Monday, 5 September 2016

When it is necessary to claim declaration in suit for specific performance of contract that cancellation of agreement of sale is invalid?

Since the plaintiff  did not perform his part
of contract within  the  extended period   in the legal
notice   referred to supra, the agreement of sale was
terminated as  per  notice    dated  28.3.1985  and  thus
there is termination  of the agreement of sale between
the plaintiff and Defendants  1­4  w.e.f.  10.4.1985.
37. As could be  seen from the prayer sought
for in the original suit, the plaintiff has not sought
for declaratory relief to  declare the termination of
agreement of sale  as bad in law. In the absence of
such prayer by the plaintiff   the original suit file dby

him before the trial court   for grant of decree for
specific performance in respect of the suit schedule
property on the basis of   agreement     of sale and
consequential   relief   of   decree   for   permanent
injunction  is not maintainable in law.
38. Therefore,  we have to hold that the relief sought
for by the plaintiff   for  grant  of  decree   for specific
performance of execution of sale deed in respect of the
suit schedule property in his favour on the basis of nonexisting
  agreement of sale is wholly unsustainable in
law. Accordingly, Point  (i) (see Para 32.1) is answered
in favour of  Defendant 5.”
What is significant   to note in the instant case is that, by
refusal  Exh. 82  dated 12.7.1982,  the plaintiff  was fully made  aware
about the intention to refuse  the performance of contract for whatever
reasons given in Exh.82. The submission made by Mr K.H. Deshpande
that such a refusal has no place in law or is not a valid  refusal  in the
eye   of   law is   a matter of   adjudication by the Court   on facts and
evidence. But then having been made fully aware about the cancellation
of agreement by Exh.82  and its full understanding  by plaintiff  which is
reflected  in  Exh.  83       dated   03.08.1982  by  the  plaintiff   itself,  it   is
difficult  to fathom as to why the plaintiff failed to pose a challenge to

the act of  cancellation Exh.82   in the suit itself by saying that  refusal
was not  valid in law. In paragraph 37   of the judgment cited supra,  the
Apex Court in clear  terms held that in the absence of such a prayer  by
the plaintiff, the original suit is not maintainable in law     since no
declaratory relief    declaring  that agreement of sale as bad in law,  was
sought  in the suit.  I  think the ratio of the above decision is  as clear as
it could  be  and there is no reason for me  to hold that in the  absence of
any challenge to the act of termination of  contract by Exh.82  the suit
would be maintainable. To sum up, this Question No.(iii) will have to be
answered by holding that the original suit was not maintainable, in the
absence of challenge to the termination  of agreement dated  31.07.1975
by termination notice  Exh.82 dated  dated 12.07.1982.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 BENCH AT NAGPUR, NAGPUR.

SECOND APPEAL NO. 235/2012 
 Smt. C.  Padmawati Naidu

v e r s u s
 Friends   Cooperative Housing Society Ltd.

 CORAM :     A.B.CHAUDHARI, J.
DATED :     3/4th March,  2016

Citation:2016(4) MHLJ289 Bom

1. Being   aggrieved   by   the   judgment   and   decree   dated
04.10.2011 in Civil Appeal No. 307/1999 passed by the  learned  District
Judge­9,   Nagpur,   arising   out   of   the   judgment   and   decree   dated
21.04.1999  in Special Civil  Suit No. 564/1985 passed by 4th  Joint Civil
Judge, Senior Division, Nagpur, the present Second Appeal has been
preferred by the original defendants. 
2. The Appeal has been taken up for final hearing  as almost all
the appellants are senior citizens and the litigation commenced in the
year 1985, on the motion  made by the  counsel for the parties. 
3. The   respondent no.1/plaintiff brought a suit for specific
performance of contract and for possession, stating that an agreement
was  executed for the purchase of the suit property by the plaintiff on

30.1.1975   for  a consideration of   Rs. 25,000/­ per  acre  and on the
date of agreement by way  of earnest, an amount of Rs. 6,000/­   was
paid.  The  sale deed  was  to be  executed  within a period of two  years
i.e. on or before   30.1.1977. The plaintiff   was   ready and willing to
obtain   the   sale   deed   but,   in   the   interregnum,     with   effect     from
17.2.1976, the Urban Land Ceiling Regulation Act, 1976 was brought
into force and the suit property was  specified for residential use in the
Master Plan  and, as such,  upon application of the Urban Land Ceiling
Act,   all transactions of transfer  were prohibited, save and except  the
exemption to be obtained u/s. 20 of the Urban Land Ceiling Act. The
exemption u/s 20 would be obtained by the landlord  or the vendor  and
the prohibition operated   as the legal impediment   for   completion of
sale deed.  The plaintiff had  by letter dated 15.04.1976 intimated the
defendant that the plaintiff  was  willing to  complete the  transfer  as
per the agreed   terms, provided   the land is released from the Ceiling
Act.    In fact, the Application for exemption was made by the defendant
on 13.08.1976  and  an additional Application on 05.02.1980 was also
filed  and  a joint  application  was signed by both the  plaintiff  as well
as the defendant,   with reference to the agreement   dated 30.1.1975.
The plaintiff  was ready and willing to perform his part of the contract
pursuant to which both of them had jointly and  individually  applied for

exemption. However on 12.7.1982,  to the utter  dismay and surprise  of
the   plaintiff,   the   defendant   informed   that   the   agreement     dated
30.1.1975  should be treated as a cancelled as the defendant   did not
hear anything from the plaintiff for a long  time. The  communication of
cancellation was duly replied on 3.8.1982 informing the  defendant  that
the plaintiff­society was  and is    ready and willing to perform the part
of the contract  but for the  fact that the proceedings  for exemption were
pending with the Government the sale deed could not be completed and
hence  defendant should not  cancel the contract. It was also stated that
there   was no unilateral right reserved in favour of the defendant   to
cancel the agreement and, therefore, the  action of  cancellation was void
ab initio. It is then contended in the suit that the pending application for
exemption was ultimately decided by an order  dated  31.12.1984  by
which the State Government granted exemption, which clearly  furthered
the  case of the plaintiff,  about  readiness and willingness and as per the
terms and conditions of the exemption order, within a   period of one
year the   transaction was to be completed.   It was then stated in the
plaint that the plaintiff was under a  bona fide  belief that it was not
necessary to have permission under Bombay Tenancy and Agricultural
Lands  (Vidarbha) Region Act,  since the suit was included in the Urban
Agglomeration.    Having     realised  that it  was  necessary, the   plaintiff

informed   the   defendant   vide   notice   dated   4.3.1985     that   a   joint
application was required to be filed under Section 89 of the BT & AL Act
to the Sub­Divisional Officer.  Finally,  the SDO   on 10.12.1985 granted
permission u/s  89 of the BT AL Act. The plaintiff  thereafter  issued a
notice on 9.8.1985 asking the defendant to execute the sale deed  and to
remain present on 20.12.1985 between  10.30 am and 2.30 pm. in  the
office of the Sub­Registrar, Nagpur.     The   defendant   gave reply on
16.12.1985     denying   the     contentions   therein,     being   baseless   and
mischievous and  did not  appear in the office of Sub­Registrar. To sum
up,  the plaintiff  thus then sought the relief of specific performance for
execution of sale deed and  delivery of possession.
In   response   to   the   suit­summons,   the     defendant   filed
written statement.   It was  not disputed in the  written statement  that
Survey Nos.130/1, 130/3  and  130/4 and 130/5 were already sold to
the plaintiff society by  a  registered sale  deed. The defendant however
placed   strong   reliance on the cancellation of   the agreement under
letter dated 12.7.1982  in respect of the suit property being Khasra No.
127/3   and  contended that since the suit  was not  filed in three years
from cancellation/refusal, the suit was barred by limitation having been
filed   on 30.12.1985. It was contended that there   were no extension
sought on the  ground of  obtaining  permission under the ULC Act as

well as BA & AL Act and that merely by   enforcement of Urban Ceiling
Act, the terms of the agreement dated 30.01.1975     would not in any
case   stand abrogated nor such   a relief  was sought by the plaintiff.  It
was  stated that thus   the agreement did not subsist, the same having
been recalled or cancelled. The  fact that the  Application u/s 20  was
jointly made on 30.8.1976 to the Competent Authority   and lastly on
5.2.1980  was not disputed by the   defendant  and it  was stated that  all
the   while   the     defendant     was   cooperating   with   the   plaintiff.     The
defendant then stated that for obtaining permission u/a. 89 of the  BT &
AL  Act  the plaintiff never sought any extension for obtaining permission
nor obtained  any  permission u/s.89 before  the  date of cancellation.
The defendant then   stated that   he   was not   aware about the order
dated  13.12.1984  about the exemption  and  even otherwise after lapse
of period of one year, the  exemption order became infructuous, the suit
having   been     lodged   on   30.12.1985.   It   was   then   stated   that   the
defendant   was   not   willing   to   sell   his   land   after   cancellation   of   the
agreement.  Finally, the defendant prayed for dismissal of the Suit.    The
State Government (original defendant no.2) also filed written statement
and     expressed   lack   of   knowledge     about   the   cancellation   of   the
agreement as contended by the defendant no.1.  The  Suit was opposed
by the State Government/defendant no.2. The trial Judge   framed the

issues  and  additional issues.  The parties to the suit  tendered oral as
well as documentary evidence. The trial Judge   heard the Suit   and
decreed the  same in part. The trial Judge  decreed the suit against the
defendant no.1,  directing  execution of sale  deed  of the suit property
as described in the plaint  para no.2   and to give possession of the same
to the plaintiff   as per  agreement  for sale Exh.63  dated 30.01.1975  on
payment of the balance consideration amount of Rs. 80,500/­, by  the
impugned judgment  and decree  dated  21.4.1999.
4. The defendant preferred an Appeal before the District Judge
u/s. 96 of the Code of Civil Procedure. The Appellate Court heard the
Appeal  after framing the points for determination and finally dismissed
the same.    Hence this Second Appeal.
ARGUMENTS :
5. In support of the Appeal,  Mr. V. V.Bhangde,  learned counsel
for the appellants invited my attention to the substantial question of law
framed by this Court at the time of admission order. He then contended
that   the   agreement   was   executed   on   30.1.1975     and   the
respondent/plaintiff   did   not   take   any   action   in   furtherance   to   the
completion of  sale deed nor had  obtained permission u/s   89 of the BT
& AL Act though  with reference to  coming into  force of   U.L.C.  Act  on

7.2.1976,   the   period   of     about   13­months   was     available.   He   then
submitted that out of the total consideration, only an amount of Rs.
6000/­ was paid towards  earnest money and thereafter there  were no
attempts to make any payments.  According to him,   the defendant  no.1
had applied  on 13.8.1976  and  2.11.1976  (Exhs. 65 and 69),     under
the U.L.C. Act for  requisite exemption and even  joint application was
filed at Exh. 97   dated 5.2.1980   which clearly   showed, according to
him,   that   the   defendant   had   no   intention   to   commit   any   breach   of
contract   and   was   fully   cooperating.   It   is   then   contended   that   since
nothing   was happening,     by issuing letter/notice   dated   12.7.1992
(Exh.82)   the   defendant cancelled the   agreement explicitly   and by
letter/notice     dated   3.8.1982   Exh.83   the   same   was   replied   by   the
plaintiff, which indicated that the plaintiff was fully aware about the
cancellation made, at least, while replying the notice Exh. 82,   by reply
Exh.83.  He, therefore, contended that in the  wake of cancellation of the
agreement  by Exh.82    and,  at any rate, the conscience knowledge   on
3.8.1982,  the suit ought to have been filed  on 11.7.1985   or 2nd August
1985, there being  an  express refusal  contemplated by Article 54 of the
Limitation Act.  He submits that the Suit  was clearly barred by limitation
but the  Courts below have  computed the limitation after legal notice
dated 9.12.1985 was   given to the defendant by plaintiff   and  that suit

was actually filed on 30.12.1985. According to   him, there is   a clear
error  of law on the part of the Courts below  in computing the limitation
from the date of giving notice on 9.12.1985. He  therefore submits that
the Suit was barred by limitation. He cited the following   decisions in
support of his submissions:­
1) 1993 Supp (4) SCC 492:   Thakamma Mathew
(smt.) vs. M. Azamatulla Khan and others 
2) (2005)   6 SCC 733:   Kasturi vs. Iyyamperumal
and others
3) (2010)   7   SCC   417:   Mumbai   International
Airport vs. Regency Convention Centre
4) (2010)   14   SCC   596:  Van   Vibhag   Karmachari
Grioha vs.  Ramesh Chander and others 
5) (2013)   15   SCC   27:   I.S.   Sikandar   vs.   K.
Subramani and others
6. Mr.   V.V.Bhangde,   learned   counsel   for   the   appellants   then
contended that there is no prayer in the suit to set up  a challenge  or
for a declaration about Exh.82  that for one  reason  or the other  the
cancellation made by the   defendant   was illegal or void in law. He
submitted that the act of cancellation of Exh.82  by the defendant is  an
act the  defendant having  waited for  more than  sufficient period from

the date of execution of the agreement     i.e. about 7 years     and,
therefore, unless the action for cancellation was brought into  question,
the  Suit could not be held to be maintainable. 
7. Mr. Bhangde,   then,   contended that all the parties to the
agreement specifically named in the agreement  Exh.63   were not  at all
joined  as a party to the suit  and only  one person was joined whereas
the   agreement   was entered into by four persons. According to him,
whether   or   not,   joining   of   a   particular   person   would   make   any
difference, is not the  criteria  but  all the persons to the agreement  are
required to be made party to the suit. He contended that  the objection
as to the no­joinder of all parties to the agreement in the suit was raised
before the  trial  Court in the  written statement, but still there  was no
action to add  all the parties to the agreement in the suit. He therefore
contended that the suit was bad  for non­joinder of  necessary parties.
8. Learned  counsel for the appellant then contended that  the
lapse of  period of  seven years  from the date of  agreement till the  date
of cancellation and the happening in between  clearly indicated that the
plaintiff  was not  ready and willing  to perform his  part of the contract
and  wanted the  defendant to wait indefinitely. According to him, the

prohibition on the landlord  under the Ceiling Act or under any other Act
cannot stop   running  of the limitation and that by itself would be no
excuse     not to file the suit within the law of limitation. Inviting my
attention to the reasons given by the Courts below, he submitted that the
Courts below have clearly confused the aspect of limitation and the
computation   thereof,   by   taking     the   notice   of   9.12.1985     as   the
commencement of   the limitation. Learned counsel for the appellant
finally  prayed for reversal of the judgments and decrees of the Courts
below.
9. Per contra, Mr. K.H.Deshpande, learned senior Counsel with
S/shri  Sudame and Pathrikar, vehemently opposed the Second Appeal
and submitted that two Courts below have concurrently found that the
Suit was well within limitation and  there  was a legal impediment  by
way of  statutory law in the matter of performance of the contract and,
in fact, the parties to the Suit  had individually  as well  as  jointly  made
the application for exemption from the provisions of the Ceiling Act,
which clearly indicated the intention of the plaintiff to be ready and
willing to obtain the sale deed in  strict adherence to the provisions of
the law including the Urban Ceiling Act and the BT & AL Act.   Adhering
to the laws, namely, obtaining exemption in Ceiling Act or permission

u/s.  89  should not be read  as unreadiness or unwillingness  to perform
the contract and, on the contrary, the  same is consistent with the stand
that the plaintiff   was ready and willing to perform the part of the
contract.   This   was   particularly   so   because   the   plaintiff   had,   in   fact,
purchased the other pieces of lands from the same party for housing its
members and, therefore, it was idle to contend that the plaintiff was not
ready and willing. Adhering  to the  important  aspect of limitation Mr. K.
H. Deshpande learned senior Advocate invited my attention to Section 5
of the Contract Act and Section 89 of the BT & AL  Act  and submitted
that  Section 5 does not permit the appellants/defendants  to unilaterally
cancel the contract by deliberately   ignoring  the fact that the suit  land
was   under   cloud   because   of   the   enforcement   of   the   Ceiling   Act.
Therefore, the cancellation of  Exh. 82  is not  cancellation in the eye of
law and is  void ab initio, which to say the least, must be ignored and
once the said cancellation Exh.82  is ignored, the limitation would never
said to have  commenced, at least,  till the plaintiff issued a notice asking
for execution of sale deed on 9.12.1985 and the Suit was thereafter
immediately   filed.     He,   therefore,   submitted   that   there   was   a   clear
breach   of the contract on the part of the appellant by issuing Exh.82
and no undue advantage can be  given to the defendant  for his  own
unlawful     act.   According to him, it is the trite law that there is no
occasion to challenge  any  action including  cancellation by Exh.82   in
the suit, since the action itself is illegal from the beginning  and having
no consequence.  The Suit  was thus clearly  filed within limitation in the
wake of the above facts.   According to him, insofar  as the objection as
to non­joinder  of parties is concerned, the same is not invalid  inasmuch
as  reading of the agreement  shows that the same is   a consolidated
action by the family members and the Suit cannot  fail on the ground of
non­joinder.    The  fact that  the parties to the suit   have  individually
and jointly applied for exemption  and in fact having an order granting
exemption   clearly   shows   that   the   plaintiff   had   always   subsisting
intention to continue  with the contract   and ultimately which evidences
readiness and willingness on the part of the plaintiff and, therefore,
there is no substance in the contention that the plaintiff was not ready
and willing to complete the contract.  Finally he prayed for  dismissal of
the Appeal.  
10. I have   heard the learned counsel for the rival parties   at
length. I have perused the entire record  and the  reasons  recorded   by
the two courts. 
11. The trial Judge framed the following issues in the Suit and

answered the same as  indicated against those issues  :
1. Does plaintiff prove that it was ready and willing
to perform  its part of  contract?
..Yes
2. Does the defendant no.1 prove   that the time
was essence of the contract?
..No
3. Does defendant no.1 prove that by notice  dated
12.07.82 he   legally   cancelled the agreement
dated 30.01.75?
.. No
4. Is agreement dated 30.01.75 unenforceable  for
want of permission from the Govt. and in view of
Section 5 (3)  of the ULCR Act?
Does not survive.
4A Whether  this Court has jurisdiction to entertain
the present suit?
..Yes
4B Whether the suit is within limitation? ..Yes
4C Whether the plaintiff is entitiled for the relief
claim in the suit?
As   per   below
order.
4D Whether suit is maintainable in law  defendant
no.2  for  want of notice under Section 80 of C.P.
Code?
No
5. Is   plaintiff     entitled   to   discretionary   relief   of
specific performance?
Yes
6 What order  Suit   is     partly
decreed   as   per
below  order.
12. The  lower   Appellate Court  framed  the following points
for  determination and answered the same  as stated therein :
1. Whether   the   plaintiff   society     was     ready   and In the affirmative

willing to perform its part of the contract
2. Whether the suit filed by the plaintiff society is
within limitation?
In the affirmative
3. Whether the plaintiff society is entitled   for the
discretionary   relief   of   specific   performance   of
contract  as prayed  against  defendant no.1?
In   the
affirmative.
4. Whether     the   act   of   the   defendant     No.1   was
justified   in   cancelling   an   agreement     dated
30.01.1975 by issuing letter (Exh.82)   on dated
12.07.1982 for the  reasons stated by him.
In the negative.
5. Whether the defendant no.1   has proved that the
plaintiff society   has failed to perform its part of
the contract?
In the negative
6. Whether the plaintiff society is   entitled for the
relief claimed   against the defendant no2­State
Government?
In the negative
7. Whether   the   impugned   Judgment     and   decree
passed   by   the   trial   Court   is   legal,   proper   and
correct?
In   the
affirmative
8. Is it necessary to interference  with the impugned
judgment  passed by the trial court?
In the negative
9. What order? As per final order
13. This Court had   framed the following substantial question
of  law in admission order  dated 29.9.2015 which are three in number:

(i) Whether the civil suit  filed by the  respondent No.
1­Plaintiff     was   maintainable     having   been   filed
after three years of cancellation of the agreement
dated  30.1.1975 ?  ( the appellants had  given  the
notice  dated  12.07.1982 (Exh. No.82) terminating
the agreement  dated 30.01.1975  and the civil suit
was filed on 30.12.1985).
(ii) Whether the civil suit   was maintainable   having
been filed beyond the period prescribed by Article
54  of the Limitation Act, 1961?
(iii) The  respondent no.1­plaintiff   having not  sought
decree   for     declaration   that   the   cancellation   of
agreement   dated 30.01.1975 was illegal, whether
the   civil   suit     praying     for   decree   for   specific
performance  of the agreement was maintainable?
14. Mr. Bhangde, learned counsel for the appellants  requested
this Court to add one more substantial question of   law   about   nonjoinder
of necessary parties, namely, parties to the agreement Exh.63.
He submitted that the question will have to be  framed because the facts
are not in dispute, namely, that all the parties  were not joined  as parties
to the Suit. The submission is opposed by the other side.     I think
framing a question about  non­joinder of necessary parties  would make
no material difference since  firstly, the same is  borne out from  record
and secondly,   an objection was taken at the   first opportunity in the

written statement  to that effect in the  written statement vide paragraph
2.    I, therefore,  frame an additional substantial  question of law,  as
under :­
(iv) “Whether the suit could be held to be bad  for nonjoinder
of necessary parties, namely, all the persons to
the agreement   Exh.63?”
15. Now, coming to the first and  second substantial questions,  I
find   that   the   agreement   Exh.63       was   executed       by   four   persons
mentioned in the agreement, jointly   and individually. Reading of the
agreement Exh.63   shows  mention  about  Survey No. 130/1, 3, 4 & 5
which  were already sold to the plaintiff­society.   The dispute is about
only survey No.127/3,   the area being   3.46 acres.   The   same   was
agreed to be sold  as can be seen from the  agreement by four persons.
Urban land Ceiling Act  came into force with effect from 7.2.1976  and
eventually  it was  repealed in 2007  in the State  of  Maharashtra.  It is
a fact that     because of the coming into force     of the ULC   Act, the
plaintiff and  defendants  were  having  absolutely no dispute. They , in
fact,   individually   or   jointly   made   applications   till   1980   seeking
exemption   from   the   Government.   This   went   on   till     Exh.82     dated

18
12.07.1982   was   issued   by   the   appellant/defendant.     It   would   be
convenient to reproduce the relevant part  from  Exh.82, which  reads  as
under:­
“ That more than 7 years   have passed, we
have not   heard anything about your purchase of the
same. 
2) That  there  are being  so many relaxation in
the  Ceiling Laws  moreover the land is  agricultural land
and it is   lying as an unproductive for so many years
since we have entered into an agreement, we did not
cultivate it nor used it for any other purpose. We   are
neither using it, nor  we have   been able to dispose it off
to anybody. Your silence appears now that you are not
intending in purchasing   the said land, therefore, since
we have not heard from you for such a long time.  We
treat  that our agreement  is cancelled, under these
circumstances  we  are free to  dispose it off to any
other sons.  Please  take note.”
   
It would  also  be   convenient  to extract  the   relevant  part
from  Exh.83, the  reply  to  Exh.82 given by the plaintiff on 3rd  August
1982.
“1. It  is     within   your     knowledge     that     the
society  has already applied in the prescribed Form  on

5.2.80 seeking   exemption  in respect of S.No. 127/3 on
the basis of  an agreement  dated  30.1.1975.   The  said
application   is   also   signed   by   you.   Government   orders
granting  exemption  are not yet received.   The Society
was and is willing  to obtain a sale deed in respect of  the
said land immediately on receipt   of necessary orders.
You are also aware that in terms of the provisions   of
the Urban Land   (Ceiling   and Regulation )   Act, 1976
you are  prohibited  to transfer the said land  by way of
sale   until   Government     orders       in   that   behalf     are
received. Please therefore take note.
2. It is also  within your knowledge  that S.No.
128/2, 129/2, 128/4 and 129/4   are under acquisition
by the Nagpur Improvement   Trust   and   in terms of
clause (3)  of the agreement   dated 30.1.1975  you have
to get the same released or abandoned from acquisition.
Kindly therefore  first   secure  such   relinquishment or
abandonment  of  the  said   land  from   the     scheme    of
acquisition  and intimate to the Society  accordingly so
that the Society may  obtain  a sale deed  from you in
respect  of the same within time stipulated  in the said
agreement.     Please   note   that   you   have   not   yet
discharged  your obligation  in this behalf  and therefore
there is no  breach  of contract on the part of the society.
As     a   result,   therefore,   you   cannot     treat   the
agreement  dated 30.1.1975   as  cancelled.

3. It is  reiterated that your  agreement  is still
valid and subsisting and the society is ready and willing
to perform   its part of the contract and you are also
bound by the terms of   the contract and obliged   to
perform     your   part   according   to   the   terms   of   the
agreement.
Please  take note.”
16. Perusal of the document Exh. 82 shows that the cancellation
was being made by the appellant/defendant   stating therein that the
defendant  was unable to deal with the suit land i.e. either the same was
not   being   used   nor   disposed   of   to   anybody   and   that   there   was   no
response  from the plaintiff for a long time and, therefore, the agreement
was being  cancelled.   Reply Exh. 83 as  quoted above, shows that the
plaintiff did not agree with the notice of cancellation and asserted that
the parties had applied in the  prescribed form on 5.2.1980    seeking
exemption from the Government and the same was not received and the
society at any rate was willing to   execute the sale deed immediately
after the necessary orders. The plaintiff  reminded the defendant that the
ceiling Act imposed   prohibition in the matter of   transfer of the suit
land  and further that the other land survey numbers (not the Suit S.NO.
127/3)  were under acquisition at the instance of  Nagpur Improvement

Trust    and the defendant did not discharge his obligation for getting
relinquishment or annulment of the NIT scheme and, therefore, there
was   no   breach   of   contract   on   the   part   of   the   plaintiff   society.   The
plaintiff   therefore   asserted   that   the     defendant   could   not     treat
agreement   as   cancelled   in   the   light   of   the   prohibition   and   the
reservation mentioned in the  reply. The contention  about  reservation
by NIT was wholly irrelevant  as it did not relate to Suit S.No.127/3.  In
the last para,  it is asserted that the agreement was  valid  and subsisting
and the plaintiff­society  was still ready and willing to perform its part of
the contract and the defendant  was bound by the terms of the contract
and obliged to   perform his part.   Exh.72 is the order made by the
Government i.e. dated 1st  December,1984  i.e. after Exh. 72   was issued
granting  exemption  for  residential use.  The moot question that arises
for consideration  is whether  the  document Exh. 82 cancellding   the
agreement   would   be   of   any   consequence   or   not   and   whether     the
agreement between the two parties would be affected due to the  stated
coming into   force of the   statutory laws in the light of the law of
limitation. The submission made by Shri K.H. Deshpande, learned Senior
Advocate that there could be no   unilateral cancellation will have to be
examined qua  its effect on the limitation provided by Article 54 of the
Limitation Act. Article  54 of the Limitation Act reads thus:­

Description fo suit Period of limitation Time   from which   period
begin to run
54. For   specific
performance of  a contract
Three years The   date   fixed   for   the
performance, or, if no such
date   is   fixed,     when   the
plaintiff   has   notice   that
performance  is refused. 
It is   a  trite law that limitation having  once begun    to run
does not stop irrespective of the intervention of the statutory law or
otherwise,  since the law  does  not provide  for   arresting the limitation
or stopping it from its  commencement. In other words,  the provisions of
the Limitation Act or the point of commencement of the limitation do not
get automatically   suspended     because of coming into force of   any
special law.   Perusal  of  Article 54 above, read in the context of the facts
of the present   case, shows that the second part thereof would have
application in that the explicit  refusal or cancellation of agreement by
Exh.82 dated  12.07.1992  would be a notice or the point or rather  a
starting point  for the commencement  of limitation.  Once the limitation
started  from the point of  refusal on the part of the vendor, that is,  the
present appellant, it would  stop only  on the date of filing of the suit.
The submission that making of   application u/s.   20     jointly     by the
parties to the suit being under consideration of the Government would
make  the  refusal   or  cancellation under Exh.82  nugatory or   null and

void,   would   be   contrary   to   the       very   basic     theme   of   the   law   of
limitation.   The     Hon’ble   Supreme   Court   in   the   case   of  Thakamma
Mathew (Smt) vs.  M.Azamathulla Khan and others ( supra ),   has
had to say in paragraph   9, thus:
“9. ............   Moreover,   in   view   of   Article   54   of   the
Limitation Act, 1963 a suit for specific performance of
contract has to be filed within three years of the date
fixed for the performance or  if no such date is fixed
where   plaintiff   has   notice   that   performance   is
refused. In the present case, the appellant by his notice
dated February 10, 1975 and  clearly indicated   that she
had   cancelled   the   agreement   and   had   forfeited   the
advance   amount   of   Rs.     18000/­   deposited   by   the
defendant.   By the said notice, it was clearly indicated
that the appellant was no longer willing to perform  the
agreement   to   sell   dated   November   14,   1974.   In   the
circumstances, it was incumbent upon the defendant to
have filed a suit  for specific performance of the contract
within a period of three years  fro the date of the said
notice  dated February 10, 1975 and if such a suit  has
been filed by the defendant, it would have been open to
the appellant to show that it was barred by the provision
contained   in   Section   16   of   the   Specific   Relief
Act.   ..............................   The   High   Court,   with   due
respect, was not right in invoking its discretionary power

under Order 7 Rule 7 CPC to  grant such  a relief to the
defendant. The said power conferred on the Court does
not   enable   it   to   override   the   statutory   limitations
contained in Section 16 of the Specific Relief Act, 1963
and  Article  54    of the  Limitation Act, 1963 which
preclude     the     grant   of   the   relief   of   specific
performance of a contract except  within the period
prescribed by the section.”
Similar   is   the   position   in  Shakuntala   (Smt.)     vs.   Narayan
Chavan and others  :   1999  8 SCC 587.     On the facts of that  case,  I
quote paragraph nos.  4,5  and 9  which read thus;
4. It was agreed   in the trial court   that the issue
relating to limitation be tried  as a preliminary issue.  The said
Court held that the suit was barred by  limitation inasmuch as
the vendor refused  to execute the deed as per his notice
dated 17.06.1977. Counting three years from that  date, the
suit ought  to  have been filed on or before 17.6.1980   but it
was filed on 13.7.1981. The suit was therefore held to be
barred by  limitation. This finding  was  affirmed by the lower
appellate court and the dismissal of the suit was confirmed.
5. In  the High Court, the learned Judge proceeded
on the assumption that  the suit must be deemed to have been
filed within the period  of  limitation  inasmuch as the parties

agreed   that   they   should   apply   for   permission   to   the
appropriate local authority    and that within one  month  from
the date of the grant of permission the sale deed had to be
executed.   The   High   Court   found   that   such   application   for
permission was not made before the local authority  and that
therefore limitation did not start and on that   ground   the
High Court reversed the finding of the courts below  and held
the suit to be within time. On that basis, it is even decreed the
suit.
9. If that be the case the limitation necessarily
started from 17.6.1977, the date of refusal  to perform his
part of the contract and the suit was  barred  by time. The
High Court was in error in taking a contrary view   and in
setting aside the judgments of the lower courts. The judgment
of the High Court is set aside and the judgment of the trial
court as affirmed by the first appellate court, is restored. 
Further in the case of    Van Vibhag Karmachari  Sanstha
vs.   Ramesh Chander and others : (2010) 14 SCC 596,     the Apex
Court observed thus,   in paragraph nos. 8, 17, 19, 21, 22 and 24 to 
“8.  The   first   respondent,   on   3.2.1991,   issued   a
public notice in a local daily, called Dainik Bhaskar,
that he is the owner and in possession of the disputed

land, and any action taken by the appellant over such
land   would   not   affect   the   rights   of   ownership   and
possession of the first respondent over the land. He also
stated   that   the   agreement   to   sell   and   Power   of
Attorney in favour of the appellant stood cancelled.
Immediately,   thereafter,   the   appellant   filed   a   suit   on
11.2.1991   (COS   No.   19A/1990)   for   declaration   of
ownership of the appellant Society in suit land and for
permanent injunction in the court of 3rd Civil Judge,
Class II, Indore. The suit was subsequently transferred to
the   7th   Civil   Judge,   Class   II,   Indore   as   COS   No.
603A/1992. 
17.  Before the trial court, the appellant contended that
on 11.2.1991, while instituting the suit, it had not sought
the relief of specific performance in view of the fact that
no exemption under  Section 20  of Urban Land Ceiling
Act (hereinafter, `the Act') was obtained in respect of suit
land. However, the said contention was rejected by the
Trial Court on 23.8.2004 by a detailed order and the suit
was   dismissed.   The   trial   court   also   dismissed   the
application under  Section 14  of the Limitation Act filed
by the plaintiff (appellant herein) praying for exclusion
of time from 11.2.1991 to 23.6.2003. 
19. Assailing the judgment   of the High Court,
the learned counsel for the  appellant urged that   the

agreement for sale, dated  31.3.1976, was  acted upon by
all   the   vendors   including   the   first   respondent.   It   was
specifically urged that the first respondent participated
and   cooperated   with   the   appellant   in   all   legal
proceedings in respect  of the said land wherein the first
respondent took the stand that the land in question has
been   agreed   to   be   sold   to   the   appellant   for   valuable
consideration and   that the appellant has been put   in
possession of the same. This Court, therefore, should not
allow  the first  respondent to approbate and  reprobate
by taking a completely different stand in the public notice
which   was   published   by   him   in  Dainik   Bhaskar.   In
support of  such contention, the learned counsel relied on
a few  judgments. 
21.  Under   the   aforesaid   circumstances,   the   crucial
question is whether the appellant has a cause of action to
file a suit for specific performance. 
22. In our judgment, the refusal by the first respondent
to acknowledge the right of the appellant over the land in
its public notice dated 3.2.1991 definitely furnishes the
appellant with a cause of action to file a suit for Specific
Performance. If the appellant had filed such a suit, it
could in the said suit, have questioned the action of the
first respondent as blowing hot and cold. But it has not
filed such a suit within the period of limitation prescribed

for filing such a suit. 
24.   In the present case, the factual situation is totally
different and the appellants have not filed any suit for
Specific Performance against the first respondent within
the period of limitation. In this context, the provision of
Article 54 of the Limitation Act is very relevant. The period
of limitation prescribed in Article 54 for filing a suit for
specific performance is three years from the date fixed for
the performance, or if no such date is fixed, when the
plaintiff has notice that performance is refused.
25.   Here   admittedly,   no   date   has   been   fixed   for
performance in the agreement for sale entered between
the parties in 1976. But definitely by its notice dated
3.2.1991,   the   first   respondent   has   clearly   made   its
intentions clear about refusing the performance of the
agreement and cancelled the agreement. 
26.  The appellant, on noticing the same, filed a suit on
11.2.1991 but he did not include the plea of Specific
Performance. The appellant wanted to defend this action
by referring to two facts­ (i) there was an acquisition
proceeding over the said land under the Land Acquisition
Act  and (ii)  in view of the provisions of the Ceiling
Act, the appellant could not have made the prayer for
Specific Performance. 

27. The   aforesaid   purported   justification   of   the
appellant is not tenable in law. If the alleged statutory
bar referred to by the appellant stood in its way to file
a suit for Specific Performance, the same would also
be   a   bar   to   the   suit   which   it   had   filed   claiming
declaration of title and injunction.  In fact,  a suit for
specific   performance   could   have   been   easily   filed
subject to the provision  of Section 20   of the Ceiling
Act.
28. Similar questions came up for consideration before a
Full   Bench   of   Gujarat   High   Court   in   the   case   of  Shah
Jitendra Nanalal v. Patel Lallubhai Ishverbhai  [AIR 1984
Guj 145].  The Full Bench held that a suit for Specific
Performance could be filed despite the provisions of the
Ceiling Act. A suit for Specific Performance in respect of
vacant land in excess of ceiling limit can be filed and a
conditional   decree   can   be   passed   for   Specific
Performance,   subject   to   exemption   being   obtained
    under    Section 20   of the Act. (Paras 11­ 13) 
29.  We are in respectful agreement with the views of the
Full   Bench   in   the   abovementioned   decision   and   the
principles decided therein are attracted here. 
30.  This   Court   is,   therefore,   of   the   opinion   that   the
appellant   had   the   cause   of   action   to   sue   for   Specific

Performance in 1991 but he omitted to do so. Having done
that, he should not be allowed to sue on that cause of
action which he omitted to include when he filed his suit.
This Court may consider its omission to include the relief of
Specific Performance in the suit which it filed when it had
cause   of   action   to   sue   for   specific   Performance   as
relinquishment of that part of its claim.”
In this   decision of this  Van Vibhag,   the Apex Court has
upheld   the decision of the Full Bench of the Gujarat High Court that
operation   of   the   provisions   of   the   Ceiling   Act   would   not     stop   the
limitation from running   or   commencing   from the date of   explicit
refusal in  this case, under Exh.82.
In my opinion, the extract of the refusal  reflected through
Exh. 82  and reply Exh.83  given by the plaintiff  clearly denotes that the
defendant clearly cancelled or refused to perform his part of contract in
writing  and the plaintiff in terms understood the  said refusal but  took
the   defence   that   the   defendant   could   not   cancel   it   because   of   the
pending  proceedings u/s.  20  etc.    In  the Supreme Court judgment  in
the  case of Van Vibhag   the answer is clearly given  that the limitation
would commence and the suit could be filed or should  have been filed

subject to Sec.20 of the Ceiling Act. Both the Courts below however
have  ignored the above position of law  and they chose  to rely  on the
notice   that   was   given   by   appellant/defendant   dated   16.12.1985
reiterating   and   denying   the   allegations   in   notice   dated   09.12.1985
wherein the plaintiff asked for performance of contract  but there  was
no reason for the courts below to keep aside the refusal by way of Exh.82
dated  12.7.1982  qua Art.54 and full and conscious  understanding  of
refusal   by the plaintiff which is clear from its reply   Exh. 83 dated
3.8.1982. Thus, within the meaning of  Article 54 of the Limitation Act,
when the plaintiff had clear notice that performance was refused on
12.07.1992 Exh.82, the suit   ought to have been filed on 11.7.1985  or,
at the most  on  02.08.1985; but the suit was admittedly  filed in the
court on 30.12.1985.   The suit was thus clearly barred by limitation.
Hence I answer  question Nos.1  and  2 holding that the suit was barred
by limitation and  thus  was not  maintainable, in view of the  express
refusal dated 12.7.1982   under Exh.82. Consequently the notice dated
09.12.1985 by plaintiff   demanding   execution of sale deed  was of no
consequence ad  was   wholly irrelevant  for  examining the important
question about limitation.
17. The   next     submission   made   by   Mr   Deshpande,   learned

senior   counsel     that   the   very     refusal   Exh.   82     was   of     no   legal
consequence  on the anvil of Sec. 5 of the Contract Act,  does not appeal
to me. If  in  the  opinion  of the plaintiff  the  cancellation  (Exh. 82 )
dated 12.07.1982 was not according to law or Section 5 of Contract Act,
nothing prevented the plaintiff  in filing the suit  within  the stipulated
time of three years provided by law,   and also   to challenge the   said
action on the   ground argued before     me   including the one about
Section 5 of the Contract Act   or   that the defendant could not   have
unilatrally   cancelled   the   agreement   for   whatever   reasons.   The   fact
remains that the agreement  was specifically cancelled  and refusal  was
specifically made by the  defendant  and Article 54  of the Limitation Act
provides  for commencement of limitation from the date of refusal.
18. The  next question   is  about  the     respondent/plaintiff   not
having     challenged   the   refusal     or   cancellation   of   agreement   dated
30/1/75 (Exh.65), whether the suit  was maintainable  in the light of the
judgment in the case of I.S. Sikandar  vs.  K.Subramani and others :
(2013)   SCC     27.    It   would   be   appropriate   to   note   the       relevant
paragraphs from the said judgment.  In that  case, the defendant nos.1
to 4  who were  served  summons had remained absent  and  were exparte.
The Apex Court  while dealing with the similar question, observed

as  under :­
“ 32. After perusal of the impugned judgment  of
the  High Court  and the   questions of  law  framed by
Defendant 5 in this appeal, the following points would
arise for determination of this Court:
32.1(i) Whether     the   original   suit   filed   by   the
plaintiff   seeking   a     decree     for   specific   performance
against Defendants 1­4 in respect of the suit  schedule
property  without seeking the declaratory relief with
respect to termination of the agreement of  sale vide
notice  dated 28.3.1985,  rescinding  the contract, is
maintainable in law ?
36. Since the plaintiff  did not perform his part
of contract within  the  extended period   in the legal
notice   referred to supra, the agreement of sale was
terminated as  per  notice    dated  28.3.1985  and  thus
there is termination  of the agreement of sale between
the plaintiff and Defendants  1­4  w.e.f.  10.4.1985.
37. As could be  seen from the prayer sought
for in the original suit, the plaintiff has not sought
for declaratory relief to  declare the termination of
agreement of sale  as bad in law. In the absence of
such prayer by the plaintiff   the original suit file dby

him before the trial court   for grant of decree for
specific performance in respect of the suit schedule
property on the basis of   agreement     of sale and
consequential   relief   of   decree   for   permanent
injunction  is not maintainable in law.
38. Therefore,  we have to hold that the relief sought
for by the plaintiff   for  grant  of  decree   for specific
performance of execution of sale deed in respect of the
suit schedule property in his favour on the basis of nonexisting
  agreement of sale is wholly unsustainable in
law. Accordingly, Point  (i) (see Para 32.1) is answered
in favour of  Defendant 5.”
What is significant   to note in the instant case is that, by
refusal  Exh. 82  dated 12.7.1982,  the plaintiff  was fully made  aware
about the intention to refuse  the performance of contract for whatever
reasons given in Exh.82. The submission made by Mr K.H. Deshpande
that such a refusal has no place in law or is not a valid  refusal  in the
eye   of   law is   a matter of   adjudication by the Court   on facts and
evidence. But then having been made fully aware about the cancellation
of agreement by Exh.82  and its full understanding  by plaintiff  which is
reflected  in  Exh.  83       dated   03.08.1982  by  the  plaintiff   itself,  it   is
difficult  to fathom as to why the plaintiff failed to pose a challenge to

the act of  cancellation Exh.82   in the suit itself by saying that  refusal
was not  valid in law. In paragraph 37   of the judgment cited supra,  the
Apex Court in clear  terms held that in the absence of such a prayer  by
the plaintiff, the original suit is not maintainable in law     since no
declaratory relief    declaring  that agreement of sale as bad in law,  was
sought  in the suit.  I  think the ratio of the above decision is  as clear as
it could  be  and there is no reason for me  to hold that in the  absence of
any challenge to the act of termination of  contract by Exh.82  the suit
would be maintainable. To sum up, this Question No.(iii) will have to be
answered by holding that the original suit was not maintainable, in the
absence of challenge to the termination  of agreement dated  31.07.1975
by termination notice  Exh.82 dated  dated 12.07.1982.
19. Now coming to the additional substantial question of law
No.(iv)  framed by me (supra), at the outset, it   has not been dealt by
any of the courts below.    The objection however  before me   from the
respondent is that   issue of non­joinder of necessary parties,   was not
framed and, therefore, it is not permissible to have adjudication here on
the said question/issue. However,  on facts,  I find  that in paragraph  2
of the  written  statement,   the following was the objection at the first
opportunity:

2) “It is not disputed  that this defendant became  the
exclusive owner  of the land mentioned in the para  by
partition deed  dated  17.2.1973, and that an agreement
was   made   on   30.01.1975   not   only   with   the   present
defendant, but also with Mrs. C. Suryabati  w/o late S.J.
Naidu; Smt. Padma Naidu and Shri Shriram Naidu. Since
they   were     parties   in   the   agreement   they   are
necessary parties for the purpose of this civil suit.”
Following is the relevant portion of deposition of witness no.
1 for the plaintiff  ­  Laxmikant :­
“.........Agreement   of sale is signed by   defendant, his
mother, his wife and son. Agreement also bears of my
signature. H.K. Sawangikar and   R.N. Nerkar were the
witnesses of that document. They  signed in my presence.
Cotne4nts were stated   by the defendant. Contents   are
correct. It is Exh.63.”
It is thus clear that the plaintiff   was made fully   aware
about the objection of the defendant at the very first stage before the
trial Judge,  that all of those who had  entered into agreement Exh.63,
were not party to the suit. It therefore cannot be said that the plaintiff is
being for the first time  noticed about the  said objection. It is  difficult

to understand  as to why the plaintiff did not take steps to add all the
persons in the agreement  who had agreed under Exh.63  to make them
parties.   There   is   no   explanation   whatsoever   much   less   plausible
explanation. These facts not being  in dispute and being the matters of
record, I think  a  pure question of law  arises  and, therefore  can be
answered by this Court.
In the case of Mumbai International Airport  vs.  Regency
Convention Centre and   others:( 2010) 7   SCC   417,   on this very
question, the Apex Court stated thus in para nos. 15, 18,19, and 26
while   also   explaining   the   ratio   in   the     case   of  Kasturi     vs.
Iyyamperumal  (2005) 6 SCC 733.     It is  therefore not necessary for
me to repeat what is  stated in the decision of Kasturi   : (2005) 6 SCC
733. 
15. A `necessary party' is a person who ought to
have been joined as a party and in whose absence no
effective decree could be passed at all by the Court. If a
`necessary party' is not impleaded, the  suit itself  is
liable to be dismissed. A `proper party' is a party who,
though   not   a   necessary   party,   is   a   person   whose
presence   would   enable   the   court   to   completely,
effectively and adequately adjudicate upon all matters
in disputes in the suit, though he need not be a person
in favour of or against whom the decree is to be made.

If a person is not found to be a proper or necessary
party, the  court has no jurisdiction to implead him,
against   the   wishes   of   the   plaintiff.   The   fact   that   a
person   is   likely   to   secure   a   right/interest   in   a   suit
property, after the suit is decided against the plaintiff,
will   not   make   such   person   a   necessary   party   or   a
proper party to the suit for specific performance. 
18. In Kasturi, this Court reiterated the position that
necessary parties and proper parties can alone seek to
be   impleaded   as   parties   to   a   suit   for   specific
performance. This Court held that necessary parties are
those   persons   in   whose   absence   no   decree   can   be
passed by the court or those persons against whom
there   is   a   right   to   some   relief   in   respect   of   the
controversy   involved   in   the   proceedings;   and   that
proper   parties   are   those   whose   presence   before   the
court would be necessary in order to enable the court
effectually   and   completely   to   adjudicate   upon   and
settle all the questions involved in the suit although no
relief in the suit was claimed against such person. 
19. Referring   to   suits   for   specific   performance,
this Court held that the following persons are to be
considered as necessary parties: (i) the parties to
the contract which is sought to be enforced or their
legal representatives; (ii) a transferee of the property

which is the subject matter of the contract. This Court
also explained that a person who has a direct interest
in   the   subject   matter   of   the   suit   for   specific
performance of an agreement of sale may be impleaded
as a proper party, on his application under Order 1
Rule 10 CPC. This Court concluded that a purchaser of
the   suit   property   subsequent   to   the   suit   agreement
would be a necessary party as he would be affected if
he   had   purchased   it   with   or   without   notice   of   the
contract, but a person who claims a title adverse to that
of the defendant­vendor will not be a necessary party. 
26. If   the   principles   relating   to   impleadment,   are
kept in view, then the purported divergence in the two
decisions   will   be   found   to   be   non­   existent.   The
observations in Kasturi and Sumtibai are with reference
to the facts and circumstances of the respective case. In
Kasturi,  this Court  held  that in  suits for  specific
performance, only the parties to the contract or any
legal representative of a party to the contract, or a
transferee   from   a   party   to   the   contract   are
necessary parties. In Sumtibai, this Court held that a
person having semblance of a title can be considered as
a   proper   party.   Sumtibai   did   not   lay   down   any
proposition   that   anyone   claiming   to   have   any
semblance of title is a necessary party. Nor did Kasturi
lay   down that no one, other than the parties to the

contract   and   their   legal   representatives/transferees,
can be impleaded even as a proper party.”
The above  dictum    of the Apex Court in relation  to the
necessary party   in a suit   for   specific performance of contract   in
particular, is clear and there is no doubt about the legal position that all
the persons  who are parties to the agreement  should be added as  party
to the suit  and upon  failure to do so, the suit  must fail. I, therefore,
answer   additional   Question   No.(iv)   in   the   affirmative.     This   Second
Appeal, in the result, must be allowed.
20. Hence I make the following order :
ORDER
a) Second Appeal No.235/2012 is allowed.
b) The judgment and decree dated 4th  October, 2011 passed by the
District Judge­9, Nagpur  in Regular Civil Appeal No.307/1999 and the
judgment and decree dated   21st  April,1999 passed by 4th   Joint Civil
Judge  (Senior Division )Nagpur  in Special Civil Suit No.564/1985  are
set  aside.
c) Special Civil Suit No.   564/1985 filed by the respondent no.1 is
dismissed.

d) Decree be drawn up  accordingly.
e) No  order as to costs.
Learned Advocate Mr.Sudame, for respondent no.1 prays  for stay
of this judgment and   order to enable the respondent no. 1 to take
recourse to the remedy provided under law. Mr. Bhangde opposes the
request.  However, in the interest of justice, the effect and operation of
this judgment and order is stayed for eight weeks.


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