http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7  

CASE NO.: Appeal (civil)  1492 of 2006

PETITIONER: Gunwantbhai Mulchand Shah & Ors.                                                 

RESPONDENT: Anton Elis Farel & Ors.                          

DATE OF JUDGMENT: 06/03/2006

BENCH: S.B. SINHA & P.K. BALASUBRAMANYAN

JUDGMENT: J U D G M E N T  (arising out of SPECIAL LEAVE PETITION (CIVIL) NO. 24643 OF  2004)

P.K. BALASUBRAMANYAN, J.

               Leave granted. 1.              This appeal is by the plaintiffs.  Their  predecessor-in-interest along with another entered into an  agreement dated 18.12.1964 for purchase of the plaint  scheduled property.  The agreement was registered.  The  agreement was to be performed by the predecessor-in- interest of defendants 1 to 3, the other party to the  agreement, within three months of the date of getting due  permission for such sale, presumably from other co- owners.  On 5.10.1968, a subsequent agreement was  executed.  It was stated that possession was transferred to  the predecessor of the plaintiffs, in pursuance of the  agreement for sale.  An intending purchaser from the  plaintiffs issued a public notice on 7.11.1993 inviting  objections, if any, to the purchase to be made by him.   Defendants 1 to 3 objected.  In the light of this objection  dated 19.11.1993, the plaintiffs filed the suit on 4.4.1994  for specific performance of the agreement dated  18.12.1964 and for a perpetual injunction restraining the  defendants from interfering with their possession of the  suit property.  It may be noted that defendant No. 1 claims  to have sold the property and the same has subsequently  been purchased by defendant No. 4 from that vendee.   

2.              It was averred in the plaint that pursuant to the  agreement for sale, the predecessor-in-interest of the  plaintiffs, had paid the entire consideration in terms of the  agreement and he was in possession of the property.  The  plaint implied that there remained nothing to be  performed on the part of the plaintiffs on the terms of the  agreement for sale and since on 19.11.1993, the plaintiffs  came to know that the defendants were refusing to  perform their part of the agreement, the suit was being  filed.  Defendant No. 1 resisted the suit.  She did not  admit the agreement.  She put the plaintiffs to proof of the  fact that the entire amount due as consideration and as  per the agreement, has been paid towards the purchase  price.  She denied the averment to that effect in the plaint.   She pleaded that she had transferred the title and  possession to another and that other had sold the  property to defendant No.4.  The pecuniary jurisdiction of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7  

the trial court was questioned.   A plea was also raised  that the suit was barred by limitation.  Defendant No. 4,  the assignee, also reiterated those contentions.   

3.              Two other facts to be noted are that according  to the plaint, the father, predecessor of the plaintiffs, died  in the year 1972 and according to defendants 1 to 3 their  predecessor, the other party to the agreement, died in the  year 1965.  

4.              The defendants sought a trial of the issue  relating to jurisdiction as a preliminary issue in terms of  Section 9A as introduced in Maharashtra and Order XIV  Rule 2 of the Code of Civil Procedure.  The trial court  allowed that prayer.  But before that issue was tried  preliminarily, the defendants pleaded that the issue of  limitation also be tried as a preliminary issue.  Though the  plaintiffs opposed the same submitting that evidence was  needed for deciding the question of limitation, the trial  court acceded to the plea of the defendants to try the issue  of limitation also as a preliminary issue.  It is seen that  both the parties informed the trial court by filing  statements in writing in that behalf, that they do not want  to lead any evidence on the issues to be tried as  preliminary issues.   The court therefore proceeded to  decide those issues on the pleadings and the documents  filed.

5.              The trial court held that it had jurisdiction to  entertain the suit.  In fact, that aspect was not projected  before us and, therefore, it is not necessary to refer to that  aspect any further.  The trial court held that the suit for  specific performance of the agreement dated 18.12.1964,  filed only on 4.4.1994, more than 29 years after the  agreement, was barred by limitation.  It, therefore,  dismissed the suit on the ground of limitation.  The  plaintiffs filed an appeal before the lower appellate court.   That court, agreed with the trial court in its conclusion  that the suit was barred by limitation.  The plaintiffs filed  a second appeal before the High Court of Bombay.  The  High Court by the impugned judgment upheld the  decision of the trial court as affirmed by the first appellate  court and confirmed the dismissal of the suit as barred by  limitation.  It is this decision of the High Court that is  challenged in this appeal at the instance of the plaintiffs.   For convenience, the parties are being referred to in this  judgment with reference to their ranks in the trial court,  namely, as the plaintiffs and the defendants.

6.              Learned counsel for the plaintiffs initially  argued that the question of limitation, on the facts and in  the circumstances of the case, was a mixed question of  fact and law and was not one of those issues which could  have been tried as a preliminary issue in terms of Order  XIV Rule 2 of the Code of Civil Procedure.  Learned  counsel further submitted that on the averments in the  plaint, it could not be said that the suit was barred by  limitation.  Obviously, no time for performance was fixed  in the agreement for sale and hence the first limb of  Article 54 of the Limitation Act which was the applicatory  article, had no application.  It was the second limb of  Article 54 of the Limitation Act that had application and  the cause of action arose only when the plaintiffs had  notice that performance was refused by the defendants.   Learned counsel submitted that the plaintiffs had notice of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7  

the refusal to perform only on 19.11.1993, when the  defendants objected to the public notice issued by an  intending purchaser from the plaintiffs and the suit  having been filed within six months of the said knowledge  of refusal, it could not be held to be barred by limitation.   Learned counsel for the defendants, on the other hand,  submitted that a reading of the plaint as a whole would  clearly show that the entire consideration is claimed to  have been paid by the predecessor of the plaintiffs before  his death in the year 1972.  According to the learned  counsel, the agreement had stipulated that on the vendor  getting consent for the sale, the purchase price payable  under the agreement would be paid by the intending  purchaser, the predecessor of the plaintiffs and on the  averments in the plaint, it is clear that the amount was  paid prior to 1972.  He pointed out that the further  stipulation in the agreement for sale was that the sale  deed would be executed within three months of the paying  of the purchase price in full and that occurred in the year  1972 itself.  Twenty one years had expired thereafter and  this is a case to which the first limb of Article 54 of the  Limitation Act would have application and the plaintiffs  should have sued within three years of payment of the  entire consideration under the agreement to the  defendants.  Alternatively, learned counsel contended that  when in spite of the payment of the entire consideration  the defendants did not come forward to execute the sale  deed in terms of the agreement for sale, the plaintiffs must  be taken to have knowledge of the refusal of the  defendants to perform their part of the contract and they  should have filed the suit within three years of the  payment of the entire consideration or in any event within  three years of the death of their father.  Learned counsel  also submitted that in a case where no time was fixed for  performance of an agreement, Section 46 of the Indian  Contract Act was attracted and the contract had to be  performed within a reasonable time.  No doubt, the  explanation to Section 46 of the Indian Contract Act  showed that what is reasonable time would depend upon  the facts of the case but on the facts of this case, going by  the agreements and by the averments in the plaint in the  light of the written statements filed, it was clear that 29  years could not be treated as reasonable time within  which the obligation under the contract had to be  performed by the predecessor of the defendants.  Learned  counsel, therefore, submitted that there was no reason to  interfere with the finding that the suit was barred by  limitation.   

7.              We may straightaway say that the manner in  which the question of limitation has been dealt with by the  courts below is highly unsatisfactory.          It was rightly  noticed that the suit was governed by Article 54 of the  Limitation Act, 1963.   Then, the enquiry should have  been, first, whether any time was fixed for performance in  the agreement for sale, and if it was so fixed, to hold that a  suit filed beyond three years of the date was barred by  limitation unless any case of extension was pleaded and  established.   But in a case where no time for performance  was fixed, the court had to find the date on which the  plaintiff had notice that the performance was refused and  on finding that date, to see whether the suit was filed  within three years thereof.  We have explained the position  in the recent decision in R.K. Parvatharaj Gupta Vs. K.C.  Jayadeva Reddy [2006 (2) SCALE 156].   In the case on

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7  

hand, there is no dispute that no date for performance is  fixed  in the agreement and if so, the suit could be held to  be barred by limitation only on a finding that the plaintiffs  had notice that the defendants  were refusing performance  of the agreement.  In a case of that nature normally, the  question of limitation could be decided only after taking  evidence and recording a finding as to the date on which  the plaintiff had such notice.   We are not unmindful of  the fact that a statement appears to have been filed on  behalf of the plaintiffs that they do not want to lead any  evidence.   The defendants, of course, took the stand that  they also did not want to lead any evidence.   As we see it,  the trial court should have insisted on the parties leading  evidence, on this question or the court ought to have  postponed the consideration of the issue of limitation  along with the other issues arising in the suit, after a trial.

8.              It is seen that the suit was dismissed by the  trial court on the finding that the claim for the relief of  specific performance was barred by limitation.   The plaint  contains not only a prayer for specific performance but  also a prayer for perpetual injunction restraining the  defendants from interfering with the possession of the  plaintiffs and from creating any documents or entering  into any transaction in respect of the suit property.  Of  course, the latter part of that prayer is directly linked to  the claim for specific performance, but the suit as regards  the prayer for perpetual injunction to protect the  possession of the plaintiff over the suit property on the  claim that the predecessor of the plaintiffs was put in  possession of the property pursuant to the agreement for  sale, on a subsequent date, could not have been held to be  not maintainable on any ground.   Of course, the grant of  the relief of injunction in a sense is discretionary and the  court ultimately might or might not have granted the relief  to the plaintiffs.  The defendants could have also shown  that the relief of injunction claimed is merely  consequential to the relief of specific performance and was  not an independent relief.    But that is different from  saying that the suit could be dismissed merely on a  finding that the prayer for specific performance of the  agreement was barred by limitation.   In any event,  therefore, the dismissal of the suit as a whole as not  maintainable, could not be justified or said to be correct.

9.              It is true, as contended by learned counsel for  the defendants that it might be possible to infer that the  entire consideration according to the plaintiff was paid  prior to 1972 when their predecessor died.  But on going  through the agreement for sale, it is seen that there were  certain obligations to be performed by the predecessor of  the defendants, who allegedly entered into the agreement  for sale and what was the position regarding the  fulfillment of those obligations had to be considered.   The  subsequent agreement or receipt relied on by the plaintiffs  had also to be proved since the same had been denied by  the first defendant in her written statement and it had to  be decided whether the possession in fact was handed  over to the predecessor of the plaintiffs by the defendants  on receipt of the amount referred to in the subsequent  agreement or receipt dated 5.10.1960.    Whether the  plaintiffs by themselves could have maintained the suit for  specific performance and, if so, whether they are entitled  to specific performance and whether even if they are not  entitled to a decree for specific performance, they are

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7  

entitled to a perpetual injunction based on their alleged  possession are all matters which had to be decided before  the suit could be satisfactorily disposed of.  These aspects  relating to the prayer for specific performance, of course,  would become relevant, only if the suit for that relief is  found to be in time and that question requires  investigation, on the terms of the agreement in this case.

10.             The reliance placed on Section 46 of the  Contract Act by learned counsel for the defendants would  also be an aspect that has to be considered when finally  deciding whether the suit could be held to be in time and  whether in a suit filed 29 years after the agreement for  sale any relief could be granted to the plaintiffs.  The  applicability of Section 46 of the Contract Act, and if  applicable, what is the reasonable time, in this case has to  be determined.  The aspect of delay will have relevance  while considering whether the plaintiffs would be entitled  to the discretionary relief of specific performance, even if  they satisfy the other requirements of the Specific Relief  Act.  But those aspects can be decided only after taking  evidence in the case and giving the plaintiffs an  opportunity to show that they had always been and they  are ready and willing to perform their part of the contract  and to show that they had paid the entire consideration  and had been put in possession of the property, and  nothing further remained for them to perform and all that  remained was the execution of the sale deed in their  favour and their failure to sue earlier does not disentitle  them to the relief of specific performance either on the  ground that the suit was barred by limitation or on the  ground of delay and latches  on their part or on the  ground that the discretion of the court in terms of Section  20 of the Specific was not liable to be exercised in their  favour in the circumstances of the case.  All these pleas  available to the defendants cannot enable the dismissal of  the suit as barred by limitation under Article 54 of the  Limitation Act, as things now stand.

11.             The question as to how long a plaintiff, even if  he had performed the whole of his obligations under an  agreement for sale, in which a time for performance is not  fixed, could keep alive his right to specific performance  and to come to court after 29 years seeking to enforce the  agreement, may have also to be considered by the court  especially in the context of the fact that the relief of  specific performance is discretionary and is governed by  the relevant provisions of the Specific Relief Act.   But  again, these questions cannot be decided as preliminary  issues and they are not questions on the basis of which  the suit could be dismissed as barred by limitation.   The  question of limitation has to be decided only on the basis  of Article 54 of the Limitation Act and when the case is not  covered by the first limb of that Article, normally, the  question of limitation could be dealt with only after  evidence is taken and not as a preliminary issue unless, of  course, it is admitted in the plaint that the plaintiffs had  notice that performance was refused by the defendants  and it is seen that the plaintiffs approached the court  beyond three years of the date of notice.  Such is not the  case here.

12.             Section 27 of the Limitation Act provides for  extinguishment of right to property only at the  determination of the period limited by the Limitation Act

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7  

for instituting a suit for possession.  Section 3 of the  Limitation Act provides that subject to Sections 4 to 24 of  the Act every suit instituted after the period prescribed  therefor in the Limitation Act shall be dismissed.  When  the suit is for specific performance of an agreement for  sale and we conduct a search in the Limitation Act in the  context of Section 3 of the Act, we are obviously  confronted only with Article 54 of the Schedule to the  Limitation Act.  We have already dealt with the scope of  Article 54 and indicated that in this case it would be the  second limb of the Article that would apply and  consequentially the suit could not be held to be barred by  limitation, having been filed three years after the  agreement for sale or the date for performance fixed in the  agreement for sale.  We have also noticed that the  plaintiffs have pleaded that they are in possession of the  suit property and since it is not a suit for possession as  such, the applicability of Section 27 of the Limitation Act  also may not arise.  It is, therefore, a case where in the  context of Article 54 of the Limitation Act, the question  had to be decided on the pleadings and evidence to be  adduced by the parties on the aspect of the second limb of  Article 54 of the Limitation Act.   

13.             We have already indicated that the suit insofar  as it relates to the prayer for a perpetual injunction  restraining the defendants from interfering with the  possession of the plaintiffs cannot be held to be barred by  limitation.   Whether the plaintiffs are able to prove that  they are in possession of the suit property as on the date  of suit and establish that they are entitled to the  injunction prayed for, is a different matter.  There is also  the question whether the relief of injunction can be treated  as being only a relief consequential to the relief of specific  performance and the denial of one would automatically  lead to the denial of the other, or whether it is an  independent relief in itself and even if the plaintiffs are not  entitled to a decree for specific performance they would  still be entitled to a decree for injunction, a relief the grant  of which is, of course, in the discretion of the court.  It  may be noticed that a suit for injunction would be  governed by the residuary article, Article 113 of the  Limitation Act and the cause of action for the said relief  arises when the right to sue accrues.  That would depend  upon the court deciding when the right accrued, on the  pleadings and the evidence in the case.  Therefore, the suit  insofar as it relates to the prayer for a decree for perpetual  injunction cannot be held to be barred by limitation at this  preliminary stage.  

14.             In such a situation, especially, when the whole  matter requires reconsideration, we do not think it proper  to go into the various arguments urged by learned senior  counsel appearing in this case.  We think that all those  arguments require to be kept alive for decision in the suit  after a trial.   Suffice it to say that we consider that the  interests of justice would be subserved by setting aside  the finding by the courts below that the suit is barred by  limitation, even while upholding the finding that the trial  court had the jurisdiction to try the suit and remand the  suit to the trial court for a decision of all the issues arising  therein, including the issue of limitation, in accordance  with law after giving the parties an opportunity to adduce  evidence in support of their respective cases.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7  

15.             In the result, this appeal is allowed, the finding  that the suit is barred by limitation and the consequential  dismissal of it are set aside and the suit is remanded to  the trial court for a proper trial of all the issues (other  than the issue of jurisdiction) arising in the case and for  disposal afresh in accordance with law.   The parties are  directed to appear in the trial court on 17.4.2006 so as to  receive further orders as to posting.    However, in the  circumstances, there will be no order as to costs.