05 August 2024 Civil Appeals >> Civil & Consumer Law  

In a recent decision of Usha Devi & Others v/s Ram Kumar Singh & Others, the Supreme Court addressed the issue of limitation in cases concerning the specific performance of contracts. The case at hand involved an appeal by the defendants challenging the judgment and order from the High Court of Jharkhand, Ranchi, which had previously upheld a decree for specific performance in favor of the plaintiffs. The appeal centered around whether the suit was barred by the limitation period.

Background:

The dispute arose over a plot of land in Namkum, District Ranchi, initially owned by Kisun Ram, the grandfather of the appellants. The land was subdivided, with Plot No. 2339B falling into the share of Bihari Lal, the predecessor of the defendants.  In July 1983, Bihari Lal entered into an agreement with the plaintiffs for the sale of this land, including the superstructure, for a total consideration of Rs. 70,000. An advance payment of Rs. 1,000 was made at that time, with the remaining Rs. 69,000 to be paid within nine months for the sale deed to be executed. The sale deed, however, was not executed within the stipulated period.

On September 20, 1985, the plaintiffs paid the balance amount, and an endorsement was made to extend the deadline for the execution of the sale deed until November 30, 1985. Despite this, the sale deed was not executed, leading to a new agreement on December 17, 1989. Under this new agreement, the land’s size was adjusted from 10 katthas to 9 katthas, and the price was increased. An initial amount of Rs. 10,000 was paid, with Rs. 1,000 remaining due upon execution of the sale deed, which was to be completed by January 16, 1990. The plaintiffs filed a suit for specific performance in September 1993, claiming that the sale deed was not executed as per the agreement. The Trial Court dismissed the suit on the grounds of limitation, ruling that it was barred because it was filed after the three-year period from the agreed date of performance.

Appellate Proceedings:

The plaintiffs appealed this decision, and the First Appellate Court overturned the Trial Court's ruling, decreeing the suit in favor of the plaintiffs. The defendants then filed a second appeal to the High Court, which was also dismissed, prompting the present appeal to the Supreme Court.

Supreme Court's Analysis:

The Supreme Court reviewed the case with a focus on the limitation period for filing a suit for specific performance, as outlined in Article 54 of the Limitation Act, 1963. According to this provision, a suit for specific performance must be filed within three years from the date fixed for performance or, if no date is fixed, from the date when performance is refused. The Court noted that the agreement dated December 17, 1989, specified that the sale deed should be executed within one month, making January 16, 1990, the fixed date for performance. Consequently, the limitation period for filing the suit would end on January 16, 1993. Since the plaintiffs’ suit was filed in September 1993, it was deemed barred by the limitation period.

The High Court's reliance on a clause extending the agreement's validity for five years was deemed irrelevant. The Court clarified that while the agreement might have remained valid for five years, it did not alter the date fixed for the performance of the sale deed.

Conclusion:

The Supreme Court overturned the lower court's decisions, ruling that the suit was indeed barred by limitation. However, in the interest of justice, the Court ordered that the appellants return the Rs. 80,000 paid by the plaintiffs, along with 12% simple interest, within three months. The appeal was allowed, and the suit was dismissed, but no costs were awarded. This ruling underscores the importance of adhering to statutory limitations and provides a clear precedent on how clauses extending the validity of agreements do not affect the fixed date of performance.

  Limitation Act, 1963