Delhi High Court
Lm Nagpal & Ors. vs M/S Fatehji & Co. & Ors. on 19 July, 2013
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
*IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 19 th July, 2013
+ RFA 350/1997
LM NAGPAL & ORS. ..... Appellants
Through: Mr. M.L. Mahajan & Mr. Gaurav
Mahajan, Advs.
Versus
M/S FATEHJI & CO. & ORS. ..... Respondents
Through: Mr. Abhinav Vasisht, Sr. Adv. with
Mr. Naveen Kumar Chaudhary & Mr.
Gulshan Chawla, Advs.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
RAJIV SAHAI ENDLAW, J
1. The appeal impugns the order dated 07.08.1997 of the Court of
Additional District Judge, Delhi rejecting the plaint, in suit No.87/1994 filed
by the appellants/plaintiffs for specific performance of an Agreement of
Sale of immovable property, on an application of the respondents/
defendants under Order 7 Rule 11 of the CPC.
2. The appeal was admitted for hearing and the Trial Court record
requisitioned. The counsels have been heard.
3. The Trial Court in the impugned order has held:
(i) that specific performance was claimed of a written Agreement
to Sell dated 02.07.1973;
(ii) that as per the Agreement to Sell, peaceful possession of the
entire property agreed to be sold had been delivered to the
RFA 350/1997 Page 1 of 18
appellants / plaintiffs;
(iii) that the suit for specific performance was filed on 29.04.1994;
(iv) that as per the written Agreement to Sell, the time for
performance of the contract fixed in the agreement was till
02.12.1973;
(v) that as per the provisions of Article 54 of the Limitation Act,
1963, the limitation for filing a suit for specific performance is
three years from the date fixed for performance and if no such
date is fixed, when the plaintiff has notice that performance is
refused;
(vi) that though the appellants / plaintiffs have filed some letters
extending the time for performance but the said time also was
extended last for six months with effect from August, 1976 i.e.
expiring on 01.02.1977 and the suit filed in 1994 was beyond
three years therefrom also;
(vii) that the appellants / plaintiffs had also pleaded that sons and
grandsons of one of the respondents / defendants had in July,
1985 filed a suit for declaration and permanent injunction to
restrain the respondents / defendants from selling the property
and to have the sale made by the respondents / defendants in
favour of the appellants / plaintiff declared as null and void but
the said suit was also dismissed on 05.04.1989;
(viii) that the suit filed in 1994 was beyond three years therefrom
also;
RFA 350/1997 Page 2 of 18
(ix) that there was no acknowledgment in writing within the
meaning of Section 18 of the Limitation Act which can give a
fresh period of limitation for filing the suit;
(x) that though the appellants / plaintiffs have pleaded that the
respondents only after August, 1991 had started avoiding the
appellants / plaintiffs and till then were assuring the appellants /
plaintiffs that they will obtain the requisite permissions for
execution of the Sale Deed and execute the Sale Deed but the
said assurances were verbal only; oral acknowledgement
cannot be proved since oral acknowledgment cannot give a
fresh period of limitation under Section 18 of the Limitation
Act which requires the acknowledgment to be in writing;
(xi) that the respondents / defendants were not going to admit any
such cause of action having arisen and accrued to the appellants
/ plaintiffs in the month of August, 1991 and thereafter;
(xii) that the fact that the appellants/plaintiffs were in possession of
the property agreed to be sold did not make any difference to
the aspect of limitation;
(xiii) that the appellants / plaintiffs were not diligent and slept over
their rights and there was nothing preventing them from within
three years of expiry of the last extension as aforesaid in
February, 1977 institute the suit;
(xiv) that nothing prevented the appellants / plaintiffs from filing the
suit for specific performance when they came to know from the
suit filed by the sons and grandsons of the respondents /
RFA 350/1997 Page 3 of 18
defendants at Kurukshetra that the intentions of the respondents
/ defendants had gone dishonest; even though the said suit was
dismissed on 05.04.1989 but the appellants / plaintiffs still kept
sleeping till 1994; and
(xv) that since the time for performance was fixed in the present
case, the limitation has to be counted from the said date only;
It was thus held that the suit was barred by time and the plaint
rejected under Order 7 Rule 11 of the CPC.
4. The counsel for the appellants/plaintiffs has contended that since the
appellants / plaintiffs have pleaded that the appellants / plaintiff as
purchasers were in possession of the property, the learned Additional
District Judge erred in applying Article 54 and the suit of the appellants /
plaintiffs could not have been barred by time.
5. I am unable to agree. Article 54 of the Limitation Act does not make
any difference between a case where possession of the property agreed to be
sold has been delivered in part performance of the Agreement to Sell or
otherwise and lays down the limitation to commence from the date fixed for
performance and if no such date is fixed then from the date when the
appellants / plaintiffs have notice that performance is refused. No fault can
thus be found in the order of the learned District Judge in holding the
factum of the appellants / plaintiffs to be in possession to be irrelevant for
the said purpose.
6. The counsel for the appellants / plaintiffs has next argued that the
land underneath the property is leasehold and the sale could not have been
completed without obtaining the permission of the superior lessor i.e. the
RFA 350/1997 Page 4 of 18
Land & Development Office (L&DO) and the Agreement to Sell also
required the respondents / defendants to take such permission. It is
contended that the said permission has not been taken till now. It is further
contended that the cause of action in such a situation would arise only when
the respondents / defendants are in a position to execute the Sale Deed and
not prior thereto. It is thus argued that the suit could not have been
dismissed as barred by time. Reliance in this regard is placed on Mrs.
Chandnee Widya Vati Madden Vs. Dr. C.L. Katial AIR 1964 SC 978,
Rojasara Ramjibhai Dahyabhai Vs. Jani Narottamdas Lallubhai AIR
1986 SC 1912 and Sewa Singh Vs. R.S. Malhotra AIR 2004 Delhi 152.
7. I am unable to agree with the said proposition also. Even if any
permission is to be obtained prior to the performance / completion of the
contract, mere fact that the respondents / defendants have not obtained the
said permission would not lead to inference that no cause of action for suing
for specific performance would arise. It has been held in Vishwa Nath
Sharma Vs. Shyam Shanker Goela (2007) 10 SCC 595, K. Raheja
Constructions Ltd. Vs. Alliance Ministries 1995 Supp. (3) SCC 17 and Van
Vibhag Karamchari Griha Nirman Sahkari Sanstha Maryadit Vs. Ramesh
Chander (2010) 14 SCC 596 that even where such permissions are to be
obtained, the decree for specific performance can be passed directing the
seller to take the said permissions and the decree for specific performance is
to be made subject to the grant of said permissions. The judgments cited by
the counsel for the appellants/plaintiffs do not deal with the said aspect and
the reliance thereon is misconceived.
8. The senior counsel for the respondents / defendants has at the outset
RFA 350/1997 Page 5 of 18
contended that since Clause 11 of the Agreement to Sell which is as under:
"11. That in the event of sale not materialising by the date
2nd December, 1973, through no cause attributable to the
Vendors, the earnest money of Rs.20,000/- already paid by
the prospective Purchaser shall stand forfeited by the
Vendors. In case the transaction fails to materialise through
causes direct or indirect attributable to the Vendors, within
the period aforesaid, the vendors shall be liable to repay
Rs.20,000/- to the Prospective Purchaser as earnest money
plus Rs.20,000/- as penalty to the Prospective Purchaser in
addition to the aforesaid sum of Rs.55,000/- (Rupees Fiftyfive
Thousand only) paid as advance and earnest money."
provides for the respondents / defendants as sellers, even if in default
of performance, to only pay double the amount of earnest money received
from the appellants / plaintiffs and does not provide for the remedy of
specific performance, the claim for specific performance is misconceived
and is liable to be dismissed.
9. Though the aforesaid ground did not form part of the application of
the respondents / defendants under Order 7 Rule 11 of the CPC and the
learned Additional District Judge has not rejected the plaint on this ground
but I may state that the same even otherwise has no merit.
10. The Supreme Court though in Dadarao Vs. Ramrao (1999) 8 SCC
416 had held so but subsequently in P.D' Souza Vs. Shondrilo Naidu
(2004) 6 SCC 649 the judgment in Dadarao was held to be per incurium
and it was held that merely because the Agreement to Sell provides for
RFA 350/1997 Page 6 of 18
payment by the sellers of compensation in the event of being in breach does
not take away the right of the purchaser to in law seek specific performance
of the Agreement to Sell. Recently, in Man Kaur Vs. Hartar Singh Sangha
(2010) 10 SCC 512 also it has been held that for agreement purchaser to
seek specific performance of a contract of sale relating to immovable
property it is not necessary that the contract should contain a specific
provision that in the event of breach, the aggrieved party will be entitled to
specific performance and the provision for damages is not intended to
provide vendor an option of paying money in lieu of specific performance.
11. The senior counsel for the respondents/defendants has next invited
attention to pages no.1231-1241 of the Trial Court record containing the
successive letters issued by the respondents / defendants to the appellants /
plaintiffs extending the time for execution of the Sale Deed on the ground
that the requisite permissions from the superior lessor i.e. L&DO and from
the Income Tax department had not been received till then. He has
contended that the last of such letters extends time from 01.08.1976 by six
months and which would expire on 31.01.1977; the suit should have been
filed within three years therefrom. It is argued that since the extensions
were always in writing and for a period of three months or six months, the
case of the appellants of oral extensions ought not to be believed and
rejected.
12. It is contended that mere clever drafting on the part of the counsel for
the appellants / plaintiffs should not be allowed to maintain a suit which
otherwise is palpably barred by time. Reliance in this regard is placed on
the observations in T. Arivandandam Vs. T.V. Satyapal (1977) 4 SCC 467
RFA 350/1997 Page 7 of 18
as reported in Church of Christ Charitable Trust & Educational
Charitable Society Vs. Ponniamman Educational Trust (2012) 8 SCC 706.
It is contended that the very fact that the respondents / defendants from 1974
till 1976 were issuing letters of extension of time for performance and
stopped doing that should have been construed by the appellants / plaintiffs
as refusal of performance and the limitation would commence therefrom.
13. At this stage it is apposite to notice the pleas in paras no.10 to 16 of
the plaint, which are as under:-
"10. That since the defendants could not obtain the aforesaid
permission to sell the property no.C-39, Defence Colony, New
Delhi from the lessor i.e. the President of India, acting
through Land & Development Office, the defendants asked
for extension of time for execution of the sale deed in favour
of late Smt. Ram Piari Nagpal, the predecessor-in-interest of
the plaintiffs from time to time, some time by written letters
and sometimes on oral request. While asking for these
extension it was made clear and was also so understood
between the parties to the said agreement to sell that time
would not, for the purpose of the said agreement, be the
essence of the said agreement to sell. No time for
performance was fixed by the parties to the said agreement
for the purpose of execution and completing performance of
the said agreement to sell when request for enlargement of
time for the performance of the contract in question after the
expiry of the period mentioned in clause (11) of the said
RFA 350/1997 Page 8 of 18
Agreement to Sell was agreed and acceded to. The late Smt.
Ram Piari Nagpal and after her death the plaintiffs, who were
in complete control and possession of the entire building in
question in pursuance to the agreement to sell in question,
right from the day of the execution thereof, had readily agreed
to the proposal and suggestions of the plaintiffs to given a go
bye to clause (11) of the agreement and to have the said
Agreement being performed by the defendants on their
obtaining the aforesaid permission from the Lessee. Even
otherwise and insptie of clause (11) time cannot be said to be
the essence of the contract in question which relates to the sale
of the immovable property. All along with plaintiffs are
treating themselves as owners of the said property.
Since, the sale in question could not be executed by the
defendants without getting and obtaining the requisite
permission from the Lessor, the period of limitation, for
enforcement / performance of the contract in question would
commence only after the said permission had been obtained
and granted and due information thereof had been intimated
to the plaintiffs by the defendants. Even otherwise, the
plaintiffs being in possession and control of the property in
question, in pursuance of the agreement to sell entered into
between the parties, the question of any limitation on the part
of the plaintiff for seeking enforcement and performance of the
said agreement does not arise. The parties to the said
agreement did not fix any time while permitting the
RFA 350/1997 Page 9 of 18
defendants to apply and obtain the said permission from the
lessor particularly after time was extended on number of
occasions and fixing no time limit thereafter.
11. That late Smt. Ram Piari Nagpal had done all that was
required of her to be done under the terms and conditions of
the said agreement to sell, inasmuch as she had paid the full
consideration towards the sale of the property in question and
was always ready and willing to perform her part of the
contact.
12. That the defendants always assured and represented to
Smt. Ram Piari Nagpal that they are always ready and willing
to execute the sale deed in question, but since they have not
been able, for one reason or the other, to obtain the requisite
permission / approval for the sale of the said property in
favour of her, they are not in the position to execute the sale
deed, but they assured the said Smt. Ram Piari Nagpal and
after her death the plaintiffs, that the defendants should be
getting the said permission any day and on the receipt thereof
would execute the sale deed.
13. That, however, sometime in the month of July, 1985
S/Shri Bhartinder Singh, Digender Singh both sons of Shri
Tikka Khushwant Singh, defendant no.2 alongwith minor
Isham Singh son of Bhartinder Singh, Prithvi singh, minor, son
of Shri Deginder Singh residents of Village Indbari now in
Village Kamoda, Tehsil Pehowa, Distirct Kurukshetra filed a
suit for declaration and permanent injunction against both
RFA 350/1997 Page 10 of 18
Shri Khushwant Singh, defendant no.2 and Smt. Gunwant
Kaur and the present plaintiffs as legal heirs of Late Smt. Ram
Piari Nagpal praying that a decree of declaration be passed in
their favour to the effect that the property in question namely
C-39, Defence Colony, New Delhi is ancestral joint Hindu
family of the plaintiffs and, therefore, the sale made by
defendant no.1 in favour of the plaintiffs herein be declared as
null and void. The said suit being false and frivolous suit
which was contested by the present plaintiffs and the same was
dismissed on 05.04.1989.
14. That after the aforesaid suit filed by Bhartinder Singh
and Digender Singh, sons of defendant no.2 along with
others, had been dismissed on 05.04.1989, the plaintiffs
asked and requested the defendants to take immediate steps
to obtain the requisite permission from the lessor, so as to
enable the defendants to execute the sale deed of the
property in question in favour of the plaintiffs. The
defendants again assured and represented to the plaintiff
that since the aforesaid suit filed by sons of defendant no.2
and others had been dismissed, now there would be no
hurdle or problem whatsoever in getting the requisite
permission from the lessor for the sale of the property in
question in favour of the plaintiffs. The plaintiffs accepted
the said assurance and representation of the defendants as
true and correct and hoped that the defendants would obtain
the said permission from the Lessor.
RFA 350/1997 Page 11 of 18
15. That again when the plaintiffs did not hear anything
from the defendants about the grant of the said permission, the
plaintiffs contacted the defendants. The defendants told the
plaintiffs that they are negotiating with the office of the Land
& development for the amount of unearned increase, i.e.
being demanded, on behalf of the lessor, for according the
said permission of sale. The defendants also informed the
plaintiffs that they are also arranging for the amount payable
to the Lessor towards the unearned increase. These talks took
place sometimes in August, 1991.
16. That the plaintiffs, again did not hear anything from the
defendants and again tried to contact them but to their utter
surprise found that the defendants are trying to evade and put-
off the plaintiffs. The plaintiffs even thereafter in 1992 and
in 1993 made efforts to contact the defendants, but could not
succeed. It appears that after the assurance and
representations made by the defendants to the plaintiffs in
August 1991 for obtaining the said permission and payment
of unearned increase in connection therewith, there seems to
be some change in the minds of the defendants or may be the
defendants backed out from making the payment of the
unearned increase for obtaining the requisite permission. In
any case, no intimation has been given by the defendants to the
plaintiffs about the obtaining of any such permission from the
Lessor. In fact, after August, 1991 the defendants almost have
succeeded in hiding themselves from the plaintiffs. The
RFA 350/1997 Page 12 of 18
plaintiffs were still under the impression that the defendants
would be making arrangements for collection of the money for
making payment to the Lessor towards the unearned
increase." (emphasis added)
14. The contention of the senior counsel for the respondents/defendants
is that the averments in aforesaid paras of the plaint, of extension are bald,
without any supporting documents and without any particulars as to which
of the appellants/plaintiffs met which of the respondents / defendants and on
which date. Reliance is placed on Hardesh Ores Pvt. Ltd. Vs. Hede and
Company (2007) 5 SCC 614 laying down the law of limitation qua Article
54 in a suit for specific performance. It is stated that while some of the
appellants /plaintiffs are abroad, all the respondents are in Dehradun and the
pleas aforesaid, without stating as to how the alleged assurances were meted
out cannot be believed.
15. The counsel for the appellants interjects informing that the letters of
extension are from Delhi.
16. The arguments of the senior counsel for the respondents/defendants,
though may be good at the post trial stage but lose sight of the fact that the
present is a stage under Order VII Rule 11 of the CPC and thus cannot be
given any credence at this stage. At the stage of Order VII Rule 11 of the
CPC, the Supreme Court recently in Mayar (H.K.) Ltd. Vs. Owners &
Parties, Vessel M.V. Fortune Express (2006) 3 SCC 100 has held, the
averments in the plaint have to be taken to be true and the fact that the case
of the plaintiff is weak and the chances of success bleak cannot weigh with
the Courts while deciding the same. The defence raised by the defendant is
RFA 350/1997 Page 13 of 18
to be ignored at the said stage. Rejection of the plaint is a serious matter as it
non-suits the plaintiff and kills the cause of action. Therefore, without
satisfaction of requirement of Order VII Rule 11, the plaint cannot be
rejected. Reference in this regard can be made to a detailed discussion in the
recent judgment of this Court in Sh. Gopal Johari Vs. Sh. Anup Diwan
MANU/DE/3111/ 2012. It was further held that at the stage of Order VII
Rule 11 of the CPC, the Court is not required to make an elaborate enquiry
into doubtful or complicated questions of law or fact.
17. It is not the contention of the senior counsel for the
respondents/defendants also that even if the averments in the plaint are to be
believed, the claim for specific performance would still be barred by time.
Rather I find that in view of the statements made in the paragraphs of the
plaint set-out hereinabove, the objection of limitation raised by the
respondents/defendants becomes a mixed question of law and facts which
necessarily requires adjudication and the defence of limitation is to be
considered after the trial is concluded and not at the threshold.
18. In this regard, it may also be noticed that though the written
Agreement to Sell between the parties did fix a date for performance but the
parties subsequently by their writings gave a go-by to the date so fixed for
performance and extended it from time to time. The appellants/plaintiffs
plead that it was still further extended orally. The senior counsel for
respondents/defendants has been unable to contend that there was any bar to
such oral extension of the time fixed for performance. Once it is held that it
was permissible for the parties to after some written extensions of the time
fixed for performance, orally/verbally extend the time for performance, it
RFA 350/1997 Page 14 of 18
becomes a matter of evidence whether they did orally/verbally extend the
time for performance till after the receipt of the permissions from the
L&DO and Income Tax Department. If the appellants/plaintiffs prove such a
oral/verbal agreement or representations, then the first part of Article 54 of
the Schedule to the Limitation Act would cease to apply and the time from
which the limitation of three years prescribed for filing a suit for specific
performance would commence would be from the date when the appellants /
plaintiffs had notice that performance is refused and which date as per the
averments in the plaint is within three years prior to the institution of the
suit.
19. The Supreme Court in Panchanan Dhara Vs. Monmatha Nath
Maity (2006) 5 SCC 240 has held that the question as to whether a suit for
specific performance of contract will be barred by limitation or not would
not only depend upon the nature of the agreement but also the conduct of
the parties and also as to how they understood the terms and conditions of
the agreement. It was further held that even where the time is fixed for
performance of the Agreement of Sale, if any case of extension of time for
performance is pleaded and established, the suit would not be barred by
limitation. It was yet further held that extension of time for performance of a
contract is not necessarily to be inferred from written document and it could
be implied also; the conduct of the parties in this behalf is relevant and once
a finding of fact has been arrived at that the time for performance of the
contract had been extended by the parties, the time to file a suit shall be
deemed to start running only when the plaintiff had notice that performance
had been refused. It was yet further held that if certain statutory formalities
RFA 350/1997 Page 15 of 18
are required to be complied with or permissions required to be obtained, a
Deed of Sale cannot be registered till the said requirements are complied
with and in a given situation the vendor may not be permitted to take
advantage of his own wrong in not taking steps for complying with the
statutory provisions and then to raise a plea of limitation. Reference was
made to Section 63 of The Indian Contract Act, 1872 providing that every
promisee may extend time for performance of the contract and it was held
that such an agreement to extend time need not necessarily be reduced to
writing and may be proved by oral evidence or by conduct including
forbearance on the part of the other party. A question of limitation, it was
held, can be decided only after taking evidence and recording finding as to
the date on which the plaintiff had such notice.
20. The Ld. Additional District Judge has held the suit of the plaintiffs to
be time barred on the ground of there being no acknowledgment in writing -
within the meaning of Section 18 of the Limitation Act - extending the
limitation period commencing from the accrual of a cause of action to the
plaintiffs. However, the application of Section 18 presupposes
determination of the accrual of a cause of action and it governs only the
question of extension of the limitation period commencing therefrom. In the
present case, the precise date of accrual of a cause of action itself is disputed
with the plaint suggesting that the time fixed for performance of the
Agreement was deferred vide letters exchanged between the parties and
subsequently through oral agreements between them. The question therefore
before this court is the determination of the date from which the cause of
action can be said to have accrued to the plaintiff and the question whether
RFA 350/1997 Page 16 of 18
the same stood extended by virtue of Section 18 of the Limitation Act need
not be gone into till the same is determined.
21. In this context, it is pertinent to note that while Section 92 of the
Evidence Act prohibits oral evidence when the terms of a contract have
been reduced in writing, however proviso IV thereof states:
The existence of any distinct subsequent oral agreement to
rescind or modify any such contract, grant or disposition of
property, may be proved, except in cases in which such
contract grant or disposition of property is by law required
to be in writing, or has been registered according to the law
in force for the time being as to the registration of
documents.
22. Thus, it would appear that the appellants / plaintiffs cannot be
deprived of the opportunity to lead evidence to prove that the time fixed for
performance of the Agreement was subsequently extended by way of oral
agreements reached between the parties.
23. It may also be highlighted that it is not in dispute that the
appellants/plaintiffs were in pursuance to the Agreement to Sell put into
possession of the property and are in possession thereof since the year 1973.
A purchaser in possession cannot be expected to rush to the Court with a
suit for specific performance, the end result whereof would only be the
execution of a deed of title in favour of such agreement purchaser. Such an
agreement purchaser, since enjoying the benefits of the property cannot be
blamed for not pursuing the matter vigorously. Rather, during the hearing I
had enquired from the counsels as to what was the stand of the
respondents/defendants in the suit filed at Kurukshetra - whether the
respondents/defendants pleaded that there was no sale as the
RFA 350/1997 Page 17 of 18
appellants/plaintiffs had failed to enforce specific performance. However
neither counsel was able to inform of the correct facts in this regard.
24. I had during the hearing also enquired whether any steps had been
taken by the respondents/defendants for recovery of possession of the
property from the appellants/plaintiffs. The senior counsel for the
respondents/defendants on instructions stated that steps were being taken.
That also shows that the respondents/defendants have not treated the rights
of the appellants/plaintiffs in the property, under the Agreement to Sell, to
have come to an end.
25. For all the aforesaid reasons, the impugned judgment and decree of
rejection of the plaint in the suit for specific performance of an Agreement
of Sale of immovable property on the ground of the claim therein being
barred by time cannot be sustained. The appeal is accordingly allowed and
the impugned judgment and decree is set aside. The appellants/plaintiffs are
also awarded costs of this appeal in the sum of Rs.25,000/- payable by the
respondents/defendants on or before the next date of hearing before the Suit
Court. Decree sheet be drawn up.
26. The parties to appear before the District Judge (South), New Delhi
stated to be having jurisdiction over the property subject matter of the suit
on 24th September, 2013.
27. The Trial Court filed be returned forthwith to District Judge (South),
New Delhi.
RAJIV SAHAI ENDLAW, J.
JULY 19, 2013/'gsr'/pp..
RFA 350/1997 Page 18 of 18