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Judgment
Biren Vaishnav, J
This appeal, under Section 96 of the Code of Civil Procedure has been filed by the appellants who were the original plaintiffs. They are aggrieved by order below application Ex. 22. The application filed under Order VII Rule 11 (a) & (d) of Code of Civil Procedure by the defendant no. 9 was allowed by the order dated 11.07.2022 passed in special Civil Suit No. 479 of 2018. The appeal arises out of the said order.
The dispute pertains to land at village Leelapur, Ta. Daskroi, Block No. 54 admeasuring H.Are.sq.mts 2-33-71. It was the case of the plaintiffs that the defendant nos. 1 to 5 had by an agreement to sell executed on 29.01.2000 agreed to sell the land in question to the father of the appellant since deceased. According to the plaintiffs, their father died on 23.11.2007. Having undergone shock and pain as a result of his death, they were not in a position to enforce the agreement to sell. On finding the document i.e. the agreement to sell in question dated 29.01.2000, it came to their notice that the defendant nos. 1 to 5 had agreed to sell the lands in question for a consideration of Rs. 6,98,950/- and the plaintiff’s father had paid Rs.69,895/- as part consideration which the defendants no. 1 to 5 had received. According to the plaintiffs, despite this agreement to sell, the defendants no. 1 to 5 did not execute the title clearance and execute the sale deed.
2.1 The plaint further goes to state that on examination of revenue records of the land in question and the mutation entries, it came to the notice of the plaintiffs on the certified copies of the revenue entries being made available on 18.07.2018 that various sale deeds were entered into by the defendants no. 1 to 5 in favour of the defendants no. 6 to 9. According to the plaint, though a registered agreement to sell was executed in favour of the plaintiff’s father on 29.01.2000, the defendants no. 1 to 5 had sold by a registered sale deed dated 27.04.2000 the land in question to the defendant no. 6. The mutation entry thereof had been certified on 28.12.2004. The defendant no. 6 in turn had sold 6020 sq. mtrs of the said land to defendant no. 7 and 6020 sq. mtrs of land to defendant no. 8 on 13.11.2006 by two different registered sale deeds. The remaining portion of the land i.e. 11331 sq. mtrs of land was sold by defendant no. 6 to the defendant no. 9. Defendants no. 7 & 8 had sold their respective 6020 sq. mtrs of land to the defendant no. 9 by executing three different registered sale deeds dated 22.06.2010.
2.2 According to the plaintiffs, the cause of action arose as after the death of their father, it was only in March 2018 when they discovered a copy of the registered agreement to sell and after having obtained the revenue records on 26.04.2018 in context of the subsequent sale transactions were they made aware and therefore the suit for a declaration that the defendants no. 1 to 5 be directed to enforce the agreement to sell in their favour i.e. 29.01.2000 and a further declaration be granted declaring the subsequent sale deeds dated 27.04.2000, 13.11.2006 and 22.06.2010 as being null and void.
2.3 On an application being filed by defendant no. 9 under Order VII Rule 11 (a) & (d) of Code of Civil Procedure stating that the suit was time barred as it was beyond the prescribed period of limitation, the trial court by the impugned order entertained the application and rejected the plaint. Hence, this appeal.
Mr. Shalin Mehta, learned Senior Advocate appearing with Mr. Vimal Purohit, learned advocate for the appellants would submit that the appellants have filed application for leading additional evidence. In the application so filed, they have annexed a cancellation deed dated 03.03.2000. According to the appellants, the cancellation deed cancelling the agreement to sell was a unilateral cancellation which was executed within five weeks from the date of the agreement to sell. It was the case of the appellants that since it was a unilateral cancellation, the cancellation document of the agreement to sell was obtained by fraud. This document was concealed since it was unilaterally signed and since the signature of the appellants were not appended to this document, they were not aware of the cancellation.
3.1 Mr. Mehta would submit that it is true that in between the date of the agreement to sell dated 29.01.2000 and the date of death of the father of the plaintiffs, there was a sale deed dated 27.04.2000 and 13.11.2006 and the date of the father’s death was 23.11.2007. There was a subsequent sale deed of the year 2010 too. It has been made clear in the plaint that the plaintiffs were made aware of these subsequent transactions when they applied for the certified copies of the revenue records which were made available to them on 16.07.2018. The suit was filed on 31.08.2018 and therefore was within the period of limitation. He would invite the court’s attention to paragraphs no. 8 & 9 of the plaint.
3.2 Mr. Mehta would submit that it is not open for the subsequent purchasers to argue that they were bonafide purchasers without notice. The question before the court is whether the subsequent purchasers did proper searches or had undertaken an exercise of due diligence. In absence of any such exercise, that an agreement to sell existed in favour of the plaintiffs would not make their case bad.
3.3 Mr Mehta would submit that in light of the cancellation deed being obtained by fraud that issue had to be gone into by the trial court and the suit ought ot have been revived permitting the appellants to amend their plaint.
3.4 Taking us through the order of the trial court under challenge, Mr. Mehta would submit that the observations of the trial court that the limitation to file the suit for specific performance of his agreement would start on expiration of 2 months from 29.01.2000 in light of the clause which entailed the responsibility on the sellers to obtain title clearance is misconceived. Admittedly no title clearance was obtained and therefore time not being the essence of the contract and therefore the limitation would not start running from the date so set out by the trial court and therefore the finding of the trial court that the suit is time barred is misconceived.
3.5 Mr. Mehta would submit that the reliance by the trial court on the judgements dealing with deemed knowledge of the registered document being available to the plaintiffs appellants will not apply to the facts of the present case. He would submit that as far as the sale deeds in question in favour of the defendants no. 6 to 9 are concerned, the plaintiffs appellants herein were third parties and cannot therefore be saddled with the burden of holding an inquiry with regard to subsequent sales. Deemed knowledge cant run against strangers. That there was no public notice.
3.6 Mr. Shalin Mehta, learned Senior Counsel would further submit that the subsequent purchasers can claim a complete defence in case where there is a bonafide purchase without notice. This is not available to any purchaser as there were already two registered documents dated 29.01.2000 and 03.03.2000. The cancellation was unilateral and since this cancellation had come to the knowledge of the plaintiffs, the suit had to be revived. It was a crucial question which could be taken by amending the plaint and when it was a case that the cancellation was a fraud, the principle of limitation applied to the case and rejection of the plaint under Order VII Rule 11 (a) & (d) of Code of Civil Procedure on a conclusion that the claim of the plaintiffs was vexetious and frivolous is misconceived.
3.7 Mr. Mehta would further submit that no doubt 18 years have passed since the date of the registered agreement to sell, there was a claim which needed a full fledged trial to show that after the death of the plaintiffs’ father, they were never aware of the existence of the subsequent agreements.
Mr. Anshin Desai, learned Senior Counsel appearing with Mr. Tattvam Patel, learned advocate for the respondent no. 9 would submit that this is a classic case where an Order VII Rule 11 application has been allowed. He would submit that reading of the plaint would indicate that it was a case where based on suppression of the date of his father’s death, a fictitious and a vexatious claim had been made out. He would submit that if the prayers of the plaint are seen, admittedly, it is a case for the plaintiffs to claim a relief for setting aside an agreement to sell dated 29.01.2000. He would submit that even after the death of their father on 27.11.2007 there were multiple registered sale deeds between the defendants no. 6 to 9 of the year 2000, 2006 and 2010. Obviously, therefore, it was a suit which was hopelessly timebarred. All the registered sale deeds are sought to be challenged after 18 years. He would submit that a continuous cause of action cannot be pleaded because the cause of action had arisen in the life time of his father i.e. prior to 27.11.2007. Two sale deeds had been registered prior to the date of death on 13.11.2006. Obviously, therefore, the suit was hopelessly time barred.
4.1 Mr. Desai, learned Senior Counsel on the question of the submission of Mr. Mehta that time was not the essence of the contract as no title clearance had come, would submit that even otherwise there was nothing to show that the plaintiffs had remained vigilant on their rights. For enforcement of specific performance, he came after 18 years in 2018. Even otherwise it is well settled that in contracts relating to immovable property, time was the essence of the contract.
4.2 With regard to the contention regarding the subsequent purchaser being not a bonafide purchaser without notice, he would submit that 18 years had gone by, the documents were registered and by the decisions of various courts, it was settled that registered documents would presume deemed knowledge.
4.3 Mr. Desai would submit that the father too had slept over his rights inasmuch as the agreement to sell having been executed in 2000, till his death in the year 2007 he did nothing to enforce his rights. Thereafter, even the heirs from the years 2007-18 did not take any action. He would therefore submit that merely because there were multiple causes of action, there would be no extension of limitation.
4.4 In support of his submission, Mr. Desai relies on the following decisions:
(a) Khatri Hotels Private Limited And Another vs. Union of India and Another [(2011) 9 SCC 126];
(b) Narinder Kumar Malik vs. Surinder Kumar Malik [(2009) 8 SCC 743];
(c) Nanjappan vs. Ramasamy and Another [(2015) 14 SCC 341]
(d) Citadel Fine Pharmaceuticals vs. Ramaniyam Real Estates Private Limited and Another [(2011) 9 SCC 147];
(e) Pragnesh Narendra Talekar vs. Vasantrav Parshottam Talekar (Decd.) and Another rendered in First Appeal No. 1712 of 2017;
(f) Raghwendra Sharan Singh vs. Ram Prasanna Singh (dead) [(2020) 16 SCC 601];
(g) Dahiben vs. Arvindbhai Kalyanji Bhanusali (Gajra) [(2020) 7 SCC 366]
(h) Whiteswan Buildcon Llp vs. Thakor Praveenji Mangaji [2022 (4) GLH 390];
(i) Shantilal Shakarbhai Patel since Decd. Vs Patel Dalsukhbhai Nanabhai (decd) [2023 (2) GLH 740];
(j) Sree Surya Developers And Promoters vs. N. Sailesh Prasad and Others [(2022) 5 SCC 736]
(k) Satish Kumar Gupta vs. State of Haryana [(2017) 4 SCC 760];
(l) State of Gujarat vs. Mahendrakumar Parshottambhai Desai [(2006) 9 SCC 772];
(m) K.R. Mohan Reddy vs. Net Work Inc. Rep Tr.M.D. [(2007) 14 SCC 257].
Mr. Shalin Mehta, learned Senior Counsel in rejoinder relies on the decision in the case of Urvashiben vs. Krishnakant Manuprasad Trivedi reported in (2019) 13 SCC 372.
Having considered the submissions made by the learned counsels for the respective parties, if the prayers in the suit are to be referred to, reading of the prayers would indicate that (i) a declaration is sought by the appellants – plaintiffs that the defendants no. 1 to 5 be directed to enter into a registered sale deed with the plaintiffs pursuant to an agreement to sell entered into by the father of the defendants (intended purchaser) and the defendants no. 1 to 5 (intended sellers) and (ii) a further declaration that the sale deed entered into between the defendants no. 1 to 5 selling the land in question to defendant no. 6 by registered sale deed dated 27.04.2000 be set aside and (iii) further to set aside the sale deed entered into between defendants no. 6 & 7 dated 13.11.2006 and between defendants no. 6 & 8 of the same date, (iv) to set aside the sale deed entered into by defendant no. 6 in favour of defendant no. 9 and defendant no. 7 in favour of defendants no. 8 & 9 dated 22.06.2010.
6.1 It is in light of these prayers that when the plaint is read, what is evident from the averments therein is that it is the case of the plaintiffs – appellants that an agreement to sell was entered into by the defendants no. 1 to 5 with the father of the plaintiffs on 29.01.2000. The agreement to sell was never enforced.
6.2 By way of a civil application for bringing additional evidence, a cancellation deed dated 03.03.2000 is pressed into service. According to the appellants, the cancellation deed being unilateral and a case of fraud, it was deemed to be non-est and therefore the right to have a sale deed executed subsisted.
6.3 The plaint further avers that subsequent sale deeds were entered into by defendants no. 1 to 5 – original owners of the land on 27.04.2000 and 13.11.2006. Also there were sale deeds entered into for the lands in question and portions thereof on 22.06.2010. Reading the dates of these registered deeds in conjunction with the date of death of their father on 23.11.2007 would indicate that even before the death of their father, there were two sale deeds of the year 2000 and 2006 which were never a subject matter of challenge by the father of the appellants. The sale deeds of the year 2010 were sought to be challenged on the ground that it was only when an inquiry was made did the plaintiffs on 26.04.2018 on acquiring certified copies came to know of these transactions way back in the years 2006 and 2010 respectively. The cause of action pleaded in the plaint indicates that only when they discovered the agreements in the year 2018 which was executed in the year 2000, did the plaintiffs realise that such an agreement to sell existed which gave a right to the plaintiffs for enforcement of a contract for specific performance.
It is in light of these facts that the trial court relied on a decision of the Apex Court in the case of Khatri Hotels (supra). Dealing with Article 58 of the Limitation Act, the Apex Court held that by a clever drafting of a plaint when a case is made out to convey an impression that a right to sue accrued in 2018 on discovery of the agreement to sell, and then relating it back to the 2010 and 2006 sale deeds, in light of the language to Article 58 of the Limitation Act, the limitation will begin to run from the time when the right to sue first accrued. Paragraphs no. 23 – 30 read as under:
“23. We shall first consider the question whether the suit filed by the appellants on 14.2.2000 was within limitation and the contrary concurrent finding recorded by the trial Court and the High Court is legally unsustainable.
The Limitation Act, 1963 (for short, `the 1963 Act') prescribes time limit for all conceivable suits, appeals etc. Section 2(j) of that Act defines the expression "period of limitation" to mean the period of limitation prescribed in the Schedule for suit, appeal or application. Section 3 lays down that every suit instituted, appeal preferred or application made after the prescribed period shall, subject to the provisions of Sections 4 to 24, be dismissed even though limitation may not have been set up as a defence. If a suit is not covered by any specific article, then it would fall within the residuary article. In other words, the residuary article is applicable to every kind of suit not otherwise provided for in the Schedule.
Article 58 of the 1963 Act, which has bearing on the decision of this appeal, reads as under:
THE SCHEDULE
PERIODS OF LIMITATION
[See sections 2(j) and 3]
FIRST DIVISION - SUITS
Description of suit
Period of limitation
Time from which period begins to run
PART III - SUITS RELATING TO DECLARATIONS
To obtain any other declaration.
Three years
When the right to sue first accrues.
Article 120 of the Indian Limitation Act, 1908 (for short, `the 1908 Act') which was interpreted in the judgment relied upon by Shri Rohtagi reads as under:
Description of suit
Period of limitati on
Time from which period begins to run
Suit for which no period of limitation is provided elsewhere in this Schedule.
Six years
When the right to sue accrues.
The differences which are discernible from the language of the above reproduced two articles are:
(i) The period of limitation prescribed under Article 120 of the 1908 Act was six years whereas the period of limitation prescribed under the 1963 Act is three years and,
(ii) Under Article 120 of the 1908 Act, the period of limitation commenced when the right to sue accrues. As against this, the period prescribed under Article 58 begins to run when the right to sue first accrues.
Article 120 of the 1908 Act was interpreted by the Judicial Committee in Mt. Bolo V/s. Mt. Koklan AIR 1930 PC 270 and it was held:
"There can be no `right to sue' until there is an accrual of the right asserted in the suit and its infringement, or at least, a clear or unequivocal threat to infringe that right, by the defendant against whom the suit is instituted."
The same view was reiterated in Annamalai Chettiar V/s. A.M.K.C.T. Muthukaruppan Chettiar (1930) I.L.R. 8 Rang. 645 and Gobinda Narayan Singh V/s. Sham Lal Singh (1930-31) L.R. 58 I.A. 125. In Rukhmabai V/s. Laxminarayan (supra), the three-Judge Bench noticed the earlier judgments and summed up the legal position in the following words:
"The right to sue under Article 120 of the 1908 Act accrues when the defendant has clearly or unequivocally threatened to infringe the right asserted by the plaintiff in the suit. Every threat by a party to such a right, however ineffective or innocuous it may be, cannot be considered to be a clear and unequivocal threat so as to compel him to file a suit. Whether a particular threat gives rise to a compulsory cause of action depends upon the question whether that threat effectively invades or jeopardizes the said right."
While enacting Article 58 of the 1963 Act, the legislature has designedly made a departure from the language of Article 120 of the 1908 Act. The word `first' has been used between the words `sue' and `accrued'. This would mean that if a suit is based on multiple causes of action, the period of limitation will begin to run from the date when the right to sue first accrues. To put it differently, successive violation of the right will not give rise to fresh cause and the suit will be liable to be dismissed if it is beyond the period of limitation counted from the day when the right to sue first accrued.”
7.1 It can therefore be reasonably believed that by a clever ploy to show the date of knowledge without any basis in the year 2018, the limitation is sought to be extended which is a vexatious claim and in dismissing the suit on the ground of being barred by limitation, the reasoning of the trial court cannot be faulted.
In the case of Narender Malik (supra) and Nanjappan (supra), the court considered the issue of time being the essence of contract. In the facts of the present case, the stipulation in the sale agreement clearly indicated a two month time limit within which the clearances had to be obtained. To ascertain if the time was essence of the contract, therefore when the condition was analysed by the trial court, it could not be said to have committed an error when the contract was in context of an immovable property. In absence of any proof tendered by the plaintiff that he was always ready and willing to perform his part of the contract, it is always open for the court to deny the discretion of specific performance when on facts it is found that it is not equitable to grant such relief after a lapse of such long period of time. Paragraphs no. 10, 13, 14 of Nanjappan (supra) read as under:
“10. In a suit for specific performance, the plaintiff has to aver and prove with satisfactory evidence that he was always ready and willing to perform his part of contract at all material time as mandatorily required under Section 16(c) of the Specific Relief Act, 1963. First appellate court and the High Court recorded findings that the plaintiff was always ready and willing to perform his part of the contract. By a careful reading of the recitals in the agreement, the concurrent findings so recorded do not seem to reflect the conduct of the parties. As per recitals in (Ex.P-1 agreement dated 30.9.1987), an amount of Rs.25,000/- was paid by the respondents-plaintiffs to the appellant-defendant. Balance amount of Rs. 20,000/- was to be paid within 21/2 years thereafter and get the sale executed. In the second agreement of sale (Ex.P-2 dated 21.3.1990) it is stated that the plaintiffs were unable to pay the balance amount within the stipulated period and get the sale deed executed and therefore the second sale agreement was executed extending the period for execution of sale deed for a further period of three years. As could be seen from the recitals from Ex.P-2, respondents were unable to pay the balance sale consideration and get the sale deed executed. It is pertinent to note that the time for performance of contract was extended again and again totaling period of eight years. Even though first appellate court and High Court recorded findings that respondents-plaintiffs were ready and willing to perform their part of contract, the fact that time was extended for eight years is to be kept in view while considering the question whether discretion is to be exercised in favour of the respondents-plaintiffs.
First sale agreement was executed on 30.9.1987 about twenty seven years ago. The property is situated in Coimbatore City and over these years, value of property in Coimbatore City would have considerably increased. In Saradamani Kandaplan vs. Rajalakshmi & Ors., (2011) 12 SCC 18, this Court has held that the value of the property escalate in the urban areas very fast and it would not be equitable to grant specific performance after a lapse of long period of time. In the instant case, first agreement was executed on 30.9.1987 i.e. twenty seven years ago. In view of passage of time and escalation of value of the property, grant of specific relief of performance would give an unfair advantage to the respondents-plaintiffs whereas the performance of the contract would involve great hardship to the appellant-defendant and his family members.
Considering the totality and the facts and circumstances, in our view, it is not appropriate to grant discretionary relief of specific performance to the respondents-plaintiffs for more than one reason. Admittedly, suit property is the only property of the appellant-defendant and the appellant is said to have constructed a house and where he is currently residing with the family. As compared to respondents, the appellant will suffer significant hardship if a decree for specific performance is granted against the appellant. Considering the circumstances, such as the construction of the residential house over the suit property, sale consideration, passage of time and hardship caused to the appellant, makes it inequitable to exercise the discretionary relief of specific performance and the concurrent finding of first appellate court and the High Court decreeing the suit for specific performance is to be set aside.”
The concept of time being the essence of a contract has also been discussed in the case of Citadel Fine Pharmaceuticals (supra) which stated that if the case was specific performance of a contract relating to immovable properties, time was normally not the essence, however this is not the absolute proposition. Paras 33-40, 47 of the same read as under:
“33. The settled law seems to be that in a case for specific performance of contract relating to immovable property time is not normally of the essence. However, this is not an absolute proposition and it has several exceptions.
Reference in this connection may be made to the decision of Privy Council in Jamshed Khodaram Irani V/s. Burjorji Dhunjibhai reported in (1915-16) 43 I.A. 26. Viscount Haldane delivering the judgment for the Judicial Committee of the Privy Council held that the law applicable to this question is contained in Section 55 of the Indian Contract Act and the learned Law Lord was of the opinion that Section 55 of the Indian Contract Act does not lay down any principle which is different from those which obtain under the law of England with regard to contracts for sale of land.
It was further held that in cases relating to specific performance, equity, which governs the rights of the parties, does not look always at the express term of the agreement but at the substance of it in order to ascertain whether the parties named a specific time within which completion was to take place and whether the parties in substance intended that the completion should take place within a reasonable time. The legal position was as follows:-
"...A Court of Equity will indeed relieve against and enforce specific performance, notwithstanding a failure to keep the dates assigned by the contract; either for completion or for the steps towards completion, if it can do justice between the parties, and if (as Lord Justice Turner said in Roberts V/s. Berry [3 D.M.& G. 284 at 289] there is nothing in the `express stipulation between the parties, the nature of the property, or the surrounding circumstances', which would make it inequitable to interfere with and modify the legal right...."
(page 32 of the report)
The learned Law Lord made it clear that equity can operate in the construction of a contract "unless excluded by any clearly expressed stipulation". However, it was made clear that equity will not assist where there has been undue delay on the part of one party to the contract and one party has given notice to the other party that the defaulting party must complete the contract within a definite time. A further caution was added by saying that equity will not assist when other circumstances will result in injustice on application of equitable principle. In the words of Lord Haldane the principles have been formulated as follows:-
"...Nor will it (equity) exercise its jurisdiction when the character of the property or other circumstances would render such exercise likely to result in injustice. In such cases the circumstances themselves, apart from any question of expressed intention, exclude the jurisdiction. Equity will further infer an intention that time should be of the essence from what has passed between the parties prior to the signing of the contract...." (Page 33 of the report)
In this case, prior to the signing of the agreement, the terms were discussed between the parties and the plaintiff purchaser willingly took upon itself the burden of obtaining the clearance within the time stipulated in the agreement.
The aforesaid principles in Jamshed Khodaram (supra) were accepted by a three- Judge Bench of this Court in the case of Gomathinayagam Pillai and others V/s. Palaniswami Nadar reported in AIR 1967 SC 868.
From the terms of agreement in this case which have been set out in the earlier part of the judgment it is clear that the time is of the essence and this is clearly stipulated and understood by the parties having regard to the previous correspondence and also having regard to the laid down terms of the contract and especially when the consequence of non- completion of the terms by purchaser within the stipulated time was spelt out in clause 9.
In a case where time is of the essence of the contract, the consequence of non- performance of such term has been very succinctly explained by Chitty on Contracts, (Volume 1, Thirteenth Edition, Sweet & Maxwell in paragraph 21-015) and the same is set out:
"Consequences of time being "of the essence". In determining the consequences of a stipulation that time is to be "of the essence" of an obligation, it is vital to distinguish between the case where both parties agree that time is to be of the essence of the obligation and the case where, following a breach of a non- essential term of the contract, the innocent party serves a notice on the other stating that time is to be of the essence. In the former case the effect of declaring time to be of the essence is to elevate the term to the status of a "condition" with the consequences that a failure to perform by the stipulated time will entitle the innocent party to: (a) terminate performance of the contract and thereby put an end to all the primary obligations of both parties remaining unperformed; and (b) claim damages from the contract-breaker on the basis that he has committed a fundamental breach of the contract ("a breach going to the root of the contract") depriving the innocent party of the benefit of the contract ("damages for loss of the whole transaction". (page 1410)
Having regard to the aforesaid principles the court cannot attribute a different intention to the parties and cannot specifically enforce the contract at the instance of the plaintiff-purchaser who has failed to perform his part of the obligation within the time stipulated.”
In a decision in the case of Pragnesh Talekar (supra), the Division Bench of this Court speaking through one of us had considered the issue of applicability of Article 58 of the Limitation Act and also the concept of deemed knowledge of registered deed. After analysing the case law on Order VII Rule 11, the court held as under:
“20. This brings us to the first legal contention raised by the appellant as regards applicability of Article 58 or Article 59 of the Limitation Act, 1963 in the facts of the case. The law of limitation is codified in the form of the Limitation Act, 1963 (herein after referred in short as 1963 Act) which prescribes a time-limit for the institution of all suits, appeals, and applications. Section 2(j) defines the expression "period of limitation" to mean the period of limitation prescribed in the Schedule for suits, appeals or applications. Section 3 lays down that every suit instituted after the prescribed period, shall be dismissed even though limitation may not have been set up as a defence. If a suit is not covered by any specific article, then it would fall within the residuary Article 113.
Article 58 and 59 of the Second Schedule to the 1963 Act, prescribe the period of limitation for filing a suit where a declaration is sought, or cancellation of an instrument, or rescission of a contract, which reads as under: PART IV--SUITS RELATING TO DECREES AND INSTRUMENTS PART IV--SUITS RELATING TO DECREES AND INSTRUMENTS
Article.
Description of Suit.
Period of limitation prescribed
Time from which period of limitation begins.
58
A suit to obtain any other declaration
Three years
From the date when the right to sue first accrues.
59
To cancel or set aside an instrument or decree or for the rescission of a contract.
Three years
When the facts entitling the plaintiff to have the instrument or decree cancelled or set aside or the contract rescinded first become known to him.
The specific ground is raised by the learned counsel for the appellant questioning applicability of Article 59 in case of third party to the impugned instrument. Looking to the prayers sought in our opinion the suit of such kind seeking cancellation of registered instrument would be governed by section 31 of the Specific Relief Act, though at the instance of a third party plaintiff. As against that Section 34 of the Specific Relief Act is though wide enough in its scope as contemplated to settle not only conflicting claims to property, but also of disputes as to legal status, however, it must always be remembered that this provision is not a panacea of all types of legal disputes. Chapter VI of the Specific Relief Act 1963 provides for Declaratory Decrees under Section 34 of the Act which governs declaratory reliefs. It reads:
“34. Discretion of Court as to declaration of status or right:
Any person entitled to any legal character, or to any right as to any property, may institute a suit against any person denying, or interested to deny, his title to such character or right, and the Court may in its discretion make therein a declaration that he is so entitled, and the plaintiff need not in such suit ask for any further relief:
PROVIDED that no Court shall make any such declaration where the plaintiff, being able to seek further relief than a mere declaration of title, omits to do so.
Explanation: A trustee of property is a "person interested to deny" a title adverse to the title of someone who is not in existence, and for whom, if in existence, he would be a trustee.”
Thus, this Section enables any person to have his right or legal character declared by a Court of law and thus get rid of the cloud from the legal character or right. It has been held that it was merely to perpetuate and strengthen testimony regarding the title of the plaintiff so that adverse attacks might not weaken it. But, this does not mean that the Section sanctions every form of declaration, but only a declaration that the plaintiff is entitled to any legal character or to any right as to any property.
In the present case though, prayer is sought seeking declaration of suit properties to be of exclusive self acquired properties of ancestor of plaintiff- Ganpatrao Kalyanji however, we cannot ignore the other prayer of challenge to the transaction entered i.e. registered WILL or sale deed. The suit filed seeking relief in view of section 31 of the Specific Relief act, as regards cancellation of registered instrument would be governed either Article 58 or 59 of the 1963 Act.
In our opinion the aforesaid issue has been put to rest in light of the decision of the Hon’ble Supreme Court in the case of Mohd. Noorul Hoda Vs. Bibi Rafiunnisa and others, (1996) 7 SCC 767. The Apex Court has held that Article 59 of the Limitation Act is a general provision. In a suit to set aside or cancel an instrument, a contract or a decree on the ground of fraud, Article 59 is attracted. The starting point of limitation is the date of knowledge of the alleged fraud. Paragraph 6 of the judgment is reproduced below:-
"6. The question, therefore is as to whether Article 59 or Article 113 of the Schedule to the Act is applicable to the facts in this case. Article 59 of the Schedule to the Limitation Act, 1908 had provided inter alia for suits to set aside decree obtained by fraud. There was no specific article to set aside a decree on any other Page 31 of 42 Downloaded on : Thu Oct 03 16:00:53 IST 2024 2024:GUJHC:29327-DB NEUTRAL CITATION C/FA/1712/2017 CAV JUDGMENT DATED: 19/04/2024 ground. In such a case, the residuary Article 120 in Schedule III was attracted. The present Article 59 of the Schedule to the Act will govern any suit to set aside a decree either on fraud or any other ground. Therefore, Article 59 would be applicable to any suit to set aside a decree either on fraud or any other ground.
It is true that Article 59 would be applicable if a person affected is a party to a decree or an instrument or a contract. There is no dispute that Article 59 would apply to set aside the instrument, decree or contract between the inter se parties. The question is whether in case of person claiming title through the party to the decree or instrument or having knowledge of the instrument or decree or contract and seeking to avoid the decree by s specific declaration whether Article 59 gets attracted? As stated earlier, Article 59 is a general provision. In a suit to set aside or cancel an instrument a contract or a decree on the ground of fraud, Article 59 is attracted. The starting point of limitation is the date of knowledge of the alleged fraud. When the plaintiff seeks to establish his title to the property which cannot be established without avoiding the decree or an instrument that stands as an insurmountable obstacle in his way which otherwise binds him, though not a party, the plaintiff necessarily has to seek a declaration and have that decree, instrument or contract cancelled or set aside or rescinded. Section 31 of the Specific Relief Act, 1963 regulates suits for cancellation of an instrument which lays down that any person against whom a written instrument is void or voidable and who has a reasonable apprehension that such instrument, if left outstanding, may cause him serious injury, can sue to have it adjudged void or voidable and the court may in its discretion so adjudge it and order it to be delivered or cancelled. It would thus be clear that the word ''person' in Section 31 of the Specific Relief Act is wide enough to encompass a person seeking derivative title from his seller. It would, therefore, be clear that if he seeks avoidance of the instrument, decree or contract and seeks a declaration to have the decrees set aside or cancelled he is necessarily bound to lay the suit within three years from the date when the facts entitling the plaintiff to have the decree set aside, first became known to him."
Applying the aforesaid provision and the legal principles in the facts of the case, the prayers couched in the plaint cannot be termed as one seeking only declaration as to legal status of plaintiff over the suit properties. We, therefore, are of the opinion that the submission of learned counsel for the appellant that suit being governed by section 34 of the Specific Relief Act and therefore Article-59 of 1963 Act, would not apply, is misconceived.
This brings us to issue of suit being barred by Section 3 of the Act, 1963. As regards submission to consider the case being governed by Article 58 of the 1963 Act is concerned, even if the aforesaid provision is made applicable for the purpose of calculation of period of limitation ie. three years from the date when the right to sue accrue first, the suit is found to be instituted beyond the prescribed period of limitation. The declaration sought for of suit properties to be exclusive and self acquired properties of Ganpat Rao, would be governed by Section 34 of the Specific Relief Act and as per Article 58 of the Act, 1963, such suit was required to be filed within three years from the date when the right to sue accrues. The right to seek such declaration in fact arose for the deceased grandfather of plaintiff i.e. during the life time of Ganpat Rao who chose not to raise any dispute with regard to family distribution as recorded in mutation entry no.364 dated 19.11.1946. In fact on close reading of the pleadings of the plaint and the documents placed on record along with list by the plaintiff, it transpired that the family arrangement prevailed since last 68 years as reflected and recorded in mutation entry no. 364, dated 19.11.1946. The appellant has for the first time in present appeal has referred to entry no. 387 which is not even pleaded before the trial court nor even placed on record. Based on such arrangement of distribution of lands amongst the heirs of Kalyanji, the first generation and his second generation has continued to enjoy the respective benefits accrued thereunder.”
In the case of Dahiben (supra), paras 23.2, 23.3 –23. 5-23.15 are reproduced hereinbelow for ready reference:
“23.2 The remedy under Order VII Rule 11 is an independent and special remedy, wherein the Court is empowered to summarily dismiss a suit at the threshold, without proceeding to record evidence, and conducting a trial, on the basis of the evidence adduced, if it is satisfied that the action should be terminated on any of the grounds contained in this provision.
23.3 The underlying object of Order VII Rule 11 (a) is that if in a suit, no cause of action is disclosed, or the suit is barred by limitation under Rule 11 (d), the Court would not permit the plaintiff to unnecessarily protract the proceedings in the suit. In such a case, it would be necessary to put an end to the sham litigation, so that further judicial time is not wasted.
23.4 In Azhar Hussain v. Rajiv Gandhi, 1986 Supp. SCC 315, Followed in Maharaj Shri Manvendrasinhji Jadeja v. Rajmata Vijaykunverba w/o Late Maharaja Mahedrasinhji, (1998) 2 GLH 823 this Court held that the whole purpose of conferment of powers under this provision is to ensure that a litigation which is meaningless, and bound to prove abortive, should not be permitted to waste judicial time of the court, in the following words :
"12. ...The whole purpose of conferment of such power is to ensure that a litigation which is meaningless, and bound to prove abortive should not be permitted to occupy the time of the Court, and exercise the mind of the respondent. The sword of Damocles need not be kept hanging over his head unnecessarily without point or purpose. Even if an ordinary civil litigation, the Court readily exercises the power to reject a plaint, if it does not disclose any cause of action."
23.5 The power conferred on the court to terminate a civil action is, however, a drastic one, and the conditions enumerated in Order VII Rule 11 are required to be strictly adhered to.
23.6 Under Order VII Rule 11, a duty is cast on the Court to determine whether the plaint discloses a cause of action by scrutinizing the averments in the plaint, Liverpool & London S.P. & I Assn. Ltd. v. M.V. Sea Success I & Anr., (2004) 9 SCC 512. read in conjunction with the documents relied upon, or whether the suit is barred by any law.
12.4 Order VII Rule 14(1) provides for production of documents, on which the plaintiff places reliance in his suit, which reads as under :
"Order 7 Rule 14: Production of document on which plaintiff sues or relies.-
(1) Where a plaintiff sues upon a document or relies upon document in his possession or power in support of his claim, he shall enter such documents in a list, and shall produce it in Court when the plaint is presented by him and shall, at the same time deliver the document and a copy thereof, to be filed with the plaint.
(2) Where any such document is not in the possession or power of the plaintiff, he shall, wherever possible, state in whose possession or power it is.
(3) A document which ought to be produced in Court by the plaintiff when the plaint is presented, or to be entered in the list to be added or annexed to the plaint but is not produced or entered accordingly, shall not, without the leave of the Court, be received in evidence on his behalf at the hearing of the suit.
(4) Nothing in this rule shall apply to document produced for the cross examination of the plaintiff's witnesses, or, handed over to a witness merely to refresh his memory."
(emphasis supplied) Having regard to Order VII Rule 14 CPC, the documents filed alongwith the plaint, are required to be taken into consideration for deciding the application under Order VII Rule 11 (a) . When a document referred to in the plaint, forms the basis of the plaint, it should be treated as a part of the plaint.
12.5 In exercise of power under this provision, the Court would determine if the assertions made in the plaint are contrary to statutory law, or judicial dicta, for deciding whether a case for rejecting the plaint at the threshold is made out.
12.6 At this stage, the pleas taken by the defendant in the written statement and application for rejection of the plaint on the merits, would be irrelevant, and cannot be adverted to, or taken into consideration Sopan Sukhdeo Sable v. Assistant Charity Commissioner, (2004) 3 SCC 137.
12.7 The test for exercising the power under Order VII Rule 11 is that if the averments made in the plaint are taken in entirety, in conjunction with the documents relied upon, would the same result in a decree being passed. This test was laid down in Liverpool & London S.P. & I Assn. Ltd. v. M.V.Sea Success I & Anr., (2004) 9 SCC 512, which reads as :
"139. Whether a plaint discloses a cause of action or not is essentially a question of fact. But whether it does or does not must be found out from reading the plaint itself. For the said purpose, the averments made in the plaint in their entirety must be held to be correct. The test is as to whether if the averments made in the plaint are taken to be correct in their entirety, a decree would be passed."
In Hardesh Ores (P.) Ltd. v. Hede & Co., (2007) 5 SCC 614, the Court further held that it is not permissible to cull out a sentence or a passage, and to read it in isolation. It is the substance, and not merely the form, which has to be looked into. The plaint has to be construed as it stands, without addition or subtraction of words. If the allegations in the plaint prima facie show a cause of action, the court cannot embark upon an enquiry whether the allegations are true in fact, D. Ramachandran v. R.V. Janakiraman, (1999) 3 SCC 267; See also Vijay Pratap Singh v. Dukh Haran Nath Singh, AIR 1962 SC 941.
12.8 If on a meaningful reading of the plaint, it is found that the suit is manifestly vexatious and without any merit, and does not disclose a right to sue, the court would be justified in exercising the power under Order VII Rule 11 CPC.
12.9 The power under Order VII Rule 11 CPC may be exercised by the Court at any stage of the suit, either before registering the plaint, or after issuing summons to the defendant, or before conclusion of the trial, as held by this Court in the judgment of Saleem Bhai v. State of Maharashtra, (2003) 1 SCC 557. The plea that once issues are framed, the matter must necessarily go to trial was repelled by this Court in Azhar Hussain (supra).
12.10 The provision of Order VII Rule 11 is mandatory in nature. It states that the plaint "shall" be rejected if any of the grounds specified in clause (a) to (e) are made out. If the Court finds that the plaint does not disclose a cause of action, or that the suit is barred by any law, the Court has no option, but to reject the plaint.
Reading of the aforesaid paragraphs would indicate that when on a meaningful reading of the plaint, it is found that the suit is manifestly vexatious, power under Order VII Rule 11 be exercised. In the facts of the present case, reading of the plaint would indicate that it cannot be believed that the plaintiffs appellants discovered the fact of a registered agreement to sell entered in the year 2000 in the year 2018, 18 years after its execution and 11 years after the death of their father in whose favour it was so executed.
13 Mr. Shalin Mehta, learned Senior Counsel would distinguish the decision of this court in the case of Whiteswan Buildcon (supra). On facts, however reading of the decision would indicate that after considering the case law, the court held that the suit was time barred. Paras 11-14 of the decision read as under:
It is fairly well settled that, so far as the issue of limitation is concerned, it is a mixed question of fact and law. It is true that limitation can be the ground for rejection of plaint in exercise of powers under O.VII R.11(d) of the CPC. Equally, it is well settled that for the purpose of deciding application filed under O.VII R.11 only averments stated in the plaint alone can be looked into, merits and demerits of the matter and the allegations by the parties cannot be gone into. Article 54 of the Limitation Act, 1963 prescribes the limitation of three years, for suits for specific performance. The said Article reads as under :
Suits for Specific Performance
3 years
The date fixed for the performance, or, if no such date is fixed, when the plaintiff has notice that performance is refused
From a reading of the aforesaid Article, it is clear that when the date is fixed for performance, limitation is three years from such date. If no such date is fixed, the period of three years is to be computed from the date when the plaintiff, has notice of refusal. When rejection of plaint is sought in an application filed under O.VII R.11, same is to be considered from the facts of each case, looking at the averments made in the plaint, for the purpose of adjudicating such application. As averred in the plaint, it is the case of the plaintiff that even after payment of the entire consideration amount registration of the document was not made and prolonged on some grounds and ultimately when he had visited the site on 25.05.2017 he had come to know that the same land was sold to third parties and appellants have refused performance of contract. In such event, it is a matter for trial to record correctness or otherwise of such allegation made in the plaint. In the suits for specific performance falling in the second limb of the Article, period of three years is to be counted from the date when it had come to the notice of the plaintiff that performance is refused by the defendants. For the purpose of cause of action and limitation when it is pleaded that when he had visited the site on 25.05.2017 he had come to know that the sale was made in favour of third parties and the appellants have refused to execute the Sale Deed in which event same is a case for adjudication after trial but not a case for rejection of plaint under O.VII R.11(d) of CPC.
Counsel for the appellants has placed reliance on the judgment in the case of Prabhakar (supra). In the above said case, this Court has held that, even where no limitation period is prescribed by the Statute, courts apply doctrine of delay/laches/acquiescence and non-suit litigants who approach court belatedly without justifiable explanation. Delay and laches are to be examined with reference to facts of each case and the said judgment is not helpful to support the case of the appellant inasmuch as this matter arises out of an application filed under O.VII R.11(d) of the CPC. The judgment in the case of T. Arivandandam (supra) pertains to eviction from tenanted premises which was contested by the tenant. In the said case where rejection of plaint under O.VII R.11(d) was considered on the ground that plaint does not disclose cause of action but not a case for rejection of plaint on the ground of limitation. In the case of Hardesh Ores (supra) it was the case falling in the first limb of Article 54 of the Limitation Act 1963 but not a case falling under second limb, where the time is not the essence of the contract. In the judgment in the case of Dilboo (Dead) (supra) this Court has considered relevant principles of applicability of O.VII R.11 of CPC. Equally, the case of I.T.C. Limited (supra) is a case concerning rejection of plaint under O.VII R.11(a) but not case of rejection on the ground of limitation. In the case of Raj Narain Sarin (supra) the suit was filed after 40 years after execution of the Sale Deed and as a fact it was found that Sale Deed was to the knowledge of the plaintiff and he had not taken any steps to declare the Sale Deed invalid. In that context, the order passed under O.VII R.11 was confirmed by this Court. In the case of N.V. Srinivasa (supra) the suit is for declaration but not for specific performance and in the said suit having regard to the facts of the case this Court has held that suit for declaration filed by the plaintiff is not maintainable. In the case of Madanuri Rama (supra) the suit was filed seeking cancellation of Sale Deed on the ground that property in question is a waqf property which cannot be sold to a private party. The aforesaid case is a case not concerning limitation under Article 54 of the Limitation Act 1963.
On the other hand, judgment in the case Gunwantbhai (supra) this Court has held as under :
"8. We may straightaway say that the manner in which the question of limitation has been dealt with by the courts below is highly unsatisfactory. It was rightly noticed that the suit was governed by Article 54 of the Limitation Act, 1963 . Then, the enquiry should have been, first, whether any time was fixed for performance in the agreement for sale, and if it was so fixed, to hold that a suit filed beyond thre years of the date was barred by limitation unless any case of extension was pleaded and established. But in a case where no time for performance was fixed, the court had to find the date on which the plaintiff had notice that the performance was refused and on finding that date, to see whether the suit was filed within three years thereof. We have explained the position in the recent decision in R.K. Parvtharaj Gupta v. K.C. Jayadeva Reddy (2002) 2 SCC 428. In the case on hand, there is no dispute that no date for performance is fixed in the agreement and if so, the suit could be held to be barred by limitation only on a finding that the plaintiffs had notice that the defendants were refusing performance of the agreement. In a case of that nature normally, the question of limitation could be decided only after taking evidence and recording a finding as to the date on which the plaintiff had such notice. We are not unmindful of the fact that a statement appears to have been filed on behalf of the plaintiffs that they did not want to lead any evidence. The defendants, of course, took the stand that they also did not want to lead any evidence. As we see it, the trial court should have insisted on the parties leading evidence on this question or the court ought to have postponed the consideration of the issue of limitation along with the other issues arising in the suit, after a trial."
In the aforesaid case, it is clearly held that in cases falling in second limb of Article 54 finding can be recorded only after recording evidence. The said view expressed by this Court supports the case of the respondent-plaintiff. In the judgment in the case of Rathnavathi (supra) in paragraphs 42 and 43 it was clearly held that when the time is not fixed in the agreement, the limitation of three years to file a suit for specific performance would begin when the plaintiff has noticed that defendant has refused the performance of the agreement. In the judgment in the case of Ahmadsahab Abdul Mulla(2)(Dead) by Proposed LRs. v. Bibijan & Ors., 2009 5 SCC 462 while interpreting Article 54 of the Limitation Act, it is held that words "date fixed for the performance" is a crystallised notion. The second part "time from which period begins to run" refers to a case where no such date is fixed. In the case of Balsaria Construction (P) Ltd. v. Hanuman Seva Trust & Ors., 2006 5 SCC 658 and Chhotanben (supra) this Court clearly held that issue of limitation, being a mixed question of fact and law, is to be decided only after evidence is adduced.”
Therefore, the submission of learned counsel for the appellant that the question of limitation is a mixed question of facts and law may not be applicable ot the facts of the case on hand.
Seeking recourse to a production application under Order XXXXI Rule 27 of Code of Civil Procedure by producing a cancellation deed dated 03.03.2000, a feeble attempt has been made by learned counsel for the appellant to suggest that since the cancellation was unilateral and fraudulent, a permission be given to amend the plaint and revive the suit is a submission which indicates that it was a clear case of afterthought.
Nothing in the plaint suggested the existence of such an agreement of cancellation in fact a positive assertion was made in the relevant paragraphs of the plaint to indicate that the agreement to sell did subsist. Obviously, therefore by filing a civil application to bring on record a cancellation deed was an attempt to cure the lacuna which is impermissible in context of the provisions of law relating to production of additional evidence. Production of such a document at appellate stage to cure a lacuna cannot be resorted to. It is not a case where the evidence which is sought to be adduced was not available with the exercise of due diligence.
On the issue of deemed knowledge of the registered sale deeds entered subsequent to the agreement to sell, the law is well settled as so held by the decisions of the Apex Court that registration of documents is deemed knowledge and the limitation would run from the date of such document. In absence of any diligence on the part of the appellants to explore execution of these subsequent documents and coming up with a vexatious plea of knowledge of such executions in the year 2018 is a frivolous plea and therefore too there is no reason why the order under challenge deserves to be upset.
For the aforesaid reasons, the appeal as well as the Civil Applications for stay as well as for additional evidence stand dismissed.