Where Agreement To Sell Fixes No Date For Performance But Ties It To A Future Event, Limitation Runs From Notice Of Refusal: Allahabad High Court

The Allahabad High Court has held that where an agreement to sell fixes no date for performance and instead makes execution of the sale deed dependent on the happening of a future event, the second part of Article 54 of the Limitation Act, 1963 applies, and time begins to run only when the plaintiff has notice that performance has been refused.

Article 54 of the Limitation Act, 1963 provides a period of three years for a suit for specific performance of a contract, computed from the date fixed for performance, or, where no such date is fixed, from the date on which the plaintiff has notice that performance is refused.

Justice Avnish Saxena held

“The agreement to sale on the basis of which the suit is instituted does not contain a fixed date of performance, which is reflected from the bare reading of the entire agreement to sale. It is only the occurrence of an event, which provides the time for performance of contract, i.e. the execution of sale deed by Avas Evam Vikas Parishad in favour of original defendant and the time provides is six months from the date of that sale deed after issuance of notice. As such, the second provision of Article 54 reiterated above is applicable in the present set of facts that the plaintiff has noticed that the performance is refused.”

The suit was instituted on 05.10.2016 by the plaintiff for a decree of specific performance directing the original defendants to execute a sale deed in his favour, and for a permanent injunction restraining them from alienating the property to a third party. The property, a plot measuring 360 square metres in the Vrindavan Scheme, Raibareilly Road, Lucknow, had been allotted to the original defendants and their mother, Smt. Janak Dulari, by the U.P. Avas Evam Vikas Parishad.

A registered agreement to sell was executed on 08.05.2015 for a consideration of Rs. 43 lakhs. Rs. 9 lakhs was paid in advance before its execution, and a further Rs. 9,37,500/- was paid between 14.05.2015 and 01.08.2016 in cash and through bank transactions. Smt. Janak Dulari died on 16.03.2016.

The plaintiff sent a notice on 29.08.2016, which was not received, followed by a notice on 19.09.2016, which was served. On 03.10.2016, a property dealer informed the plaintiff that the original defendants intended to sell the property to someone else, and the suit was filed two days later.

Condition no. 3 of the agreement required the original defendants to intimate the plaintiff in writing once the Parishad executed a sale deed in their favour, the sale deed in favour of the plaintiff to follow within six months of that intimation. Condition no. 4 gave the plaintiff liberty to approach the court if they failed to execute it within the specified period.

The Parishad executed the sale deed in favour of the original defendants on 05.11.2016, a month after the suit was filed. The revisionists purchased the property by a sale deed dated 23.11.2016 and were impleaded as defendants no. 3 and 4 on 31.10.2019.

A coordinate bench of the High Court dismissed the plaintiff's challenge to that impleadment on 10.01.2022, clarifying that the impleaded defendants would not be permitted to raise any defence inconsistent with that of the original defendants, and his special leave petition was dismissed on 30.01.2023.

The impleaded defendants then applied under Order VII Rule 11 CPC for rejection of the plaint. The trial court rejected the application by order dated 10.07.2025, and the present revision followed.

Before the High Court, the impleaded defendants argued that the suit was premature, since under condition no. 3 the plaintiff's right to have a sale deed executed arose only after the Parishad transferred the property to the original defendants, which had not happened when the suit was filed. The suit being premature, it was argued, no period of limitation was available to the plaintiff.

It was further argued that the plaintiff was a property dealer who had entered into agreements to sell with twenty other allottees of the Parishad, which made the agreement a sham document, and that the suit was barred by Sections 17 and 19 of the Specific Relief Act.

The plaintiff countered that the plaint disclosed a cause of action and named the person who had given him the information about the proposed transfer, that the original defendants were the ostensible owners of the property, and that a registered agreement to sell subsisted under which a substantial part of the consideration had already been paid.

The Court observed that it was concerned only with clauses (a) and (d) of Order VII Rule 11 CPC, non-disclosure of a cause of action, and the suit appearing from the plaint to be barred by law, the law in question being the Limitation Act, 1963. Noting that a cause of action is a bundle of facts coupled with the legal right of the plaintiff to relief, and is not confined to the actual infringement of that right, the Court held that the plaint disclosed one.

On limitation, the Court relied on the decision of the Supreme Court in Ahmadsahab Abdul Mulla (2) (dead) by proposed LRs v. Bibijan and others, where it was held that a date fixed for performance is a crystallised notion, meaning a definite date on the calendar, leaving no question of gathering an intention from other circumstances. Reading the agreement as a whole, the Court found no such date in it.

“This notice of refusal of performance is explicitly averred in paragraph 7 of the plaint disclosing the name of the source, who has intimated that the original defendants are in agreement with other persons to transfer the scheduled suit property. As such, it cannot be considered that the suit for specific performance is barred by the provisions of Limitation Act in reference to first relief.”

The Court also noted that what the plaintiff had been told proved correct: the impleaded defendants obtained a sale deed in their favour on 23.11.2016, soon after the Parishad executed the sale deed in favour of the original defendants.

On the arguments under the Specific Relief Act, the Court held that they had no bearing at this stage.

“There are many points pertaining applicability to the provisions of Specific Relief Act argued before this court, which need not to be dealt with. As the same has no bearing while dealing with the application under Order VII Rule 11 CPC, which are subject matter of trial and will not directly attracted for rejection of plaint.”

Holding that the trial court had rightly appreciated the facts and the law, the Court affirmed the order impugned and dismissed the revision petition as devoid of merit.