Sunday, 21 June 2015

When suit for specific performance of contract is barred by limitation?



 A single Bench of this Court in the case of Maharudrappa v. Mahadevappa, MANU/KA/1184/2014: ((2014 (5) KCCR 578): 2013 (3) Kar.L.J. 684) has dealt with Article 54 of the Limitation Act. In paragraph 12 of the said decision, it is held that normally time is not the essence of the contract in respect of immovable properties, and it is clarified that the same does not give leverage to file a suit at any time. Paragraph 12 is relevant and is reproduced below:
'12. It is true that time is not essence of the contract in respect of immovable properties, but that does not give a leverage to the plaintiff to file a suit at any time he thinks it proper. Admittedly, the agreement of sale is dated 25.8.1986. The defendant is illiterate and specifically denied the genuineness of the said agreement. Though no time is fixed in the agreement of sale for executing regular sale deed, it does not mean that the plaintiff can sleep over his right and issue a notice and therefore contend that the suit was maintainable as it was filed within three years from the date of receipt of the notice or the date of reply given by the defendant.'
Admittedly no notice was got issued by the plaintiff before filing of the suit. Since the plaintiff has contended the (sic) defendant has chosen to file a suit for declaration of title and injunction in respect of the same property against him, it was virtually a not (sic) issued against him, and he should have filed the suit for seeking the reded (sic) specific performance. He kept quiet without enforcing his right though R.A. 13/04 was disposed of on 22.9.2005. But he chose to file the suit in the year 2008, i.e. on 28.6.2008.
8. What is argued by the learned Counsel for the appellant is that the suit was filed within 3 years from the date of disposed (sic disposal) of M.A. 13/04 and therefore it is in time. This Court is unable to accept the same. A Bench of three Judges in the case of Ahmadsahab Abdul Mulla (Dead by Proposed LRs) v. Bibijan and Others MANU/SC/0533/2009 : ([2009] 5 SCC 462) has discussed the provision of Section 54 of the Limitation Act at length. What is held in the said decision is that 'the expression 'date fixed for performance' is crystalized notion. When a date is fixed, it means there is a definite date fixed for doing a particular act. Even in the second part, the stress is on 'when the plaintiff has notice that performance is refused.' According to the Hon'ble Apex Court, there is a definite point of time when the plaintiff notices refusal, and in that sense both parts refer to definite dates and hence there is no question of finding out an intention from other circumstances.'

IN THE HIGH COURT OF KARNATAKA
KALABURGI BENCH
DATED THIS THE 17TH DAY OF DECEMBER, 2014
BEFORE
THE HON’BLE MR. JUSTICE A.V.CHANDRASHEKARA
RFA.NO.6007/2012
BETWEEN
M/S UNIVERSAL ASSOCIATES DEVELOPERS
& PROMOTERS, SUPER MARKET, GULBARGA

Vs
SHRI. BHUPAT
S/O. RATILAL CHOUDA,

Citation;AIR 2015(NOC)681 KAR,2015(2) AKR 197, 2015(1)KCCR836


Unsuccessful plaintiff of an original suit in 92/08
which was pending on the file of II Additional Senior Civil
Judge at Gulbarga, has challenged the judgment and
decree passed therein dated 12.12.2011.
2.
The suit filed by the appellant-plaintiff before the
trial court for specific performance of the contract has
been dismissed after contest mainly on the ground of
limitation.
Therefore
this
appeal
has
been
filed
challenging the same on various grounds as set out in
3
the appeal memo.
Respondent herein is the sole
defendant I the said suit. Parties will be referred to as
plaintiff and defendant as per their ranking beforeo the
trial court.
3.
The facts leading to the filing of O.S.92/08 are as
follows:
a) The defendant was the absolute owner of the suit
schedule property bearing No.16 measuring 125 feet x
100mfeet situate at Jail Garden, Supermarket area,
Gulbarga. He had entered into an agreement of sale with
the plaintiff on 11.5.1989 agreeing to sell the same for a
total consideration of Rs.13,50,000/- and received a sum
of Rs.1,00,000/- by demand draft on 2.3.1989 drawn on
State
Bank
of
Hyderabad,
Supermarket
Branch,
Gulbarga, and another Rs.12,00,000/- through demand
draft. Only Rs.50,000/- was due to the defendant which
was sent by the plaintiff. But defendant refused to receive
the same.
Plaintiff’s further case is that he was ever
4
ready and willing to perform ohis part of the contract and
requested the defendant to receive the same.
b) Instead of receiving the same, the defendant
chose to file a suit in O.S.248/98 for declaration of title
and permanent injunction before the Civil Judge (Junior
Divn.), Gulbarga.
But the plaint was returned under
Order VII Rule 10, C.P.C. for re-presenting the same
before the proper court.
Being aggrieved by the said
order, defendant (who was plaintiff in O.S.248/98) filed
M.A.13/04 before the III Additional Civil Judge (Senior
Divn.), Gulbarga.
The said appeal came to be dismissed
upholding the order of rejection of plaint for re-
presenting the same before the appropriate court.
Consequent upon the order dated 22.9.2005 passed in
M.A.13/04, he did not re-present the plaint.
c) Defendant herein, while seeking the relief of
permanent injunction in O.S.248/98, had requested the
court sought to restrain the defendant therein (present
5
appellant) not to proceed with further construction or
alienate the property. After the dismissal of M.A.13/04,
plaintiff chose to file the suit for specific performance
based on the agreement of sale dated 11.5.1989.
The
suit came to be resisted by the defendant on various
grounds.
d) According to the defendant, the suit was not at
all maintainable either in law or on facts and it was
specifically barred by time.
He had specifically denied
the averment in regard to readiness and willingness of
the plaintiff. According to him, he had already cancelled
the agreement of sale dated 11.5.1989 by issuing notice
dated 26.1.1998 and as such no agreement of sale was in
existence to be enforced. With these pleadings, he had
requested the trial court to dismiss the suit.
e) On the basis of the above pleadings, the trial
court framed the following issues:
1) Whether the plaintiff proves he is ever ready
and willing to p4rform his part of contract?
6
2) Whether
defendant
proves
that
sale
agreement dated 11.5.1989 is already
cancelled through notice dated 26.1.1998?
3) Whether defendant proves that suit is barred
by time?
4) Whether plaintiff is entitled for suit reliefs as
prayed for?
5) What order or decree?
Shakeel, the managing partner of the plaintiff firm is
examined as PW1 and 3 more witnesses have been
examined on his behalf. 38 documents have been got
marked on his behalf.
Though the defendant chose to
file affidavit in lieu of examination-in-chief, he did not
tender himself for cross-examination and hence his
examination-in-chief
has
been
eschewed
from
consideration.
f) After hearing arguments and perusing the
records, the learned civil judge has answered issue
nos.1,2 and 4 in the negative and issue no.3 in the
affirmative, holding that the suit is specifically barred by
7
time. It is this judgment and decree which is called in
question by the plaintiff on various grounds as set out in
the appeal memo.
4.
Learned counsel for the appellant, Mr.Jambayya
Swami Hiremath has vehemently argued that the trial
court has adopted a wrong approach to the real state of
affairs while examining Ex.P2 the agreement of sale and
that time was not the essence of the contract.
He has
argued that the trial court has failed to look into the oral
and documentary evidence, and has not taken into
consideration the fact of returning the plaint filed by the
defendant in that suit.
He has further argued that
consequent upon the agreement of sale, possession was
handed over to the plaintiff and he has already completed
construction and thus the has virtually become the
owner for all practical purposes. He has argued that the
trial court has not taken into consideration the material
facts in regard to the agency coupled with interest in the
8
light of executing the general power of attorney vide
Ex.P1 by the defendant in favour of the plaintiff.
5.
After hearing arguments and perusing the records,
the following points arise for consideration in this appeal:
1) Whether dismissal of the suit in
O.S.92/08 on the ground of limitation is
justified?
2) Whether the defendant has been able to
prove that the agreement of sale in favour
of the plaintiff dated 11.5.1989 has been
cancelled in accordance with law?
3) Whether the agreement of sale marked as
Ex.P2 is coupled with interest as per
Ex.P1?
4) Whether the plaintiff is entitled for
protection as per the provisions of Section
53-A of the Transfer of Property Act under
the concept of part performance?
5) Whether interference is called for and if
so, to what extent?
REASONS
6.
Point no.1: Article 54 of the Limitation Act governs
the period within which a suit for specific performance is
9
to be filed.
Normally time is not the essence of the
contract in respect of immovable properties; but the
party who intends to argue that time was the essence of
the contract, has to make out a clear case that the
agreement speaks to that effect. In the present case, the
agreement of sale dated 11.5.1989 relied by the plaintiff
and marked as Ex.P2 is not seriously disputed by the
defendant-respondent. The defendant has not disputed
receipt of Rs.13,00,000/- on various dates from the
plaintiff.
There is a specific clause in page 2 of Ex.P2
about the payment of interest at 18% p.a. in respect of
belated payment. The plaintiff was expected to pay the
last installment on or before 30.10.1989. The defendant
had, apart from agreeing to receive interest for belated
payment, handed over possession of the
schedule
property to the plaintiff and he was permitted to put up
construction after obtaining necessary permission from
the competent authorities and to enter into lease or sale
agreements with prospective owners/occupants, as the
case may be. The defendant has gone to the extent of
incorporating a covenant in Ex.P2 assuring the plaintiff
that he would satisfy purchasers about the title that the
plaintiff has to sell the above property.
The relevant
clause is found in the last paragraph of page 2 of Ex.P2
and the same is reproduced below for better clarification
of the facts of the case:
‘That the vendor has agreed to satisfy the
purchasers that he has absolute title to sell the
aforementioned schedule site and the vendor is
entitled
to
purchasers
convey
free
the
from
said
all
title
to
the
encumbrances,
charges or claims.’
Apart from this, defendant has agreed that he would not
interfere with possession or construction to be put up by
the plaintiff thereon, and that he would co-operate with
the plaintiff to obtain plan, licence from the competent
authority.
7.
The last payment was to be made by the plaintiff
on or before 30.10.1989.
Of course the plaintiff was
expected to pay Rs.4,00,000/- each on or
before
30.6.1989 and 30.8.1989, and the plaintiff did not pay
the instalments as agreed.
But the defendant did not
insist for payment of any interest although there is a
covenant in that regard. Article 54 of the Limitation Act
provides for a period of three years for seeking the relief
of
specific
performance
from
the
date
fixed
for
performance or if no such date is fixed, when the plaintiff
has noticed that performance is refused. In the present
agreement, no time is fixed within which the defendant
was expected to execute the regular sale deed. Therefore
the case on hand falls within the purview of clause (2) of
Article 54, Limitation Act.
If no time is fixed, the
intending purchaser cannot keep quiet for a long time
and then seek the relief of specific performance.
9.
A single Bench of this court in the case of
MAHARUDRAPPA
.v.
MAHADEVAPPA
(2013
(3)
Kar.L.J. 684) has dealt with Article 54 of the Limitation
Act. In paragraph 12 of the said decision, it is held that
12
normally time is not the essence of the contract in
respect of immovable properties, and it is clarified that
the same does not give leverage to file a suit at any time.
Paragraph 12 is relevant and is reproduced below:
’12. It is true that time is not essence of
the contract ion respect of immovable properties,
but that does not give a leverage to the plaintiff
to file a suit at any time he thinks it proper.
Admittedly, the agreement of sale is dated
25.8.1986.
The defendant is illiterate and
specifically denied the genuineness of the said
agreement. Though no time is fixed in the
agreement of sale for executing regular sale
deed, it does not mean that the plaintiff can
sleep over his right and issue a notice and
therefore contend that the suit was maintainable
as it was filed within three years from the date of
receipt of the notice or the date of reply given by
the defendant.’
Admittedly no notice was got issued by the plaintiff
before filing of the suit. Since the plaintiff has contended
that the defendant has chosen to file a suit for
declaration of title and injunction in respect of the same
property against him, it was virtually a notice issued
against him, and he should have filed the suit for seeking
the relief of specific performance. He kept quiet without
enforcing his right though R.A.13/04 was disposed of on

22.9.2005. But he chose to file the suit in the year 2008,
i.e. on 28.6.2008.
9.
What is argued by the learned counsel for the
appellant is that the suit was filed within 3 years from
the date of disposed of M.A.13/04 and therefore it is in
time. This court is unable to accept the same.
A Bench
of three Judges in the case of AHMADSAHAB ABDUL
MULLA (DEAD BYPROPOSED L.Rs.) .v. BIBIJAN AND
OTHERS ([2009]
5
SCC
462) has discussed the
provision of Section 54 of the Limitation Act at length.
What is held in the said decision is that ‘the expression
‘date fixed for performance’ is crystalized notion. When a
date is fixed, it means there is a definite date fixed for
doing a particular act. Even in the second part, the stress
is on ‘when the plaintiff has notice that performance is
refused.’ According to the Hon’ble apex court, there is a
definite point of time when the plaintiff notices refusal ,
and in that sense both parts refer to definite dates and
hence there is no question of finding out an intention from
other circumstances.’
10.
In the present case, defendant chose to file the suit
for declaration of title and injunction in O.S.248/98 and
the plaint was returned for being re-presented before the
appropriate court.
filed.
Against this order, M.A.13/04 was
Thus filing of the suit for declaration and
injunction was a good notice for all practical purposes
and at least within 3 years from the date of filing of the
suit, plaintiff ought to have enforced his right under the
agreement of sale.
11.
In the light of the decision in the case of
AHMADSAHAB ABDUL MULLA (supra) and the decision of
the
single
Bench
of
this
court
in
the
case
of
MAHARUDRAPPA (supra), it can be definitely said that
the suit filed by the present appellant before the court
below seeking the equitable relief of specific performance
is barred by time. Hence the trial court is justified ion
15
holding so.
Accordingly point no.1 is answered in the
affirmative.
12.
Point nos.2 and 3: They are taken up together for
common discussion.
Execution of Ex.P2-agreement of
sale by the defendant in favour of the plaintiff is not at all
disputed.
Reference is made to a very important
covenant in Ex.P2 referred to earlier while discussion on
the question of limitation. Ex.P1 is the general power of
attorney executed by the defendant in favour of the
plaintiff on 15.5.1989.
dispute.
This document is also not in
On a perusal of these documents, it is
abundantly clear that the defendant not only executed an
agreement of sale but also handed over possession of the
suit property to the plaintiff permitting him to seek
permission from the concerned authorities in order to
put up construction and to lease out buildings to
anybody he likes.
Defendant had even assured the
plaintiff that he would execute necessary documents in
favour of lessees or licencees or any person concerned.
16
13.
What is argued before this court is that the
defendant has the absolute right of taking possession of
the
schedule
property
from
the
plaintiff
if
sale
consideration is not paid within 3 months from the date
on which the installment became due.
One clause
cannot be read out of context and be blown out of
proportion.
The entire document has to be read as a
whole and a single infernce has to be deduced. On going
through the clauses in Ex.P2, it is evident that the
defendant had virtually transferred all the right he had in
favour of the plaintiff under the agreement of sale and he
was content with the payment of money. If the plaintiff
were to make belated payments, he was liable to pay
interest at 18% p.a. The defendant did not exercise his
right of cancellation and taking possession of the
property. Instead he filed a suit for declaration of title
and permanent injunction and the very plaint was
returned. An appeal filed against the said order was also
17
dismissed and thus, the attempt made by him has
virtually become ineffective.
14.
Power of attorney is an authority whereby one is
authorized to act for another which normally includes
incidental powers for the authority being granted.
A
Division Bench of this court in the case of MOHAMMED
@ PODYA .v. ASSISTANT COMMISSIONER (ILR 1993
KAR 2306) has held that ‘when general power of attorney
is given in respect of specific power, the generality of
power will have to be read in the light of specific powers
granted.’ In the instant case, plaintiff has not only been
empowered to obtain a regular sale deed, but also
possession was handed over to him on the date of
executing the agreement of sale and the defendant has
received RS.13,00,000/-out of the agreed consideration
of Rs.13,50,000/-. Defendant has also allowed the
plaintiff necessary
to
obtain
permission
from
the
competent authorities to put up a building. The fact that
plaintiff
has
obtained
permission
from
various
18
authorities
to
put
up
construction
and entire
construction is put up, is not seriously disputed. In the
light of the decision in the case of MOHAMED @
PODYA,(SUPRA) this court is of the considered opinion
that Ex.P2 is an agreement coupled with interest vide
Ex.P1. In this view of the matter, the power of attorney
executed vide Ex.P1 is irrevocable.
In view of Sections
201 and 202 of Indian Contract Act.
15.
A few important clauses incorporated in Ex.P2
inhibit the defendant to revoke the power of attorney and
agreement of sale.
The defendant has taken a specific
plea that he has cancelled Ex.P2 executed in favour of
the plaintiff vide Ex.P1. Except taking such plea, he has
neither substantiated the same, nor has he placed any
document while cross-examining PW1, Apart from this,
he has not entered the witness box.
In fact burden was
on the defendant to substantiate the plea of cancellation
of Exs.P1 and P2 and he has not placed any evidence in
regard to the same. Hence an adverse inference will have
19
to be drawn under Section 114 (g) of the Evidence Act
holding that he has not cancelled either Ex.P1 or Ex.P2.
Thus the defendant has failed to prove the plea of having
cancelled the agreement of sale. It is not his case that he
has cancelled Ex.P1, the GPA.
As already discussed,
both the documents are irrevocable in view of the totality
of clauses found in them.
Thus it is held that the
plaintiff has acquired right under Exs.P1 and P2 and has
exercised such right by obtaining permission from the
concerned authorities and putting up construction and
even attempted to enter into agreements with intending
purchasers/occupiers. Hence point no.2 is answered in
the
negative
and
point
no.3
is
answered
in
the
affirmative.
16.
Point no.4: The oral and documentary evidence
placed on record specifically makes it clear that the
plaintiff having acquired possession of the property by
put up the buildings by spending more than one crore of
rupees, He has virtually exercised the right accrued to
20
him side Ex.P1 and Ex.P2. Though the suit is dismissed
on the ground of limitation, the right that he has
acquired by virtue of part performance cannot be taken
away.
The defendant cannot evict the plaintiff since
agreement of sale did not require registration in 1989. If
possession had been handed over on the strength of the
agreement of sale after 24.9.2001, it necessarily required
registration as per Section 17(1)(A) of the Registration Act
and Section 53-A of the Transfer of Property Act which
have come into force from 24.9.2001.
17.
A full Bench of this court in the case of
NARASIMHA SETTY .v. PADMA
SETTY (ILR1998
KAR3230) has held that a person in possession on the
strength of an agreement of sale cannot be dispossessed
by the transferor provided the agreement of sale is in
writing. It is further held in the said decision as under:
TRANSFER OF PROPERTY ACT, 1882
(Central Act No.4 of 1882) Section 53-A.
Whether the defence available to the
Transferee under Agreement to sell under
Doctrine of Part Performance” is lost in case
where the suit for specific performance of the
21
contract is barred by time? HELD-Transferee
under an Agreement to sell can resist a suit
for possession by the owner of the property
even specific performance within the period of
limitation because the extinction of the
statutory remedy by some reason or the
other, does not lead to the extinction of a
right created by a legislature by incorporating
section 53-A in the Act.
Admittedly in the present case, both the documents, i.e.
Exs.P1 and P2 have been proved and the factum of
handing over possession of the schedule property under
Ex.P1 is not at all disputed. Therefore dismissal of the
suit on the ground of limitation will not come in the way
of the plaintiff exercising his right and the same will not
lead to extinction of his right created by the Legislature
by incorporating Section 53-A of the Transfer of Property
Act. Hence point no.4 is answered in the affirmative.
18.
In view of the above findings, the appeal will have
to be dismissed mainly on the ground of suit having
become barred by time. But the findings on other points
will be helpful to the plaintiff.
Hence, the appeal will
have to be allowed in part to the extent of providing
22
protection of possession to the plaintiff-appellant under
Section 53-A of the Transfer of Property Act.
19.
In the result, I pass the following order:
ORDER
The appeal is allowed in part.
The finding of the
trail court insofar as limitation is concerned, is upheld.
Notwithstanding dismissal of the suit on the question of
limitation, the plaintiff is entitled for protection under
Section 53-A of the Transfer of Property Act as the right
acquired by him under Exs. P1 and P2 has not
extinguished by lapse of time, more particularly when
Ex.P1-general power of attorney is coupled with interest
as per Ex.P2-agreement of sale.
In the facts and circumstances of the case, parties
to bear their own costs.
Sd/-
JUDGE
vgh*

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