Saturday, 9 March 2019

Whether date fixed for performance of agreement can be extended by conduct of parties?

 There are essentially two points that arise for our
consideration in this case. The first relates to limitation. A
specific date i.e. 31.03.1975 was fixed for performance of
the Agreement, i.e. execution of the sale deed. As per
Article 54 of the Schedule to the Limitation Act, when a
date is fixed for performance of the contract, the period of
limitation is three years from such date. The cause of
action has arisen on 31.03.1975 and the suit ought to have
been filed within three years from that date. Admittedly,
the suit was filed only in the year 1987. However, the
submission of the Plaintiffs is that the date fixed for
performance of the Agreement stood extended by the
conduct of the parties. It was submitted that even after
31.03.1975, the Defendants were pursuing the application
filed for permission before the L&DO with the cooperation
of the Plaintiffs. The further submission of the Plaintiffs is
that without the permission of the L&DO, the sale deed
could not have been executed on 31.03.1975. Therefore,
the Plaintiffs submit that the date fixed by the agreement
for the execution of the sale deed stood extended. It is
settled law that the vendee cannot claim that the cause of
action for filing the suit has not arisen on the date fixed in

the contract on the ground that certain conditions in the
contract have not been complied with. (See: Fateh
Nagpal & Co. v. L.M. Nagpal1, Vishwa Nath Sharma
v. Shyam Shanker Goela2 and K. Raheja
Constructions Ltd. v. Alliance Ministries3).

Non - Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 2525 of 2019
[ Arising out of S.L.P. (Civil) No. 32480 of 2018 ]

Urvashi Aggarwal  Vs Kushagr Ansal

L. NAGESWARA RAO, J.
Dated:March 06, 2019.

Leave granted.
1. The correctness of the judgment of the High Court,
affirming the judgment of the Trial Court, by which the suit
for specific performance filed by the Appellant and his
mother Smt. Urvashi Aggarwal (since deceased) was
dismissed, is the issue in the above appeal. The parties
are being referred to as they are arrayed in the suit.
2. The plaint averments are that Justice Chander Bhan
Aggarwal, father-in-law of the First Plaintiff (Smt. Urvashi

Aggarwal) took the first and second floors of the property
at 82, Jor Bagh, New Delhi on rent from Smt. Suraj Kumari
(since deceased). After the death of Justice Chander Bhan
Aggarwal in 1973, the tenancy of first and second floors of
the property was transferred to M/s Vinod Industries
Limited (of which the First Plaintiff was a Director). On
05.10.1974, the First Plaintiff and her son Rajiv Chander
Aggarwal (since deceased) entered into an agreement with
Smt. Suraj Kumari (original Defendant No.1) for the sale of
the above property (‘Agreement’). The consideration for
the sale of the property was fixed at Rs.1,85,000/-. The
relevant conditions pertaining to the payment of the
amount of consideration and the other rights that were
conferred on the parties were mentioned in the plaint.
According to the Plaintiffs, the sale deed had to be
executed by the Defendant No.1-Smt. Suraj Kumari after
obtaining permission from the Land and Development
Office (L&DO) and from the Income Tax Department. It
was stated that the Plaintiffs paid an amount of
Rs.20,000/- on 05.10.1974, Rs.40,000/- on 31.01.1975 and
Rs.10,000/- on 26.12.1975. According to them, they were

put in proprietary possession of the premises on payment
of Rs.70,000/- as stipulated in the Agreement.
3. M/s Vinod Industries stopped paying the rent to Smt.
Suraj Kumari as it had become a tenant of the Plaintiffs as
per the Agreement. The tenant of the ground floor- Shri
A.C. Deb had to pay the rent to the Plaintiffs as per the
Agreement. The Plaintiffs permitted the First Defendant to
collect the rent from Shri Deb, the tenant of the ground
floor which would be adjusted later against the balance
amount payable by them towards the sale consideration.
Shri Deb died in 1985 and his wife continued to live on the
ground floor. Mrs. Deb vacated the ground floor premises
at the end of September, 1987. After Mrs. Deb vacated the
ground floor, the Defendants started making repairs. On an
enquiry made by the Plaintiffs, the Defendants informed
them that the Defendant No.4 intended to occupy the
ground floor for which reason the repairs were being made.
The Plaintiffs demanded specific performance of the
Agreement on 13.10.1987 but the Second Defendant
refused to convey the property which gave rise to a cause
of action to file the suit. The Plaintiffs stated that from
1975 onwards the First Plaintiff’s husband was

continuously enquiring with the Second Defendant about
the status of the permission by the L&DO. He was being
informed that the permission was not granted. The
Plaintiffs pleaded that they were always ready and willing
to perform their part of the Agreement and alleged that
the Defendants were guilty of breach of the Agreement.
On the basis of the said averments, the Plaintiffs sought a
decree for specific performance and a direction to the
Defendants to execute the sale deed for the suit property,
a prohibitory injunction restraining the Defendants from
occupying or permitting others to occupy the ground floor
of the said property, and a mandatory injunction to the
Defendants to remove the wall constructed on the side
gate of the property.
4. The Defendants filed a written statement in which
they contended that the suit was barred due to laches and
that it was liable to be dismissed as the Plaintiffs were not
ready and willing to perform the essential terms of the
Agreement. There was no denial about the execution of
the Agreement dated 05.10.1974 but the averment
pertaining to the Plaintiffs complying with the conditions of
the Agreement was seriously disputed by the Defendants.

According to the Defendants, time for payment was of the
essence of the contract and the Plaintiffs failed to make
the payment as stipulated in the Agreement. The
allegation made by the Plaintiffs that inquiries were being
made about the status of the application before the L&DO
was denied. The Defendants categorically stated in the
written statement that the Agreement was never changed,
varied, or modified. The Defendants asserted that the
Plaintiffs were never put in proprietary possession of any
part of the property, the tenant on the ground floor
continued to pay the rent to the First Defendant, the
house-tax, ground rent etc. were being paid by the First
Defendant, and M/s Vinod Industries stopped paying rent
to the First Defendant. Apart from the other averments, the
Defendants also stated in the written statement that a
petition for eviction against the tenant on the ground floor
was filed by the Defendants and they ultimately settled the
matter with Mrs. Deb who vacated in 1987. Finally, the
Defendants pleaded that the Plaintiffs were never ready
and willing to perform their part of the contract and hence,
the suit was liable to be dismissed.
5. The Trial Court framed the following issues:

“1. Whether the suit is within limitation?
2. Whether the suit is not bad for misjoinder of parties in
cause of action?
3. Whether the Agreement to sell dated 5/10/74 was
amended and varied by the parties with regard to
payment of Rs. 50,000/- upto 31/10/74 and the balance
sale consideration in installments of Rs.7,000/-
commencing from January 1975 till full payment of the
sale consideration as alleged? If so, to what effect?
4. Whether the amount of Rs. 10,000 paid by the
plaintiffs was towards installment of Rs. 50,000 as
alleged by the plaintiff?
5. Whether the plaintiff was put into proprietary
possession of the entire suit property by defendant no. 1
as alleged in para 15 of the plaint?
6. Whether there is a subsisting Agreement to sell
capable of specific performance as alleged?
7. Whether the defendant committed breach of the
contract?
8. Whether the plaintiff has been ready and willing to
perform the Agreement to sell?
9. Whether time for payment was not the essence of the
contract, as alleged by the plaintiff?
10. Whether the Agreement to sell was breached,
repudiated, abandoned, and given up, as alleged by the
defendant?
11. Whether the plaintiffs are entitled to specific
performance of the Agreement to sell dated 5/10/74 and
to what other relief or reliefs are the plaintiffs entitled to
and against whom?
12. Relief.”
6. The Trial Court dismissed the suit by concluding that
time was of the essence of the Agreement. The Plaintiffs
were held to be neither ready nor willing to perform their
part of the Agreement and that the suit was filed beyond
the prescribed period of limitation. The High Court
dismissed the Plaintiffs’ appeal and affirmed the judgment
of the Trial Court agreeing with the submissions of the
Defendants that the suit was barred by limitation and that

the Plaintiffs failed to prove their readiness and willingness
to perform the essential terms of the Agreement.
7. Before embarking upon the adjudication of the
dispute, it would be relevant to refer to the relevant terms
of the Agreement entered into between the Plaintiffs and
the Defendants. The suit property was agreed to be sold
at a price of Rs.1,85,000/-. The first instalment of
Rs.20,000/- was to be paid at the time of signing the
Agreement and the second installment of Rs.50,000/- was
due by 31.10.1974. Balance amount was payable in
instalments of Rs.7,000/- per month beginning from the 1st
week of January, 1975 until the total amount was paid. No
interest was payable on the deferred payment schedule till
December, 1975. A simple interest at the rate of 12% p.a.
was payable on the balance amount from January, 1976
every month along with the installments of Rs.7,000/- per
month. The rate of interest was increased from 12% to
24% if all the payments were not made as per the
schedule. On payment of the first two installments of
Rs.20,000/- and Rs.50,000/-, the Plaintiffs were entitled to
receive the rents from Shri A.C. Deb who was residing on
the ground floor as a tenant and M/s Vinod Industries. The

liability for payment of the house tax, ground rent and all
other outgoings had to be borne by the Plaintiffs after the
Plaintiffs started receiving the rents from Shri A.C. Deb and
M/s Vinod Industries. The Plaintiffs were made responsible
for taking steps to evict the tenants. The Defendants had
to get the necessary permission to sell the property from
the L&DO before the date of execution of the sale deed as
well as the necessary permission from the Income Tax
Authorities. Clause 10 of the Agreement provided that the
sale deed shall be executed before 31.03.1975. In case of
failure on the part of the Defendants to execute the sale
deed, the Plaintiffs were given the right to get the suit
property conveyed by specific performance through the
Court.
8. We have heard Mr. Jayant Bhushan, learned Senior
Counsel for the Appellants/Plaintiffs and Mr. Sachin Datta,
learned Senior Counsel for the Respondents/Defendants.
Mr. Jayant Bhushan submitted that the suit was filed within
the prescribed period of limitation and the findings of the
Courts below that the suit was barred by limitation are
unsustainable. According to him, no cause of action
accrued for filing a suit on 31.03.1975, which was the date

fixed for execution of the sale deed, as there was no
permission granted by the L&DO for transfer of the
property as on that date. He submitted that a sale deed
could not have been executed without the permission from
the L&DO. He relied upon Section 63 of the Indian Contract
Act, 1872 to urge that the date fixed for execution of the
sale deed could be extended. There is no dispute about the
pendency of the application filed by Smt. Suraj Kumari
before the L&DO even on 31.03.1975. He argued that the
conduct of both the Plaintiffs and the Defendants after
31.03.1975 would show that the date fixed for execution of
the sale deed on 31.03.1975 stood extended. He stated
that once the date fixed in the Agreement was extended
and no new date was fixed, the second part of Article 54 of
the Schedule to the Limitation Act, 1963 (Limitation Act)
would apply and the limitation for filing the suit would start
from the date of refusal to perform the Agreement. There
was no refusal to perform the Agreement by the
Defendants until 1987 and thereafter, the suit was filed
within the period of limitation. Mr. Bhushan contended that
Section 16(c) of the Specific Relief Act, 1963 stood
complied with as the Plaintiffs pleaded and proved their

readiness and willingness to perform the essential terms of
the Agreement. He submitted that there was no doubt
about the financial capacity of the Plaintiffs in paying the
balance sale consideration due to their affluent
background. In view of the friendly relations between Vinod
Chander Aggarwal, the husband of the First Plaintiff and
Sushil Ansal, Defendant No.2 (not a party to the
Agreement), it is submitted by Mr. Bhushan that the
Plaintiffs believed that the application for permission
before the L&DO was still pending and in any event, the
Defendants did not inform the Plaintiffs about the
permission granted by the L&DO in the year 1977.
Assuming that time is the essence of the Agreement,
according to Mr. Bhushan, Section 55 of the Indian
Contract Act provides for the contract becoming voidable
at the instance of the Plaintiffs which option was not
exercised by them. In case, time is not the essence, the
Plaintiffs are entitled for damages. He further stated that
the Defendants did not terminate the Agreement and did
not refund the amount paid by the Plaintiffs toward part of
the sale consideration.

9. Mr. Sachin Datta, learned Senior Counsel appearing
for the Defendants submitted that the limitation for filing
the suit started on 31.03.1975, which was the date fixed
for performance of the Agreement. As the suit was not filed
within three years from that date, it was barred by
limitation. He referred to the findings recorded by the
Courts below that the agreement was neither varied nor
modified. He further submitted that the non-fulfilment of
the condition pertaining to obtaining permission cannot be
an excuse for the Plaintiffs to not file a suit for specific
performance within the prescribed period of limitation.
According to him, the second part of Article 54 of the
Schedule to the Limitation Act is not applicable to this
case. He asserted that there was an inordinate delay in
filing the suit which by itself is a ground for dismissal of the
suit. The torpid silence of the Plaintiffs in not resorting to a
legal remedy within a reasonable period tantamounts to
their abandoning the Agreement. Finally, Mr. Datta
submitted that the findings of fact on the point of
readiness and willingness cannot be interfered with by this
Court in exercise of its jurisdiction under Article 136 of the
Constitution of India.

10. There are essentially two points that arise for our
consideration in this case. The first relates to limitation. A
specific date i.e. 31.03.1975 was fixed for performance of
the Agreement, i.e. execution of the sale deed. As per
Article 54 of the Schedule to the Limitation Act, when a
date is fixed for performance of the contract, the period of
limitation is three years from such date. The cause of
action has arisen on 31.03.1975 and the suit ought to have
been filed within three years from that date. Admittedly,
the suit was filed only in the year 1987. However, the
submission of the Plaintiffs is that the date fixed for
performance of the Agreement stood extended by the
conduct of the parties. It was submitted that even after
31.03.1975, the Defendants were pursuing the application
filed for permission before the L&DO with the cooperation
of the Plaintiffs. The further submission of the Plaintiffs is
that without the permission of the L&DO, the sale deed
could not have been executed on 31.03.1975. Therefore,
the Plaintiffs submit that the date fixed by the agreement
for the execution of the sale deed stood extended. It is
settled law that the vendee cannot claim that the cause of
action for filing the suit has not arisen on the date fixed in

the contract on the ground that certain conditions in the
contract have not been complied with. (See: Fateh
Nagpal & Co. v. L.M. Nagpal1, Vishwa Nath Sharma
v. Shyam Shanker Goela2 and K. Raheja
Constructions Ltd. v. Alliance Ministries3).
11. On a detailed consideration of the evidence on record,
the Courts below have come to the conclusion that the
clauses in the Agreement have neither been amended nor
varied. Merely because the Defendants were pursuing the
application filed for permission before the L&DO, it cannot
be said that the date fixed for performance of the
Agreement stood extended. We agree with the findings of
the Courts below that the suit ought to have been filed
within three years from 31.03.1975 which was the date
that was fixed by the Agreement. The submission made on
behalf of the Plaintiffs that part II of Article 54 of the
Schedule to the Limitation Act applies to this case and that
the suit was filed within limitation as the refusal by the
Defendants was only in the year 1987 is not acceptable.
Moreover, the Plaintiffs have not performed their part of
the Agreement within a reasonable period. As per the
1 (2015) 8 SCC 390, para 6
2 (2007) 10 SCC 595, para 12
3 1995 Supp (3) SCC 17, para 4

Agreement, the Plaintiffs were given the right to get the
sale deed executed through the Court in case of failure on
the part of the Defendants to execute the sale deed by
31.03.1975. The Plaintiffs filed the suit 12 years after the
date fixed for performance. It is relevant to refer to the
judgment of this Court in K.S.Vidyanadam v. Vairavan  (1997) 3 SCC 1
wherein it was held as follows:
“Even where time is not of the essence of the contract,
the plaintiffs must perform his part of the contract
within a reasonable time and reasonable time should be
determined by looking at all the surrounding
circumstances including the express terms of the
contract and the nature of the property.”
12. The silence maintained by the Plaintiffs for about 12
years amounted to abandonment of the Agreement and we
approve the finding in this regard made by the Trial Court.
13. The Courts below have found that the Plaintiffs failed
to prove their readiness and willingness to perform their
part of the Agreement. The failure on the part of the
Plaintiffs in not paying the monthly instalments of
Rs.7,000/-, not collecting the rent from the tenant on the
ground floor, not paying the house tax etc., and not taking
any action for eviction of the tenant on the ground floor
are some of the points held against the Plaintiffs by the
Courts below which show that they were not ready and
willing to perform their part of the Agreement. There is no
compelling reason to re-examine the said findings of fact
by the Courts below in exercise of our jurisdiction under
Article 136 of the Constitution of India. We are in
agreement with the view of the Courts below that the
Plaintiffs have not proved their readiness and willingness
to perform their part of the Agreement and, therefore, are
not entitled to a decree of specific performance.
14. The High Court directed a refund of Rs.70,000/- which
was paid by the Plaintiffs to the Defendants in 1975 with
interest at the rate of 24% p.a.. In view of the peculiar
facts of this case in which the Plaintiffs have paid
Rs.70,000/- way back in 1975 and the steep increase in the
price of the property over time, we are of the considered
opinion that the Plaintiffs are entitled to a higher amount
than what was granted by the High Court. Instead of the
refund of Rs.70,000/- with interest at the rate of 24% p.a.,
we direct the Defendants to pay Rs. 2,00,00,000/- (Rupees
Two Crores) to the Plaintiffs within a period of eight weeks
from today.
15. Subject to the above modification, the appeal is
dismissed.

..............................J.
[L. NAGESWARA RAO]
..............................................J.
[MOHAN M. SHANTANAGOUDAR]
New Delhi,
March 06, 2019.

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