Limitation period for a Specific Performance suit will run from the date Fixed for the Performance rather than from the Expiry of the Validity of the Agreement: SC
Recently, the Supreme Court (SC) bench of Justice Prasanna Bhalachandra Varale and Justice Vikram Nath held that for a specific performance suit, the limitation period will run from the date fixed for the performance rather than from the expiry of the validity of the agreement. While setting aside the findings of the Appellate Court and the Jharkhand High Court, the bench observed, “The First Appellate Court and the High Court went on the consideration that the agreement further recorded that this agreement would remain valid for a period of five years from today’s date i.e. date of the execution of the agreement to sell. Placing reliance on this clause, in our considered opinion, is totally irrelevant. The performance was to take place within one month. The validity of the agreement is something different and does not change the date of performance. What was the reason for incorporating this clause of validating the agreement for five years is not spelled out in the agreement, but in any case, it does not change the date fixed for the performance.”
The SC bench was hearing the defendant’s appeal against the judgment and order of the Jharkhand HC confirming the judgment and decree of the First Appellate Court, decreeing the suit for specific performance filed by the respondents. In this case, the sale deed was to be executed within 1 month from the date of the said agreement, December 17, 1989. As per this agreement to sell, the sale deed was to be executed and registered within one month, up to January 16, 1990. This means that the limitation period would be 3 years from the said date, which would expire on January 16, 1993. The agreement to sell also incorporated a clause at the end of the document stating that the said agreement would be valid for five years. Since the sale deed was not executed, the respondents instituted a suit for specific performance of the contract in September 1993.
The appellants denied the plaint allegations stating that the suit was barred by limitation since it was filed beyond three years from the date of performance of the sale deed as per the agreement. After hearing the matter, the SC bench said, “We need not enter into the other issues as we are convinced that the suit was barred by limitation. The limitation under Article 54 of the Limitation Act, 1963 for instituting a suit for specific performance of a contract would be three years from the date fixed for the performance, or, if no such date is fixed, when the plaintiff has notice that performance is refused.”
Furthermore, the SC observed, “...in the agreement dated 17.12.1989, it is specifically mentioned that the sale deed would be executed within one month from the date of the said agreement. The period of one month would expire on 16.01.1990, and once there is a specific date fixed for performance, the limitation period would be three years from the said date, which would expire on 16.01.1993. The Trial Court thus held that the suit was barred by limitation as it was filed in September 1993.” It added, “The validity of the agreement is something different and does not change the date of performance.” The bench concluded, “As such, the suit was liable to be dismissed on the ground of limitation alone.” The SC allowed the appeal and set aside the impugned judgments of the Appellate Court and the High Court.
