to perform his obligations under the Agreement to Sell, by calling the Appellant to execute the sale deed within 2 weeks of the Notice.

(ix) That the Appellant responded vide Rejoinder Reply dated 16.09.1991, in which she denied that a sale deed could be executed and specifically enforced and declared herself to be illiterate. Despite being brought to the Revenue Office, she was uninformed of the details of the alleged statement that she had made.

(x) The Land Purchaser in order to prevent the Appellant from handling the Suit Property until she completes the Sale Deed, filed a lawsuit seeking a permanent injunction before the Trial Court in O.S. No. 1508 of 1991 (Injunction Suit) on 15.07.1991. It was asserted that the Appellant was negotiating with third parties regarding the sale of the Suit Property.

(xi) The Appellant contested the Suit filed by the Land Purchaser, and in her written statement, she had alleged that the Purchaser was never ready and willing to perform the Agreement to Sell. The Land Purchaser had therefore filed a suit for injunction instead of a suit of specific performance. She had claimed that time was essence of the contract and that the Appellant had consented for extension of time till 26.11.1989, but the Land Purchaser had not paid the balance sale consideration before the due date. Hence, the Suit Property had been leased out to one A. Gopalakrishnan, who was in possession and was cultivating the land.

(xii) In the aforesaid Suit for Injunction, the Ld. Trial Court passed an Interim Order in favour of the Land Purchaser. However, on 23.12.1992, the Injunction Suit was dismissed as not pressed.

(xiii) The Land Purchaser later assigned his rights under the Agreement to Sell in favour of K.P. Murali, and S.P. Duraisamy (Respondents), vide Assignment Agreement dated 23.12.1992.

(ix) The Respondents herein filed a Suit for Permanent Injunction in S. No. 1651 of 1994 (Injunction Suit 2) with a prayer to restrain the Appellant from dealing with the Suit Property.

(x) Meanwhile, the Appellant on 02.05.1995, sold 5 acres, i.e. a portion of the Suit Property, for a sale consideration of Rs.7,50,000/- to B. Namichand Jain and three others. The purchasers were put in possession and enjoyment of such portions of the Suit Property.

(xi) The Respondents herein on 27.09.1995, during pendency of the Injunction Suit 2, filed a Suit for Specific Performance bearing S. No. 1126 of 1995 (Specific Performance Suit), before the Ld. Court of the Additional District and Sessions Judge, Fast Track Court No.1, Tiruchirapalli, (Fast Track Court) subsequently renumbered as O.S. No. 21 of 2004.

(xii) The Appellant defended the Specific Performance Suit on several grounds including, inter alia, constructive res judicata, bar under Order II Rule 2 of the Code of Civil Procedure, 1908 (Suit to include the whole claim), bar of limitation, failure to show readiness and willingness to perform the Agreement to Sell and invalidity of the Assignment Agreement dated 23.12.1992 executed by Land Purchaser.

(xiii) Thereafter the Ld. Fast Track Court passed an Order dated 28.12.2006 in S. No. 21 of 2004 in favour of the Respondent herein and directed him to execute the Sale Deed.

(xiv) Aggrieved by the Ld. Fast Track Court Order dated 28.12.2006, the Appellant filed an Appeal in (MD) No.63 of 2007 before the Madras High Court Bench at Madurai (High Court) seeking setting aside of Ld. Fast Track Court Order dated 28.12.2006.

(xv) The High Court dismissed the Appeal filed by the Appellant vide Order dated 20.12.2016 by upholding the Ld. Fast Track Court Order dated 28.12.2006.

Supreme Court Analysis

Aggrieved by the High Court Order dated 20.12.2016, the Appellant filed Civil Appeal No. 5342 of 2023 before the Supreme Court.

(1) The Bench observed that Article 54 of Part II of the Schedule to the Limitation Act, 1963 stipulates the limitation period for filing a suit for specific performance as three years from the date fixed for performance, and in alternative when no date is fixed, three years from the date when the plaintiff has notice that performance has been refused.

(2) That Section 9 of the Limitation Act, 1963 (Continuous running of time) stipulates that once the limitation period has commenced, it continues to run, irrespective of any subsequent disability or inability to institute a suit or make an application.

(3) That the Suit for Permanent Injunction dated 15.07.1991 filed by the Land Purchaser made specific averments in the Plaint that the Appellant was making excuses and was going back on the terms previously agreed, and negotiating with third parties for sale of the Suit Property.

(4) That the Respondents herein were aware of the refusal and thus the cause of action had arisen forcing them to approach the Court with a prayer for injunction against the Appellant-Seller.

(5) The Apex Court in Brahmanand and Ors. v. K.R. Mutugopal (2005) 12 SCC 764 held that in respect of extension of time, it need not be in writing and can be proved by oral evidence.

(6) That the submission stating that the Agreement to Sell was to be specifically performed only after disposal of the Partition Suit in S. No. 787 of 1985 is misconceived and wrong. The Apex Court held that the relevant clause of the Agreement to Sell does not state that the sale deed was to be executed only after disposal of the Partition Suit.

(7) The 3-year limitation period to file a Suit for Specific Performance by the Respondent commenced as early as when the Land Purchaser had filed Suit for Injunction on 15.07.1991. The Appellant’s Reply dated 09.08.1991 or Reply to Rejoinder dated 16.09.1991 were again sufficient written notice to the Land Purchaser of her refusal and unwillingness to perform the Agreement to Sell. But the Suit for Specific Performance was filed on 27.09.1995, which is beyond the 3-year limitation period. Hence, the Suit for Specific Performance filed by the Respondent before the Ld. Fast Track Court in S. No. 21 of 2004 is barred by limitation.

(8) However, during the course of hearing, the Parties had tried to negotiate a settlement but it had not frucified. But the Appellant had agreed to pay Rs. 50,00,000/- (Rupees Fifty Lakhs Only) to the Respondents on the ground that the Land Purchaser had spent money in obtaining approval of layout plans.

Conclusion

Thus, based on the aforesaid observations and laws, the Supreme Court held that by exercise of power under Article 142 of the Constitution of India, to do substantial justice, the Bench directed the Appellant to pay Rs.50,00,000/- (Rupees Fifty Lakhs Only) to the Respondents, K.P. Murali and S.P. Duraisamy within 6 months and if she fails, interest @ 8% per annum on Rs. 50,00,000/- would be payable from the date of the judgment till the date on which the payment is actually made. As a result, the Appeal filed by the Respondents were allowed and the High Court Order dated 20.12.2016 upholding the Ld. Fast Track Court Order dated 28.12.2006 were both set aside.

Suneel Kumar Jaiswal

Associate

The Indian Lawyer