M/s. Universal Associates Developers and Promoters Vs. Bhupat - Court Judgment

(Prayer: This Rfa Is Filed Under Section 96 Of The Cpc, Against The Judgment And Decree Dated 12.12.2011 Passed In O.S. No. 92/2008 On The File Of The Ii Addl. Senior Civil Judge At Gulbarga, Dismissing The Suit Of Plaintiff.)

1. Unsuccessful plaintiff of an original suit in 92/08 which was pending on the file of II Additional Senior Civil Judge at Gulbarga, has challenged the judgment and decree passed therein dated 12.12.2011.

2. The suit filed by the appellant-plaintiff before the trial court for specific performance of the contract has been dismissed after contest mainly on the ground of limitation. Therefore this appeal has been filed challenging the same on various grounds as set out in the appeal memo. Respondent herein is the sole defendant I the said suit. Parties will be referred to as plaintiff and defendant as per their ranking before the trial court.

3. The facts leading to the filing of O.S.92/08 are as follows:

a) The defendant was the absolute owner of the suit schedule property bearing No. 16 measuring 125 feet x 100mfeet situate at Jail Garden, Supermarket area, Gulbarga. He had entered into an agreement of sale with the plaintiff on 11.5.1989 agreeing to sell the same for a total consideration of Rs. 13,50,000/- and received a sum of Rs. 1,00,000/- by demand draft on 2.3.1989 drawn on State Bank of Hyderabad, Supermarket Branch, Gulbarga, and another Rs. 12,00,000/- through demand draft. Only Rs.50,000/- was due to the defendant which was sent by the plaintiff. But defendant refused to receive the same. Plaintiffs further case is that he was ever ready and willing to perform ohis part of the contract and requested the defendant to receive the same.

b) Instead of receiving the same, the defendant chose to file a suit in O.S.248/98 for declaration of title and permanent injunction before the Civil Judge (Junior Divn.), Gulbarga. But the plaint was returned under Order VII Rule 10, C.P.C. for re-presenting the same before the proper court. Being aggrieved by the said order, defendant (who was plaintiff in O.S.248/98) filed M.A. 13/04 before the III Additional Civil Judge (Senior Divn.), Gulbarga. The said appeal came to be dismissed upholding the order of rejection of plaint for re-presenting the same before the appropriate court. Consequent upon the order dated 22.9.2005 passed in M.A. 13/04, he did not re-present the plaint.

c) Defendant herein, while seeking the relief of permanent injunction in O.S.248/98, had requested the court sought to restrain the defendant therein (present appellant) not to proceed with further construction or alienate the property. After the dismissal of M.A. 13/04, plaintiff chose to file the suit for specific performance based on the agreement of sale dated 11.5.1989. The suit came to be resisted by the defendant on various grounds.

d) According to the defendant, the suit was not at all maintainable either in law or on facts and it was specifically barred by time. He had specifically denied the averment in regard to readiness and willingness of the plaintiff. According to him, he had already cancelled the agreement of sale dated 11.5.1989 by issuing notice dated 26.1.1998 and as such no agreement of sale was in existence to be enforced. With these pleadings, he had requested the trial court to dismiss the suit.

e) On the basis of the above pleadings, the trial court framed the following issues:

1) Whether the plaintiff proves he is ever ready and willing to p4rform his part of contract? 

2) Whether defendant proves that sale agreement dated 11.5.1989 is already cancelled through notice dated 26.1.1998?

3) Whether defendant proves that suit is barred by time?

4) Whether plaintiff is entitled for suit reliefs as prayed for?

5) What order or decree?

Shakeel, the managing partner of the plaintiff firm is examined as PW1 and 3 more witnesses have been examined on his behalf. 38 documents have been got marked on his behalf. Though the defendant chose to file affidavit in lieu of examination-in-chief, he did not tender himself for cross-examination and hence his examination-in-chief has been eschewed from consideration.

f) After hearing arguments and perusing the records, the learned civil judge has answered issue nos. 1,2 and 4 in the negative and issue no.3 in the affirmative, holding that the suit is specifically barred by time. It is this judgment and decree which is called in question by the plaintiff on various grounds as set out in the appeal memo.

4. Learned counsel for the appellant, Mr.Jambayya Swami Hiremath has vehemently argued that the trial court has adopted a wrong approach to the real state of affairs while examining Ex.P2 the agreement of sale and that time was not the essence of the contract. He has argued that the trial court has failed to look into the oral and documentary evidence, and has not taken into consideration the feet of returning the plaint filed by the defendant in that suit. He has further argued that consequent upon the agreement of sale, possession was handed over to the plaintiff and he has already completed construction and thus the has virtually become the owner for all practical purposes. He has argued that the trial court has not taken into consideration the material facts in regard to the agency coupled with interest in the light of executing the general power of attorney vide Ex.P1 by the defendant in favour of the plaintiff.

5. After hearing arguments and perusing the records, the following points arise for consideration in this appeal:

1) Whether dismissal of the suit in O.S.92/08 on the ground of limitation is justified?

2) Whether the defendant has been able to prove that the agreement of sale in favour of the plaintiff dated 11.5.1989 has been cancelled in accordance with law?

3) Whether the agreement of sale marked as Ex.F2 is coupled with interest as per Ex.Pl?

4) Whether the plaintiff is entitled for protection as per the provisions of Section 53 A of the Transfer of Property Act under the concept of part performance?

5) Whether interference is called for and if so, to what extent?

REASONS

6. Point no.1: Article 54 of the Limitation Act governs the period within which a suit for specific performance is to be filed. Normally time is not the essence of the contract in respect of immovable properties; but the party who intends to argue that time was the essence of the contract, has to make out a clear case that the agreement speaks to that effect. In the present case, the agreement of sale dated 11.5.1989 relied by the plaintiff and marked as Ex.P2 is not seriously disputed by the defendant-respondent. The defendant has not disputed receipt of Rs. 13,00,000/- on various dates from the plain off. There is a specific clause in page 2 of Ex.P2 about the payment of interest at 18% p.a. in respect of belated payment. The plaintiff was expected to pay the last installment on or before 30.10.1989. The defendant had, apart from agreeing to receive interest for belated payment, handed over possession of the schedule property to the plaintiff and he was permitted to put up construction after obtaining necessary permission from the competent authorities and to enter into lease or sale agreements with prospective owners/occupants, as the case may be. The defendant has gone to the extent of incorporating a covenant in Ex.P2 assuring the plaintiff that he would satisfy purchaser s about the title that the plaintiff has to sell the above property. The relevant clause is found in the last paragraph of page 2 of Ex.P2 and the same is reproduced below lor better clarification of the facts of the case:

That the vendor has agreed to satisfy the purchasers that he has absolute title to sell the aforementioned schedule site and the vendor is entitled to convey the said title to the purchasers free from all encumbrances, charges or claims.'

Apart from this, defendant has agreed that he would not interfere with possession or construction to be put up by the plaintiff thereon, and that he would co-operate with the plaintiff to obtain plan, licence from the competent authority.

7. The last payment was to be made by the plaintiff on or before 30.10.1989. Of course the plaintiff was expected to pay Rs. 4,00,000/- each on or before 30.6.1989 and 30.8.1989, and the plaintiff did not pay the instalments as agreed. But the defendant did not insist for payment of any interest although there is a covenant in that regard. Article 54 of the Limitation Act provides for a period of three years for seeking the relief of specific performance from the date fixed for performance or if no such date is fixed, when the plaintiff has noticed that performance is refused. In the present agreement, no time is fixed within which the defendant was expected to execute the regular sale deed. Therefore the case on band falls within the purview of clause (2) of Article 54, Limitation Act. If no time is fixed, the intending purchaser cannot keep quiet for a long time and then seek the relief of specific performance.

8. A single Bench of this court in the case of MAHARUDRAPPA .v. MAHADEVAPPA (2013 (3) Kar.L.J. 684) has dealt with Article 54 of the Limitation Act. In paragraph 12 of the said decision, it is held that normally time is not the essence of the contract in respect of immovable properties, and it is clarified that the same does not give leverage to file a suit at any time. Paragraph 12 is relevant and is reproduced below:

'12. It is true that tiine is not essence of the contract ion respect of immovable properties, but that does not give a leverage to the plaintiff to file a suit at any time he thinks it proper. Admittedly, the agreement of sale is dated 25.8.1986. The defendant is illiterate and specifically denied the genuineness of the said agreement. Though no tmie is fixed in the agreement of sale for executing regular sale deed, it does not mean that the plaintiff can sleep over his right and issue a notice and therefoi e contend that the suit was maintainable as it was filed within three years from the date of receipt of the notice or the date of reply given by the defendant.'

Admittedly no notice was got issued by the plaintiff before filing of the suit. Since the plaintiff has contended that the defendant has chosen to file a suit for declaration of title and injunction in respect of the same property against him, it was virtually a notice issued against him, and he should have filed the suit for seeking the relief of specific performance. He kept quiet without enforcing his right though R.A. 13/04 was disposed of on 22.9.2005. But he chose to file the suit in the year 2008, i.e. on 28.6.2008.

9. What is argued by the learned counsel for the appellant is that the suit was filed within 3 years from the date of disposed of M.A. 13/04 and therefore it is in time. This court is unable to accept the same. A Bench of three Judges in the case of AHMADSAHAB ABDUL MULLA (DEAD BYPROPQSED L.Rs.) .v. BIBIJAN AND OTHERS ([2009] 5 SCC 462) has discussed the provision of Section 54 of the Limitation Act at length. What is held in the said decision is that 'the expression 'date fixed for performance' is crystalized notion. When a date is fixed, it means 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.' According to the Hon'ble apex court, there is a definite point of time when the plaintiff notices refusal , and in that sense both parts refer to definite dates and hence there is no question of finding out an intention from other circumstances.'

10.  In the present case, defendant chose to file the suit for declaration of title and injunction in O S.248/98 and the plaint was returned for being re-presented before the appropriate court. Against this order, M.A. 13/04 was filed. Thus filing ol the suit for declaration and injunction was a good notice for all practical purposes and at least within 3 years from the date of filing of the suit, plaintiff ought to have enforced his right under the agreement of sale.

11.  In the light of the decision in the case of AHMADSAHAB ABDUL MULLA (supra) and the decision of the single Bench of this court in the case of MAHARUDRAPPA (supra), it can be definitely said that the suit filed by the present appellant before the court below seeking the equitable relief of specific performance is barred by time. Hence the trial court is justified ion holding so. Accordingly point no. 1 is answered in the affirmative.

12. Point nos.2 and 3: They are taken up together for common discussion. Execution of Ex.P2-agreement of sale by the defendant in favour of the plaintiff is not at all disputed. Reference is made to a very important covenant in Ex.P2 referred to earlier while discussion on the question of limitation. Ex.PI is the general power of attorney executed by the defendant in favour of the plaintiff on 15.5.1989. This document is also not in dispute. On a perusal of these documents, it is abundantly clear that the defendant not only executed an agreement of sale but also handed over possession of the suit property to the plaintiff permitting him to seek permission from the concerned authorities in order to put up construction and to lease out buildings to anybody he likes. Defendant had even assured the plaintiff that he would execute necessary documents in favour of lessees or licencees or any person concerned. 

13. What is argued before this court is that the defendant has the absolute right of taking possession of the schedule property from the plaintiff if sale consideration is not paid within 3 months from the date on which the installment became due. One clause cannot be read out of context and be blown out of proportion. The entire document has to be read as a whole and a single infernce has to be deduced. On going through the clauses in Ex.P2, it is evident that the defendant had virtually transferred all the right he had in favour of the plaintiff cinder the agreement of sale and he was content with the payment of money. If the plaintiff were to make belated payments, he was liable to pay interest at 18% p.a. The defendant did not exercise his right of cancellation and taking possession of the property. Instead he filed a suit for declaration of title and permanent injunction and the very plaint was returned. An appeal filed against the said order was also dismissed and thus, the attempt made by him has virtually become ineffective.

14. Power of attorney is an authority whereby one is authorized to act for another which normally includes incidental powers for the authority being granted. A Division Bench of this court in the case of MOHAMMED @ PODYA .v. ASSISTANT COMMISSIONER (ILR 1993 KAR 2306) has held that 'when general power of attorney is given in respect of specific power, the generality of power will have to be read in the lightof specific powers granted.' In the instant case, plaintiff has not only been empowered to obtain a regular sale deed, but also possession was handed over to him on the date of executing the agreement of sale and the defendant has received RS. 13,00,000/-out of the agreed consideration of Rs. 13,50,000/-. Defendant has also allowed the plaintiff to obtain necessary permission from the competent authorities to put up a building. The fact that plaintiff has obtained permission from various authorities to put up construction and entire construction is put up, is not seriously disputed. In the light of the decision in the ease of MOHAMMED @ PODYA, (SUPRA) this court is of the considered opinion that Ex.P2 is an agreement coupled with interest vide Ex.Pl. In this view 01 the matter, the power of attorney executed vide Ex.Pl is irrevocable. In view of Sections 201 and 202 of Indian Contract Act

15. A few important clauses incorporated in Ex.P2 inhibit the defendant to revoke the power of attorney and agreement of sale. The defendant has taken a specific plea that he has cancelled Ex.P2 executed in favour of the plaintiff vide Ex.Pl. Except taking such plea, he has neither substantiated the same, nor has he placed any document while cross-examining PW1, Apart from this, he has not entered the witness box. In fact burden was on the defendant to substantiate the plea of cancellation of Exs.Pl and P2 and he has not placed any evidence in regard to the same. Hence an adverse inference will have to be drawn under Section 114 (g) of the Evidence Act holding that he has not cancelled either Ex,P1 or Ex.P2. Thus the defendant has failed to prove the plea of having cancelled the agreement of sale. It is not his case that he has cancelled Ex.P1, the GPA. As already discussed, both the documents are irrevocable in view of the totality of clauses found in them. Thus it is held that the plaintiff has acquired right under Exs.P1 and P2 and has exercised such right by obtaining permission from the concerned authorities and putting up construction and even attempted to enter into agreements with intending purchasers/'occupiers. Hence point no.2 is answered in the negative and point no. 3 is answered in the affirmative.

16. Point no.4: The oral and documentary evidence placed on record specifically makes it clear that the plaintiff having acquired possession of the property by put up the buildings by spending more than one crore of rupees, He has virtually exercised the right accrued to him side Ex.P1 and Ex.P2. Though the suit is dismissed on the ground of limitation, the right that he has acquired by virtue of part performance cannot be taken away. The defendant cannot evict the plaintiff since agreement of sale did not require registration in 1989. If possession had been handed over on the strength of the agreement of sale after 24.9.2001, it necessarily required registration as per Section 17(1)(A) of the Registration Act and Section 53-A of the Transfer of Property Act which have come into force from 24 9.2001.

17. A full Bench of this court in the case of NARASIMHA SETTY .v. PADMA SETTY (ILR 1998 KAR3239) has held that a person in possession on the strength of an agreement of sale cannot be dispossessed by the transferor provided the agreement of sale is in writing. It is further held in the said decision as under:

TRANSFER OF PROPERTY ACT, 1882 (Central Act No.4 of 1882) Section 53-A.

Whether the defence available to the Transferee under Agreement to sell under Doctrine of Part Performance" is lost in case where the suit for specific performance of the contract is barred by time? HELD-Transferee under an Agreement to sell can resist a suit for possession by the owner of the property even specific performance within the period of limitation because the extinction of the statutory remedy by some reason or the other, does not lead to the extinction of a right created by a legislature by incorporating section 53-A in the Act.

Admittedly in the present case, both the documents, i.e. Exs.P1 and P2 have been proved and the factum of handing over possession of the schedule property under Ex.Pl is not at all disputed. Therefore dismissal of the suit on the ground of limitation will not come in the way of the plaintiff exercising his right and the same will not lead to extinction of his right created by the Legislature by incorporating Section 53-A of the Transfer of Property Act. Hence point no.4 is answered in the affirmative.

18. In view of the above findings, the appeal will have to be dismissed mainly on the ground of suit having become barred by time. But the findings on other points will be helpful to the plaintiff. Hence, the appeal will have to be allowed in part to the extent of providing protection of possession to the plaintiff-appellant under Section 53-A of the Transfer of Property Act.

19. In the result, I pass the following order:

ORDER

The appeal is allowed in part. The finding of the trail court insofar as limitation is concerned, is upheld. Notwithstanding dismissal of the suit on the question of limitation, the plaintiff is entitled for protection under Section 53-A of the Transfer of Property Act as the right acquired by him under Exs. P1 and P2 has not extinguished by lapse of time, more particularly when Ex.P1-general power of attorney is coupled with interest as per Ex.P2-agreement of sale.

In the facts and circumstances of the case, parties to bear their own costs.