Gujarat High Court
Sarfaraz Abdulsattar Patel vs Chimanbhai Purshottambhai Patel on 19 July, 2021
Author: J. B. Pardiwala
Bench: J.B.Pardiwala, Vaibhavi D. Nanavati
C/FA/1810/2021 JUDGMENT DATED: 19/07/2021
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 1810 of 2021
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2020
In R/FIRST APPEAL NO. 1810 of 2021
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
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1 Whether Reporters of Local Papers may be allowed to YES
see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy of NO
the judgment ?
4 Whether this case involves a substantial question of NO
law as to the interpretation of the Constitution of India
or any order made thereunder ?
CIRCULATE THIS JUDGEMENT IN THE SUBORDINATE
JUDICIARY
==========================================================
SARFARAZ ABDULSATTAR PATEL
Versus
CHIMANBHAI PURSHOTTAMBHAI PATEL
==========================================================
Appearance:
MR ABHISST K THAKER(7010) for the Appellant(s) No. 1,2,3,4
for the Defendant(s) No. 1,1.1,1.1.1,1.1.2,1.1.2.1,1.1.2.2,2,3
MR PARTH Y PATHAK(7528) for the Defendant(s) No. 4
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CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
Date : 19/07/2021
ORAL JUDGMENT
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(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)
1 This First Appeal under Section 96 of the Civil Procedure Code
(for short, 'the C.P.C.') is at the instance of the original plaintiffs of a Special Civil Suit and is directed against the order passed by the 27 th Additional Senior Civil Judge, Vadodara dated 6 th March 2020 below Exhibit : 9 in the Special Civil Suit No.284 of 2019, whereby the Civil Judge rejected the plaint under the provisions of Order VII Rule 11 of the C.P.C. substantially on the ground that the suit is time barred.
2 The facts giving rise to this appeal may be summarised as under:
3 For the sake of convenience, the appellants herein shall be referred to as the "original plaintiffs" and the respondents herein shall be referred to as the "original defendants".
4 The plaintiffs entered into an agreement for sale with respect to the suit properties with the defendant No.1 (since deceased) vide a registered sale agreement dated 11th March 2012. The agreement for sale reads thus:
"Agreement to Sell Agreement to sell for the property having construction of shop no.1 and 2 on the ground floor, two show-rooms on the first floor and two flats on the third floor, named as "C.P. Point" at Plot no. F-41/B in the scheme named "Samrajya" constructed on the land bearing City Survey no. 756/A out of Revenue Survey no. 33 at Akota, District - Vadodara :-
Today on 11th day of March 2012.
The Executee of this Agreement to Sell / First Party :-Page 2 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021
C/FA/1810/2021 JUDGMENT DATED: 19/07/2021
(1) Sarfaraj Abdulsattar Patel, Religion: Muslim, aged about: adult,
Occupation: agriculture, business
(2) Asha Abdulsattar Patel, Religion: Muslim, aged about: adult,
Occupation: agriculture, business
(3) Irfan Abdulsattar Patel, Religion: Muslim, aged about: adult,
Occupation: agriculture, business
(4) Azaz Gulambhai Patel, Religion: Muslim, aged about: adult,
Occupation: agriculture, business
All residing at Masjid Faliya, Akota village, Dist. Vadodara.
(who hereinafter referred to as "you the executee" or "the first party" or "you" which includes you the executee, your heirs, successors, administrators, assignees, nominee etc.) The Executor/ Second Party:-
Chimanbhai Purshottambhai Patel, Religion: Hindu, aged about: adult, occupation: Business, residing at 6, Chinarwood, Opp. R.C. Patel Estate, Akota main road, Akota, Vadodara (who hereinafter referred to as "we the executor" or "the second party" or "we" which includes we the executor, our heirs, successors, administrators, assignees, nominee etc.) We the executor, with our willingness, execute this agreement to sell in favor of you the executee that;
The property having our sole occupation and ownership which includes the construction of three storey with a stair-cabin at plot no. F-41/B at the scheme known as "Samrajya" is located on the non- agricultural land bearing City Survey no. 756/A out of the land at Revenue Survey no. 33 at Akota village, Ta. and Dist. Vadodara.
We, the executor had purchased the property as an open plot at plot no. F-41/B from its original owner Jayesh Jagdishchandra Dave, the Chairman of M/s. Hindustan Earthmovers Pvt. Ltd. vide Sale Deed no. 7971. On the basis thereof, we, the executor are the sole legal owner and occupant of the property. Our name was entered in the City Page 3 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 Survey Records as the owner and occupant vide an entry dated 19.04.2005 and the same is in continuation. A complex has been constructed on the land after obtaining the necessary permissions thereof at our expenses.
The permission for construction on the land having Revenue Survey no. 33 was given by Vadodara Municipal Corporation vide Development Permission/ Rja Chitthi no. Ward.6/L - 86/1997-98 dated 07.10.1997 and Revised Permission/ Rja Chitthi no. ward. 6/L - 52/1998-99 dated 20.07.1998 whereby the lay-out plan and building plan was also approved. The permission for converting the land into non-agricultural land was given by the Collector, Vadodara vide Order no. NA/Vashi/155/198 dated 26.02.1998.
The Vadodara Municipal Corporation had given the permission of construction at plot/ unit no. F-41/B, named as 'Samrajya' vide Development Permission/ Rja Chitthi Complex No. Ward - 6/71/2003-2004 dated 28.07.2003 in favor of us and approved the maps thereof. On the stated land, we constructed a ground floor having four shops and a parking space, the first floor having two show- rooms and the second and the third floor having two flats on each of the floor, totaling four flats, with a stair-cabin thereon. Plinth Checking Certificate no. Ward-6/208/ 2007-2008 dated 26.02.2008 and Completion Certificate no. 166 dated 20.11.2009 were also given to us.
Out of our above stated property at the complex, we the executor, considering our family requirements, intend to sell shop no.1 and 2 at the ground floor, show-room no.1 and 2 at the first floor and the complete construction on the third floor except the second floor. As you the executee intend to purchase the property as described (in the annexure), we have agreed to sell the property on the terms and conditions stated in the annexure below and execute this Agreement to Page 4 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 Sell. Following is the description of the property:-
-:Schedule:-
Description of the property of agreement to sell Detail of area and other particulars of the property decided to sell is situated at the plot/unit No.F-41/B of a scheme namely "Samrajya", in a non agriculture land of Revenue Survey no.33 paiki city survey No.756/ A of village Akota Taluka Dist. Vadodara, Division(Akota), Sub District Vadodara, Regi. District Vadodara, Gujarat State. Construction has been done on it's area of 386.56 square meter (4162.00 square feet), shop No.1 and 2 on the ground floor and two (2) showrooms on the first floor and both the flats on the third floor excluding the second floor of a complex namely "C.P. Point".
No. Particulars of the property Area of construction 1 Shop No.1 and shop no.2 on the ground 24.78 Sq.meter floor 2 Two showrooms of the first floor 126.28 Sq.meter 3 Flat no.1 and flat no.2 of third floor 126.28 Sq.meter We have decided to sale all of the above constructed property along with it's ownership of the share of undistributed land and with all the rights of the land of agreement to sell including the right to use the common parking and staircase. We have executed agreement to sell for the same. Boundaries of the same are as below.
East: There is property of plot no. F-53 of Samrajya Scheme.
West: Akota - Padara main road.
North: Akota - Padara main road.
South: Internal road of the extension of 'Samrajya' and Ashwamegh III
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complex is there.
1. We, the seller, have decided to make absolute sale of our property mentioned in the schedule and it's ownership of the share of undistributed land and with the permanent right to use the common parking land along with all the rights relating to the land mentioned in the schedule and the property with it's original boundary mark and measurement, i.e the property mentioned in the schedule and the rights of using common entrance and common staircase along with common right of disposing the rainwater and all our right over the mentioned property in the schedule, to you the purchaser for Rs.81,53,000/- rupees eighty one lakh fifty three thousand. Out of the full amount of the consideration, Rs.5,00,000 (five lakh ) in form of five cheques of Rs.1,25,000/- (one lakh twenty five thousand) each have been paid to us the seller by you the purchaser as the earnest money.
2. We have decided to make absolute sale of our property mentioned in the schedule along with all the rights relating to the same and with it's original boundary mark and measurement i.e all the property mentioned in the schedule A to C along with the rights of using the common entrance, right of disposing rainwater and all our rights over the property to you the purchaser for Rs.81,53,000/- rupees eighty one lakh fifty three thousand and Rs.5,00,000 (five lakh ) in form of five cheques of Rs.1,25,000/- one lakh twenty five thousand each have been paid as the earnest money. We, the seller are ready to accept that, you will pay the remaining amount of the consideration to me till 30th May 2012. It is decided that, if you fail to pay the consideration in the stipulated time limit, the present agreement to sell will be considered as cancelled and the amount of earnest money will be forfeited. It is also decided that, cheque of Rs.45,00,000/- (forty five lakh) is to be drawn towards name of "Jayeshbhai Chimanbhai Patel". Moreover, Rs.11,00,000/- (eleven lakh) is to be deposited in the "Bank of India" before the sale deed is executed. Thereafter, the remaining Page 6 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 amount of the sale is to be paid to Chimanbhai Parsottambhai Patel. But, all the amount is to be considered as the selling amount.
3. It has been decided that, the possession of the property mentioned in the schedule is to be handed over to you the purchaser, when the consideration is paid or at the time of sale deed. We have executed this agreement to sell, assuring that, from hereafter no additional amount will be demanded from you, except the remaining amount of the decided amount and we give our full assurance that, we will not make any such demand.
4. The consideration has been received as mentioned above. Upon payment of decided remaining sale consideration by you, we are to execute the sale deed of this property as per your instruction, to your name or to name stated by you, and get it registered after putting our signature and thumb impression, without raising any dispute and we, the seller are bound to get the same registered.
5. You the purchaser are entitled to get the registered sale deed of this property mentioned in the schedule, after paying the remaining amount of sale consideration as mentioned above. But, at any time when we, the seller do not execute sale deed for you the purchaser or show reluctance to do so, even if you the purchaser are ready to execute the sale deed, at that time, you the purchaser are entitled to file suit against me in any appropriate Court for specific performance of this agreement to cell and to get executed the registered sale deed by court procedure. We, the seller are liable to pay all the expenses incurred by you in such circumstances.
6. The seller has availed loan from Bank of India, R.V.Desai road branch, Vadodara on the property decided to be sold and at present the amount of Rs.11,00,000/- (Rupees Eleven lakh only) is outstanding Page 7 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 towards the said loan. Meanwhile, we, the seller have sold shop no.3 and 4 of ground floor with permission of the bank. Thus, the said property is not subject to any encumbrance or charge except of the said bank. Thus, the property described in the schedule has clear title and free from any encumbrances except of the said bank.
7. No transactions or documents to sell, transfer or assign for the property decided to be sold have been executed by the seller till today with any other person except of the encumbrance in favour of the bank and now onwards, we, the seller will not create any such rights by entering into such transactions. This agreement to sell has been executed upon such assurance, faith and undertaking. Despite that, if claims arise regarding such rights then we will get such claims removed at our cost and risk.
8. The property described in the schedule and decided to be sold carries interest of all the family members of we, seller i.e elders, heirs. We have decided to sell the aforesaid property in their interest and in their knowledge and the transaction for selling the aforesaid property is binding to seller and his entire family.
9. The revenue taxes, amount of taxes etc are to be paid by the seller until the execution of sale deed for the property described in the schedule and decided to be sold but thereafter, amount of all the revenue taxes are to be paid by the purchaser.
10. All the expenses i.e stamp duty, writing fee, typing cost, registration cost at the time of execution of sale deed for the property described in the schedule and decided to be sold are to be borne by the purchaser.
Thus, the property to be sold, mentioned in the agreement to sell is undisputed free from encumbrance; its title is clear and marketable Page 8 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 and the seller has complete right to sell the property mentioned in the schedule. The seller has executed the agreement to sell for the aforementioned property after giving complete assurance for the above stated facts. Yet, if any kind of claims or dispute arise regarding the property mentioned in the agreement to sell then the seller will get such claims, disputes removed at his cost and risk. Moreover, if compensation is to be paid to someone in that regard then it will be paid by seller and I give complete assurance and undertaking in that regard. Yet, if the seller fails to get such disputes removed and such disputes are removed by the purchaser then in such case, it is and will be the responsibility of the seller to repay the cost borne by the purchaser.
The aforementioned agreement to sell has been willingly executed by the seller after reading, understanding the same, in a completely sound state of body and mind, without any kind of intoxication, pressure or influence, after accepting the earnest money mentioned in the said agreement. The same is and will be binding and acceptable to the seller, his elders, heirs etc and Jayeshbhai Chimanbhai Patel and Alpesh Chimanbhai Patel.
Date:
Place: Vadodara Seller Witness Sd/- (illegible) 1. Sd/- (illegible) (Chimanbhai Purshottambhai Patel) 2. Sd/- (illegible)"
5 Thus, it appears from the aforesaid agreement for sale that the defendant No.1 agreed to sell the suit properties for a total sale consideration of Rs.81,53,000/- (Rupees Eighty One Lakh Fifty Three Page 9 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 Thousand only). At the time of execution of the sale agreement, five cheques each of the amount of Rs.1,25,000/- were issued by the plaintiffs in favour of the defendant No.1 towards earnest money. It was understood between the parties in accordance with the terms and conditions as contained in the agreement for sale that the balance amount towards the sale consideration shall be paid by the plaintiffs to the defendant No.1 by 30th May 2012. It was also understood that if the plaintiffs herein would fail to abide by the time period, as prescribed in the agreement, then the agreement would stand cancelled and the earnest money would also stand forfeited.
6 It appears that disputes cropped up between the parties, which, ultimately, led to filing of the Special Civil Suit No.284 of 2019 by the plaintiffs in the Court of the Senior Civil Judge, Vadodara. The plaintiffs filed the Special Civil Suit seeking the following reliefs:
"1. The respondent No.1 has executed registered agreement to sell in favour of us - the plaintiffs for both the show-rooms on first floor and flat No.1 and 2 on third floor among the disputed properties mentioned in para-2 of the plainot. Be pleased to pass an order for further execution of the agreement to sell and execution of registered sale deed in favour of us - the plaintiffs by the respondent No.1 and 4 and pass a decree in favour of us - the plaintiffs.
2. Be pleased to hold that we - the plaintiffs have become owner of the properties mentioned in the above para No.1 by the agreement to sell and accordingly, pass a decree in favour of us - the plaintiffs.
3. Alternatively, pass a decree to execute sale-deed of the said properties in favour of the plaintiffs by appointing court commissioner and to give possession to the plaintiffs if the respondent No.1 and 4 do Page 10 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 not execute registered sale deed for both the show-rooms on first floor and flat No.1 and 2 on third floor among the disputed property and do not hand over actual, peaceful and vacant possession of the property.
4. Though the shop No.1 and 2 on the ground floor are not owned by the respondent No.1, he has executed registered agreement to sell in favour of the plaintiff showing false ownership and has received the amount for the shop, which the respondent No.1 is not entitled to receive. Therefore, kindly pass an order directing the respondent to pay the average price of shop No.1 and 2 including the interest to the plaintiff and pass a decree in accordance with the order in favour of us - the plaintiffs. Kindly pass a decree in favour of the plaintiffs to recover the said amount including the interest from the person and the property of the respondents if the respondent No.1 fails to comply with the said decree.
5. Kindly declare that the respondent No.1 and 4 do not have any right to transfer the properties mentioned in relief No.1 to any person or organization by sale, mortgage, gift, encumbrance or any other way or to make any change in possession or physical structure of the properties.
6. Kindly pass a permanent injunction in favour of the plaintiffs restraining the respondent No.1 and 4 from transfering the properties mentioned in relief No.1 to any person or organization by sale, mortgage, gift, encumbrance or any other way or making any change in possession or physical structure of the properties.
7. Kindly award the cost of suit from the respondents.
8. Kindly provide any other relief which the Court may find proper and just."Page 11 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021
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7 The cause of action, as pleaded in the plaint, reads thus:
"(9) Cause of Action:
The respondent No.1 and 4 accepted the consideration amount for the disputed property through a token receipt from us - the plaintiffs on 25/11/2011 and executed registered agreement to sell for the property on 11/04/2012. They had informed that they would execute sale deed after settlement of family suit pertaining to the disputed property between the respondent No.1 and 4 and title clearance of the property. After accepting the whole amount of consideration for the disputed property, the respondent No.1 delayed execution of sale deed on one pretext or another. Thereafter, when I felt suspicious over the conduct of the Respondent No.1 and 4, I enquired about the family suits and title of the disputed property and came to know that, though shop No.1 and 2 among the disputed properties were not owned by the respondent No.1, he falsely executed the sale deed. The respondents have received the whole amount of consideration and are not settling the suit in collusion and are using the disputed property and not executing sale deed of the property in dispute even after receiving the whole amount of consideration from the plaintiffs. Thus, we - the plaintiffs have filed this suit for recovery of average value of the shop sold earlier and further specific performance of the agreement to sell for the other disputed properties and cause of action has arisen due to unlawful conduct of the respondents."
8 It appears that a notice was issued by the defendant No.1 dated 14th September 2012 to the plaintiffs terminating the agreement of sale. The notice reads thus:
"Date : 14/09/12 Through Registered Post Page 12 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 To, (1) Sarfraj Abdul Sattar Patel (2) Aash Abdul Sattar Patel (3) Irfan Abdul Sattar Patel (4) Aezaz Gulambhai Patel No - 1 to 4 all residing at Vadodara, Akota village, Masjid Faliyu, Vadodara.
:: Registered Notice ::
I, advocate Prakash I. Patel, inform you through this notice on behalf of my client Chimanbhai Pursotambhai Patel, residing at Vadodara, 6 - Chinarwood, opposite to R.C. Patel Estate, Akota main road, Akota, Vadodara, that ;
(1) My client has the property of land of his independent ownership and possession with Plot No - F-41/B and the construction of three storeyed state cabin complex in the Samrajya Scheme on the non-agricultural land with City Survey No - 756/A with Revenue Survey No - 33 paiki of Akota village limit at moje Akota, Taluka-
District - Vadodara of the registration district - Vadodara, Sub-district - Vadodara.
Since you wanted to purchase the said land, you had shown your willingness for the same. My client had also shown his willingness for the same and decided to sell the said property for Rs. 81,53000/- and an agreement to sell had been executed on 11/04/2012. It was decided in the said agreement to sell that the remaining amount of selling price shall be paid and the sale deed shall be executed within the period from the date of the agreement to sell to 30/05/2012. You should take note that the said agreement to sell had been executed with you on this condition. An agreement to sell had been executed to sell the properties with the whole construction of Shop No - 1 and 2 on the ground floor, two showrooms on the first Page 13 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 floor and both the flats on the entire third floor of "C.P. Point" Complex located on the Plot No - F-41/B of the "Samrajya" Scheme constructed on land with City Survey No - 756/A with Revenue Survey No - 33 paiki at moje Akota, Taluka-District - Vadodara.
(2) Under the said agreement to sell, you have given 4 cheques for the payment of Rs. 500,000/- as the earnest money. The details of the same have been given below.
Sr. Name of Bank Amount Rs. Cheque No. Date
No.
1 Bank of Baroda, Akota 1,25000/- `000058 19/04/2012
Branch, Baroda
2 - Do - 1,25000/- `000064 19/04/2012
3 - Do - 1,25000/- `000176 19/04/2012
4 State Bank of India, 1,25000/- a558539 19/04/2012
Mujamhoda Branch, Baroda
Total Rs. 5,00,000/-
In this manner, you issued the above cheques in the name of my client's son Jayesh Chimanbhai Patel on the request of my client. Because it has been clearly mentioned in the said agreement to sell that "Out of the said selling price, Rs. 4500,000/- (Forty Five Lakhs only) shall be paid to Jayesh C. Patel through cheque." and for this, you issued the above cheques in the name of my client's son. Moreover, in the said agreement, it has been clearly stated that "the date for executing the sale deed is mentioned as 30/05/2012 and if the sale deed is not executed on the prescribed date, the earnest money shall be forfeited." It is an important condition. Further, it has also been clearly mentioned in the agreement that "the said property is mortgaged in the Bank of India and Rs.11,00,000/- (Eleven Lakhs only) are due to be paid in it and the condition of payment of the same within 30/05/2012" has been mentioned in the agreement. The said condition is also very important.
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(3) You and my client are bound to comply with the said
agreement to sell and all the conditions mentioned in it. Then even, keeping faith in you, total 4 cheques of Rs. 5,00,000/- for the earnest money, each of which was the cheque of Rs. 1,25,000/- issued in the name of my client's son, have been returned to you due to lack of sufficient fund in your account. In this manner, you have clearly breached the condition of the agreement to sell. Not only this, you have also not deposited Rs. 11,00,000/- (Eleven lakhs only), which was required to be deposited in the "Bank of India". In this manner, take note that you have violated all the conditions of the agreement. Also take note that my client has drawn your attention and made requests in this regard.
(4) Thus, you have breached the conditions of the agreement to sell and many months have passed since 30/05/2012 by which the remaining amount was to be paid and the sale deed was to be executed as mentioned in the agreement to sell. Therefore, take note that the agreement to sell is not in existence now and the same is now void.
Therefore, you are informed through this notice that the said agreement to sell has ended and you have no rights with respect to the same. Further, the cheque for the earnest money have also been returned. Therefore, you shall not make or get made any transactions on the basis of the said agreement to sell as the agreement to sell has been canceled with effect from 31/05/2012.
Date : 14/09/2012 Vadodara.
Sd/- (illegible) By instruction and request of client.
Sd/- (Illegible) (Prakash I. Patel) Advocate"
9 We are informed that the defendant No.1 has passed away. The Page 15 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021
defendant No.4 is the son of the defendant No.1. The defendant No.4 is said to have partially transferred the suit properties in favour of the defendants Nos.2 and 3 respectively.
10 The defendant No.4 preferred an application Exhibit : 9 before the Court below seeking to get the plaint rejected under the provisions of Order VII Rule 11 of the C.P.C. on the ground that the suit filed by the plaintiffs for specific performance of contract and for refund of the earnest money is time barred. The Court below adjudicated the application Exhibit : 9 and vide order dated 6 th March 2020 allowed the application Exhibit : 9 and rejected the plaint.
11 The Court below, while rejecting the plaint, observed as under:
"[8] It is crystal clear from the averments made in the plaint that the present Suit is based upon the Agreement to Sell executed in favour of the Plaintiffs. Now, the burden is on the shoulders of the Plaintiffs to prima-facie manifest from the contents of the plaint that the present Suit is filed within the limitation and also the plaint discloses the cause of action. At this juncture, if we directly go to Para-4 of the plaint, it is an admitted position on the part of the Plaintiffs that the registered Agreement to Sell was executed on 11.04.2012 on sale consideration of Rs.81,53,000/- and the Plaintiffs have paid Rs.5,00,000/- through cheques. Further, it transpires from the said para that the aforesaid cheques as shown in the Agreement to Sell were dishonored on account of insufficient fund. Not only that the Plaintiffs have admitted in the plaint that Notice dated 14.09.2012 was received from the Defendants for cancellation of Agreement to Sell and forfeiture of earnest money. Furthermore, it transpires from the aforesaid para of the plaint that Defendant No.1 has not clarified in his notice the part payment received against the sale consideration during the period from the year 2011 to 11.04.2012. In this context, if we examine Agreement to Sell in question which is at Mark 4/2 from which, it is crystal clear that the same is registered at Serial No.4574 on 11.04.2012 with the office of Sub-Registrar, Vadodara and the deceased Defendant No.1 has signed being Vendor in the aforesaid Agreement to Sell. This Court has minutely examined the whole record of the Suit proceedings but this Court has not found any other Agreement to Sell for either extension of the period or execution of new Agreement to Sell. To make the things more crystal and better understanding if we go through the date wise Page 16 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 events, it transpires that Agreement to Sell was executed on 11.04.2012, whereas the condition of the Agreement to Sell was to make full payment of the sale consideration on or before 30.05.2012. Thenafter, Notice forfeiture of Agreement to Sell was issued on 14.07.2019, whereas, the present Suit was filed on 31.07.2019. This Court is of the firm view that rather going on any other aspects the dates of the events are more important to decide the issue of limitation. This Court is of the view that as per the terms and conditions of the Agreement to Sell, the same was ineffective or rather invalid after 30.05.2012 and also it can be ascertained that the Defendants have awaited for sale consideration upto 4 months which can be ascertained from the plaint as well as the documents adduced with the same. Further, this Court is of the view that worse of the worse if we consider the date of Notice issued for forfeiture or the cancellation of Agreement to Sell, the Plaintiffs has to file the Suit within three years from the aforesaid date. It is pertinent to mention here that it does not disclose from the plaint that there exists continuous cause of action. Thus, this Court is of the view that the Plaintiffs have come with the present Suit on lapse of 6 years 10 months and 17 days. In this nexus, the Ld. Advocate for the Defendants has drawn attention of the Court towards Article 54 of the Limitation Act and this Court is in full agreement with the arguments advanced by Ld. Advocate for the Defendants. For better understanding, Article 54 of the Limitation Act is reproduced hereinbelow:
Article Description of Period of Time from which period suit limitation begins to run 54 For specific Three years The date fixed for the performance of performance, or, if no a contract such date is fixed, when the plaintiff has notice that performance is refused.
[9] As discussed earlier, it can be said that the Plaintiffs have remained negligent for more than 6 years therefore, this Court is of the view that the law does not helpful to such negligent litigant. During the arguments advanced by Ld. Advocate for the Plaintiffs, he has categorically submitted that the plaint should be read as a whole. In other words, he has submitted that the plaint should not be read in piecemeal. This Court is of the contrary view to the arguments advanced by Ld. Advocate for the Plaintiffs because it is crystal clear that the Plaintiffs have remained idle for payment of sale consideration or the compliance of the terms and conditions of Agreement to Sell levied upon the Plaintiffs. Rather this Court is of the view that the Plaintiffs have tried to create illusionary cause of action in the plaint by Page 17 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 demonstrating that several payments were made. In this regard, the Plaintiffs have adduced several vouchers of part payment made to the Defendants against the total sale consideration. If we go through the plaint, this Court does not find specific averments in respect of the documents of payment being made to the Defendants so the same cannot be reliable and thereby it cannot be said that cause of action extended for time to time. It is appreciated that the Plaintiffs have adduced the Notice dated 14.09.2012 at Mark 4/17 vide which there was cancellation of Agreement to Sell on account of breach of terms and conditions of the Agreement to Sell. Therefore, this Court is of the firm view that, it is an admitted position on the part of the Plaintiffs that Defendant No.1 has cancelled the Agreement to Sell at relevant point of time.
[10] This court has gone through the relief sought for vide Para14(4) of the plaint from which it transpires that the Plaintiffs have prayed for recovery of the earnest money paid to Defendant No.1 against the sale transaction of Shop No.1 and 2 situated at Ground Floor. This Court is of the view that the aforesaid prayer emerge from the cancellation of the Agreement to Sell so the cause of action started running from the date of Notice issued for cancellation of Agreement to Sell. Over and above, this Court is of the view that for aforesaid prayer sought for at Para -14(4) of the plaint, no evidence is required to be taken. The other aspect of the aforesaid prayer is that even though the Defendant No.1 was not having title, the Agreement to Sell was executed. In this regard, this Court is of the view that principle of "caveat emptor" (let the buyer beware) applies. Therefore, this Court is of the opinion that the buyer alone is responsible for checking the title of the Suit property before purchase is made.
[12] This Court has respectfully gone through aforesaid Case-Laws relied upon by the Defendants, which are squarely applicable to their present application seeking rejection of the plaint on the ground of law of limitation. Keeping in mind the ratio laid down in the above said Case-Laws, it is to be reiterated here that the sale transaction of the disputed property was happened on the basis of written registered Agreement to Sell and thenafter, there was no extension of Agreement to Sell. Moreover, it transpires that in view of contents of the Notice that the cheques issued as mentioned in Agreement to Sell were dishonored so it is believable that the Plaintiffs have grossly failed to comply with the terms and conditions of the Agreement to Sell. Furthermore, it is crystal clear from the averments of the plaint that the Plaintiffs have filed the present Suit after the lapse of 6 years. Not only that, this Court is of the view that Plaintiffs' plaint does not disclose cause of action.
[14] In view of the aforesaid discussions and material available on record, this Court is of the firm view that the Plaintiffs have grossly Page 18 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 failed to establish that Plaintiffs' Suit is not barred by law of limitation and the plaint does not disclose cause of action. Therefore, in the large interest of justice, the following order is passed."
12 The operative part of the impugned order reads thus:
"O R D E R The Defendant No.4's present application at Exh.9 preferred under Order 7, Rule 11(a)(d) of Code of Civil Procedure is hereby allowed.
Further, the plaint is hereby ordered to be rejected. Decree be drawn up accordingly.
The Plaintiffs have to bear their own costs and costs of the Defendants."
13 Being dissatisfied with the impugned order passed by the Court below, the plaintiffs are here before this Court with the present appeal.
SUBMISSIONS ON BEHALF OF THE APPELLANTS - PLAINTIFFS: 14 Mr. Thaker, the learned counsel appearing for the plaintiffs vehemently submitted that the impugned order passed by the Court below is not in accordance with the provisions of Order VII Rule 11 of the C.P.C. and the well settled principles governing the rejection of plaint.
15 According to Mr. Thaker, the plaint came to be rejected only on the basis of the notice issued by the original defendant No.1 dated 14 th September 2012 terminating the sale agreement. He would submit that the Court below considered 14th September 2012 i.e. the date of notice referred to above as the starting point for the purpose of computing the period of limitation for filing a suit for specific performance of contract Page 19 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 in accordance with Article 54 of the Limitation Act. However, Mr. Thaker would submit that the Court below failed to read the plaint as a whole. Mr. Thaker pointed out that in the plaint, there are averments to the effect that after the sale agreement came to be terminated on 14 th September 2012, the plaintiffs once again negotiated with the defendant No.1 and a settlement was arrived at and pursuant to such settlement, it was decided to proceed further with the original agreement for sale and substantial payment was also made by the plaintiffs to the defendant No.1 by way of cheques and cash. According to Mr. Thaker, such pleadings in the plaint would assume significance when the Court is called upon to decide an application seeking to get the plaint rejected. Mr. Thaker would submit that the averments in the plaint are ordinarily to be believed as true until after a full fledged trial the case put up by the plaintiffs is disproved by the defendants:
"With respect to the consideration paid to the respondents in the beginning of the year 2012, when the plaintiffs asked to execute the sale deed of the property in suit, the Respondent No - 1 stated that the sale deed of the property in suit cannot be executed since the title of same is not cleared. Therefore, when the plaintiffs asked the respondents to give in writings for the security of the amount paid to the respondents by the plaintiffs, Respondent No - 1 executed a registered agreement to sell vide no - 4574 for the property in suit on 11/04/2012 in favour of plaintiffs. In the said agreement to sell, the plaintiff had given the cheques of Rs. 500,000/- (Five Lacs only) to the respondent as the earnest money among the consideration amount for sale of the property in suit. Prior to execution of the agreement to sell for the property in suit and after the execution of the said agreement, the Respondent No - 1 and 4 have accepted following amounts from plaintiffs as the consideration for sale of the property.Page 20 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021
C/FA/1810/2021 JUDGMENT DATED: 19/07/2021
Sr. Amount Particulars Date
No.
1 Rs.1,00,000=00 By cash, to Jayeshbhai Patel 08/11/2011
2 Rs.10,00,000=00 By cash, to Jayeshbhai Patel 22/12/2011
3 Rs.10,00,000=00 By cash, to Varshaben on behalf of 12/12/2011
Jayeshbhai Patel
4 Rs.4,00,000=00 Bearer Cheque No.99355, State Bank of 23/12/2011
India, to Ganeshbhai Desai on behalf of
Respondent No.1
5 Rs.4,00,000=00 Bearer Cheque No.000087, Bank of 23/12/2011
Baroda, to Ganeshbhai Desai on behalf
of Respondent No.1
6 Rs.3,50,000=00 Bearer Cheque No.000049, from the 21/01/2012
account of Bank of Baroda of Shiraj
Pathan, to Jayeshbhai Patel
7 Rs.3,50,000=00 Bearer Cheque No.000050, from the 21/01/2012
account of Bank of Baroda of Afzal
Adam, to Jayeshbhai Patel
8 Rs.11,50,000=00 By Cash, to Jayeshbhai Patel 10/02/2012
9 Rs.5,00,000=00 By Cash, to Jayeshbhai Patel 18/02/2012
10 Rs.2,50,000=00 To Jayeshbhai Patel, by Che No.000064 18/02/2012
of HDFC Bank
11 Rs.10,00,000=00 By cash, to Varshaben on behalf of 25/02/2012
Jayeshbhai Patel
12 Rs.2,50,000=00 From the account of Bank of Baroda of 06/11/2012
Sarfaraz, to Jayeshbhai Patel
(Regarding cheque return of agreement
for sale)
13 Rs.2,50,000=00 From the account of Bank of Baroda of 06/11/2012
Ezaj, to Jayeshbhai Patel
14 Rs.2,50,000=00 From the account of Bank of Baroda of 06/11/2012
Aas, to Jayeshbhai Patel (Regarding
cheque return of agreement for sale)
15 Rs.2,50,000=00 From the account of State Bank of India 05/11/2012
of Irfan, to Jayeshbhai Patel
16 Rs.20,00,000=00 By cash, in installments from the year
2012 to the year 2015
Total Rs.95,00,000=00 In words Rupees Ninety Five Lacs only
Thus, the plaintiff, as per the conditions of the agreement for sale, has paid the amount of Rs.95,00,000/- (Rupees Ninety Five Lacs only) as described in the schedule above and the amount of Page 21 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 Rs.20,00,000/- (Rupees Twenty Lacs only) by token receipt, totaling to Rs.1,15,00,000/- (Rupees One Crore Fifteen Lacs only) till today to the respondents of this case.
(4) The Respondents executed agreement to sell on 11/04/2012 and the lumpsum amount of Rs.81,53,000/-(Rupees Eighty One Lakh Fifty Three Thousand only) was decided as consideration amount. Cheques of Rs.5,00,000/- were provided as earnest money. After providing the aforementioned cheques, we, plaintiffs had a dispute with the respondent no.1 regarding the consideration amount of the suit property. Following the dispute, we did not arrange funds in the accounts from which the cheques were issued to the respondents and subsequently the said cheques were returned. Therefore, respondent no.1 issued notice through his advocate Prakash R. Patel on 14/09/2012 by RPAD for dishonoring the cheques and violating the conditions of agreement to sell, leading to forfeiture of the said agreement. But, the amount received by the respondent no.1 till 11/04/2012 in the said transaction was not mentioned in the notice.
Upon receiving the aforementioned notice, we, plaintiffs demanded the amount from respondent no.1 but respondent no.1 denied for the same. Thereafter, we, plaintiffs had settlement with the respondents regarding the value of suit property and consideration amount of the suit property was increased and amount of Rs.1,15,00,000/-(Rupees One Crore Fifteen Lakh only) was decided as consideration amount for the suit properties in October, 2012. It was also decided that from the increased amount of consideration, Rs.11,00,000/- which is to be paid to the bank, will be paid by respondent no.1 himself. Thereafter, respondent no.1, respondent no.4 and his wife Varshaben have received the increased amount in the consideration through cheque and vouchers, time and again. The same is mentioned in the above appendix by us- the plaintiffs. Thus, the plaintiffs and respondents proceeded with the agreement to sell by canceling Notice of Forfeiture of the agreement to Page 22 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 sell prepared by the respondent in favour of the plaintiff willingly and with mutual consent. Thus, we - the plaintiffs paid the consideration amount of Rs.81,53,000/- stated in the agreement to sell within time limit and the remaining surplus amount in cash in installments by November, 2015 to the respondent. When we- the plaintiffs asked for the receipt of the amount, the respondent told that, a receipt cannot be given for this amount as it is surplus of the amount fixed in the agreement to sell. Thus, the respondent did not give receipt for the amount of increase in the price paid by us - the plaintiffs, but the said amount has been received by the respondent and we - the plaintiffs have no amount due to be paid to the respondent No.1."
16 Mr. Thaker would submit that as the parties negotiated and arrived at some distinct understanding, the same would necessarily imply that the parties never wanted time to be the essence of the contract.
17 According to Mr. Thaker, assuming for the moment without admitting that the relief for specific performance could be said to be time barred, the plaintiffs are entitled to refund of the earnest money and the period of limitation to seek refund of the earnest money would be governed by Article 62 of the Limitation Act and the period would be 12 years. He would submit that the moment sale price is paid, a statutory charge is created over the property towards purchase money in favour of the buyer. Therefore, it is the contention of the learned counsel that unless the conditions set out in Section 55(6)(b) of the Transfer of Property Act are established, a statutory charge created on the basis of the agreement will not be lost. He would submit that his clients are entitled for refund of the advance amount on the basis of the principle governed under Section 55(6)(b) of the Transfer of Property Act, which is a trite principle of justice, equality and good conscience.
Page 23 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 18 In such circumstances referred to above, Mr. Thaker would submit
that even if one of the reliefs is not found to be time barred, the plaint could not have been rejected.
19 In such circumstances referred to above, Mr. Thaker prays that there being merit in his appeal, the same be allowed and the impugned order may be quashed and set aside.
SUBMISSIONS ON BEHALF OF THE DEFENDANTS: 20 Mr. Parth Pathak, the learned counsel appearing for the
defendants, on the other hand, has vehemently opposed the present appeal. He would submit that no error, not to speak of any error of law could be said to have been committed by the Court below in passing the impugned order rejecting the plaint. He would argue that the suit could be said to be hopelessly time barred, more particularly, when the plaintiffs themselves have produced the notice dated 14 th September 2012 issued by the defendant No.1 terminating the agreement for sale. He would argue that the period of limitation could be said to have commenced on receipt of the notice dated 14 th September 2012. The suit should have been filed within three years from the date of receipt of the notice as prescribed under Article 54 of the Limitation Act.
21 In such circumstances referred to above, Mr. Pathak prays that there being no merit in the present appeal, the same may be dismissed.
ANALYSIS: 22 Having heard the learned counsel appearing for the parties and
having gone through the materials on record, the only question that falls for our consideration is whether the Court below committed any error in passing the impugned order rejecting the plaint.
Page 24 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 23 We take notice of the fact that the plaintiffs prayed for specific
performance of contract based on the agreement for sale and in the alternative, prayed for refund of the earnest money paid to the defendant No.1 over a period of time. At this stage, it may not be out of place to state that the relief in this regard i.e. in terms of para 14(4) of the plaint has been couched in a very unusual language or words. However, we may not go by the form of the relief but should look into the substance. The substance of the prayer is that the plaintiffs want the refund of the purchase price paid by them to the defendant No.1.
24 One way of addressing the issue of limitation can be as under.
25 The learned counsel for the appellants would submit that the provisions of Order VII Rule 11 of the C.P.C. shall apply to a case where it does not disclose a cause of action; where the relief claimed is undervalued and despite direction of the Court the plaintiff does not correct the valuation; where the relief claimed is properly valued but proper Court fees is not paid; where the Suit appears from the statement in the plaint to be barred by any law; where it is not filed in duplicate; where the plaintiff fails to comply with sub-Rule (2) of Rule 9 and where the plaintiff fails to comply sub-Rule (3) of Rule 9. The submission is that the Court proceeded under sub-Rule (d) of Rule 11 but without appreciating that the suit was not barred under some law. The submission is that the Suit may be barred by limitation but if the Civil Court otherwise has the jurisdiction to decide the dispute between the parties then it cannot be said that such a Suit is barred by any law. It is submitted that in a given case if the suit is not within limitation then the Civil Court cannot refuse to entertain the suit but may or may not grant the decree. The submission is that the question of limitation would not fall within the sweep and scope of clause (d) of Rule 11 of Order VII of Page 25 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 the Civil Procedure Code.
26 The learned counsel for the respondents on the other hand vehemently submitted that if the suit appears to be barred by limitation from the pleadings and statement made in the plaint then no useful purpose would be served by going on with the ordeal of the trial and even otherwise the suit would be barred by law as it would be held to be barred by limitations and therefore would be barred by some law.
27 Order VII Rule 11 (for the purpose of this appeal) observes that the plaint shall be rejected in the following cases:
"clauses (a), (b), [c] ...
clause (d) where suit appears from the statement in the plaint to be barred by any law."
28 A suit which is barred by limitation cannot be strictly said to be a suit barred by any law; the Court has jurisdiction to entertain the suit but would be precluded from granting any relief to such a person because he has lost his remedy by lapse of time. A suit cannot be said to be barred by any law if the Civil Court otherwise can entertain suit and is also entitled to grant relief. It cannot be argued that if a suit for specific performance is filed within limitation then the suit would not be maintainable. In a given case the Court may or may not grant a decree in favour of the plaintiff and even in a given case where it does not grant a decree it would not say that the suit is barred by some law or any law. The Civil Court would have the jurisdiction to decide civil disputes and a matter relating to specific performance of the agreement would be a civil dispute between the parties.
29 Article 54 of the Limitation Act provides limitation of 3 years for filing a suit for specific performance of the agreement from the date Page 26 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 when the cause of action accrues in favour of the plaintiff, it may be within 3 years from the date of the agreement or within 3 years from the date of last extension or within 3 years from the date of refusal. The question would be a question to be decided as an issue after the same is cast and not under Order VII Rule 11. There may be myriad examples but to cite few we may say that a suit challenging assessment under the Sales tax, Income-tax or property Tax is barred by limitation. Suits between workmen and employers which can be tried by a Labour Court would not be entertained by Civil Court as the same would be barred by law. A suit to challenge election to be held under the Representation of People Act would be barred. A suit of such other nature would be barred including a suit where the conviction and award of sentence by Criminal Court is challenged before a Civil Court. Suits which are not entertainable under some law must be read in the said law and not by aid and help of the limitation. In the present matter without casting issues the learned trial Court proceeded to entertain the application filed under Order VII Rule 11 of the Civil Procedure Code.
30 When the parties have filed their pleadings then a duty is cast upon the Court to cast issues and then to proceed with the trial. If the Court is of the opinion that particular issues are pure question of law and can be decided without recording any evidence then such issues can be decided as preliminary issues under Rule 2 of Order XIV and if the Court otherwise holds then all the issues shall be tried together.
31 We may refer to and rely upon a decision of the Supreme Court in Narne Rama Murthy vs. Ravula Somasundaram reported in 2005(6) SCC 614, wherein the Supreme Court has observed as under:
"We also see no substance in the contention that the Suit was barred by limitation and that the Courts below should have decided the question of limitation. When limitation is the pure question of law and from the Page 27 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 pleadings itself it becomes apparent that a suit is barred by limitation, then, of course, it is the duty of the Court to decide limitation at the outset even in the absence of a plea. However, in cases where the question of limitation is a mixed question of fact and law and the Suit does not appear to be barred by limitation on the face of it, then the facts necessary to prove limitation must be pleaded, an issue raised and then proved. In this case the question of limitation is intricately linked with the question whether the Agreement to Sell was entered into on behalf of all and whether possession was on behalf of all. It is also linked with the plea of adverse possession. Once on facts it has been found that the purchase was on behalf of all and that the possession was on behalf of all, then, in the absence of any open, hostile and overt act, there can be no adverse possession and the Suit would also not be barred by limitation. The only hostile act which could be shown was the advertisement issued in 1989. The Suit filed almost immediately thereafter."
32 In the present matter, the Court below was obliged to cast the issues and decide the matter in accordance with law. The Court below, in the considered opinion of this Court, acted illegally in entertaining the application filed by the defendant No.4.
THE ISSUE OF LIMITATION MAY ALSO BE LOOKED INTO FROM A DIFFERENT PERSPECTIVE AS UNDER:
33 We should keep in mind the two relevant dates: first, the date of institution of the suit i.e. 11th April 2019 and secondly, the date of the notice issued by the defendant No.1 terminating the agreement or cancelling the agreement i.e. 14 th September 2012. The Court below picked up the date of the notice i.e. 14 th September 2012 for the purpose of computing the period of limitation in accordance with the Article 54 of the Limitation Act, but in the process, completely missed to look into the averments made in paras 4 and 5 respectively of the plaint referred to above. In para 4 of the plaint, the plaintiffs have specifically said about the understanding arrived at between themselves and the defendant No.1 and have also pleaded as regards the full payment made by them to the defendant No.1. It is the specific case of the plaintiffs Page 28 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 (whether such case is true or false is not to be looked into at the time the Court is considering the plea for rejecting the plaint) and such specific plea is about payment being made to the defendant No.1 after 14 th September 2012. The statement of payment in the plaint should have been looked into by the Court below.
34 The relevant Article of the Limitation Act i.e. Article 54 reads thus:
"For specific performance of a contract -- three years -- The date fixed for the performance, or if no such dated is fixed, when the plaintiff has notice that performance is refused."
35 Under the above Article, the period of limitation for specific performance of a contract is three years and under the said Article, there are two alternative points of time which would be the starting points for limitation - One from the date fixed for the performance of the contract; and another, if date is not fixed, when the plaintiff had noticed that the performance was refused by the other party. we agree with Mr. Pathak, the learned counsel that the subsequent payment even if believed would not have the effect of extending the period of limitation from which the time for institution of the suit begin to run. We hold that it is not a money suit, but it is a suit for specific performance of contract and the subsequent payment has no effect while computing the period of limitation. However, we are of the view that the subsequent payment as pleaded has relevance in considering the question whether the parties intended that time is the essence of the contract. It could be said from the conduct of the defendant No.1 in receiving money after 14 th September 2012 that the parties never intended that time be the essence of the contract.
36 The Supreme Court in Panchanan Dhara and Others vs. Monmatha Nath Maity (Dead) Through LRs. and Another reported in Page 29 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 (2006) 5 SCC 340 has specifically held that "a plea of limitation is a mixed question of law and fact. 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 on the conduct of the parties and also as to how they understood the terms and conditions of the agreement." In this judgment, the Supreme Court has further held that while determining the applicability of the first or the second part of Article 54 of the Limitation Act, 1963, the Court should first see as to whether any time was fixed for performance of the agreement of sale and if it was so fixed, whether the suit was filed beyond the prescribed period unless any case of extension of time for performance was pleaded and established. When, however, no time is fixed for performance of contract, the court may determine the date on which the plaintiff had notice of refusal on the part of the defendant to perform the contract and in that event the suit is required to be filed within a period of three years therefrom. Most importantly, in the judgment, referred hereinabove, it has been held that in a suit for specific performance of contract in respect of any immovable property, time would ordinarily not be the essence of the contract.
37 In Panchanan Dhara's case (supra), the Supreme Court has also held as under:
"20. Contention of Mr. Mishra as regard the applicability of the first or the second part of Article 54 of the Limitation Act will have to be judged having regard to the aforementioned findings of fact. A plea of limitation is a mixed question of law and fact. 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 is not in dispute that the suit for specific performance of contract would be governed by Article 54 of the Limitation Act, 1963. While determining the applicability of the first or the second part of the said provision, the court will firstly see as to whether any time was fixed for performance of the agreement of sale and if it was so fixed, whether the suit was Page 30 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 filed beyond the prescribed period unless any case of extension of time for performance was pleaded and established. When, however, no time is fixed for performance of contract, the court may determine the date on which the plaintiff had notice of refusal on the part of the defendant to perform the contract and in that event the suit is required to be filed within a period of three years therefrom."
38 It is no longer res integra that although Order VII Rule 11 of the C.P.C. enables the Court to reject the plaint, yet what is contemplated by this provision is that the plaint as a whole is open to rejection. Mr. Thaker is right in his submission that even if one of the reliefs sought by the plaintiffs cannot be rejected under this provision, the plaint as such cannot be rejected.
39 We may refer to and rely upon a decision of the Supreme Court in case of D. Ramachandran vs. R. V. Janakiraman and others reported in AIR 1999 SC 1128. We quote the relevant observations:
"10. On the other hand, Rule 11 of Order 7 enjoins the Court to reject the plaint where it does not disclose a cause of action. There is no question of striking out any portion of the pleading under this rule. The application filed by the first respondent in O.A. No. 36/97 is on the footing that the averments in the election petition did not contain the material facts giving rise to a triable issue or disclosing a cause of action. Laying stress upon the provisions of Order 7, Rule 11 (a), learned senior counsel for the first respondent took us through the entire election petition and submitted that the averments therein do not disclose a cause of action. On a reading of the petition, we do not find it possible to agree with him. The election petition as such does disclose a cause of action which if unrebutted could void the election and the provisions of Order 7, Rule 11(a) C.P.C. can not therefore be invoked in this case. There is no merit in the contention that some of the allegations are bereft of material facts and as such do not disclose a cause of action. It is elementary that under Order 7 Rule 11 (a) C.P.C., the Court can not dissect the pleading into several parts and consider whether each one of them discloses a cause of action. Under the rule, there can not be a partial rejection of the plaint or petition. See Roop Lal Sathi Versus Nachhattar Singh Gill (1982) 3 S.C.C. 487. We are satisfied that the election petition in this case could not have been rejected in limine without a trial."Page 31 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021
C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 40 Thus, from the aforesaid the Principle of law discernible is that
under Order 7 Rule 11 (d) the Civil Procedure Code, the Court cannot dissect the pleading into several parts and consider whether each one of them discloses a cause of action. Under the Rule, there cannot be a partial rejection of the plaint.
41 We may also refer to a decision of the Punjab and Haryana High Court in the case of ABN AMRO Bank vs. the Punjab urban Planning and Development Authority reported in AIR 2000 P & H 44, wherein Honourable Mr. Justice Swatanter Kumar (as his Lordship then was) observed as under:
"21. The right of the plaintiff bank, thus, to recover the amount to the above limited extent, even if it is assumed that the letter dated 7th July, 1993, is valid and proper cannot be frustrated, the amount being less than the amount claimed in the plaint. Thus, in any case the plaint to the limited extent discloses cause of action in favour of the plaintiff bank and against the defendant. What will be the merit of this claim is again a question to be gone into by the Court at the appropriate stage and upon conclusion of evidence. Partial rejection of a plaint is against not permissible. The provisions of Order 7, Rule 11 of the Code of Civil Procedure are intended to finally determine the rights of the parties at earlier stage on the limited grounds stated in that rule. A Bench of this Court in the case of Bansi Lal v. Som Prakash, MANU/PH/0004/1952 held as under :--
This rule (Order 7, Rule 11) does not justify the rejection of any particular portion of a plaint." In support of this statement the learned author has relied on Raghubans Puri v. Jyoti Swarupe, MANU/UP/0054/1907: ILR 1907 All 325, Appa Rao v. Secretary of State, MANU/TN/0069/1930 and Maqsud Ahmad v. Mathura Datt and Co., AIR 1936 Lah 1021.
"I am therefore of the opinion that the learned Senior Subordinate Judge was in error in upholding the rejection as to a part and setting aside the rejection in regard to the other part. This appeal which I am treating as a petition for revision must therefore, be allowed and the rule made absolute, and I order accordingly."
22. The concept of partial rejection is apparently inapplicable to the provisions of Order 7, Rule 11 of the Code of Civil Procedure, it would Page 32 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 have its limited application in regard to the provisions of Order 6, Rule 16 of the Code. There could be partial striking out of pleadings but not rejection of plaint. Partial acceptance or rejection or even admission of appeals in absence of a specific rule to that effect was described by the Hon'ble Supreme Court of India not a proper exercise of jurisdiction. In this regard, reference can be made to the case of Ramji Bhagala v. Krishnarao Karirao Bagre, MANU/SC/0034/1980 : AIR 1982 SC 1223. This is not even the main controversy between the parties in the present case. Thus, I see no reason to discuss this contention in any further elucidation.
23. To bring out the cause of action, a plaint must state necessary conditions to maintain a suit. The merit of those conditions and/or terms is inconsequential at the stage, for consideration of such application. What evidence the plaintiff would lead to prove his case or what probable defence the defendant would raise is not the concern of Court at that initial stage of proceedings. Cause is the proper generic term. Its construction must and has to be decided keeping in mind the facts and circumstances of each case. The steps taken in the suits are proper in law and on facts of the case, they call for no need to retrace the order passed by the learned trial Court."
42 Thus, the Court in no uncertain terms has held that there could be partial striking out of pleadings but not rejection of the plaint. To bring out the cause of action, a plaint must state the necessary conditions to maintain a suit. The merits of those conditions and/or terms is inconsequential at the stage for consideration of any application at the instance of the defendants for rejection of the plaint. What evidence the plaintiff would lead to prove his case or what probable defense the defendants would raised is not the concern of the Court at that initial stage of the proceedings.
CLAIM OF REFUND OF EARNEST MONEY OR PART PAYMENT:
43 Keeping in mind the aforesaid, we now address ourselves on the relief for refund of the earnest money or part payment as prayed for in the plaint. It is the case of the plaintiffs that in all, they have paid Rs.95 Lakh towards the agreement for sale of suit properties to the defendant No.1. Although the prayer in terms of para 14(4) has been couched in a Page 33 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 different language, but in substance, it appears that the plaintiffs want the amount paid by way of part payment or earnest money to be refunded. If such is the relief prayed for, then whether the same could be said to be time barred keeping Article 54 of the Limitation Act in mind. According to Mr. Thaker, for refund of an advance amount, Article 62 of the Limitation Act alone is to be applied since a charge could be said to have been created over the suit properties under Section 55(6)(b) of the Transfer of Property Act.
44 On the other hand, Mr. Pathak would contend that when the suit agreement itself is not enforceable, the plaintiffs are not liable to refund of the advance amount as pleaded in the plaint. In fact, according to Mr. Pathak, no amount has been paid in advance to his clients. He pointed out that Rs.5 Lakh paid on the date of the execution of the agreement for sale by way of five cheques also has not come in the pocket of his clients as those cheques were dishonoured.
45 Article 62 of the Limitation Act reads as follows:
Description of suit Period of limitation Time from which period begins to run
62. To enforce payment of Twelve years When the money money secured by a mortgage or sued for becomes otherwise charged upon due.
immovable property.
46 Section 55(6)(b) of the Transfer of Property Act reads as follows:
"55. Rights and liabilities of buyer and seller: In the absence of a contract to the contrary, the buyer and the seller of immovable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next following or such of them as are applicable to the property sold:Page 34 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021
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"(6) The buyer is entitled-
(a) where the ownership of the property has passed to him, to the benefit of any improvement in, or increase in value of, the property, and to the rents and profits thereof;
(b) unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, to the extent of the seller's interest in the property, for the amount of any purchase-money properly paid by the buyer in anticipation of the delivery and for interest on such amount;
and, when he properly declines to accept the delivery, also for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission.
An omission to make such disclosures as are mentioned in this section, paragraph (1), clause (a) and paragraph (5), clause (a), is fraudulent."
47 While dealing with the provisions in Section 55(6)(b) of the Transfer of Property Act and Article 62 of the Limitation Act, the Apex Court in its decision reported in 2000(1) CTC 507, Delhi Development Authority vs. Skipper Construction Co.(P) Ltd., has observed at paragraph Nos.29 to 33 as follows:
"29.These points depend upon the effect of the provisions in Sub-clause (6) of Section 55 of the Transfer of Property Act. That Section starts with the words "In the absence of a contract to the contrary", and reads thus (insofar as it is material for our purpose):
"Section 55 (6)(b): The buyer is entitled
(a) .................
(b) unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, to the extent of the seller's interest in the property, for the amount of any purchase-money property paid by the buyer in anticipation of the delivery and for interest on such amount;
and, when he properly declines to accept the delivery, also for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission".
Page 35 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 It is plain from the above provision that, in the absence of a contract to the contrary, the buyer will have a charge on the seller's interest in the property which is the subject matter of the sale agreement insofar as the purchase money and interest on such amount are concerned, unless the buyer has improperly declined to accept delivery. The charge is available against the seller and all persons claiming under him. This charge in favour of the buyer is the converse of the seller's charge under Section 55(4)(b). The buyer's charge under this Section is a statutory charge and differs from a contractual charge which a buyer may be entitled to claim under a separate contract (Chettiar Firm Vs. Chettiar) (AIR 1941 P.C. 47). No charge is available unless the agreement is genuine. ( T.N. Hardas Vs. Babulal) ( AIR 1973 SC 1363) As pointed out in Mulla's Commentary on Transfer of Property Act, 8th Ed. (P.411), the charge on the property under Section 55(6)(b) is enforceable not only against the seller but against all persons claiming under him. Before the amending Act of 1929, the words 'with notice of payment' occurred after the words "all the persons claiming under him". These words were omitted as they allowed a transferee without notice to escape. After the Amendment of 1929, notice to the purchaser has now become irrelevant.
30. When the property upon which the charge is created gets converted into another form, the buyer will be entitled to proceed against the substituted security. This is a general principle of law and Section 73 of the Transfer of Property Act is only an example of the said principle. The above principle has been applied to enforce mortgage on substituted securities (see Barham Deo Prasad Vs. Tara Chand ( 1913) 41 I.A. 45 (PC) and Muniappa Vs. Subbaiah ( AIR 1917 Mad.880)). The same principle which is applicable to mortgages applies to cases of statutory charge under Section 55(6)(b). If immovable property is charged and is converted into another property or money, then the charge will fasten on the property or money into which the subject matter of the agreement is converted.
31. The above sub-section of Section 55 also makes it clear that the buyer is entitled to interest on the amount of purchase money paid. Interest is payable from the date of payment of the purchase money to the seller till date of delivery of property to the purchaser or till the execution of the sale deed, whichever is earlier. Points 1 and 2 are decided accordingly in favour of the buyers.
POINT 3:
32.Article 62 of the Limitation Act, 1963 ( which corresponds to Article 132 of the Limitation Act 1908) provides a period of 12 years "to enforce payment of money secured by a mortgagee or otherwise charged upon immovable property". Time runs from the date "when Page 36 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 money becomes due".
33. From the above Article, it is clear that the period of limitation for enforcement of the statutory charge created under Section 55(6)(b) is 12 years from the date when becomes due and not 3 years. The period remains the same even for enforcement of the charge on the substituted security. Point 3 is decided accordingly. (emphasis supplied) 48 Similarly in another decision reported in 2004 (SCC) 711, Videocon Properties Ltd. vs. Dr. Bhalchandra Laboratories, while considering the scope of Section 55(6)(b) of the Transfer of Property Act, the Supreme Court has observed at paragraph No.13 as follows:
"The buyer's charge engrafted in clause (b) of paragraph 6 of Section 55 of the Transfer of Property Act would extend and enure to the purchase-money or earnest money paid before the title passes and property has been delivered by the purchaser to the seller, on the seller's interest in the property unless the purchaser has improperly declined to accept delivery of property or when he properly declines to accept delivery including for the interest on purchase money and costs awarded to the purchaser of a suit to compel specific performance of the contract or to obtain a decree for its rescission. The principle underlying the above provision is a trite principle of justice, equity and good conscience. The charge would last until the conveyance is executed by the seller and possession is also given to the purchaser and ceases only thereafter. The charge will not be lost by merely accepting delivery of possession alone. This charge is a statutory charge in favour of a buyer and is different from contractual charge to which the buyer may become entitled to under the terms of the contract, and in substance a converse to the charge created in favour of the seller under Section 55(4)(b). Consequently, the buyer is entitled to enforce the said charge against the property and for that purpose trace the property even in the hands of third parties and even when the property is converted into another form by proceeding against the substituted security, since none claiming under the seller including a third party purchaser can take advantage of any plea based even on want of notice of the charge. The said statutory charge gets attracted and attaches to the property for the benefit of the buyer the moment he pays any part of the purchase money and is only lost in case of purchaser's own default or his improper refusal to accept delivery. So far as payment of interest is concerned, the section specifically envisages payment of interest upon the purchase-money/price prepaid, though not so specifically on the earnest money deposit, apparently for the reason Page 37 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 that an amount paid as earnest money simplicitor, as mere security for due performance does not become repayable till the contract or agreement gets terminated and it is shown that the purchaser has not failed to carry out his part of the contract, and the termination was brought about not due to his fault, the claim of the purchaser for refund of earnest money deposit will not arise for being asserted."
49 In Saidun Nessa Hoque and others vs. Calcutta Vyapar Paratisthan Ltd. reported in AIR 1978 Cal 285, the High Court of Calcutta, in paragraph 44, has held as follows:
"44. It seems to me that under S. 55 of the T. P. Act the moment earnest money is paid it forms a charge on the immovable property. This is the position under the Indian Law. It follows that it is a charge for repayment of the earnest money. If that is so, how far this is consistent with the right of forfeiture of deposit as laid down in the judgment in the English cases? Under S. 55 (6) the buyer has a charge on the immovable property not only for the purchase money but also for the earnest. It is a statutory charge. The buyer will be entitled to the statutory charge in respect of the purchase money unless he has improperly declined to accept delivery of the property and for the earnest when he properly declines to accept delivery. It follows, therefore, that under the subsection unless the buyer properly declines to accept delivery the charge for the earnest money will remain from the time of payment. This section, however, begins with the words "In the absence of the contract to the contrary". So, if there is a contract contrary to S. 55 (6), namely, if the parties expressly stipulate that the purchase money will not form the charge on the property or it will be released from the charge on certain circumstances or that earnest money would be forfeited under certain circumstances the provisions of sub-sec. (6) will not be attracted. But mere fact that money is described as earnest does not make the contract to the contrary within the meaning of this sub-section. It seems to me that mere use of the word 'earnest' would not be sufficient to exclude the operation of S. 55 (6).Admittedly, there is no express term to the contrary in the facts of the present case. There is also no evidence as to whether the parties by using the word 'earnest' excluded the operation of sub-sec. (6). These are all questions of fact. Therefore, the rule in sub-sec. (6) would be attracted, viz., that the buyer will be entitled to the benefit of charge unless the buyer properly (improperly?) declines to accept delivery. It follows, therefore, that if the buyer improperly 'declines to accept' delivery he is not entitled to a charge under sub-sec. (6). So, although, this is a statutory charge under S. 55 (6), but to answer whether the seller can forfeit the earnest, ultimately, the same question arises, viz., has the buyer repudiated the contract?Page 38 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021
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45. Mr. Bhabra has relied on the decision of the Privy Council in Chiranjit Singh v. Har Swarup, AIR 1926 PC 1 and submitted that there was forfeiture of earnest money in case of immovable property in that case. But it should be noted that in the facts of that case the buyer of the immovable property was unable to purchase the same due to certain unavoidable circumstances and informed the same to the seller by telegram. On the admitted facts of that case, the transaction failed due to default or failure of the purchaser. So, no question of charge under S. 55 (6) of the T. P. Act arose or could arise under the facts of that case. .. .."
50 In Mst. Anchi and Others vs. Maida Ram reported in AIR 1987 Raj 11, the High Court of Rajasthan has taken a similar view. In paragraph 9, it has been held as follows:
"9. . Section 55 of the Transfer of Property Act deals with rights and liability of buyer and seller and Sub-clause (b) of Sub-section (6) while dealing with the rights of buyer lays down that "unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, to the extent of the seller's interest in the property, for the amount of any purchase-money properly paid by buyer in anticipation of the delivery and for interest on such amount; and, when he properly declines to accept the delivery, also for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission"... .."
A conjoint reading of above judgments and Section 55(6)(b) of the Transfer of Property Act, make it clear that for the money paid by the buyer before the title passes, a statutory charge will be created and attached to the property and such a charge will be lost in case of the purchaser's own default and in case he refused to accept delivery. The charge attaches to the property from the moment the buyer pays the purchase money and is only lost in case of his own subsequent default. Therefore, under Section 55(6)(b) unless the buyer improperly declines to accept delivery or properly declines to accept the delivery the charge Page 39 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 for the amount paid will remain from the time of payment. The above referred judgments also makes it clear that a statutory charge arises only when the buyer shows that he has not improperly declined to accept the delivery of the property or he properly declined to accept delivery.
51 Section 54 of the Transfer of Property Act would indicate that mere agreement itself does not create any interest or charge in the property. Section 54, in fact, requires an act of parties for creating any right or interest in any such property, meaning thereby, mere simple agreement for sale would not create any charge. Whereas Section 55(6)
(b) of the Transfer of Property Act, otherwise creates a statutory charge, which can be said to have been created by the act of parties. The charge created under Section 55(6)(b) also depends upon certain contingencies i.e. when the buyer has improperly declined to accept delivery of the property or when he properly declines to accept delivery. As already cited, in the judgment of Videocon Properties Ltd. vs. Dr. Bhalchandra Laboratories (cited supra) it has been clearly observed that a statutory charge gets attracted for the benefit of the buyer the moment, the purchaser pays purchase money and is only lost in case of his own default or his improper refusal to accept delivery.
52 We may clarify at this stage that ultimately, after a full fledged trial on the basis of the evidence that may be led by both the sides, oral as well as documentary, the Trial Court may take the view that having regard to the conduct of the plaintiffs i.e. in view of their own default, the charge created over the property has been lost and the suit for recovery of money should fail. However, assuming the same the plaint could not have been rejected. In Videocon Properties Ltd. (supra) referred to above, the Supreme Court has categorically held that the charge gets attracted for the benefit of the buyer the moment he pays Page 40 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 any part of the purchase money and is only lost in case of purchaser's default or his / her improper refusal to accept the delivery. In such circumstances, the Trial Court will have to go in many other issue like whether the plaintiffs were ready and willing to perform their part of the contract, etc. 53 The perusal of Articles 54 and 62 respectively of the Limitation Act, do indicate that both these Articles are distinct and operate in different fields. In other words, they are to be applied only in respect of the suit for which the respective Article is meant for. Needless to say that as per Article 54 of the Limitation Act, a suit for specific performance of the contract has to be filed within a period of three years from the date fixed for the performance or if no such date is fixed from the date of the refusal of such performance. At the same time, it is to be noted that the plaintiffs are not precluded from seeking an alternative prayer for refund of the advance amount. Such alternative prayer, certainly, is not a consequential prayer to the other relief of specific performance and on the other hand, such alternative prayer itself will have the character of the main relief, however, alternatively sought for. If such alternative prayer for refund of advance money is also sought for in a suit for specific performance, then, in our opinion, the period of limitation to be considered in respect of such relief would be Article 62 of the Limitation Act and not the limitation period fixed for specific performance. Article 62 of the Limitation Act grants 12 years time for enforceable payment of money secured by a mortgaged or otherwise charge upon an immovable property.
54 In the overall view of the matter, we are convinced that the Court below ought not to have rejected the plaint on the ground that the suit is time barred. The case on hand is not one wherein on the face of the Page 41 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 averments made in the plaint the suit for specific performance could be said to be time barred. Having regard to the pleadings and the documentary evidence sought to be relied upon by the plaintiffs, the issue of limitation, in our opinion, becomes a mixed question of law and fact. This issue of limitation will have to be determined after a full fledged trial.
55 In a very recent pronouncement of the Supreme Court in the case of Shakti Bhog Food Industries Ltd vs. The Central Bank of India and another [Civil Appeal No.2514 of 2020 decided on 5 th June 2020], the Court observed as under:
"It is well established position that the cause of action for filing a suit would consist of bundle of facts. Further, the factum of suit being barred by limitation, ordinarily, would be a mixed question of fact and law. Even for that reason, invoking Order VII Rule 11 of the CPC is ruled out."
56 Although it may not be relevant for the purpose of the present case, yet for the guidance of the Subordinate Courts, we would like to observe something important. Even a mixed question of law and fact cannot be decided as a preliminary issue.
57 Rule 2 of the Order XIV of the Code was substituted by Section 64 of the Code of Civil Procedure Code (Amendment) Act, 19764. Prior to the amendment, the rule read as follows-
"Where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on the issues of law only, it shall try those issues first, and for that purpose may, if it thinks fit, postpone the settlement of the issues of fact until after the issues of law have been determined."
58 In 1964, the above referred rule came before the Supreme Court Page 42 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 for consideration in the case of Major S. S. Khanna vs. Brig. F.J. Dillon reported in AIR 1964 SC 497 wherein it was held that only where the court is of the opinion that the whole suit may be disposed of on the issues of law alone that the jurisdiction to try the issues of law apart from the issues of fact may be exercised. However, it is pertinent to note that the Code confers no jurisdiction upon the Court to try a suit on mixed issues of law and fact preliminarily. It further held that normally all the issues in a suit are to be tried by the Court and it shall not do so in a situation where the issues, even of law, depend upon issues of fact, would result in a lopsided trial of the suit.
The substituted Rule came in force on 1st of February, 1977. The Rule was substituted to provide that although a suit can be disposed of on a preliminary issue, yet the Court shall ordinarily pronounce its judgement on all issues; but where any issue relates to the jurisdiction of the Court or a bar created by any law for the time being in force, the Court may postpone the settlement of the other issues until the preliminary issue with regard to the jurisdiction of the Court or such bar has been determined and the Court may deal with the suit in accordance with the determination of such preliminary issue.
Though there has been a slight amendment in the language of Order XIV, Rule 2 Code of Civil Procedure by the amending Act, 1976 but the principle enunciated in the decision in Major S. S. Khanna Case (supra) still holds the field with respect to the principle that the Code confers no jurisdiction upon the Court to try a suit on mixed issues of law and fact as a preliminary issue and where the decision on issue of law depends upon decision of fact, it cannot be tried as a preliminary issue.
59 In Ramdayal Umraomal vs. Pannalal Jagannathji [1979 M.P.L.J. 736], a Full Bench of Madhya Pradesh High Court has observed that Page 43 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 under Order XIV, Rule 2, mixed questions of law and fact requiring recording of evidence cannot be tried as a preliminary issue.
60 The Apex Court in the matter of Ramesh B. Desai and others vs. Bipin Vadilal Mehtaand others [(2006) 5 SCC 638] held that in the case of a disputed question of fact, the question of limitation cannot be decided as a preliminary issue without a decision on facts based on the evidence that has to be adduced by the parties. The Court has no jurisdiction Under Order XIV, Rule 2 of the Code to decide a mixed question of law and fact as a preliminary issue.
61 Is it permissible for the Court to consider limitation as a preliminary issue? A plea of limitation cannot be decided as an abstract principle of law divorced from the facts for rejection of the plaint Under Order VII, Rule 11(d) of the Code. As mentioned above, a mixed question of law and facts cannot be decided as a preliminary issue; therefore such questions of limitation are not to be determined preliminarily. The same has been reaffirmed by the Apex Court in the case of Satti Paradesi Samadhi and Pillayar Temple vs. M. Sankuntala (Dead) through Legal Representatives and others [(2015) 5 SCC 674], where it has observed that the issue of limitation requiring an inquiry into the facts, cannot be tried as a preliminary issue and has restated that the mixed questions of law and facts cannot be decided as a preliminary issue. We quote the observations made by the Supreme Court as under:
"11 The core question that emerges for consideration is whether an issue of limitation could at all have been taken up as a preliminary issue.
12 In Ramrameshwari Devi and others v. Nirmala Devi and others [(2011) 8 SCC 249], while dealing with Order 14, Rule 2, observed that :Page 44 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021
C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 "25. Sub-rule (2) of [Order 14] refers to the discretion given to the court where the court may try an issue relating to the jurisdiction of the court or the bar to the suit created by any law for the time being in force as a preliminary issue."
13 The controversy pertaining to the provisions contained in Order 14 Rule 2 had come up for consideration before this Court in Major S.S. Khanna v. Brig. F.J. Dillon [AIR 1964 SC 497] wherein it has been ruled thus: -
"18...Under Order 14 Rule 2 where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on the issue of law only, it shall try those issues first, and for that purpose may, if it thinks fit, postpone the settlement of the issues of fact until after the issues of law have been determined. The jurisdiction to try issues of law apart from the issues of fact may be exercised only where in the opinion of the Court the whole suit may be disposed of on the issues of law alone, but the Code confers no jurisdiction upon the Court to try a suit on mixed issues of law and fact as preliminary issues. Normally all issues in a suit should be tried by the Court: not to do so, especially when the decision on issues even of law depends upon the decision of issues of fact, would result in a lop-sided trial of the suit."
Be it stated, the aforesaid pronouncement was made before the amendment of the Code of Civil Procedure in 1976.
14 In Ramesh D. Desai and others v. Bipin Vadilal Mehta and others [(2006) 5 SCC 638], while dealing with the issue of limitation, the Court opined that :
"19. a plea of limitation cannot be decided as an abstract principle of law divorced from facts as in every case the starting point of limitation has to be ascertained which is entirely a question of fact."
The Court further proceeded to state that a plea of limitation is a mixed question of fact and law. On a plain consideration of the language employed in sub-rule (2) of Order 14 it can be stated with certitude that when an issue requires an inquiry into facts it cannot be tried as a preliminary issue. In the said judgment the Court opined as follows: -
"13. Sub-rule (2) of Order 14 Rule 2 CPC lays down that where issues both of law and of fact arise in the same suit, and the court is of the opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to (a) the jurisdiction of the court, or (b) a bar Page 45 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 to the suit created by any law for the time being in force. The provisions of this Rule came up for consideration before this Court in Major S.S. Khanna v. Brig. F.J. Dillon and it was held as under: (SCR p. 421) "18...Under Order 14 Rule 2, Code of Civil Procedure where issues both of law and of fact arise in the same suit, and the court is of opinion that the case or any part thereof may be disposed of on the issues of law only, it shall try those issues first, and for that purpose may, if it thinks fit, postpone the settlement of the issues of fact until after the issues of law have been determined. The jurisdiction to try issues of law apart from the issues of fact may be exercised only where in the opinion of the court the whole suit may be disposed of on the issues of law alone, but the Code confers no jurisdiction upon the court to try a suit on mixed issues of law and fact as preliminary issues. Normally all the issues in a suit should be tried by the court; not to do so, especially when the decision on issues even of law depend upon the decision of issues of fact, would result in a lopsided trial of the suit."
Though there has been a slight amendment in the language of Order 14 Rule 2 CPC by the amending Act, 1976 but the principle enunciated in the abovequoted decision still holds good and there can be no departure from the principle that the Code confers no jurisdiction upon the court to try a suit on mixed issues of law and fact as a preliminary issue and where the decision on issue of law depends upon decision of fact, it cannot be tried as a preliminary issue."
15 In the case at hand, we find that unless there is determination of the fact which would not protect the plaintiff under Section 10 of the Limitation Act the suit cannot be dismissed on the ground of limitation. It is not a case which will come within the ambit and sweep of Order 14 Rule 2 which would enable the court to frame a preliminary issue to adjudicate thereof. The learned single Judge, as it appears, has remained totally oblivious of the said facet and adjudicated the issue as if it falls under Order 14 Rule 2."
62 We should also look into the decision of the Supreme Court in the case of Nusli Neville Wadia vs. Ivory Properties and others reported in AIR 2019 SC 5125, wherein the Supreme Court has observed that in a case the question of limitation can be decided based on admitted facts, it can be decided as a preliminary issue under Order XIV Rule 2(2)(b).
Page 46 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 Once the facts as regards the limitation are disputed, the determination of the question of limitation also cannot be made under Order XIV Rule 2(2) as a preliminary issue or any other such issue of law which requires examination of the disputed facts. We quote the relevant observations:
"47. In a case question of limitation can be decided based on admitted facts, it can be decided as a preliminary issue under Order XIV Rule 2(2)(b). Once facts are disputed about limitation, the determination of the question of limitation also cannot be made under Order XIV Rule 2(2) as a preliminary issue or any other such issue of law which requires examination of the disputed facts. In case of dispute as to facts, is necessary to be determined to give a finding on a question of law. Such question cannot be decided as a preliminary issue. In a case, the question of jurisdiction also depends upon the proof of facts which are disputed. It cannot be decided as a preliminary issue if the facts are disputed and the question of law is dependent upon the outcome of the investigation of facts, such question of law cannot be decided as a preliminary issue, is settled proposition of law either before the amendment of CPC and post amendment in the year 1976.
48. The suit/application which is barred by limitation is not a ground of jurisdiction of the court to entertain a suit. If a plea of adverse possession has been taken under Article 65 of the Limitation Act, in case it is successfully proved on facts; the suit has to be dismissed. However, it is not the lack of the jurisdiction of the Court that suit has to be dismissed on the ground of limitation, but proof of adverse possession for 12 years then the suit would be barred by limitation such question as to limitation cannot be decided as a preliminary issue.
56. In Gunwantbhai Mulchand Shah v. Anton Elis Farel and others, (2006) 3 SCC 634, the suit was filed for specific performance. The Court held that the question of limitation in the facts could not have been decided as a preliminary issue. The suit could not have been dismissed as barred by limitation for the relief of specific performance.
Though the Court held that there was jurisdiction, the matter was remitted to the trial court to decide all the issues, including limitation after parties adduced evidence. In Indian Bank v. Maharashtra State Cooperative Marketing Federation Ltd., (1998) 5 SCC 69, it is observed that there is jurisdiction to entertain when the question is of applicability of Section 10. This Court in Sneh Lata Goel v. Pushplata and others, (2019) 3 SCC 594 observed that given the provisions of Section 21 of CPC, no objection as to the place of suing should be allowed by the appellate court unless there is a consequent failure of justice. An objection raised in adjudicating court was as to territorial Page 47 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021 jurisdiction, which did not travel to the root or to the inherent lack of jurisdiction of a civil court to entertain the suit. The competence to try a case has been considered in Hiralal Patni v. Kali Nath, AIR 1962 SC 199 referred to in Sneh Lata Goel (supra), in which this Court has observed thus:
"13. Sub-section (1) of Section 21 provides that before raising an objection to territorial jurisdiction before an appellate or revisional court, two conditions precedent must be fulfilled:
(i) The objection must be taken in the court of first instance at the earliest possible opportunity; and
(ii) There has been a consequent failure of justice.
This provision which the legislature has designedly adopted would make it abundantly clear that an objection to the want of territorial jurisdiction does not travel to the root of or to the inherent lack of jurisdiction of a civil court to entertain the suit. Hence, it has to be raised before the court of first instance at the earliest opportunity, and in all cases where issues are settled, on or before such settlement. Moreover, it is only where there is a consequent failure of justice that an objection as to the place of suing can be entertained. Both these conditions have to be satisfied.
14. The learned counsel appearing on behalf of the respondents has submitted that the objection as to the lack of territorial jurisdiction was raised in the written statement before the trial court. But evidently, the suit was decreed ex parte after the respondents failed to participate in the proceedings. The provisions of Section 21(1) contain a clear legislative mandate that an objection of this nature has to be raised at the earliest possible opportunity before issues are settled. Moreover, no such objection can be allowed to be raised even by an appellate or revisional jurisdiction, unless both sets of conditions are fulfilled." It is in the context of the inherent lack of jurisdiction to entertain the suit, the expression has been used in Section 9A."
62. In our opinion, it cannot be laid down as proposition of law under Order VII Rule 11(d) that plaint cannot be rejected as barred by limitation. It can be said that it is permissible to do so mainly in a case where the plaint averment itself indicate the cause of action to be barred by limitation and no further evidence is required to adjudicate the issue."
63 In the result, this appeal succeeds and is hereby allowed. The Page 48 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021 C/FA/1810/2021 JUDGMENT DATED: 19/07/2021
impugned order passed by the 27 th Additional Senior Civil Judge, Vadodara, below Exhibit : 9 in the Special Civil Suit No.284 of 2019 is hereby quashed and set aside. The plaint stands restored to the file of the Trial Court to its original number for being proceeded in accordance with law. All contentions available to both parties are kept open including the issue of limitation to be decided along with other issues on the basis of the plea taken in the written statement and the evidence produced by the parties in that behalf uninfluenced by the observations made in the present judgement on factual matters.
64 Consequently, the connected Civil Application for stay also stands disposed of.
(J. B. PARDIWALA, J) (VAIBHAVI D. NANAVATI,J) CHANDRESH Page 49 of 49 Downloaded on : Thu Sep 09 08:56:25 IST 2021