Supreme Court Clarifies Limitation for Specific Performance Suits in Landmark Ruling

Supreme Court Law Insider

LI Network

Published on: October 29, 2023 at 16:25 IST

The Supreme Court clarified the limitations for filing suits for specific performance, particularly in cases where no date is fixed for performance.

The Court emphasized that the limitation period runs from the date when the plaintiff has notice of the refusal to perform the agreement. This decision arose from an Agreement to Sell (ATS) case and highlights the importance of adhering to the legal timeframes.

The Supreme Court case involved an ATS dated July 31, 1975, filed by the respondent Anjuman (now represented by legal heirs) on January 1, 1981.

Article 54 of the Schedule to the Limitation Act, 1963 dictates that the limitation for filing a suit for specific performance is three years “from the date fixed for performance or if no such date is fixed, when the plaintiff has notice that the performance is refused.”

In this particular case, the Court noted that even after five and a half years, there was no mention in the pleadings that Anjuman was ready and willing to perform its obligations under the ATS and pay the remaining amount. This led the Court to conclude that the suit was time-barred on the grounds of limitation.

The case had its origins in an ATS executed in favor of the respondents by the appellants on July 31, 1975. The ATS stipulated that the appellants were required to apply for permission from the District Magistrate to sell the property within eight days.

Once permission was granted, it was to be intimated to the respondents, and the Sale Deed was to be executed within 15 days of such intimation. However, the appellants failed to apply for permission, which prompted the respondents to file a suit for specific performance on January 1, 1981. The suit was decreed on March 8, 1982.

The Supreme Court, composed of Justices Vikram Nath and Ahsanuddin Amanullah, emphasized that the consequences of non-performance created a right for the respondents to seek legal action. It was observed that the respondents couldn’t indefinitely wait for the appellants to inform them about the permission. They needed to act diligently and promptly after the first eight days expired.

The appellants argued that the respondents had not taken any steps in five years, indicating their lack of readiness to perform their part of the contract, rendering the suit time-barred. On the other hand, the respondents argued that since the appellants had not applied and, therefore, had not informed them, the suit was within the limitation period.

The Court clarified that the onus was on the appellants to apply for permission within eight days and, once permission was obtained, to inform the respondents. If the appellants failed to do so, the respondents had the right to move the Court for execution of the sale deed and possession.

The Court concluded that there was no valid reason for the respondents to wait for five and a half years before instituting the suit, especially when there was no notice given to the appellants during that time. The Court set aside the impugned judgment in this case.

This decision underscores the importance of adhering to specific timeframes and understanding the limitations for filing suits for specific performance under Indian law.


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