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Kantamaneni Venkateswara Rao And Another v. Meka Vankateswara Rao And Another
Structured Summary of the Opinion
Factual and Procedural Background
The petition under review is a Civil Revision Petition challenging an order dated 26 April 1991 passed in I.A. No. 926 of 1985 in O.S. No. 67 of 1974 by the Subordinate Judge, Machilipatnam. The petitioners are the plaintiffs in the original suit and the respondents are the defendants.
The key factual details as stated in the opinion are:
- On 19 July 1970 the parties entered into an agreement for sale of Ac. 00.90 cents in Pagolu village for Rs. 12,150/-, and the plaintiffs were put in possession.
- On 20 August 1974 the plaintiffs filed a suit for specific performance. The suit was decreed; the opinion records a decree date of 12 September 1977 in one place and later refers to a decree passed on 20 April 1977 in its reasoning.
- The decree required payment of the balance of sale consideration with interest (12% per annum from 19 July 1970 to 20 July 1977 in the decree as described) within three months of the decree and, on deposit and measurement, the sale deed was to be executed in plaintiffs' favour.
- The opinion states that "the amount was deposited pursuant to the decree" (paragraph 2). Despite that, the defendants issued a notice dated 26 April 1985 for deposit of consideration; the plaintiffs replied on 13 May 1985 claiming the amount had already been paid.
- Thereafter the defendants filed I.A. No. 926 of 1985 under Section 28 of the Specific Relief Act in the same suit praying for rescission of the contract and restoration of possession. The plaintiffs resisted the petition.
- No oral evidence was led; documents marked included Ex. A-1 (notice dated 26-4-1985), Ex. A-2 (reply dated 13-5-1985), and Ex. A-3 (certified copy of the decree).
- The trial court, after considering the record, concluded that the plaintiffs' plea of payment was not correct, held that the plaintiffs were in default and not ready to perform, rescinded the contract and directed delivery of possession with mesne profits at Rs. 500 per fasli year from 20 July 1977. That order was passed on 26 April 1991 and is the subject of the present revision.
Legal Issues Presented
- Whether Article 137 of the Limitation Act is applicable to an application under Section 28(1) of the Specific Relief Act praying for rescission of a contract for sale which was the subject-matter of a suit.
- If Article 137 is applicable, when does the right to file the application for rescission accrue to the vendor/defendant?
Arguments of the Parties
Plaintiffs' (Petitioners') Arguments
- The learned counsel for the petitioners argued that the application (I.A. No. 926 of 1985) was not maintainable because it was barred by limitation; accordingly, the impugned order suffers from error of jurisdiction and should be set aside.
Defendants' (Respondents') Arguments
- The learned counsel for the defendants submitted that the application was not barred by limitation because Article 137 of the Limitation Act is not applicable to such an application.
- Alternatively, counsel argued that the cause of action for filing under Section 28 accrued only when the defendants became aware of the plaintiffs' intention not to comply with the decree — specifically when the plaintiffs took an incorrect plea in their reply dated 13 May 1985 — and that the defendants filed the application within two months of that date, thus within limitation.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| The Kerala State Electricity Board, Trivandrum v. T.P. Kunhaliumma, 1976 4 SCC 634 | The interpretation that Article 137 ("any other application for which no period of limitation is provided elsewhere in this Division") applies broadly to petitions or applications filed under any Act to a Civil Court; it is not confined to applications under the Code of Civil Procedure. | The court relied on this decision to conclude that Article 137 of the Limitation Act applies to applications under Section 28(1) of the Specific Relief Act, since Section 28 provides no prescribed period of limitation. |
| Cherukuri Venkatarao v. Brahmajosyula Balagangadhara Sarma, 1987 APLJ 114 | The principle that specific performance is an equitable remedy and that applications for execution or rescission in such matters must be made within a reasonable time; generally, the three-year limitation for enforcing an agreement of sale serves as an outer limit. | The court invoked this authority to emphasize that Section 28 applications must ordinarily be made within a reasonable time and that the three-year period (as an outer limit) applies when considering whether an application is time-barred. |
Court's Reasoning and Analysis
The court proceeded in a stepwise manner:
- Interpretation of Section 28(1), Specific Relief Act: The court set out the text of Section 28(1) and observed that it expressly permits the vendor or lessor, in the same suit in which a decree for specific performance has been made, to apply to have the contract rescinded where the purchaser or lessee fails to pay the sums ordered by the court within the period allowed. The court noted that Section 28 also bars a separate suit for such relief.
- Absence of a specified limitation period: The court noted that Section 28 contains no period of limitation for filing an application for rescission.
- Application of Article 137 of the Limitation Act: Because no specific period is provided, the court held that Article 137 applies. The court relied on the Supreme Court decision in Kerala State Electricity Board v. T.P. Kunhaliumma to support the proposition that Article 137 covers "any petition or application filed under any Act to a Civil Court" and is not limited to procedural applications under the Civil Procedure Code.
- Equitable requirement of reasonable time: The court also referred to the Division Bench decision in Cherukuri Venkatarao to underscore that reliefs under the Specific Relief Act are equitable; applications must be made within a reasonable time and that the three-year period for enforcing an agreement of sale is generally the outer limit.
- Accrual of right to apply under Section 28(1): The court held that the right to file an application under Section 28(1) accrues on the purchaser's failure to pay the purchase money or other sums ordered by the court within the period allowed by the decree (or any further period allowed by the court). The opinion states the decree required payment within three months of the decree.
- Application to the facts: The court applied the above principles to the facts of the case. The opinion records that the decree (the opinion contains two references: once to a decree dated 12-9-1977 and elsewhere to a decree said to have been passed on 20-4-1977) gave the plaintiff time to deposit the amount within three months. The court observed that the defendants' application (I.A. No. 926 of 1985) was filed long after the three-year period from the accrual of the right — the application was filed on 8 July 1985, about seven and a half years after the date from which limitation ran, and thus was barred by Article 137.
- Conclusion on jurisdiction and validity of the trial court order: Because the defendants' application was time-barred, the trial court lacked jurisdiction to pass the order under revision after the prescribed period of limitation. The trial court's order rescinding the contract and directing possession with mesne profits was therefore set aside.
The court further observed (relying on the authorities) that reasons for non-deposit are immaterial once limitation begins to run unless saved by specific provisions of the Limitation Act.
Holding and Implications
Holding:
ORDER UNDER REVISION SET ASIDE; CIVIL REVISION PETITION ALLOWED.
The court held that:
- Article 137 of the Limitation Act applies to applications under Section 28(1) of the Specific Relief Act because Section 28 prescribes no period of limitation.
- The right to apply under Section 28(1) accrues on the purchaser's failure to pay the sums ordered by the decree within the period allowed; the outer limit for bringing such applications is the three-year period under Article 137.
- Applying those principles to the facts before it, the defendants' application (I.A. No. 926 of 1985) was barred by limitation and the trial court therefore had no jurisdiction to pass the impugned order of 26 April 1991 rescinding the contract.
Direct consequences:
- The trial court's order dated 26 April 1991 (which rescinded the sale contract and directed delivery of possession with mesne profits) was set aside.
- The Civil Revision Petition was allowed and no order as to costs was made.
Broader implications:
The opinion emphasizes that Section 28 applications are governed by Article 137 when no specific limitation is provided and that courts should treat the three-year period as the general outer limit for bringing such equitable applications. The opinion does not state that it is laying down a novel precedent beyond applying established principles; it decides the matter on the statutory interpretation and authorities cited.
Note: This summary is confined strictly to statements and reasoning contained in the provided opinion. No facts or conclusions have been added beyond the text of the opinion.
1. This Civil Revision Petition is directed against the order dated April 26, 1991 passed in I.A No. 926 of 1985 in O.S No. 67 of 1974 on the file of the Subordinate Judge, Machilipatnam. The petitioners herein are the plaintiffs in the said suit and the respondents are the defendants. Hereinafter, the parties will be referred as ‘Plaintiffs’ and ‘Defendants’.
2. On 19-7-1970 the parties entered into an agreement for sale of an extent of Ac. 00.90 cents situated in Pagolu village for a consideration of Rs. 12,150/-. Under the Said agreement, the plaintiffs were handed over possession of the said property. On 20th August, 1974, the plaintiffs filed the said suit for specific performance of the agreement of sale, which was decreed on 12-9-1977. The decree provided inter alia that the balance of sale consideration payable under the agreement for sale with interst at 12% per annum from 19-7-1970 to 20th July, 1977, be paid within three months from the date of decree and on deposit of the said consideration, after measuring the land in question, the plaintiffs would be entitled to have the sale deed/executed and registered in their favour. The amount was deposited pursuant to the decree. The defendants issued a notice dated 26-4-1985 for the deposit of the consideration pursuant to the decree. The plaintiffs gave a reply taking the plea that the amount was already paid to the defendants. On those facts, the defendants filed I.A No. 926 of 1985 under Section 28 of the Specific Relief Act in the said suit to rescind the contract for sale of the suit property and for restoration of possession to the defendants. The plaintiffs resisted the petition on the ground that it was not maintainable in law and on facts.
3. The material facts were not disputed by the plaintiffs. However, the plaintiffs gave particulars of the payment of sale consideration made by them to the defendants. No oral evidence was led by the parties. However, the defendants marked Exs. A-1 to A-3. Ex. A-1 is the notice dated 26-4-1985 issued by the defendants to the plaintiffs. Ex. A-2 is the reply notice dated 13-5-1985 sent by the plaintiffs to Ex. A-1. Ex. A-3 is the certified copy of the decree dated 12-9-1977 in O.S No. 67 of 1974 on the file of the Subordinate Judge, Machilipatnam.
4. On a consideration of the evidence on record, the trial court came to the conclusion that the plea of payment of the balance amount of consideration by the plaintiffs to the defendant pursuant to the decree was not correct and that the plaintiffs committed default in complying with the terms of the decree and that they were never ready to perform their part of the contract in terms of the decree and accordingly rescinded the contract for sale of the suit land and further directed the plaintiffs to deliver to the defendants along with mesne profits at the rate of Rs. 500/- for each fasli year from July 20, 1977 and thus allowed the petition on 26th April, 1991. The validity of this order is assailed by the plaintiffs in this Civil Revision Petition, as stated above.
5. Sri. M.R.K Chowdary, the learned counsel for the petitioners, submits that the petition was not maintainable in law as it was barred by limitation and therefore, the order under revision suffers from error of jurisdiction. He, therefore, prays that the order under revision be set aside. Sri. Ramanarayana, the learned Counsel for the defendants-respondents, contends that the application was not barred by limitation firstly because Article 137 of the Limitation Act is not applicable and secondly because the cause of action accrued to the defendants when they came to know of the intention of the plaintiffs not to comply with the decree of the Court in the suit as they have taken incorrect plea of having deposited the amount in the reply notice (Ex. A-2) dated 13-5-1985 and from that date, the application I.A No. 926 of 1985 was filed within two months and therefore, the petition was within limitation.
6. In view of the above rival contentions of the counsel for the parties, two questions arise for consideration:
(i) Whether for an application under Section 28(1) of the Specific Relief Act praying for rescission of contract for sale which was the subject-matter of a suit, is Article 137 of the Limitation Act applicable?
(ii) If so, when does the right to file the application for rescission of the contract accrue to the defendants?
7. First, I shall take up the first question. Section 28(1) of the Specific Relief Act, which is relevant for our purpose, reads as follows:—
“Where in any suit a decree for specific performance of a contract for the sale or lease of immovable property has been made and the purchaser or lessee does not, within the period allowed by the decree or such further period as the Court may allow, pay the purchase money or other sum which the Court has ordered him to pay, the vendor or lessor may apply in the same suit in which the decree is made, do have the contract rescinded and on such application the court may, by order, rescind the contract either so far as regards the party in default or altogether, as the justice of the case may require.”
8. From the perusal of the above provision, it is clear that it confers a right on the vendor or lessor to have the contract rescinded by filing an application in the same suit if the purchaser or lessee does not pay the purchase money or other sum which the Court has ordered him to pay within the period specified by the Court or within such further period as the Court may allow. On such an application, the Court is empowered to rescind the contract either so far as regards the party in default or altogether as the justice of the case may require. In said Section provides that in respect of any relief which maybe claimed under Section 28 no separate suit shall lie at the instance of the vendor, purchaser, lessor or lessee, as the case may be.
9. No period of limitation is provided for filing the application to have the contract rescinded. Therefore, Article 137 of the Limitation Act would be attracted, which reads as follows:
“Description of suits Period of limitation. Time from which period begins to run. 137. Any other application for which no period of limitation is provided elsewhere in this Division. Three years When the right to apply accrues.
10. It follows that the application for rescission of the Contract has to be filed within three years from the date when the right to apply for rescission accrues. I am fortified in my view by the Judgment of the Supreme Court in The Kerala State Electricity Board, Trivendrum v. T.P Kunhaliumma . 1976 4 SCC 634. In that case, the Supreme Court observed.
“The words “any other application” under Article 137 cannot be said on the principle of ejusdem generis to be applications under the Civil Procedure Code other than those mentioned in Part I of the third division. Any other application under Article 137 would be petition or any application under any Act. But it has to be an application to a court for the reason that Sections 4 and 5 of the 1963 Limitation Act speak of expiry of prescribed period where Court is closed and extension of prescribed period if applicant or the appellant satisfied the court that he had sufficient cause for not preferring the appeal or making the application during such period. Article 137 will apply to any petition or application filed under any Act to a Civil Court. It is not confined to applications contemplated by or under the Code of Civil Procedure.”
11. In Cherukuri Venkatarao v. Brahmajosyula Balagangadhara Sarma . 1987 APLJ 114., the question was where a decree in a suit for specific performance of contract did not provide time for depositing balance consideration, whether the payment of balance of consideration after six years of filing of an execution petition was barred by limitation. Dealing with this question, a Division Bench of this Court held as follows:
“The relief of specific performance is an equitable remedy. Indeed, the Specific Relief Act itself is based upon equity, fair play and good conscience. The purchaser cannot, and should not be allowed to take unfair advantage of the situation. He must act with reasonable diligence. The application for execution of the sale deed and/or for delivery of possession, whether by way of an E.P or an application under Section 28(3) must therefore be made within a reasonable time. What is ‘Reasonable time’ is question of fact to be decided in the facts and circumstances of a given case. No hard and fast rule can be enunciated in that behalf. However, it may be borne in mind that the period of limitation prescribed by the Limitation Act for enforcing an agreement of sale is three years from the date fixed for the purpose or, if no such date is fixed, when the plaintiff has notice that performance is refused. The Said period must be treated as the outer limit, generally speaking. Indeed it should be much sooner.”
12. The first question is answered accordingly. The second question is when will the cause of action accrue to the defendant to file the application under Section 28(1) of the Act. It has been noticed above that the cause of action to file? the application under Section 28(1) to have the contract rescinded, accrues on the failure of the purchaser, or the lessee to pay the purchase money and other sum which the Court has ordered him to pay within the period allowed by the decree or such further period as the Court may allow. In the instant case, the decree was passed on 20th April, 1977. for payment of the balance consideration. The plaintiff had time to deposit the amount within three months from that date, i.e, till 20th October, 1977. The application to have the contract rescinded was not filed within three years from that date. It was filed on 8th July 1985, i.e, after about seven year and six months. It cannot be pretended that as the plaintiffs did not correctly measure the land the application could not be filed earlier as till date the approach of the defendants has been the same. It was open to the plaintiffs to file an application before the Court for having the land measured within the said period of three months granted and deposit the amount. The reasons given for not depositing the amount is not material because once the period of limitation starts, it does not stop unless the period is saved by the provisions of the Limitation Act itself. Therefore, the application filed by the defendants to have the contract for sale rescinded, was clearly barred by limitation. As such, the trial court did not have jurisdiction to pass the order under revision after prescribed period of limitation, to view of this, the order under revision is set aside.
13. The Civil Revision Petition is accordingly allowed. Having regard to the circumstances of the case, I make no order as to costs.
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