A) ABSTRACT / HEADNOTE

This case revolves around the enforceability of a suit for specific performance of a contract concerning the sale of immovable property. The key issue pertains to the limitation period under Article 54 of the Limitation Act, 1963, which mandates a three-year filing period from the fixed date of performance or, if no date is fixed, from when the plaintiff is aware of refusal. Despite the agreement including a clause stating its validity for five years, the Supreme Court ruled that this clause did not alter the original date fixed for performance (16.01.1990). The plaintiffs filed their suit in 1993, exceeding the limitation period. Hence, the suit was dismissed on grounds of limitation. The Court, however, ordered the defendants to return the advance amount paid by the plaintiffs with 12% simple interest, ensuring equitable relief.

Keywords: Suit for specific performance, Limitation Act 1963, Article 54, Agreement to sell, Validity period.

B) CASE DETAILS

i) Judgment Cause Title: Usha Devi & Ors. v. Ram Kumar Singh & Ors.

ii) Case Number: Civil Appeal No. 8446 of 2024 (Arising out of SLP (C) No. 2997 of 2023)

iii) Judgment Date: August 5, 2024

iv) Court: Supreme Court of India

v) Quorum: Vikram Nath and Prasanna Bhalachandra Varale, JJ.

vi) Author: Vikram Nath, J.

vii) Citation: [2024] 8 S.C.R. 501 : 2024 INSC 599

viii) Legal Provisions Involved: Article 54 of the Limitation Act, 1963

ix) Judgments Overruled by the Case: None

x) Case is Related to Which Law Subjects: Civil Law, Contract Law, Specific Relief

C) INTRODUCTION AND BACKGROUND OF JUDGMENT

This case stems from a dispute over the execution of a sale deed under an agreement to sell dated 17.12.1989. The appellants (defendants) argued that the suit for specific performance, filed in 1993, was barred by limitation. The agreement stipulated the execution of the sale deed within a month, setting 16.01.1990 as the fixed date. The plaintiffs (respondents) contended that the agreement’s clause extending validity to five years permitted filing within this period. The trial court ruled the suit as time-barred, but the appellate and High Courts overturned this. The Supreme Court’s intervention sought to clarify the application of limitation laws in contracts with stipulated performance dates.

D) FACTS OF THE CASE

1. The property in dispute pertains to Plot No. 2339B, Purulia Road, Ranchi, initially owned by Bihari Lal, the appellants’ predecessor.
2. An initial agreement was executed on 22.07.1983, stipulating a sale consideration of Rs. 70,000/- with Rs. 1,000/- paid in advance.
3. The plaintiffs alleged the balance was paid by 20.09.1985, with possession handed over to them.
4. Subsequently, the sale deed was not executed, and a fresh agreement was executed on 17.12.1989, setting a revised consideration of Rs. 81,000/- for a reduced area of 9 katthas.
5. The agreement mandated execution and registration of the sale deed within one month (16.01.1990) but also mentioned a validity clause of five years.
6. The plaintiffs filed the suit in September 1993, claiming the agreement’s validity period allowed filing beyond the three-year limitation under Article 54.
7. The defendants denied allegations, claiming the agreements were forged and time-barred under the Limitation Act.

E) LEGAL ISSUES RAISED

i. Whether the suit for specific performance was barred by limitation under Article 54 of the Limitation Act, 1963.

ii. Whether the five-year validity clause in the agreement extended the limitation period.

iii. Whether the agreements were valid and enforceable against the appellants.

F) PETITIONER / APPELLANT’S ARGUMENTS

1. Limitation Bar: The appellants argued that the suit, filed after three years from 16.01.1990, was time-barred as per Article 54 of the Limitation Act, 1963.
2. Forgery Allegations: They alleged the agreements were forged and fabricated, as the signatures of Bihari Lal were not genuine.
3. Validity of Agreements: They contested the enforceability of the agreements due to material alterations and lack of signatures.
4. Ownership Dispute: They asserted that Bihari Lal was not the absolute owner of the suit property, challenging the validity of the sale agreement.

G) RESPONDENT’S ARGUMENTS

1. Validity Clause: The respondents relied on the clause stipulating a five-year validity period to justify the delay in filing the suit.
2. Performance Readiness: They asserted they were always ready and willing to perform their obligations, as evidenced by partial payments and possession.
3. Equitable Relief: They claimed entitlement to equitable relief, given the substantial payments made to the appellants.
4. Fraudulent Denial: They argued that the defendants fraudulently denied their obligations, necessitating judicial intervention.

H) JUDGMENT

a) Ratio Decidendi:

1. The limitation period for filing a suit for specific performance begins on the date fixed for performance or from notice of refusal if no date is fixed.
2. The validity clause in the agreement did not alter the date of performance (16.01.1990), making the suit time-barred under Article 54 of the Limitation Act, 1963.

b) Obiter Dicta:

The Court noted that incorporating a validity clause is irrelevant if a specific date for performance is already fixed.

c) Guidelines:

1. Limitation periods cannot be circumvented through clauses that extend contract validity.
2. Courts must distinguish between the validity of a contract and the fixed date for performance.

I) CONCLUSION AND COMMENTS

The Supreme Court’s decision underscores strict adherence to statutory limitation periods in contractual disputes. It cautions against interpreting validity clauses to circumvent limitation laws, reinforcing clarity in contracts. While ensuring equitable relief through interest on the advance amount, the judgment protects parties from stale claims.

J) REFERENCES

a. Important Cases Referred

i. Chand Rani v. Kamal Rani, (1993) 1 SCC 519
ii. K.S. Vidyanadam v. Vairavan, (1997) 3 SCC 1
iii. Govind Prasad Chaturvedi v. Hari Dutt Shastri, AIR 1977 SC 1005

b. Important Statutes Referred

i. Limitation Act, 1963 – Article 54