Research › Search › Judgment

Kerala High Court · body

2025 DIGILAW 1550 (KER)

Rajalakshmy Rajagopal, (Died) Legal Heirs Recorded v. Leela Kidavu, D/o. Late Smt. Susheela

2025-05-30

EASWARAN S.

body2025
JUDGMENT : EASWARAN S., J. The defendants in O.S No.314 of 2005 before the Sub Court, Kozhikode, in a suit for specific performance are the appellants herein. Succinctly stated the facts are as follows: 2. The plaint schedule property was a subject matter of an agreement dated 22.01.1979 between the predecessor-in-interest of the defendants and Kerala State Housing Board. By virtue of the said agreement, the Kerala State Housing Board agreed to transfer plot No.M-10-11 in Chevayur Village, Kozhikode Taluk, having an extent of 2 Ares 24 Square Meters. Pursuant to the said agreement, the predecessor-in-interest of the defendants entered into an agreement of sale with one Smt.K.Suseela. The respondents herein, are the predecessor-in-interest of Smt.K.Suseela. Going by the agreement, the predecessor of the appellants agreed to transfer the plot to the predecessor of the plaintiffs, after getting the necessary documents for transfer from the Kerala State Housing Board. The parties were in serious variance as regards the modality of performing the contract. Therefore the predecessor of the defendants did not complete the contract by executing necessary conveyance in favour of Smt.K.Suseela, who is the predecessor-in-interest of the plaintiffs. Hence, the plaintiff issued a lawyer’s notice on 01.02.2005 calling upon the defendants to perform the contract. On 02.03.2005, the defendants issued a reply notice, wherein they refused to perform the contract and therefore the plaintiffs filed O.S No.314/2005 before the Sub-Court, Kozhikode. The defendants entered appearance and contested the suit and contended that the suit for specific performance is barred by limitation. It was further contended that, at the time of execution of Ext.A2, the predecessor of the defendants had no right title to be conveyed and therefore the agreement is hit by the provisions contained under Section 17 of the Specific Relief Act, 1963. It was further contended that though it was agreed between the parties that the predecessor of the plaintiff would discharge the entire liability to the Housing Board, there was a default and that was the reason why the conveyance was not executed. Reference was made to the letter dated 25.11.2009, issued by the Housing Board to the plaintiff to discharge the final outstanding amount under Ext.A2 contract. According to the defendants, the aforesaid amount was discharged by them and therefore the plaintiffs have no right to claim the execution of the agreement. Reference was made to the letter dated 25.11.2009, issued by the Housing Board to the plaintiff to discharge the final outstanding amount under Ext.A2 contract. According to the defendants, the aforesaid amount was discharged by them and therefore the plaintiffs have no right to claim the execution of the agreement. As regards the prayer sought for in the plaint, for a decree against the Housing Board to execute the Sale Deed, it was contended that inasmuch as there is no privity of contract between the supplemental 5 th defendant-Board and the plainti suit for specific performance is not maintainable. In support of the pleadings, Ext.A1 to A10 documents were produced on behalf of the plaintiff and PW1 was examined. On behalf of the defendants Exts.B1 to B6 documents were produced and DW1 was examined. In the light of the rival contentions, the Trial Court framed the following issues:- 1. Whether the suit is maintainable? 2. Whether the suit is bad for non joinder of necessary parties? 3. Whether the suit is barred by limitation? 4. Whether the plaintiffs are entitled to get a decree for specific performance as prayed for? 5. Whether the plaintiffs are entitled to get damages from the defendants as prayed for? 6. Relief and cost? 3. The Trial Court proceeded to hold that the suit was within the period of limitation and further found that in the light of the agreement entered between the parties the plaintiffs are entitled to a decree for specific performance. Accordingly, decreed the suit. Aggrieved by the same, the appellants preferred A.S No.105/2011 before the II Additional District Court, Kozhikode. In appeal the First Appellate Court rejected the contention of the appellants that the suit is barred by limitation and held that since no period is fixed in the contract for sale, the suit is not hit by Article 54 of the Limitation Act, 1963. It was further held that the plaintiffs were entitled for a decree for specific performance under Section 20 of the Specific Relief Act. It is aggrieved by the dismissal of the appeal, the defendants have come up with the present appeal. 4. Heard Shri.K.P.Sreekumar, learned counsel appearing for the appellants and Smt.P.Vandana, the learned counsel appearing for the plaintiffs. 5. It was further held that the plaintiffs were entitled for a decree for specific performance under Section 20 of the Specific Relief Act. It is aggrieved by the dismissal of the appeal, the defendants have come up with the present appeal. 4. Heard Shri.K.P.Sreekumar, learned counsel appearing for the appellants and Smt.P.Vandana, the learned counsel appearing for the plaintiffs. 5. Shri.K.P.Sreekumar, the learned counsel appearing for the appellants, primarily contended that both the Trial Court as well as the First Appellate Court misread the provision of Article 54 of the Limitation Act. According to the learned counsel, even if no period is fixed for performance of contract, even then a suit for specific performance will have to confirm to the rigour of Article 54 of the Limitation Act. It is further pointed out that a reading of clause 21 of Ext.A2 agreement would specifically show that there is a total inhibition on the part of the predecessor of the defendants from entering into any contract for assignment of the rights covered under Ext.A2. In the light of the specific embargo, the suit was clearly hit by provisions of Section 17 of the Specific Relief Act. It is further pointed out that the plea of the plaintiffs that the suit is not barred by limitation cannot be accepted since in the cross examination of PW1, it was specifically admitted that the Housing Board will not grant no objection for execution of the Sale Deed and the agreement was entered with full knowledge regarding the embargo. It is further pointed out that DW1, during her cross examination specifically deposed that during August 1991, late Susheela had approached her for execution of the Sale Deed and the defendants had refused and therefore the starting point of limitation was from 1991 and not from 2005, when the lawyer’s notice was issued. 6. Smt P.Vandana, learned counsel for the plaintiffs, would however contend that, the suit is preferred well within the period of limitation. According to the learned counsel, the plaintiffs are entitled to prefer the suit within a period of three years from the date of refusal. The date of refusal in the present case was from 02.03.2005, when the reply notice was issued by the defendants. According to the learned counsel, the plaintiffs are entitled to prefer the suit within a period of three years from the date of refusal. The date of refusal in the present case was from 02.03.2005, when the reply notice was issued by the defendants. It is further pointed out that after the execution of Ext.A2 agreement, there was a clear understanding between the parties to the effect that the predecessor of the plaintiffs would discharge the entire liability under Ext.A2. A period of 15 years was in fact fixed for discharging of the aforesaid liability and therefore, the plaintiffs were entitled to wait till the entire amounts were paid under the agreement to the Housing Board. It is further pointed out that the fact that the plaintiffs have paid the entire amount cannot be disputed. The last payment was made on 02.03.1999. The plaintiffs waited for filing the suit only on a belief that the defendants would honour the terms and conditions of the contract. Though Ext.A2 was executed by the predecessor of the defendants, under clause 6 of Ext.A3 agreement, the same will be binding on the legal heirs and successor-in-interest. Therefore, the learned counsel submitted that the concurrent findings of the fact by the courts below are not liable to be interfered with by this Court in exercise of the powers under Section 100 of Code of Civil Procedure. 7. I have considered the rival submission raised across the bar and perused the records. 8. While admitting the appeal this Court had framed following substantial questions of law for consideration:- 1. In case of violation or non performance of Ext.A3 agreement, the parties themselves have agreed to limit their remedy for compensation, will a suit of this nature is maintainable after 26 years from the date of Ext.A3? 2. The disinclination on the part of the defendants to perform Ext.A3 having been noticed admittedly long years back, are not the Courts below erred in not refusing relief to the plaintiff on the ground that the suit is barred by time? 3. Are the Courts below right in granting a decree to the plaintiffs who admittedly knew that in respect of a property alleged to have been offered for sale, the seller has no saleable interest on the date of Ext.A3 agreement? 4. 3. Are the Courts below right in granting a decree to the plaintiffs who admittedly knew that in respect of a property alleged to have been offered for sale, the seller has no saleable interest on the date of Ext.A3 agreement? 4. When it is stipulated that as per agreement Ext.A2 between the seller and the Housing Board that until execution of the final sale deed for the property and the building thereon in favour of the seller, the ownership will continue with the Housing Board, can such an agreement confer title on the seller to agree for sale of such a contingent right? 9. The primary question that falls for consideration before this Court is whether the suit is barred by limitation. The suit for specific performance has to be filed within three years from the date fixed for performance or from the date of refusal ,which is to the knowledge of the plaintiff. Article 54 of the Limitation Act 1963 reads as under:- Description of suit Period of limitation Time from which period begins to run 54 For specific performance of a contract Three Years The date fixed for the performance, or, if no such date is fixed, when the plaintiff has noticed that performance is refused. 10. In the present case, the suit is filed for a specific performance of Ext.A3 agreement. Ext.A3 was executed between one M.C.Rajagopal, predecessor-in- interest of the defendant and Smt.Susheela, predecessor- in-interest of the plaintiff on 07.12.1979. The decision of this Court on the substantial question of law framed as above would basically depend upon the construction of Ext.A3. In order to appreciate the rival submissions made across the Bar, it is felt that certain clauses in Ext.A3 be extracted. (1) The second executant shall pay all future instal- ments amounting in all to Rs.43,000/- (Rupees forty three thousand only) with interest due from the first executant to the Kerala State Housing Board regularly without any default, and shall also pay land revenue, building tax, electricity and water charges and all other taxes, cesses etc. due in respect of the property. due in respect of the property. (2) The first executant agrees to execute all documents necessary for transfer of the property by the Kerala State Housing Board to the second executant directly and to do all things necessary for securing such transfer; and if this is not possible due to any reason, to execute and register a sale deed in favour of the second executant after getting the sale deed in his favour from the Kerala State Housing Board. (3) The first executant agrees to obtain the original Agreement for Sale dated 22.01.79 between the Kerala State Housing Board and himself and to hand the same over to the second executant. (4) The first executant agrees to inform the second. executant of any notice, letter or other communication which he receives from the Kerala State Housing Board in respect of the property, immediately on such receipt. (5) If either party to this agreement defaults in the performance of their respective obligations under this agreement, the defaulting party shall be liable to compensate the other for the loss suffered by the other. 11. On an entire reading of Ext.A3, with specific reference to clauses 2,3,4 and 5 would give an impression that parties never intended to treat the time as an essence of the contract. But, can it be said that even if the parties never intended to treat the time as an essence of the contract, the suit instituted after expiry of 26 years is not barred by limitation. The answer to the question would lie on the appreciation of the evidence adduced by the parties. As stated above, Ext.A3 was preceded by execution of Ext.A2 between the predecessor-in-interest of the defendants as well as the Kerala State Housing Board. The specific reference to clause 2 and 5 in Ext.A3 would show that the condition for execution of a registered conveyance deed was that, the receipt of the original sale deed from the Kerala State Housing Board. Interestingly, none of the parties chose to write the bargain in writing, so as to enable either party to approach the Civil Court and obtain a decree for specific performance of the contract. It is also when, in clause 5 it is specifically stated that if either party defaults in performance, the other party shall be liable to compensate, the party complaining the loss. 12. It is also when, in clause 5 it is specifically stated that if either party defaults in performance, the other party shall be liable to compensate, the party complaining the loss. 12. Right to seek specific performance of agreement need not be observed in an agreement of sale. But, reserving such a right will shed clarity to the rights of the parties. In the absence of such a clause, a cloud is created on what actually the parties intended. Here in this case, parties were quite aware of the defect in the title of late M C Rajagopal. The absence of clause enabling the parties to get specific performance of the contract, is certainly an indicative factor as regards the cloud in the title of vendor. 13. That said, it will be imperative for this court to decide, whether even in absence of a clause reserving the parties to an agreement to seek enforcement of a contract, can a party maintain the suit for specific performance. Prima facie, there cannot be any doubt as regards the entitlement of a party to approach the civil court for specific performance would not depend on the presence of such a clause in a contract of sale. This is because Section 20 of the Specific Relief Act 1963 is a statutory right which cannot be curtailed by agreement. But, even then, the right under Section 20 of the Specific Relief Act 1963 is not an unqualified right. It would certainly depend on other extenuating circumstances. 14. One of the important factors for maintaining a suit for specific performance of a contract of sale is definitely the ‘title of the vendor’. If the parties consciously enter into an agreement for sale, knowing fully well that the vendor had no conveyable right on the property or that the right was qualified in certain aspects, then the court cannot grant specific performance of a contract. Thus, the entitlement to file a suit for specific performance must be judged in the context of a presence of a crystallized right of the vendor in the property. How far the vendor, late M.C.Rajagopal had tile over the plaint schedule property at the time of execution of agreement of sale will form the crux of this Judgment and will be discussed in the preceding paragraphs. 15. How far the vendor, late M.C.Rajagopal had tile over the plaint schedule property at the time of execution of agreement of sale will form the crux of this Judgment and will be discussed in the preceding paragraphs. 15. As far as the plea of limitation is concerned, one must remember that the plaintiff has sought to sustain the suit solely based on the issuance of reply notice whereby the demand for specific performance of the agreement was refused. On contrary, the defendants contend that, during the cross examination of DW1 it has come out in evidence that during August 1991, late Susheela approached the plaintiffs for execution of a Sale Deed, which was not accepted since defendants wanted to see the original of the sale agreement. The plaintiff had no case that the said statement is not true. In other words, in the absence of any contra evidence led in by the plaintiff to disprove the fact that after 1991 till 2005, they had at any time demanded the defendants to perform the contract and there was refusal only during 2005, it must be held that the suit did not satisfy the requirements of second part of Article 54 of the Limitation Act 1963. 16. The learned counsel for the plaintiffs made a fervent plea to get over the question of limitation, pointing out that since the parties were required to discharge the liability over a period of 15 years and the plaintiff were entitled to reckon and set off the said period towards the limitation. Though, it may be true that from 1979 onwards till 1994 a period of 15 years was prescribed for the purpose of discharging the liability under Ext.A2 agreement, that by itself will not enable the plaintiff to tide over the period of limitation. Even assuming for argument's sake, that 15 years was provided for payment of amount to the 5th defendant Housing Board, the period expedited by 1994 and the suit was filed only in year 2005 and it has come out in evidence that, on 02.03.1999 the entire liability under Ext.A2 agreement was discharged. That be so, the plaintiffs ought to have filed the suit at any rate immediately after 02.03.1999 or at any rate within a period of three years from August 1991, when there was a clear refusal on the part of the defendants to perform the contract. That be so, the plaintiffs ought to have filed the suit at any rate immediately after 02.03.1999 or at any rate within a period of three years from August 1991, when there was a clear refusal on the part of the defendants to perform the contract. Having not done so, the plaintiffs cannot rely on the issuance of the lawyer’s notice and contended that the suit was perfectly maintainable. 17. In Rathnavathi and Another v. Kavitha Ganashamdas [ 2015 (5) SCC 223 ], the Supreme Court held that the period of limitation prescribed under Article 54 would start to run from the date of refusal to perform the contract of sale. In the present case, when there is clear evidence to show that in August 1991 there was a clear refusal on the part of the defendants to perform the contract, the suit filed on 13.09.2005 was clearly barred by the limitation. Accordingly, the first question of law is answered by saying that the suit O.S No.314/2005 is barred by limitation. 18. As regards the substantial question of law 2, 3 and 4 is concerned, this Court finds that these questions could be considered commonly. The evidence in this case as indicated above clearly showed the disinclination on the part of the defendants to perform Ext.A3. Therefore, the trial court ought not have decreed the suit as prayed for. That apart, when the evidence of PW1 is read closely, it is evident that there is a clear admission that her mother had signed the agreement for sale knowing fully well that the Housing Board will not grant sanction for the sale of the property. The relevant portion of the oral testimony of the PW1 is extracted as under:- “ ?????(cid:4) ????? ??(cid:9)????????(cid:15)?????? Housing Board ? (cid:4)???? 19. It is in this context, that close 21 of Ext.A2 has to be appreciated. Clause 21 is extract as hereunder:- (21 ) The party of the second part shall not assign any of his right, lot, transfer for part with the possession of the whole or any part of the building or of the property without the prior written permission of the Board. Clause 21 is extract as hereunder:- (21 ) The party of the second part shall not assign any of his right, lot, transfer for part with the possession of the whole or any part of the building or of the property without the prior written permission of the Board. The Board shall not be bound to recognise any such transfer or assignment in favour of the third parties and notwithstanding such purported assignment done contrary to these conditions mentioned above, the party of the second part shall continue to be liable to the Board for all the obligations contained in this indenture. 20. A reading of the aforesaid clause would clearly show that late M.C Rajagopal was under a solemn obligation not to assign any of his rights or transfer any part with the possession of the property scheduled in the agreement. In the context where, the enforceability of an agreement of sale is called into question, the power of the court to grant a decree for specific performance is highly doubtful. The proposition of law is elaborated with reference to the infirmity in the title as pleaded by the parties. 21. The power of the court to grant specific performance of an agreement entered by a vendor who has no title over the property, is dealt under Section 17 of the Specific Reliefs Act, 1963. Section 17 of the Specific Reliefs Act, reads as follows:- Contract to sell or let property by one who has no title, not specifically enforceable- (1) A contract to sell or let any immovable property cannot be specially enforced in favour of a vendor or lessor- (a) who, knowing himself not to have any title to the property, has contract to sell or let the property; (b) who, though he entered into the contract believing that he had a good title to the property, cannot at the time fixed by the parties or by the court for the completion of the sale or letting, give the purchaser or lessee a title free from reasonable doubt. (2) The provisions of sub-section (1) shall also apply, as far a may be, to contracts for the sale or hire of movable property. 22. A reading of Section 17(1)(a) shows that the contract to sell immovable property cannot be enforced, if the vendor had no prior title to the property. (2) The provisions of sub-section (1) shall also apply, as far a may be, to contracts for the sale or hire of movable property. 22. A reading of Section 17(1)(a) shows that the contract to sell immovable property cannot be enforced, if the vendor had no prior title to the property. In the present case, as stated above, the entitlement of the plaintiffs to seek a specific performance in terms of Section 20 will have to be judged along with the provisions of Section 17. As stated , in Ext.A3 deed, there is no specific reservation of the right to the parties to approach the Civil Court for enforcement of the contract. Perhaps, it is because of the inherent lack of authority to transfer the rights over the plaint schedule property that the parties had not reserved the right. Therefore, though the statute prescribes an independent right under Section 20 to approach the Civil Court for a suit for a specific performance, the right is not unqualified and would operate subject to the reservations as provided under Section 17. 23. In Waheed Baig v. Bangi Lakshmamma and Others; [ (2008) 14 SCC 435 ], the Hon’ble Supreme Court considered the scope of Section 17 of the Specific Relief Act, 1963, and held that in contract of sale, if it is found that the vendor had no alienable right, the specific performance of the contract has to be refused. The said principle was reiterated by the Supreme Court in Pemmada Prabhakar and Others v. Youngmen’s Vysya Association and Others [ (2015) 5 SCC 355 ]. 24. A reading of the judgment of the Trial Court as afÏrmed by the First Appellate Court shows that the intricacies of law which has presented itself in these appeals and before the courts below were not appreciated in the right manner, leading to an irresistible conclusion that both the judgments are unsustainable and requires interference by this Court. 25. Resultantly, answering the questions of law 2, 3 and 4 in favour of the appellant, this Court holds that Ext.A3 contract of sale is unenforceable under the law in the light of the specific bar under Section 17 of the Specific Relief Act, 1963 and hence the suit was not maintainable. 26. Before parting with this case, this court needs to address one final point raised by the learned counsel for the plaintiffs. 26. Before parting with this case, this court needs to address one final point raised by the learned counsel for the plaintiffs. According to the learned Counsel, the 5th defendant had no objection in executing the sale deed in favour of the plaintiff and thus the suit was maintainable. However, this court is afraid that the said contention is completely misconceived inasmuch there was no privity of contract between them and the Kerala State Housing Board. Though, the learned counsel for the plaintiffs fervently took PW4 to this Court to refer to the answer to the interrogatories sought for by the plaintiffs, wherein the Kerala State Housing Board has admitted that they had no objection in transferring the property to the plaintiffs. This Court is afraid that the answer given by the Kerala State Housing Board to the interrogatories by itself, will not constitute a contract which enables them to seek specific performance under Section 20 of the Specific Relief Act, 1963. 27. Viewed in the above perspective, this Court has no hesitation to hold that the judgments of the Courts below though concurrently found against the appellant are unsustainable in law. Accordingly, the appeal is allowed. The Judgments of the courts below are thus set aside and the suit stands dismissed. No order has to cost.