Naresh Chandra vs Central Academy Education Society

Arun Bhansali, J.—This revision petition is directed against order dated 12.10.2012 passed by the Additional District Judge (Fast Track) No. 3, Jodhpur Metropolitan, whereby, the application filed by the petitioners-defendants under Order VII, Rule 11, CPC read with Section 151 CPC, seeking rejection of the plaint, has been dismissed. The facts in brief may be noticed thus: the respondent filed a suit on 17.5.2011 seeking specific performance of an agreement dated 30.4.2002 (''the agreement'') concerning sale of plot No. 17 situated at Paota, Jodhpur, which was in possession of the plaintiff as tenant; it was, inter alia, averred in the plaint that the plaintiff has performed its part of the contract and has paid entire consideration of Rs. 55,00,000/- by December, 2007; however, the sale deed was not executed/registered and the same was avoided; despite payment of entire consideration, the plaintiff continued recovery of monthly rent @ Rs. 44,000/- per month, when in fact it was not entitled to such rent; the excess rent of Rs. 16,69,232/- was paid till January, 2011 and when the same was stopped, the defendants gave notice dated 22.2.2011 alleging default, which was replied to and on personal meeting the defendants refused performance on 15.3.2011 and, therefore, the suit seeking specific performance of the contract and recovery of sum of Rs. 16,69,232/-, the alleged excessive rent paid, was filed; alongwith plaint the plaintiff, inter alia, filed copy of the agreement, the notice dated 22.2.2011, its reply dated 28.3.2011 to the notice and cheques said to have been returned by the defendants on receipt of amount in cash as per the agreement.

On being served, the petitioners-defendants filed application under Order VII, Rule 11 CPC read with Sec. 151 CPC, inter alia, with the averments that from the averments made in the plaint and the documents annexed with it, it is apparent that the plaintiff has not made payment in terms of the main condition and, therefore, no agreement, which could be specifically enforced, is in existence as the same has come to an end automatically, therefore, the suit is not maintainable and is barred by law; it was further contended that as per the plaint and agreement, the payment of last installment was made in December, 2007 and as per Article 54 of the Limitation Act, 1963 (�the Limitation Act'') the limitation for filling suit is three years and as the suit is barred by limitation, the plaint was liable to be rejected.

A reply to the application was filed by the plaintiff disputing the contentions raised in the application; it was, inter alia, submitted that all the conditions indicated in the agreement have been fulfilled by the plaintiff and it cannot be said that the suit was barred by law; the defendants orally refused to register the sale deed on 15.3.2011 and, therefore, the suit was filed within limitation. It was prayed that the application be rejected.

The trial court after hearing the parties, by the impugned order came to the conclusion that based on the averments contained in the plaint, the cause of action is spelt out, the suit is not barred by any law and, consequently, rejected the application.

Before recounting the submissions made by learned counsel for the parties, it would be appropriate to notice the relevant contents of the agreement and the averments relating to limitation made in the plaint, which reads thus:

Extracts from the agreement

It was contended by learned counsel for the petitioners that from the averments contained in the plaint and the documents filed with it including the agreement, it is apparent that the plaint does not disclose any cause of action, as in terms of the agreement, the same stood cancelled; in terms of Article 54 of the Limitation Act, the suit filed by the plaintiff is barred by limitation arid, therefore, the trial court fell in error in rejecting the application filed by the petitioners.

Elaborating the submissions, it was inter alia submitted that the agreement clearly envisaged payment of monthly installments, of the consideration by 10th day of each month; in case of default, the agreement to sale shall stand cancelled and the vendee shall have no right to seek specific performance; the said condition was the main condition and the parties were bound by the same. It was submitted that from the cheques, which have been produced by the plaintiff alongwith the plaint, which bear the date of alleged payment of installments, clearly indicate that several such alleged payments were made beyond 10th clay of the month and, consequently, the agreement stood cancelled in terms of the relevant clause, which was the main condition and, therefore, the plaintiff has no cause of action to file the suit seeking specific performance.

It was further submitted that oral extension in terms of Section 63 of the Contract Act, 1872 ("the Contract Act'') has also not been pleaded and, therefore, the said plea is not even available to the plaintiff.

Regarding the plea of limitation, it was submitted that the agreement envisaged execution of sale deed on payment of entire consideration and, as according to the plaintiff, the consideration was paid by December, 2007, the suit having been filed on 17.5.2011 was ex facie barred by limitation; the plea raised regarding arising of cause of action on account of alleged denial by the petitioners on account of the notice dated 22.2.2011 and oral denial dated 15.3.2011, is ex facie false; with respect to allegation that there as no sale deed in favour of the vendors of the land in question, which was registered on 27.1.2010, which, inter alia, gave the cause of action, it was submitted that in terms of Section 17 of the Specific Relief Act, 1963 (''the Specific Relief Act'') the disability is attached to the vendor and not to the vendee and from the agreement itself, it was apparent that the petitioners had not claimed any registered instrument in their favour.

Reliance was placed on Hardesh Ores Pvt. Ltd. Vs. Hede and Company, Keshavlal Lallubhai Patel and Others Vs. Lalbhai Trikumlal Mills Ltd., , The Church of Christ Charitable Trust & Educational Charitable Society v. M/s. Ponniamman Educational Trust: AIR 2012 SC 3912, Ameer Mohammed Vs. Barkat Ali, , Citi Bank N.A. Vs. Standard Chartered Bank and Others, Smt. Thakamma Mathew Vs. M. Azamathulla Khan and others, , Janardhanam Prasad Vs. Ramdas, , Satish Batra Vs. Sudhir Rawal, , Sumat Prakash Jain v. Laxmi : AIR 2010 Raj. 63, Deenanath v. Chunnilal: 1974 RLW 383, Tirumalasetty Santhamma and Others Vs. Yenuganti Venkaiah, , Sadhu Behera and Others Vs. Krishna Chandra Sutar and Another, and Hukam Chand Vs. Hari Singh (dead) through L.Rs.

Per contra, it was submitted by learned Senior Counsel appearing for the plaintiff-respondent that at no stage the plea regarding coming to an end of the agreement was raised/indicated by the petitioners, inasmuch as, admittedly, the plaintiff is in possession of the suit property, the notice dated 22.2.2011 issued on behalf of the plaintiff does not even make a mention of the agreement and even as per the said agreement and the term, which is being relied on by the petitioners the defendants were required to refund 50% of the amount to the plaintiff, having failed to do the same, the said plea is not open. It was also disputed that the agreement could come to an end as alleged by the petitioners, as it was open for the petitioners to encash the cheques, if the payment was not made by 10th of the month, which condition is also specifically stipulated in the agreement. However, it was submitted that the alleged lack of plea regarding the oral extension is wholly baseless as it is not the case of the plaintiff, at this stage, in the plaint that on account of the condition as relied on by the petitioners, the agreement came to an end, which stood extended on account of the acceptance of cash payments from time to time. However, it was submitted that the above aspect cannot be examined at this stage as the same necessarily require a plea in the written statement and leading of evidence by the parties. At the stage of Order VII, Rule 11 CPC, the plaint averments alone need to be looked into.

Regarding the plea that-the suit was barred by limitation, it was submitted that no date was fixed for the performance by the petitioners of their obligation under the agreement and, therefore, the refusal, which was reflected in the notice followed by oral communication dated 15.3.2011 between the parties, would be the time from which, the period as envisaged by Article 54 of the Limitation Act would begun to run and the plea raised in this regard is wholly devoid of any substance. It was also submitted that while considering an agreement, if two provisions are in conflict, the document has to be read as a whole and what transpired before and after the agreement also needs to be taken into consideration. However, it was reiterated that the above aspects regarding alleged automatic cancellation of the agreement and the suit being barred by limitation cannot be examined at this stage as the plaint discloses the cause of action and it cannot be said to be barred by limitation. Ultimately, it was prayed that the petition be rejected with heavy costs.

Reliance was placed on S. Brahmanand and Others Vs. K.R. Muthugopal (D) and Others, , Ahmmadsahab Abdul Milla (dead) by proposed Lrs. Vs. Bibijan and Others, , Ram Karan and Others Vs. Govind Lal and Another, , Goparaju Venkata Bharata Rao and Another Vs. Nagula Ramakotayya and Others, D.N. Raju Vs. Smt. Santosh Verma and Another, Mst. Sugani Vs. Rameshwar Das and Another, , Radha Sundar Dutta Vs. Mohd. Jahadur Rahim and Others, Sahebzada Mohammad Kamgarh Shah v. Jagdish Chandra Deo Dhabal & Ors. : AIR I960 SC 953, Puran Singh Sahni Vs. Sundari Bhagwandas Kripalani (Smt) and Others, and Deokbai (Smt.) v. Uttam: (1993) 4 SCC 181.

I have considered the rival submissions.

The parameters, within which, an application under Order VII, Rule 11(a) needs to be considered, has been laid down by this Court in Bhagwan Das Vs. Goswami Brijesh Kumarji and Others, wherein, this Court observed and held as under:-

Learned counsel for the opposite party may be right in urging that it the plaint is based on a document, then such a document may be considered as forming part of the plaint itself and the document can also be looked into, while considering the averments of the plaint, for the purpose of deciding the question that the plaint discloses a cause of action or not But it has to-be remembered that the averments made in the plaint as well as the contents of the document which may constitute part of the plaint, can be looked into on the face value thereof and the question relating to the validity or invalidity of the document cannot be considered at the stage of deciding an application under O. 7, R. 11, C.P.C.

The petitioners-defendants have essentially raised two issues in their application under Order VII, Rule 11 CPC (a) as the agreement stood cancelled on account of the violation of the main condition of the agreement, no cause of action is disclosed as, in such circumstances, suit for specific performance is not maintainable, and (b) the suit is barred by law of limitation as the date fixed for the performance in the agreement was December, 2007 and the suit has been filed in May, 2011.

The case of the petitioners is that in terms of Clause 2, the plaintiff was bound to make payment of the monthly installments by 10th of each month and, on default thereof, the agreement would stand cancelled automatically and the plaintiff would have no right to seek performance of the said agreement. From the documents i.e. the cheques, which have been filed alongwith the plaint, it is ex facie clear that the payment of the installment in the first instance i.e. for the month of April, 2002 itself was made on 6.7.2002 and despite the fact that as per plaint allegations, payment of rest of the 69 cheques were made from month to month, wherein also on several occasions, as per the endorsements made on the cheques, the same were paid beyond 10th of the relevant month, the agreement stood cancelled in terms of the said condition. The further plea is that it is not the case of the plaintiff that in terms of Section 63 of the Contract Act, the performance of the promise made in the agreement was dispensed with or the same stood extended and, in absence thereof, from a plain reading of the plaint alongwith the agreement and the cheques, it is apparent that the plaint does not disclose any cause of action.

On the other hand, the plaintiff in its plaint has claimed that in terms of the same Clause-2, if the amount was not paid in cash on return of the cheque by 10th each month, the petitioners were entitled to realize the amount from the bank through the cheque and as the entire consideration was paid for the 69 cheques, from which, 67 cheques were returned and two cheques were retained by the defendants, they had performed their part of the contract.

In the plaint averments, there is apparently no whisper of either the defendants dispensing with the performance of the promise or extension of the time for such performance in terms of Section 63 of the Contract Act, apparently as according to the plaint by accepting the entire consideration, the terms of the contract which was assigned to the plaintiff in the agreement stood performed.

Presently at the stage of considering the application under Order VII, Rule 11 CPC, the plea regarding the automatic cancellation of the agreement dated 30.4.2002 and effect of absence of any averment in terms of Section 63 of the Contract Act cannot be considered, as such a plea can only be taken by the defendants in their written statement. The examination of plea as raised by the petitioners at this stage would not only presuppose an objection about automatic cancellation in the written statement, defence by the plaintiff in terms of Section 63 of the Contract Act, consideration of submissions regarding interpretation of the agreement (specially reconciliation of the conditions relied on by plaintiff and defendants with varying interpretation), when the averments made in the plaint alone have to be looked at, which is wholly impermissible.

So far as the judgments relied on by learned counsel for the petitioners is concerned, in the case of Keshavlal Lallubhai Patel (supra) relied on by learned counsel for the petitioners, the Hon''ble Supreme Court held and observed as under:-

(8) The true legal position in regard to the extension of time for the performance of a contract is quite clear under Sec. 63 of the Indian Contract Act. Every promise, as the section provides, may extend time for the performance of the contract. The question as to how extension of time may be agreed upon by the parties has been the subject -matter of some argument at the Bar in the present appeal. There can be, no doubt, we think, that both the buyer and the seller must agree to extend time for the delivery of goods. It would not be open to the promise by his unilateral act to extend the time for performance of his own accord for his own benefit. It is true that the agreement to extend time need not necessarily be reduced to writing. It may be proved by oral evidence. In some cases it may be proved by evidence of conduct. Forbearance on the part of the buyer to make a demand for the delivery of goods on the due date as fixed in the original contract may conceivably be relevant on the question of the intention of the buyer to accept the seller''s proposal to extend time. It would be difficult to lay down any hard and fast rule about the requirements of proof of such an agreement. It would naturally be a question of fact in each case to be determined in the light to evidence adduced by the parties. Having regard to the probabilities in this case, and to the conduct of the parties at the relevant time, we think the appellants are entitled to urge that their oral evidence about the acceptance of the respondents proposal for the extension of time should be believed and the finding of the learned trial judge on this question should be confirmed.

The emphasis in the said judgment also is determination of the question of fact in the light of evidence adduced by the parties, as such, at the present stage, the said plea is not open to examination.

Similarly, in the case of Citi Bank N.A. (supra) the issue was raised and decided after the pleadings of the parties were complete. In the present case, the written statement and/or replication has not been filed till the application under Order VII, Rule 11 CPC was decided by the trial Court, therefore, the said judgment also has no relevance at this stage.

The judgment in the case of Ameer Mohammed (supra), this Court dealt with the requirements in a case of oral agreement to sale and has apparently no relevance in the present case where the suit is based on a written agreement dated 30.4.2002. Similarly, in the case of Church of Christ Charitable Trust (supra) the plaint was rejected for lack of compliance of Forms 47 and 48 as the plaintiff failed to give date of agreement in the plaint, which is apparently not the situation in the present case.

The plea raised by the plaintiff in response to the submissions made on the said issue i.e. non-compliance of part of the condition, wherein, in case the agreement stood cancelled, the petitioners were required to refund 50% of the amount paid to them; non-mentioning of alleged cancellation in the notice dated 22.2.2011 and alleged conflict between the provisions of the agreement and their interpretation and the judgments in the case of Radha Sundar Dutta (supra), Sahebzada Mohammad Kamgarh Shah (supra) and Puran Singh Sahni (supra) do not call for any consideration at this stage.

In view of above discussion, on the grounds raised by the petitioners, it cannot be said that the plaint does not disclose any cause of action.

Art. 54 of the Schedule appended to the Limitation Act provides the following period of limitation in a suit for specific performance of a contract:

The above Article envisages two points of time, from which, period begins to run in a suit for specific performance of a contract (a) the date fixed for the performance (b) if no such date is fixed, when the plaintiff has notice that performance is refused.

In the present case, while the case of the plaintiff is that the limitation begun to run from the date of refusal i.e. 15.3.2011, when despite payment of the entire consideration, the petitioners raised demand for the alleged arrears of rent by notice dated 22.2.2011 and the performance was refused orally, on 15.3.2011 and the case of the defendants is that the limitation begun to run from the date fixed for performance, which in the present case is December, 2007 and, as the suit was filed on 17.5.2011, the same was barred by limitation. In the plaint in para 18 (as quoted hereinbefore) the plaintiff has also referred to the fact that on 31.1.2009 the suit filed by the petitioners against their predecessor in interest regarding the suit property for specific performance was decreed on 31.1.2009 and on 27.1.2010 the sale deed in their favour was executed in execution of the decree dated 31.12.2009. Several submissions were made by counsel for the petitioners that in view of provision of Section 17 of the Specific Relief Act, the fact that there was no registered document in favour of the petitioners, cannot be taken advantage of by the plaintiff as in the agreement dated 30.4.2002, the petitioners had not claimed any such registered document in their favour.

The said aspect of the matter cannot be considered in isolation and only in the context of Section 17, but the same has to be considered alongwith provisions of Section 13(1)(a) of the Specific Relief Act. However, at the stage of consideration of application under Order VII, Rule II CPC neither the provision of Section 17 nor Section 13 can be possibly employed by either party as the same necessarily requires leading of evidence as to the intent and purpose, with which, the agreement dated 30.4.2002 was entered into between the parties.

The judgments relied by the petitioners in the case of Deenanath (supra), Tirualasetty Santhamma (supra), Sumar Prakash Jain (supra) and Hukam Chand (supra) have no relevance at the present stage of the proceedings.

The plea regarding the ''date fixed for the performance '' of the agreement has to be considered in the light of the law laid down by Hon''ble Supreme Court in the case of Ahmadsahab Abdul Mulla (supra), wherein, the Larger Bench of Hon''ble Supreme Court posed the following question in para 2 and answered the same in para 11 and 12 of the said judgment:-

The relevant question is: whether the use of expression "date" used in Article 54 of the Schedule to the Limitation Act, 1963 (in short "the Act") is suggestive of a specific date in the calendar?

The inevitable conclusion is that the expression "date fixed for the performance" is a crystallised notion. This is clear from the fact that the second part "time from which period begins to run" refers to a case where no such date is fixed. To put it differently, when date is fixed it means that there is a definite date fixed for doing a particular act. Even in the second part the stress is on "when the plaintiff has notice that performance is refused." Here again, there is a definite point of time, when the plaintiff notices the refusal. In that sense both the parts refer to definite dates. So, there is no question of finding out an intention from other circumstances.

Whether the date was fixed or not the plaintiff had notice that performance is refused and the date thereof are to be established with reference to materials and evidence to be brought on record. The expression "date" used in Article 54 of the Schedule to the Act definitely is suggestive of a specific date in the calendar. We answer the reference accordingly. The matter shall now be placed before the Division Bench for deciding the issue on merits.

In the agreement dated 30.4.2002 it is indicated that if by December, 27 or before, the plaintiff pays the entire amount of consideration, then on receipt of the entire consideration, the Vendor would execute the sale deed and get it registered in favour of the purchaser. While the petitioners claim that the December, 2007 is the date fixed for performance in terms of Article 54, the plaintiff claims that the said date was merely fixed for performance on part of the plaintiff and no time was fixed for performance on the part of the Vendor and, therefore, the limitation in the present case would begin to run on the date the same was orally refused on 15.3.2011.

The trial court by the impugned order opined that no specific date was indicated for registration in the agreement and, therefore, the limitation would begin to run from the date of refusal, which is claimed to be 15.3.2011, when on personal meeting after receipt of notice dated 22.2.2011 the petitioners refused to get the sale deed executed.

The principle that if no time is fixed for execution of the sale deed, the limitation for the purpose of institution of a suit would be the date when the performance is refused is settled by the judgment of this Court in Ram Karan (supra) and has also been considered in the cases of Goparaju Venkata Bharata Rao (supra) and D.N. Raju (supra) by the Andhra Pradesh High Court.

A plain reading of the term in the agreement though clearly envisage an outer limit of December, 2007 for payment of the entire consideration, the execution of the sale deed thereafter within a fixed period/outer limit cannot be deciphered from the said agreement. However, this aspect also, in the present case, needs to be examined only based on the evidence to be led by the parties as the said issue regarding limitation is a mixed question of law and fact and cannot be decided merely based on the averments contained in the plaint and the agreement dated 30.4.2002.

The judgment relied on by learned counsel for the petitioners in the case of Hardesh Ores (supra) has little application as the issue involved therein was renewal of lease, which can only be done by a registered instrument and in the said case there was a specific denial by letter dated 29.12.2001. The case of Thakamma Mathew (supra) was a case where suit was filed by the Vendor for cancellation of agreement to sale and recovery of possession and the trial Court invoking provisions of Order VII, Rule 7 CPC passed decree for specific performance and the Hon''ble Supreme Court from the date of notice cancelling the agreement found the relief to be barred by limitation. Similarly, in the case of Janardhanam Prasad (supra) based on evidence led by the parties, the Hon''ble Supreme Court came to the conclusion that the plaintiff was aware of the refusal. None of the cases relied on by the petitioners deal with a similar situation or the principles similar to the facts of the present case as all the cases deal with limitation in case of a refusal.

The Hon''ble Supreme Court in Panchanan Dhara and Others Vs. Monmatha Nath Maity (Dead) thr. L.Rs. and Another, which appears to be of much relevance in the present case, held and observed as under:-

Contention of Mr. Mishra as regards 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 on 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, 1963. While 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.

In view of the above discussion, in the facts and circumstances of the present case, as to whether the first part of Article 54 i.e. the date fixed for the performance, would be applicable or when the plaintiff claims to have notice that performance is refused would be applicable, cannot be decided merely on the reading of the plaint and/or the agreement dated 30.4.2002 and the same necessarily requires leading of evidence by the parties and it cannot be said at this stage that the suit filed by the plaintiff is barred by limitation.

The rest of the pleas raised by the petitioners regarding alleged contradictions in the averments contained in the plaint and that the petitioners were entitled to forfeit the earnest money relying on the judgment of Hon''ble Supreme Court in the case of Satish Batra (supra) does not call for any determination by this Court at the present stage. Accordingly, in view of the above discussion, the order impugned passed by the trial Court does not call for any interference, there is no substance in the revision petition and, consequently, the same is dismissed. No costs.