T.L.Muddukrishana
& ANR Vs. Smt.Lalitha Ramchandra Rao [1997] INSC 4 (6 January 1997)
K.
RAMASWAMY, G.T. NANAVATI
ACT:
HEAD NOTE:
THE
6TH DAY OF JANUARY, 1997 Present:
Hon'ble
Mr.Justice K.Ramaswamy Hon'ble Mr.Justice G.T.Nanavati G.V. Chandrasekhar, Adv.
For P.P.Singh, Adv. for the appellants. Harish Salve, Sr.Adv., S.K.Kulkarni and
Ms.Sangeeta Kumar, Advs. with him for the Respondent
O R D E
R
The
following Order of the Court was delivered:
Leave
granted.
This
appeal by special leave arises from the judgment of the learned single Judge of
the High Court of Karnataka, made on 29.5.1996 in CRP No.2246/93.
The
admitted facts are that he appellants and the respondent entered into an
agreement on March 16,
1989 for sale of plot
of land bearing No.114/8 situated at Peenya Industrial Suburb II Stage, Peenya Village, Bangalore for a consideration of Rs.64 lakhs.
The date for the performance of the contract was fixed as May 28, 1989. the appellants issued notice on October 2, 1989 calling upon the respondent to comply
with the conditions mentioned under the agreement, namely, to obtain Income-tax
clearance certificate and from the Urban Ceiling Authority permitting the
respondent to alienate the property to the appellants. The respondent had
issued a notice on November
6,1989 repudiating the
contract though the execution thereof was admitted. The appellants then filed a
suit for mandatory injunction on April 21, 1992 directing the respondent to comply with the requirements as
mentioned in the agreement. While the suit was pending, the appellants made an
application on November
5,1992 under Order VI,
Rule 17 of the CPC for amending the plaint and seeking specific performance of
the contract. The said application was rejected by the trial Court and the
rejection was affirmed by the High Court. Thus, this appeal by special leave.
Learned
counsel for the appellants has contended that time is not the essence of the
contract; and, the performance, though it was fixed for May 28, 1989, the other clauses relating to
payment of interest for the delayed period of performance would indicate that
the time is not essence of the contract. The application. therefore, could not
have been dismissed at that stage. It is further contended that the appellants
had an oral agreement with the respondent that the agreement will be performed
after the respondent obtained requisite permission from the competent
authority. Thus, his contention is that the relief of specific performance was
not barred by limitation. it is then contended for the respondent that by
operation of first clause of Article 54 of the Schedule to the Limitation Act,
1963, once the date has been fixed for the performance, limitation begins to
run form that date. Whether time is the essence of the contract of not is not
relevant for the purpose of deciding the question of limitation. in the
agreement, time having been fixed for performance of the contract as may 28,
1989, the limitation began to run under the first clause from that date. the
second clause, therefore, has no application to the facts in his case. The
courts below, therefore, were correct in refusing permition for amendment of
the plaint introducing specific relief of performance.
It is
seen that limitation under Section 3 of the Limitation Act is one of the defence
available to the defendant. article 54 of the Schedule to the Limitation Act
postulated that for specific performance of a contract the period of limitation
is three years from the date fixed for the performance, or, if no such date is
fixed, from the date plaintiff has notice that performance is refused. Under
first part of Article 54, once date for performance of the contract has been
fixed by the parties, the limitation begins to run from that date and specific
performance of the contract could be had within three years from that date
unless the parties by an agreement extend the fixed time. in this case, date
was fixed for performance, i.e., May 28, 1989. the question whether or not the time is the essence of the
contract is not of much relevance since the case falls in first part of Article
54? The decision relied on by the learned counsel for the appellant in Smt. Chand
Rani (dead) by LRs. vs. smt. Kamal Rani (Dead) by LRs. [(1993) 1 SCC 519] of
the constitution bench dose not help the learned counsel for the appellant. In
that case, this Court has reviewed the entire case law and need for reiteration
is obviated. the Court held Thus:
"It
is well-accepted principle that in the case of sale of immovable property, time
is never regarded as the essence of the contract. In fact, there is a
presumption against time being the essence of the contract. This principle is
not in any way different from that obtatinable in England. under the law of equity which
governs the rights of the parties in the case of specific performance of
contract to sell real estate, law looks not at the letter but at the substance
of the agreement. It has to be ascertained whether under the terms of the
contract the parties named a specific time within which completion was to take
placed really and in substance it was intended that it should be completed
within a reasonable time.
An
intention to make time the essence of the contract must be expressed in
unequivocal language." After considering the question in the light of the
terms of the contract made by the partied extracted in paragraphs 25 and 26 of
the judgment, the Constitution Bench concluded in paragraph 28 that the parties
intended to make time as the essence of the contract. The contract was to be
performed within a particular period and the respondent had repudiated the
contract. Under those circumstances, it was held that the time was an essence
of the contract. the same ratio was reiterated by this Court in K. Raheja
Construction Ltd. vs. Alliances Ministries & Ors. [1995 Supp.(3) SCC 70]
which relates to the amendment of the plaint. it was held therein that since
the party had repudiated the agreement, the limitation began to run from that
date. Since the application for amendment of the plaint was filed after the
expiry of three years, the same could not be enterationed.
the
controversy in regard to the limitation was also considered by this Court in Tarlok
Singh vs. Vijay Kumar Sabharwal [(1996) 3 SCALE 558] wherein this Court has
that when the time has been fixed for performance of the contract by operation
of Article 54 of the Limitation Act, the time begins to run from the date fixed
by the parties. The Court observed thus:
"The
question is: as to when the limitation began to run? In view of the admitted
position that the contract was to be performed within 15 days after the
injunction was vacated, the limitation began to run on April 6, 1986. In view of the position that the
suit for perpetual injunction was converted into one for specific performance
by order dated August 25,1989, the suit was clearly barred by
limitation. We find force in the sand of the appellants. We think that parties
had, by agreement, determined he date for performance of the contract. Thereby
limitation began to run induction laid on December 23, 1987 would not be of any avail nor the
limitation began to run from that date. Suit for perpetual induction is
different from suit for specific performance.
The
suit for specific performance in fact was claimed by way of amendment
application filed under order VI, Rule 17, CPC on September 12, 1979. It will operate only on the application bring ordered.
Since
the amendment was ordered on August 25, 1989,
the crucial date would be the date on which the amendment was ordered by which
date, admittedly, the suit is barred by limitation. the courts below,
therefore, were not right in decreeing the suit." In Ramzan vs. Hussaini
[(1990) 1 SCC 104] this Court held in paragraph 6, thus:
"The
relevant provisions in the alleged agreement of sale as quoted in the judgment of
the trial Court reads as follows:
"This
house is under mortgage with Jethamal Bastimal for Rs.1000. When you will get
this house, the description of which get this house, the description on which
is given below, redeemed from M/s Jethamal Bastimal and take the papers of the
registry in your possession on that day I will have the sale deed of the said
house, written, executed and registered in your favour".
The
question in whether a date was fixed for the performance of the agreement and
in our view the answer is in the affirmative. It is true that a particular date
from the calendar was not mentioned in the document and the date was not
ascertainable originally, but as soon as the plaintiff redeemed the mortgage,
it became an ascertained date. If the plaintiff had, immediately after the
redemption, field the suit, could it be thrown out on the ground that she was
not entitled to the specific performance asked for? We do not think so. she
would have been within her right to assert that she had performed her part of
the contract and was entitled to insist that her brother should complete his
that her brother should complete his part. the agreement is a typical
illustration on a contingent contract within the meaning of Section 31 of the
Indian Contract Act, 1872 and become enforceable as soon as the even of
redemption) by the plaintiff herself) happened, We agree with the view of the
Madras High Court in R. Muniswami Goundar vs. B.M. Shamanna Gauda expressed in
slightly different circumstances.
The
doctrine of id certum est quod certum reddj potest is clearly applicable to the
case before us which in the language of Herbert Broom (in his book dealing with
legal maxims) is that certainty need not be ascertained at the time; for if, in
the fluxion of time, a day will arrive which will make it certain, that is
sufficient. A similar question had Club and Norfolk Hotel Company, relied upon
in the Madras case.
Under
an agreement, the plaintiff had supplied some furniture to the defendant for
which payment was made but after some delay. He claimed interest. The rule at
common law did not allow interest in such a case, and the plaintiff in support
of his claim relied upon a statutory provision which could come to his aid only
if the price was payable at a certain time.
Blackburn,
J. observed that the did not have the slightest hesitation in saying that the
agreement contemplated a particular day, which, when the goods were delivered
would be ascertained; and then the money would be payable at a certain time;
but rejected the plaintiff's demand on the ground that the price did not become
payable by the written instrument at a certain time. The other learned Judges
did not agree with him, and held that the statute did not require that the
document should specify the time of payment by mentionion the event upon which
the payment was to be made, and if the time of event was capable of being
ascertained the requirements of the action were satisfied. the same is the
position in the case before us. The requirement of Article 54 is not that the
actual day should necessarily be ascertained upon the face of the deed, but
that the basis of the calculation which was to make it certain should be found
therein. We accordingly, hold that under the agreement the date for the
defendant to execute the sale deed was fixed, although not by mentioning a
certain date but by a reference to the happening of a certain event, namely,
the redemption of the mortgage; and, immediately after the redemption by the
plaintiff, the defendant became liable to execute the sale deed which the
plaintiff was entitled to enforce. The period of limitation thus started
ruining on that date.
The
case is therefore, covered by the first part of Article 54 (third column) and
not the second part." Under these circumstances, it must be held that for
the purpose of limitation, what is material is that the limitation begins to
run from the date the parties have stipulated for performance of the contract.
The suit required to be filed within three years from the date fixed by the
parties under the contract. Since the application for amendment of the plaint
came to be filed after the expiry of three years, certainly in changed the
cause of action as required to be specified in the plaint. The suit for
mandatory injunction is filed and the specific performance was sought for by
way of an amendment. The cause of action is required to be stead initially in
the plaint but it was not pleaded. It was sought to be amended, along with an
application for specific performance which, as stated earlier, was rejected.
Under there circumstances, even by the date of filing of the application,
namely, November 5,
1992, the suit was
barred by limitation. the high Court, therefore, was right in refusing to
permit the amendment of the plaint.
It is
then contended that the appellants have already paid the substantial amount
and, therefore, they will be deprived of the remedy of recover thereof. Shri Harish
Salve, learned counsel for the respondent, in fairness, has stated that his
client would refund by depositing in the trial Court the entire amount with
interest as stipulated in the contract within a period of six months from
today.
The
appeal is accordingly dismissed subject to the above undertaking given by the
respondent. No costs.
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