Delhi High Court
Subhash Chander Kathuria vs Umed Singh And Anr. on 24 January, 2006
Equivalent citations: AIR2006DELHI194, 127(2006)DLT292, AIR 2006 DELHI 194, 2006 (4) AKAR (NOC) 561 (DEL), (2006) 127 DLT 292, (2006) 2 RECCIVR 671
Author: A.K. Sikri
Bench: A.K. Sikri
JUDGMENT A.K. Sikri, J.
1. The plaintiff has filed the instant suit for specific performance, possession and permanent injunction. He is seeking specific performance of Agreement to Sell dated 27th July, 1988 (hereinafter referred to as `the Agreement'). As per the plaintiff, vide this Agreement the defendants agreed to sell agricultural land measuring 34 bighas 1 biswas, particulars whereof are given in para 1 of the plaint, for a total consideration of Rs.20,92,656/-. A sum of Rs. 2 lacs was given as earnest money. The suit was filed on 16th February, 1999. The defendants have contested the suit by raising various pleas on merits as well as objections to the maintainability of this suit. On 27th September, 2004, following issues were framed which would reflect the nature of disputes raised by the defendants:
1. Whether the suit of the plaintiff is within limitation OPD.
2. Whether the suit of the plaintiff is under valued for the purposes of court fee and jurisdiction? OPD
3. Whether the plaintiff is entitled for relief of specific performance of agreement to sell as prayed in the suit? OPP
4. Whether the plaintiff is entitled for the alternative relief of damages as claimed in the suit? OPP
5. Relief.
2. Issues No.1 and 2 were treated as the preliminary issues. I have heard learned counsel for the parties on these two issues and my findings are as under:
Issue No.1 : Re: Limitation
3. As pointed out above, the Agreement is dated 27th July, 1988 and the suit is filed in the year 1999. As per Article 54 of the Limitation Act (for short `the Act') period for filing a suit is three years from the date of cause of action. From which date three years' period needs to be counted is the bone of contention. I may first reproduce this Article:
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.
4. As per the averments made in the plaint, on entering into the aforesaid Agreement, the plaintiff also gave earnest money of Rs.2 lacs on the same date for which receipt was executed by the defendants in the presence of attesting witnesses. The balance consideration was to be paid by the plaintiff at the time of registration of the sale deed. However, before this registration the defendants were to obtain no objection certificate and income tax clearance from the concerned authorities. After obtaining the permission, the defendants were to inform the plaintiff, in writing, by means of registered post and to execute the sale deed within three months in favor of the plaintiff. It is also alleged that the plaintiff approached the defendants several times but requisite permissions were not taken by the defendants. On 13th September, 1996, the defendants requested the plaintiff to pay an additional amount of Rs.20,000/- for getting the no objection certificate and income tax clearance from the concerned authorities which amount was paid and a separate receipt was also executed.
5. According to the plaintiff, therefore, the three years' period is to be counted from 13th September, 1996 and the present suit would be within limitation.
6. The contention of learned counsel for the defendants, on the other hand, is that the Agreement clearly specified that the sale deed was to be executed within three months. If it was not executed within three months of the Agreement i.e. by 27th October, 1988, cause of action accrued in favor of the plaintiff on that date and three years' period is to be counted from 27th October, 1988 which expired on 26th October, 1991 and, therefore, present suit filed in the year 1999 would be hopelessly time barred. Learned counsel further submitted that even as per the plaintiff's own averments in para 4 wherein it is alleged that the plaintiff approached the defendants several times but the defendants were not giving any response, it would be clear that according to the plaintiff breach of the Agreement is alleged and thus the plaintiff cannot take advantage of the purported payment of Rs.20,000/- given on 13th September, 1996 though it is denied that any such payment was given on that date, it is contended that the receipt of Rs.20,000/- does not bear any date which amount was in fact given at the time of execution of the Agreement. In any case, it was contended, even if there is any such acknowledgment/payment much after the expiry of limitation, it would not come to the rescue of the plaintiff in view of Sections 18 & 19 of the Act.
7. In order to appreciate the respective contentions, it would be necessary to take note of the relevant portions of the Agreement. This Agreement, after recording that against total consideration of Rs.20,92,656/-, a sum of Rs.2 lacs as advance money and part payment is received and the balance consideration will be received by the purchaser from the seller at the time of registration of the sale deed, stipulates the following clauses:
That the vendor will obtain the no objection certificate and income tax clearance certificate from the authorities concerned. That after obtaining the said permissions, the vendor will inform the vendee by registered post.
That within 3 (three) months from the date hereof, the vendor will execute the sale deed of the said land in favor of the vendee or his nominee/s, failing which the vendee will be entitled to get the sale deed registered through the court of law by specific performance of the contract, at the cost and expenses of the vendor.
8. Two things which flow from the aforesaid stipulation in the Agreement are:
(a) The defendants were to obtain the no objection certificate and income tax clearance from the concerned authorities and after obtaining these permissions, they were to inform the plaintiff by registered post.
(b) Within three months from the date of the Agreement, the defendants were to execute the sale deed in favor of the plaintiff failing which the plaintiff was given right to get the sale deed registered through the court of law for specific performance of the contract.
9. A conjoint reading of the two clauses would make it amply clear that the defendants were to get the clearances from the concerned authorities as well within a period of three months from the date of the Agreement as without such permissions execution of the sale deed was not possible. Further, the plaintiff was entitled to get the sale deed registered in case the defendants failed to execute the sale deed in favor of the plaintiff.
10. No doubt, as aforesaid, for execution of the sale deed permissions were required, the question for consideration is as to whether the plaintiff could wait if the permissions were not obtained or no steps were taken by the defendants for obtaining such permissions. The failure on the part of the defendants in not executing the sale deed could be (a) want of permissions and (b) even if permissions are obtained, the defendants' refusal to get the sale deed executed. Therefore, in a case where no steps were taken for obtaining the clearances by the defendants, it would constitute breach on their part. As mentioned above, the defendants were expected to obtain these permissions within three months as that was a period prescribed for execution of the sale deed. If no steps were taken for obtaining the permissions, in that eventuality also, limitation period would start running after the expiry of three months from the date of Agreement i.e. with effect from 27th October, 1988. This is what is clearly provided under Article 54 of the Act. In this context, I may now notice the averments made by the plaintiff in para 4 of the plaint wherein the plaintiff has stated :
That the plaintiff approached the defendants several times with the request that they are ready with the balance sale consideration and also requested the defendants to get No Objection Certificate and Income Tax Clearance Certificate from the concerned authorities and communicate the same to the plaintiff in writing by means of registered post as per terms and conditions of the agreement to sell dated 27.8.1988. However, there was no response from the defendants and they approached the plaintiff on 13th Sept.1996 requesting the plaintiff to pay an additional amount of Rs.20,000/- for getting No Objection Certificate and Income Tax Clearance Certificate from the concerned authorities, which the plaintiff immediately agreed and paid an amount of Rs.20,000/- for which, both the defendants executed a separate receipt in presence of witnesses.
11. This para is in two parts. The first part relates to the plaintiff approaching the defendants with balance consideration and requesting the defendants to get no objection certificate and income tax clearance. It is admitted by the plaintiff that when the plaintiff approached the defendants with the aforesaid request there was no response from the defendants. No specific date is mentioned as to when the plaintiff approached. Still, even what is stated to be accepted is correct on its face value, as per the plaintiff's own allegation there was no response from the defendants. If that was the position, such attitude of the defendants would clearly amount to their refusal to execute the sale deed for which outer limit was three months. Applying Article 54 of the Act on this fact situation, the irresistible conclusion would be that limitation period of three years starts from the expiry of three months i.e. 27th October, 1988. In the second part of para 4, it is alleged that the defendants had approached the plaintiff on 13th September, 1996 when the plaintiff gave Rs.20,000/- for getting the necessary clearances. Whether on this ground the plaintiff can seek extension of limitation period or to put it differently, whether the date of 13th September, 1996 would become the starting point of the limitation is the question I would revert at later stage.
12. When the matter is examined on the basis of averments/admissions contained in first part of para 4, the limitation period expired on 26th October, 1991. There is no averment in the plaint as to what happened during these three years. There is no averments as to what happened even after that period i.e. from 1991 till 13th September, 1996. It is also not alleged that three months' period stipulated in the Agreement was ever extended by the parties. The suit filed in the year 1999 would, therefore, clearly be time barred. This is the legal position which is reflected in various judgments.
13. Notwithstanding the aforesaid legal position, learned counsel for the plaintiff tried to bring the suit within the period of limitation by contending that it was for the defendants to bring the clearances from the concerned authorities and intimate the plaintiff by registered post about the same and as these clearances were not obtained, the period of limitation would not run. I am unable to subscribe to this view. The clause of obtaining the permissions cannot be read dehors the clause specifically stipulating that three months' outer limit for the execution of sale deed and the manner in which I have interpreted the combined effect of these clauses, namely, the permissions were also to be obtained within the said three months and not taking the steps for obtaining these permissions also could constitute breach giving rise to cause of action in favor of the plaintiff and, therefore, the limitation is to be counted from 27th October, 1988.
14. Learned counsel for the plaintiff relied upon the following judgments:
(i) Gomathinayagam Pillai and Ors. v. Palaniswami Nadar .
(ii) Govind Prasad Chaturvedi Vs. Hari Dutt Shastri and another .
(iii) Bhagwan Singh v. Teja Singh alias Teja Ram .
15. In the first case, the Supreme Court held that whether time is of the essence of the contract or not would depend on the intention of the parties, namely, time is of essence if the parties intend it to be so and such an intention may be evidenced either by express stipulations or by circumstances which are sufficiently strong to displace ordinary presumption that in contract for sale of land stipulation as to time is not of essence. The court held that fixation of period within which contract is to be performed does not make the stipulation as to time being essence of the contract nor default clause in the contract. Therefore, ordinarily, the presumption would be that in the contract for sale of sale stipulation as to time is not of essence. However, if the parties intended to be so in a particular case, it can be treated that time is the essence of contract. Such an intention is evidenced either by express stipulation or by circumstances. If time is not of essence originally, it can be made of essence even subsequently by serving notice on other party. In the present case, not only period of three months is fixed in the Agreement, the clause in no uncertain terms further stipulates that in case the defendants failed to execute the sale deed within three months, the plaintiff would be entitled to seek specific performance by filing the suit. Thus, there is an express stipulation which signifies the intention of the parties to make the time in the Agreement essence of the contract.
It may be noted that in the said case before the Supreme Court, apart from stating that the sale deed will be executed on or before 15th April, 1999 there was no further stipulation. While there cannot be any quarrel on the proposition of law laid down in the said case which is binding on this court, it is found that in the facts of this case, time was made essence of the contract.
16. In the second case cited by learned counsel for the plaintiff, fact situation was the same, namely, it was found that time was not made essence of the contract between the parties. In fact, the Supreme Court found that neither in the pleadings nor during the trial vendors contended that time was of essence of the contract. The parties had, in fact, not gone to trial on that basis and no issues were framed in that regard. It was, in these circumstances, held that time was not the essence of the contract.
17. Let me now deal with the third judgment cited by learned counsel for the plaintiff with much emphasis contending that the said case was on almost equal footing. Before dealing with the legal position stated by the court in that case, I may at the outset point out that that was also a case where the defense that time was the essence of the contract was not pleaded as would be clear from following narration:
Though, it was argued before the lower appellate Court that time was the essence of the contract yet it was not made part of the pleadings as such. There is no issue. Rather the pleadings of the defendant clearly go to show that the time was not the essence of the contract inasmuch as it was pleaded that the suit was premature and the conditions precedent for the completion of the sale did not exist even on the date of the suit.
18. Thus not only there was absence of pleading in this behalf, the vendor rather specifically pleaded that even the suit when filed was premature in the absence of permission having granted by the authorities. In fact, further reading of that judgment would show that the parties had proceeded on the basis that obtaining of this permission was a condition precedent for sale and as the permission was not granted there was `legal hitch' in execution of the sale deed. This was the case of vendors themselves in the written statement and in view of such a stand of the defendants that the clauses in the Agreement were not interpreted. This would be clearly demonstrated from the following discussion in para 13 of the judgment:
The conditions precedent for the sale did not exist even on the date of the filing of the suit, the defendant having not obtained the sale certificate/deed from the State Government and having taken no steps to provide a path, as provided in the agreement and pleaded in the plaint in para 3(b), which was not denied. Clause in the agreement, as reproduced in the earlier part of this judgment assumes importance in the context of the pleadings of the parties in para 3(h) of the plaint and its corresponding reply in the written-statement. The clause regarding legal hitch in the execution of the sale deed as per the agreement and as understood by the parties is highlighted in para 3(h) of the plaint and not disputed in the written-statement. Parties to the agreement were perhaps contemplating that there may be restriction on the right of the defendant to sell the property for some time after the same had been purchased by him in auction from the State Government. Clause regarding `legal hitch' in the agreement was in that context. If there is clause in the sale certificate issued by the State Government that the purchaser shall not be entitled to further sell the land, say before the expiry of fifteen years then the sale under the agreement could not be completed up to 1981. It is in this context that the plea regarding the suit being premature, was perhaps raised and pleading drafted accordingly.
19. Once the facts of the case before the Punjab & Haryana High Court are appreciated in the correct perspective in the aforesaid manner, the obvious conclusion would be that period of limitation did not start till the permission was taken and that is what the court held. It may be noted that the land which was subject matter of sale by the defendants to the plaintiff was purchased by the defendants from the Rehabilitation Department. Though date of execution of sale deed as specified, the vendor was to obtain the sale certificate before execution of the sale deed as the sale certificate issued by the State Government in favor of the vendor clearly stipulated that the defendants would not be entitled to further sell the land before the expiry of 15 years. It is because of this reason that the court concluded that the parties never intended that time would be essence of the contract as there was `legal hitch'. It is because of this reason that some of the judgments cited by the defendant in that case in support of the proposition that time was the essence of the contract were treated as not applicable. However, reading of those very judgments in the facts of present case would make it clear that the time has to be treated as essence of the contract in the instant case. These judgments are :
(i) Gomathinayagam Pillai and Ors. v. Palaniswami Nadar .
(ii) Sumerchand Hukumchand and Ors. v. Hukumchand Mathurdas and Ors. .
(iii) Shrikrishna Keshava Kulkarni and Ors. v. Balaji Ganesh Kulkarni and Ors. .
20. In the case of T.L.Muddukrishana v. Smt. Lalitha Ramchandra Rao reported as 1997 II AD SC 32, the Supreme Court held that for the purpose of limitation, what is material is that the limitation beings to run from the date the parties have stipulated for performance of the contract. The suit is required to be filed within three years from the date fixed by the parties under the contract. For this reason, in the said case, the court even rejected the application for amendment of the plaint which came to be filed after the expiry of three years on the ground that it would change the cause of action.
21. Similarly in the case of Babaji Charan Sahu and Ors. v. Rajendra Narayan Dash and Ors. reported as , the court found that evidence on record revealed that seller unambiguously agreed to alienate property within six months from the date of disposal of lis and collection of documents from court and this was treated as the date fixed for performance of the contract. The court accordingly opined that the case would be governed by the first part of third column of Article 54 and time of three years would begun to run on expiry of time fixed in agreement for performance. Suit filed beyond three years from that date was held to be time barred. To the same effect is the judgment of the Karnataka High Court in the case of Mahboob Pasha v. Syed Zaheeruddin and Ors. reported as AIR 1988 Karnataka 83.
22. The other aspect which needs to be dealt with now is as to whether fresh limitation period would start from 13th September, 1996 when allegedly Rs.20,000/- was given by the plaintiff to the defendants.
23. As already mentioned above, this receipt does not mention any date as and when this amount is taken. It also does not mention that this amount is taken for obtaining the requisite permissions as it is the averment made in the plaint. Further, as mentioned above, between 1988 when the Agreement was executed and 1996 there is nothing on record which would indicate that the defendants had represented that they were taking steps to obtain NOCs or asked for time for this purpose. On the contrary, averment made in the plaint is that there was no response from the defendants all these years and all of a sudden the defendants allegedly approached the plaintiff on 13th September, 1996 requesting the plaintiff to pay additional amount of Rs.20,000/-. The pleadings regarding such assurances that they were taking steps for obtaining the NOCs are post 1996 only; to be precise they relate to the period 1997 & 1998 as contained in paras 6 and 7 of the plaint wherein it is alleged that on plaintiff's approaching in December 1997 and June, 1998 the defendants stated that they would be obtaining the NOCs and would be ready to executed the sale deed by August, 1998. Learned counsel for the plaintiff submitted that it is a matter of evidence and, therefore, the issue cannot be decided. Learned counsel for the defendants, on the other hand, argued that the matter may be proceeded on the basis of allegations contained in the plaint. Therefore, on the assumption that Rs.20,000/- was given on 13th September, 1996 I proceed further with the matter.
24. Admittedly, the limitation had expired on 26th October, 1991. Fresh period of limitation, therefore, cannot start from making this payment of Rs.20,000/-. That is the effect of Section 18 of the Act as per which part payment has to be made within the period of limitation. Here, the payment was made much after the period of limitation. Issue No.1 is accordingly decided against the plaintiff and in favor of the defendants holding that the suit filed by the plaintiff is time barred.
25. In view of this finding, it is not necessary to deal with issue No.2 as the consequence is that the suit warrants to be dismissed on the ground of limitation. The suit is accordingly dismissed with costs.