Specific Performance | Limitation Is A Triable Issue When Plaint Avers Supplementary Agreement Extended Timeline: Allahabad High Court

A Bench of Justice Jaspreet Singh held that, in such circumstances, the question of whether the suit is barred by limitation is a mixed question of law and fact, which can be ascertained only after the parties have led evidence at the trial stage.

Perusing Article 54 of the Limitation Act, Justice Singh observed that the provision has two parts:

"(i) when in the agreement, a date is fixed for performance. In such a case, there is not too much of a difficulty, since the date for performance is already fixed and once the said date is breached, the period of limitation commences and the suit in such circumstances have to be filed within three years. However, the (ii) part of Article 54 states that when no such date of performance is fixed, then the limitation commences when the plaintiff acquires the notice that the performance has been refused."

Finding that the original plaintiff's (respondent before the HC) averments in the plaint, if accepted at face value, would bring the case under the second part of the provision, the Single Judge dismissed the Civil Revision petition filed by the original defendants/revisionists in the HC (Devendra Srivastava and others).

It may be noted that the revisionists (original defendants) challenged the order of the Civil Judge (Senior Division), Lucknow, which refused to dismiss the plaint filed by the respondent/original plaintiff (M/S Eifel Recreation Club (P) Ltd.).

Case in Brief

An agreement to sell was executed between the parties on December 12, 2012. The revisionists (original defendants) agreed to sell the property to the respondent (original plaintiff) for a total consideration of Rs. 2.65 crores.

Rs. 2.4 crores had been paid to the revisionist and Rs. 25 lakhs were to be paid during the execution of the sale deed. The remaining sale consideration was to be paid within one year from the date of the agreement. The agreement also provided that the sale deed would be executed within one year, i.e., by December 2013.

However, the suit for specific performance was instituted by the plaintiff only on November 30, 2021, nearly eight years after the original deadline.

Although the revisionists (original defendants) filed an application under Order VII Rule 11 of the CPC for rejection of the plaint in suit on the ground that it was barred by limitation, the Trial Court rejected the said application. Thus, challenging that order, the original defendants moved the HC under Section 115 CPC.

Arguments

Senior Advocate Pritish Kumar, appearing for the revisionists, argued that the suit was patently barred. Relying on the first part of Article 54, he contended that the limitation expired in December 2016 (three years after the original deadline). He characterised the suit as a "completely dead case", given "artificial respiration" by the plaintiff to create an illusion of a cause of action.

On the other hand, Senior Advocate Gaurav Mehrotra, appearing for the respondent-plaintiff, argued that the Court must undertake a meaningful reading of the plaint. He pointed out that the plaint specifically averred the execution of a Supplementary Agreement on September 6, 2013, claiming that under it, the parties had agreed that the sale deed would be executed "as and when the plaintiff would require".

The plaint further stated that the plaintiff had paid an additional Rs. 24 lakhs (leaving only Rs. 1 lakh due) and that the delay was due to an encumbrance on the property (a loan from HDFC Bank), which the defendants were obligated to clear.

The plaintiff contended that the limitation period began to run only on September 17, 2021, when the defendants, for the first time, explicitly refused to execute the sale deed.

Thus, it was the original plaintiff's categorical claim was that the suit fell within the second part of Article 54, which provides that the limitation period begins on the date of refusal; in this case, that date was September 2021.

High Court's Observations

Against the backdrop of these submissions, Justice Jaspreet Singh reiterated that while exercising power under Order VII Rule 11 CPC, the Court is bound only to consider the averments made in the plaint and the defence pleas cannot be considered at this stage.

The Court noted that the plaintiff had pleaded with "sufficient particularity" regarding the supplementary agreement (purportedly extending the timeline) and the payment of additional consideration. It was observed that the supplementary agreement was even filed along with an affidavit under Order XXXIX Rule 1 and 2 CPC at the time of instituting the suit.

It also noted that in 2019, the balance consideration was sent by cheque to the revisionist-defendant, who refused to accept it and execute the sale deed. The rest of the delay was attributable to COVID-19, noted the Court.

It was observed that, in September 2021, the plaintiff received notice of the forfeiture of the sale consideration and the defendant's refusal to execute it. Subsequently, the suit for specific performance was filed.

Addressing the core issue of limitation involved in the present case as per the plaint averments, the Court held:

"Whether the supplementary agreement was actually executed between the parties, whether it had the capability of extending the period of limitation...whether the defendants had assured the execution of the deed at a later date...are all contentious issues which can only be ascertained after the parties lead evidence."

The Court held that, since the plaintiff had averred facts indicating that the case fell within the latter part of Article 54 (running from the date of refusal), the Trial Court committed no error in declining to dismiss the plaint at the threshold.

The High Court clarified that while it was not expressing any opinion on the merits or the truthfulness of the supplementary agreement, the presence of these averments made the issue of limitation a triable one.

Consequently, the revision petition was dismissed.

Counsel for Revisionist(s): Senior Advocate Pritish Kumar, Amal Rastogi, Surya Prakash

Counsel for Opposite Party(s): Senior Advocate Gaurav Mehrotra, Brijesh Kumar, Ishita Yadu, Rakshit Raj Singh, Utkarsh Srivastava

Case title - Devendra Srivastava And Ors. vs. M/S Eifel Recreation Club (P) Ltd.

Citation : 

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