Dhara & Ors Vs. Monmatha Nath Maity & Anr  Insc 318 (12 May 2006)
Sinha & P.P. Naolekar S.B. Sinha, J :
appeal is directed against a judgment and order dated 29th January, 1998 passed by the Calcutta High Court in Second Appeal No.
887 of 1991 affirming the judgment and order dated 29th June, 1990 passed by the learned Asstt. District Judge, Ghatal,
District Midnapore, West Bengal in Title Appeal No. 74 of 1989 whereby and
whereunder an appeal against the judgment dated 31st August, 1989 passed by the
learned Munsif, Ghatal, District Midnapore, West Bengal in Title Suit No. 133
of 1985 was dismissed.
basic fact of the matter is not much in dispute. Respondent No. 2 herein (the
company) is a company registered and incorporated under the Companies Act,
1956. The said company held and possessed the suit property situated in the
District of Midnapur in the State of West Bengal. It intended to sell the said property. Respondent Nos. 1
and 2 having came to know of the said intention on the part of the company
entered into an agreement for sale thereof, wherefor a sum of Rs. 6000/- was
paid to the Company by way of advance. The balance amount was to be paid within
a period of fourteen months. As the title of the Respondent No. 2 in respect of
the said property was not clear, the Company instituted a suit against some
persons who were claiming title thereover on or about 22.05.1971. The said suit
was marked as Title Suit No. 110 of 1971. In the said suit a compromise
petition was filed on 3.4.1979 which having been accepted by the concerned
court, a consent decree was passed on the basis thereof on 3.5.1979. Respondent
No. 1 thereafter issued several letters being dated 12.11.79, 11.01.80,
05.01.81 and 08.10.84 asking the Company to execute and register a sale deed in
his favour. The Company in response thereto had all along been assuring the
Respondent No. 1 that it would do so.
letter dated 16.3.1985, one of the Directors of Respondent No. 2 assured
Respondent No. 1 that no apprehension should be entertained by Respondent No. 1
that the contract between him and the company would not be honoured. However,
on 21.8.1985, the company refused to execute and register a deed of sale in
favour of Respondent No. 1 on the plea that the same became barred by
for specific performance of the said agreement for sale dated 18.04.1971 was
filed in the Court of Munsif, Ghatal, District Midnapore, West Bengal which was
marked as Title Suit No. 133 of 1985. It is not in dispute that not only the
Appellant herein had filed a caveat in the said suit, it purchased the said
property on 13.11.1985, i.e., during pendency thereof.
in the deed of sale executed in favour of the Appellant by the Company the
factum of the said suit being pending in the court had specifically been
the learned Trial Judge, inter alia the following contentions were raised on
behalf of the Appellant:
for sale was not enforceable as the provisions of Sections 46 and 48 of the Companies
Act had not been complied with.
It was not
established that the Respondent No. 1 had all along been and ready and willing
to perform his part of contract.
The suit was
barred by limitation.
regards the contention that in executing the said agreement the provisions of
Sections 46 and 48 of the Companies Act had not been complied with, the learned
Trial Judge held that as all the Directors of the Company were parties to the
said agreement, the said provisions are not attracted. The plea that the
Respondent No. 1 was not ready and willing to perform his part of contract was
also held to have been waived. The plea of limitation was also negatived.
appeal preferred thereagainst was also dismissed by the First Appellate Court.
Second Appeal preferred by the Appellant herein, it does not appear that any
substantial question of law was framed by the High Court as was mandatorily
required under Section 100(4) of the Code of Civil Procedure. However, a
learned Single Judge of the court dealt with all the contentions raised on
behalf of the Appellant and dismissed the suit.
Santosh Mishra, learned counsel appearing on behalf of the Appellant, in
support of this appeal submitted that the courts below committed a manifest
error in arriving at the finding that the suit was not barred by limitation,
purported to be relying on or on the basis of the first part of Article 54 of
the Limitation Act whereas in this case the second part thereof could be
attracted. It was urged that the Respondent No. 1 in terms of the agreement for
sale dated 18.04.1971 was required to pay the balance sum of Rs. 8,000/- within
fourteen months therefrom but even assuming that the deed of sale was to be
executed and registered on perfection of title, the suit filed by the Company
against third parties having been decreed on 31st August, 1979, the period of
limitation in terms of Article 54 of the Limitation Act should have been
reckoned from the said date. Strong reliance in this behalf has been placed on
Ramzan v. Hussaini [(1990) 1 SCC 104], Tarlok Singh v. Vijay Kumar Sabharwal
[(1996) 8 SCC 367], T.L. Muddukrishana and Another v. Lalitha Ramchandra Rao
(Smt.) [(1997) 2 SCC 611] and Venkappa Gurappa Hosur v. Kasawwa C/o Rangappa
Kulgod [(1997) 10 SCC 66].
further urged that in the event, the terms and conditions contained in the said
agreement dated 18.04.1971 were found to be uncertain, the same would be void
in terms of Section 29 of the Indian Contract Act.
learned counsel would furthermore submit that having regard to the provisions
of Sections 46 and 48 of the Companies Act having not been complied with, the
said agreement could not have been enforced.
Mishra, as regards the plea of readiness and willingness on the part of the
Respondent No. 1 to perform his part of contract, would submit that although
the said plea is not available so far as the present Appellant is concerned in
view of the decision of this Court in Jugraj Singh and Another v. Labh Singh
and Others [(1995) 2 SCC 31] but it was for the court to see as to whether the
plaintiff has proved his case in this behalf or not.
Gourab Banerji, learned Senior Counsel appearing on behalf of the Respondents,
on the other hand, submitted that the question of limitation being a mixed
question of fact and law, the contention that the first part of Article 54 of
the Limitation Act would not be attracted in this case should not be permitted
to be raised having not been raised before the courts below.
submitted that both the courts understood that having regard to the conduct of
the parties, the agreement was kept alive and at all material point of time the
contract was subsisting. As regards alleged non-compliance of the provisions of
Sections 46 and 48 of the Companies Act, the learned counsel urged that from
the findings of the fact arrived at by all the courts, it would be evident that
all the Directors signed the agreement of sale on behalf of the Company and in
any event they have sufficient authority to do so. Even under the Articles of
Association of the Company, it was urged, one of the Directors was entitled to
execute the deed of sale on behalf of the Company.
Appellant herein is a subsequent purchaser. A finding of fact has been arrived
at by all the courts that he had purchased the property with full notice of the
said agreement for sale.
Company has not preferred any appeal against the judgment and decree passed by
the learned Munsif before the appellate court.
of sale has already been executed in favour of the First Respondent in
execution of the decree passed by the learned Trial Court.
the High Court, as noticed hereinbefore, no substantial question of law was
framed. The question as regards the applicability of the first part or the
second part of Article 54 of the Limitation Act had also not been raised before
the High Court. The parties adduced evidence only on that basis.
as the question of limitation is concerned, the learned Trial Judge held:
letters sent by the plaintiff or his brothers on behalf of the plaintiff (ext.
8 to 11), the letter of chairman director Purushattam Roy (ext. 7) coupled with
the fact of non issuing of any notice by defendant no. 1 estate repudiating
that contract proved beyond any trace of doubt that the agreement between
plaintiff and defendant no. 1 estate was subsisting and was still in force and
that the suit was not barred under Article 54 of Limitation Act." We may
notice that the learned First Appellate Court as regards the Appellants'
contention that the suit was barred by limitation held:
it was vehemently argued before this court that the suit is barred by
limitation as it was recited in ext. 3 that the transfer would be effective
within 14 months after execution of the bainanama (Ext. 3). But the argument is
not tenable in view of the fact that the time has been expanded by the
respondent no. 2 impliedly by agreeing to transfer of the suit property as and
when time comes. The respondent no. 1 and his brother despatched several
letters (Ext. 8,9,10,11) to the respondent no. 2 for transfer of the suit
property to them.
by ext. 7 (a letter sent by the company to the respondent no. 1) the company
has agreed to extend the time giving the respondent no. 1 assurance that just
in time transfer would be made effective. Ext. 7 also suggests that the letters
(ext 8,9,10,11) sent by the respondent no. 1 and his brothers were received by
the company, respondent no. 2. Thus, it can be said safely that the time which
was recited in the ext 3 was extended by respondent no. 2 by ext 7 and
moreover, ext 3 suggests unequivocally that time is not essence of the
contract. Had the time being the essence, the words "subject to
perfection" on the title of the respondent no. 2 of the suit property would
not have occurred in ext 2. Therefore, when the ld. Munsif has discussed this
point in this light this court sees nothing to interfere." The High Court
has also accepted the said reasonings of the learned lower appellate court
regards the second point urged by Mr. Mukherjee, in my opinion, the same is
also without any force. The respondent no. 1 having made specific case that the
company refused to perform its part of the contract in the year 1985 and having
produced letters written on behalf of the company showing that the agreement
was subsisting and no person having come forward to depose on behalf of the
company to convert those statements, in my opinion, the learned courts below
rightly found that the suit is not barred by limitation." 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, 1964.
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 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.
this case, before the Trial Court, the parties proceeded on the basis that the
Second Respondent herein refused to execute and register a deed of sale in
terms of the said agreement on 21.8.1985. The courts below have also arrived at
a finding of fact that the time for performance of the said agreement for sale
had all along been extended and even as on 16.3.1985, a Director of the Second
Respondent assured the First Respondent that it would be honored. In a suit for
specific performance of contract in respect of any immovable property, time
would ordinarily not be the essence of the contract. The Appellant herein also
did not raise any plea to the said effect.
perusal of Article 54 of the Limitation Act would show that the period of
limitation begins to run from the date on which the contract was to be
specifically performed. In terms of Article 54 of the Limitation Act, the
period prescribed therein shall begin from the date fixed for the performance
of the contract. The contract is to be performed by both the parties to the
agreement. In this case, the First Respondent was to offer the balance amount
to the Company, which would be subject to its showing that it had a perfect
title over the property. We have noticed hereinbefore that the courts below
arrived at a finding of fact that the period of performance of the agreement
has been extended. Extension of contract is not necessarily to be inferred from
written document. It could be implied also. The conduct of the parties in this
behalf is relevant. Once a finding of fact has been arrived at, that the time
for performance of the said contract had been extended by the parties, the time
to file a suit shall be deemed to start running only when the plaintiff had
notice that performance had been refused. Performance of the said contract was
refused by the Company only on 21.8.1985. The suit was filed soon thereafter.
The submission of Mr. Mishra that the time fixed for completion of the
transaction was determinable with reference to the event of perfection of title
of the Second Respondent cannot be accepted.
said plea had never been raised before the courts below. Had such a plea been
raised, an appropriate issue could have been framed. The parties could have
adduced evidence thereupon. Such a plea for the first time before this Court
cannot be allowed to be raised. Even otherwise on a bare perusal of the
agreement for sale dated 18.4.1971, it does not appear that it was intended by
the parties that the limitation would begin to run from the date of perfection
Ramzan (supra), Sharma, J., (as the learned Chief Justice then was), opined
that the date fixed for the parties for performance of the agreement should be
ascertained on the basis of the terms of the contract. On an interpretation of
the agreement in sale, which was the subject matter of the said suit, the same
was held to be a contingent contract within the meaning of Section 31 of the
Indian Contract Act. Therein, the property was placed under a mortgage and the
defendant had agreed to execute a deed of sale on the redemption of the
mortgage by her. The mortgage was redeemed in 1970. It was in the
aforementioned fact situation, the doctrine of id certum est quod certum redid
potest (certainty need not be ascertained at the time) was applied. The said
decision, therefore, is not applicable in the instant case.
Tarlok Singh (supra), an agreement was entered into by the parties on
21.12.1984. A proceeding was pending in respect of the suit land. The time for
performance was extended by an agreement dated 18.8.1984 stipulating that the
Appellant therein would be required to execute the same within the 15 days of
the order vacating the injunction which had been passed. In view of the said
admitted fact, it was held that the date for performance of the contract was
fixed. The order granting injunction having been vacated on 6.4.1986, the suit
which was instituted on 25.8.1989, was held to be barred by limitation.
T.L. Muddukrishana (supra), Tarlok Singh (supra) was followed.
Venkappa Gurappa Hosur (supra), a finding of fact was arrived at that the
agreement was refused to be executed as far back in 1959 and in that view of
the matter it was held that the issuance of a notice in August, 1972 did not stop
running of the period of limitation. The said decision, therefore, has no
application in the present case.
of a contract may be dependent upon several factors including grant of
permission by the statutory authority in appropriate cases.
certain statutory formality is required to be complied with or permission is
required to be obtained, a deed of sale cannot be registered till the said
requirements are complied with. In a given situation, the vendor may not be
permitted to take advantage of his own wrong in not taking steps for complying
the statutory provisions and then to raise a plea of limitation.
almost identical question came up for consideration before a Division Bench of
this Court in S. Brahmanand and Others v. K.R. Muthugopal (Dead) and Others
[(2005) 12 SCC 764] wherein this Court laid down the law:
this was a situation where the original agreement of 10-3-1989 had a
"fixed date" for performance, but by the subsequent letter of 18-6-
1992 the defendants made a request for postponing the performance to a future
date without fixing any further date for performance. This was accepted by the
plaintiffs by their act of forbearance and not insisting on performance
forthwith. There is nothing strange in time for performance being extended,
even though originally the agreement had a fixed date. Section 63 of the
Contract Act, 1872 provides that every promisee may extend time for the
performance of the contract. Such an agreement to extend time need not
necessarily be reduced to writing, but may be proved by oral evidence or, in
some cases, even by evidence of conduct including forbearance on the part of
the other party. Thus, in this case there was a variation in the date of
performance by express representation by the defendants, agreed to by the act
of forbearance on the part of the plaintiffs.
was originally covered by the first part of Article 54, now fell within the
purview of the second part of the article" In R.K. Parvatharaj Gupta v.
K.C. Jayadeva Reddy [(2006) 2 SCALE 156], wherein one of us was a member, it
terms of the said Article, a suit for specific performance of a contract is
required to be filed within three years; in the event no date is fixed for the
performance, within a period of three years from the date when the plaintiff
has notice that performance is refused. The notice dated 24.04.1984, thus, is
required to be construed in the context of the agreement dated 13.10.1982
entered into by and between the parties.
cannot be any doubt whatsoever that in respect of a contract for sale of
immovable property, time is not of the essence of the contract, but the
question as regard the conduct of the Appellant must be considered in the
backdrop of the events noticed hereinbefore." The said decision has again
been noticed in Gunwantbhai Mulchand Shah & Ors. v. Anton Elis Farel &
Ors. [(2006) 3 SCALE 82] wherein it has been held:
may straightaway say that the manner in which the question of limitation has
been dealt with by the courts below is highly unsatisfactory.
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 v. K.C. Jayadeva
Reddy 2006 (2) Scale 156. In the case on 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." In view of the aforementioned pronouncements of
this Court, we are of the opinion that the plea raised by the learned counsel
for the Appellant that the suit was barred by limitation cannot be accepted as
all the courts have arrived at a finding of fact that the period for execution
of the deed of sale had been extended.
the applicability of the provisions of Section 29 of the Indian Contract Act
having not been raised, the same cannot be permitted to be raised for the first
time before this Court. Even otherwise we do not see, on a plain reading of the
said agreement of sale dated 18.04.1971, that the terms thereof were uncertain
or vague so as to attract the provisions of Section 29 of the Indian Contract
46 and 48 of the Companies Act, read as under:
behalf of a company may be made as follows:
which, if made between private persons, would by law be required to be in
writing signed by the parties to be charged therewith, may be made on behalf of
the company in writing signed by any person acting under its authority, express
or implied, and may in the same manner be varied or discharged;
which, if made between private persons, would by law be valid although made by
parole only and not reduced into writing, may be made by parole on behalf of
the company by any person acting under its authority, express or implied, and
may in the same manner be varied or discharged.
A contract made
according to this section shall bind the company.
A company may,
by writing under its common seal, empower any person, either generally or in
respect of any specified matters, as its attorney, to execute deeds on its
behalf in any place either in or outside India.
A deed signed by
such an attorney on behalf of the company and under his seal where sealing is
required, shall bind the company and have the same effect as if it were under
its common seal." Section 46 merely lays down the mode of signing contract
on behalf of the company. Once a deed is executed on behalf of the company, it
is company and not the persons signing can sue or be sued on the contract if
the evidence is clear that the signature was only that of the company.
oral agreement for sale is permissible in law. There is furthermore no dispute
that the agreement for sale was entered into by three directors of the company.
The subsequent letters written on behalf of the Company clearly demonstrate
that all the directors were aware of the said agreement.
company before the Trial Court never chose to file any written statement or dispute
the contentions raised in the plaint. The Company, thus, never denied or
disputed the correctness or otherwise of the contents of the said agreement.
The Company never denied or disputed the terms of the agreement nor raised any
plea that the agreement was not binding on the company or the same was illegal.
In fact in the deeds executed in favour of the agreement, it had clearly been
stated that the suit for specific performance of contract filed by Respondent
No. 1 was pending.
Chairman, Life Insurance Corpn. and Others v. Rajiv Kumar Bhasker [(2005) 6 SCC
188], this Court held:
as is well settled, is a legal concept which is employed by the Court when it
becomes necessary to explain and resolve the problems created by certain fact
situations. In other words, when the existence of an agency relationship would
help to decide an individual problem, and the facts permits a court to conclude
that such a relationship existed at a material time, then whether or not any
express or implied consent to the creation of an agency may have been given by
one party to another, the Court is entitled to conclude that such relationship
was in existence at the time, and for the purpose in question. [See
Establishing Agency by GHL Fridman 1968 (84) Law Quarterly Review 224 at p.
231.]" It is not in dispute that the contract was executed in the name of
the company. It has furthermore not disputed that all the five directors
executed the agreement. The company was a private limited company. The Trial
all the directors of the company took part in execution of ext. 3 there was
not necessity of giving any special authorization either u/s 46 or u/s 48 of
the Companies Act for entering into or for execution of the contract. It is
true that at the time of execution of the documents in favour of the party
defendants (ext. A series) there was a resolution of the company. The copy of
the said resolution was marked (ext. 1). On plain reading of Ext. 1 it is
found that as 4 directors out of the 5 directors of the company were empowered
to execute those documents said resolution was necessary u/s. 48 of the
Companies Act." Before the courts below, execution of the agreement was
even in the absence of resolution the contract could not have been held to be
invalid or illegal.
as the question of putting up of the seal of the Company is concerned, it is a
relic of the days when mediaeval barons, who could not read or write, used
their rings to make a characteristic impress. Even in absence of a seal, the
Company may still be held to be liable having regard to the nature of
transaction and the authority of those who had executed it.
act of the Directors is not ultra vires or no public policy is involved, the
parties acting thereupon cannot be left at large. [See Probodh Chandra v.
Roadoils (India) Ltd., AIR 1930 Cal 782 and OTV
Birwel Co. Ltd. v. Technical and General Guarantee Co. Ltd., (2002) 4 All ER
the reasons aforementioned, we do not find any merit in this appeal which is
dismissed accordingly. No costs.