Once Suit For Specific Performance Is Filed Within Period Of Limitation, Delay Cannot Be Ground For Refusing Relief- SC
The Supreme Court has observed that as long as a suit for specific performance is filed within the period of limitation, delay cannot be a ground to refuse the relief of specific performance.
The Bench of Justice Sanjiv Khanna and Justice Bela M. Trivedi observed –
"The aforesaid ratio has also been followed recently by this Court in R. Lakshmikantham V. Devaraji (2019) 8 SCC 62. We, therefore, have no hesitation in holding that mere delay alone in filing the suit for specific performance, without reference to the conduct of the plaintiff could not be a ground for refusing the said relief, when the suit was filed within the statutory time limit by the respondent- plaintiff."
In this case, an appeal was preferred before the Supreme Court assailing the judgment of the Madras High Court which had allowed the appeal, modified the decree passed by the Trial Court, and decreed the suit by granting the prayer of specific performance and also for a permanent injunction against the Appellant (original Defendant) in respect of the suit property.
The Respondent (original Plaintiff) had filed the suit before the Trial Court seeking specific performance of an agreement for sale dated October 5, 1989, against the Appellant (original Defendant) and had prayed in the alternative for a refund of the earnest (advance) money with interest, and also for the compensation.
The Respondent had also prayed for a permanent injunction restraining the Appellant–Defendant from alienating or transferring the suit property to any third party.
The Trial Court partly decreed the suit granting prayer for a refund of the earnest money with interest at the rate of 12% per annum and dismissed the suit so far as other prayers were concerned, vide the judgment and decree dated June 28th, 2002.
As per the case of the Respondent, though he had contacted the Appellant several times requesting to execute the sale deed, and had shown readiness and willingness to perform his part of the contract, the Appellant failed to respond or perform his part of the contract. Thereafter, the Respondent-Plaintiff filed a suit for specific performance of the said agreement.
The High Court had granted the relief of specific performance in favor of the Respondent-Plaintiff.
Counsel Vikash Singh appeared for the Appellant while Counsel S. Thananjayan appeared for the Respondent before the Court.
The Appellant had contended before the Apex Court that the Respondent had filed the suit for specific performance of the agreement after the expiry of three years of the agreement.
Referring to this, the Supreme Court noted that per Article 54 of the Limitation Act, 1963, the suit for the specific performance of the contract could be filed within three years from the date fixed for the performance, or when no such date has been fixed, from the date when the plaintiff has noticed that performance is refused
The Court also noted that the period of limitation had started from the date the Respondent noticed that the performance was refused by the Appellant and not from the date of the execution of the agreement in question.
In this context, the Bench observed-
"It cannot be gainsaid said that even though time is not considered as the essence of the contract in case of immoveable property and that the suit could be filed within three years as provided in Article 54 of the Limitation Act, the respondent - plaintiff had to perform his part of the contract within the reasonable time having regard to the term of the agreement prescribing the time limit."
The Court held that the time limit prescribed in the agreement cannot be ignored on the ground that time was not made the essence of the agreement or that the suit could be filed within three years from the date fixed for performance or from the date when the performance is refused by the vendor.
The Court held, "…the suit having been filed by the respondent well within the prescribed time limit under Article 54 of the Limitation Act, the respondent could not have been non-suited on the ground of the suit being barred by limitation as sought to be submitted by learned counsel for the appellant."
The next issue dealt with by the Court was whether the High Court was justified in granting the relief of specific performance in favor of the Respondent-Plaintiff.
Adverting to this issue, the Court referred to certain provisions of the Specific Relief Act, 1963 as they stood prior to the 2018 amendment including Section 10, Section 16, and Section 20.
*Section 10: Cases in which specific performance of contract enforceable;
*Section 16: Personal bars to relief – Specific performance of a contract cannot be enforced in favour of a person;
*Section 20: Discretion as to decreeing specific performance.
The Court while referring to these provisions noted, "From the bare reading of the afore-stated provisions, it clearly emerges that the Specific Performance of the contract, may in the discretion of the court, be enforced, when the act agreed to be done, was such that compensation in money for its non-performance would not afford adequate relief, and that the breach of a contract to transfer immoveable property could not be adequately relieved by compensation in money."
The Court also held that 'readiness and willingness are not one, but two separate elements.
While noting that 'time' is not the essence of the contract in the case of immovable properties, unless there are grounds to hold the contrary, the Court held –
"This doctrine is applied, without being unfair and inequitable to the defendant/seller, as the court should not ignore that a person sells the property when he needs money, and, therefore, expects the money in the stipulated or reasonable time, which would meet the purpose of the sale."
"The High Court also had rightly held that the plaintiff had complied with the requirements of Section 16(c) of the said Act by making a specific pleading with regard to his readiness and willingness and also proving the same by reliable evidence. This Court does not find any illegality or infirmity in the impugned judgment passed by the High Court. We, therefore confirm the same, so far as granting of decree for specific performance of the agreement in question is concerned," the Bench observed.
The Court also observed that the agreement in question was entered into between the parties in October 1989, and considering the steep rise in the prices of land, and that interest of justice would be met if the Respondent is directed to pay some more amount.
Thus, the Court directed the Respondent to deposit Rs. 1 Crore in the Trial Court towards the sale consideration over and above the amount already deposited by him and dismissed the appeal.
Cause Title – P. Daivasigamani v. S. Sambandan