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Van Vibhag Karmchari Griha Nirman Sahakari Sanstha Maryadit, Indore v. Rameshchandra
Factual and Procedural Background
The appellant (a Society) and respondent No.1 entered into an agreement dated 20-3-1974 for sale of 2.039 hectares of land in village Chitawad at Rs. 2,00,000 per hectare. The Society paid Rs. 3,20,000 in instalments between 22-3-1982 and 28-8-1984. On 3-2-1991 a newspaper publication indicated the land was being sold to a third party. The Society filed a suit on 11-2-1991 for declaration of title and injunction before the Civil Judge, Class II, Indore.
The case proceeded until it was realized that a suit for declaration of title and injunction alone did not address the breach of contract requiring specific performance. An application under Order 6 Rule 17 CPC to amend the plaint to seek specific performance was filed on 16-12-2002 and allowed by order dated 10-3-2003; the learned Civil Judge directed return of the plaint for presentation to the court having jurisdiction. The respondents resisted the amendment and filed a review application which was dismissed on 23-6-2003.
The plaint was presented to the proper Court on 25-6-2003 along with an application under section 14 of the Limitation Act seeking exclusion of the period from 11-2-1991 to 23-6-2003. The trial court treated the limitation issue as a preliminary issue, dismissed the section 14 application and held the suit barred by limitation. The appellant challenged that order by the present appeal.
Legal Issues Presented
- Whether the period from 11-2-1991 to 23-6-2003 could be excluded under section 14 of the Limitation Act for the purpose of presenting the plaint after amendment.
- Whether an amendment under Order 6 Rule 17 CPC to add a claim for specific performance after the passage of many years (and after filing a suit originally only for injunction/declaration) could be permitted, or whether the relief of specific performance was barred by limitation.
- Whether the trial court erred in treating the suit as barred by limitation and dismissing the section 14 application as a preliminary issue.
- What relief, if any, should be granted to the appellant in view of prior payments and authorities permitting refund in lieu of specific performance when amendment is time-barred.
Arguments of the Parties
Appellant's Arguments
- Once the Civil Judge allowed the amendment on 10-3-2003, the respondents should have challenged that order; having not done so, they could not object to exclusion of the period from 11-2-1991 to the date of return of the plaint for presentation to the proper Court.
Respondents' Arguments
- The respondents contended that the appropriate remedy against the order dated 10-3-2003 was to seek review; since a review application was filed and rejected, they were not precluded from raising an objection before the Additional District Judge.
- The respondents relied on Supreme Court decisions (including K. Raheja Constructions Ltd. v. Alliance Ministries and Tarlok Singh v. Vijay Kumar Sabharwal) to argue that amendment to seek specific performance after a long lapse could not be permitted as it would defeat the right of limitation and that limitation would not be postponed by allowing amendment.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| K. Raheja Constructions Ltd. v. Alliance Ministries, 1995 Supp (3) SCC 17 : AIR 1995 SC 1768 | That where a suit is filed for injunction (restraining alienation etc.), a subsequent amendment of the plaint to seek specific performance could not be allowed after a lapse of seven years because it would defeat the valuable right of limitation accrued to the respondent; plaintiffs should have sought specific performance in the original suit. | The court relied on this authority to support the conclusion that permitting amendment to seek specific performance long after the cause of action would be improper and would be barred by limitation. |
| Tarlok Singh v. Vijay Kumar Sabharwal, JT 1996 (4) SC 245 | That even if amendment is permitted, limitation will commence from the date of the suit and not from the date the amendment was permitted; if the suit was filed after the limitation period, it is barred. | The court cited this case to emphasise that allowing amendment does not reset the limitation period and that the claim for specific performance remained time-barred. |
| T.L. Muddukrishana v. Smt. Lalitha Ramchandra Rao, (1997) 2 SCC 611 : AIR 1997 SC 772 | That an amendment under Order 6, Rule 17 to seek specific performance after expiry of the period is barred by limitation, but on the defendant's concession to refund the amount with interest the Court directed refund to the plaintiff as an alternative remedy. | The court applied this authority as a precedent for directing a monetary refund (by way of deposit) in place of specific performance; relying on counsel's concession, the court directed respondents to deposit Rs. 30,00,000 as refund and interest. |
Court's Reasoning and Analysis
The court first recited the factual matrix: agreement of 1974, payments made by the Society between 1982 and 1984 amounting to Rs. 3,20,000, the 1991 publication of proposed sale to a third party, and institution of suit on 11-2-1991 for declaration and injunction. It noted that the amendment to claim specific performance was sought only on 16-12-2002 and allowed on 10-3-2003, after which the plaint was returned for presentation to the proper Court.
Applying settled principles from the cited Supreme Court authorities, the court observed that a claim for specific performance must be prosecuted within the period prescribed by limitation (three years from the date of cause of action under Article 54 as noted in the cited decisions). The court reasoned that permitting an amendment long after the cause of action to introduce a relief which is itself time-barred would defeat the right of limitation of the opposite party.
The court concluded that the amendment to seek specific performance was not within limitation. In view of authority such as K. Raheja and Tarlok Singh, the trial court did not commit illegality in dismissing the appellant's application under section 14 of the Limitation Act and treating the suit as barred by limitation.
The court then considered equitable relief available in similar situations. Referring to T.L. Muddukrishana, which permitted refund where specific performance was time-barred subject to the defendant refunding amounts with interest, the court recorded that senior counsel for respondents proposed to refund the monies with compound interest and, by agreement, offered to pay Rs. 30,00,000 as refund and interest in lieu of calculating precise interest amounts.
On that basis the court directed respondents No. 2, 3 and 4 to deposit Rs. 30,00,000 in the court within three months, made provision for the Society to withdraw the amount after deposit, and imposed an interest consequence (18% per annum) if the deposit was not made within the stipulated period.
Holding and Implications
Holding: The trial court's decision treating the suit as barred by limitation and dismissing the appellant's application under section 14 of the Limitation Act was upheld.
Disposition and Immediate Consequences: The appeal is disposed of with the direction that respondents No. 2, 3 and 4 deposit Rs. 30,00,000 (Rupees Thirty Lacs only) in the Court of the 19th Additional District Judge, Indore, within three months. The Society is entitled to withdraw the deposited amount after deposit. If the amount is not deposited within three months it shall carry interest at the rate of eighteen percent per annum. There shall be no order as to costs.
Implications: The court applied existing Supreme Court authorities to hold that the relief of specific performance could not be introduced by belated amendment where it was time-barred; instead, on the parties' concession, the court directed a monetary refund. The opinion does not purport to lay down a new precedent beyond applying the cited authorities.
S.K Kulshrestha, J.:— This appeal is directed against the order dated 23rd August, 2004, passed by the XIX Additional District Judge, Indore, in Civil Suit No. 6-A/2003, by which the application of the appellant under section 14 of the Limitation Act, has been dismissed.
2. The case has a chequered history. On 20-3-1974, an agreement was entered into by the appellant and the respondent No. 1 for sale of land, admeasuring 2.039 hectares (5 acres) in village Chitawad, for consideration at the rate of Rs. 2,00,000/-, per hectare. In pursuance of the said agreement, payment was made by the appellant — Society in instalments commencing from 22-3-1982 to 28-8-1984 and, thus, a total amount of Rs. 3,20,000/- was paid. However, on 3-2-1991, a publication in the Newspaper appeared to the effect that the said land was being sold to a third party. It was in this context that a suit was filed on 11-2-1991 for declaration of title and injunction before the Civil Judge, Class II, Indore. The case was pursued upto 16-12-2002, but on realisation that suit for declaration of title and injunction simpliciter was not maintainable in respect of the breach of the contract requiring specific performance, an application under Order 6 Rule 17 of the Code of Civil Procedure, was filed on 16-12-2002. This application was allowed by the learned Civil Judge, by order dated 10-3-2003 and since the learned Civil Judge ceased to have jurisdiction on account of the amendment of the plaint, he directed return of the plaint for being presented to the Court having jurisdiction.
3. The respondents resisted the proposed amendment and after the amendment was accepted, a review application was filed against the same, but it was dismissed by order dated 23-6-2003. Accordingly, the plaint was returned and it was presented to the Court having jurisdiction on 25-6-2003 along with an application under section 14 of the Limitation Act, seeking exclusion of the period from 11-2-1991 to 23-6-2003. Since the said claim was based on account of the proceedings of the Court of Civil Judge, Class H, and no evidence was required to be adduced, the Court tried the said issue as a preliminary issue and dismissed the suit on the ground of limitation. It is against this order that the present appeal has been filed.
4. Learned counsel for the appellant submits that once the order was passed on 10-3-2003 allowing the amendment, it was incumbent upon the respondents (defendants) to challenge, that order and the defendants having not done so, it was not permissible to them to object to the time being excluded from 11-2-1991 to the date of the return of the plaint for presentation to the proper Court. Learned counsel for the respondents, however, submits that the only remedy that was available against the order dated 10-3-2003 was to seek review and since application for review was also rejected by the learned Civil Judge, no further remedy was available and they were not precluded from raising this objection before the learned Addl. District Judge.
5. Learned counsel for the respondent has invited attention to the decision of the Supreme Court in K. Raheja Constructions Ltd. v. Alliance Ministries, 1995 Supp (3) SCC 17 : AIR 1995 SC 1768 to the effect that where a suit is filed for relief of permanent injunction restraining the respondents from alienating, encumbering, selling, disposing of, or in any way dealing with the property, subsequent amendment of plaint for seeking relief of specific performance of contract could not be allowed as the plaintiffs had divesting themselves of the relief for specific performance which could not have been added after a lapse of seven years, being barred by limitation. Attention has been drawn to the following passage from the said report:—
“The petitioners having expressly admitted that the respondents have refused to abide by the terms of the contract, they should have asked for the relief for specific performance in the original suit, itself. Having allowed the period of seven years elapsed from the date of filing of the suit, and the period of limitation being three years under Article 54 of the Schedule to the Limitation Act, 1963, any amendment on the ground set out, would defeat the valuable right of limitation accrued to the respondent.”
6. It is trite that against the breach of the contract it was necessary for the person aggrieved to seek specific performance and since the present appellant had instituted a suit only for declaration of title and perpetual injunction, the appellant ought not to have been allowed to make an amendment under Order 6 Rule 17, to incorporate the relief of specific performance. In a similar case, in Tarlok Singh v. Vijay Kumar Sabharwal., JT 1996 (4) SC 245, it was held that even in the case of such amendment, the limitation will commence from the date of the suit and not from the date the amendment was permitted. Since the suit was filed after three years, it was clearly barred by limitation. We may refer to the following passage containing the law laid down by the Apex Court:—
“We think that parties had, by agreement, determined the date for performance of the contract. Thereby limitation began to run from April 6, 1986. Suit merely for injunction laid on December 23, 1987 would not be of any avail nor the limitation began to run from that date. Suit for perpetual injunction is different from suit for specific performance. The suit for specific performance in fact was claimed by way of amendment application filed under Order 6, Rule 17, Civil Procedure Code on September 12, 1979. It will operate only on the application being ordered. Since the amendment was ordered on August 25, 1989 the crucial date would be the date on which the amendment was ordered by which date, admittedly, the suit is barred by limitation.”
7. From the above narration of facts, based on record, it is manifest that the suit was filed by the present appellant on 11-2-1991 and it was only after several years that the amendment was sought by application dated 16-12-2002, to incorporate the relief of specific performance, which was allowed on 10-3-2003. Since relief of specific performance can be claimed only within a period of three years from the date of the cause of action, in any case, the amendment to seek the relief of specific performance was not within limitation. Under these circumstances, we are of the considered view that the trial Court did not commit any illegality in not allowing the application of the appellant, under section 14 of the Limitation Act, and treating the suit as barred by limitation.
8. However, we may now advert to the other facets of the case. In T.L Muddukrishana v. Smt. Lalitha Ramchandra Rao, (1997) 2 SCC 611 : AIR 1997 SC 772, it was held that an amendment under Or. 6, R. 17 of the Civil Procedure Code, after the expiry of the period, to seek specific performance of the contract, would be barred by limitation, but on concession of the counsel to refund the amount together with interest, the Court directed that the entire amount, with interest, as stipulated in the contract, be paid to the plaintiff within six months from the date of the order. Mr. M.L Agrawal, learned sr. counsel, in view of the fact that the appellant has paid Rs. 3,20,000/-, has proposed to refund the said amount together with compound interest. Instead of getting into the question of calculation, he has agreed to pay a sum of Rs. 30,00,000/- (Rs. Thirty Lacs only) to the appellant towards refund of the amount paid by the appellant as also the interest thereon.
9. We, therefore, direct respondents No. 2, 3 and 4, namely: Rameshchandra S/o Manakchandji Mangal; Rajesh Kumar S/o Rameshchandra Mangal and Kusumlata Garg W/o Dineshchandra Garg, to deposit the amount of Rs. 30,00,000/- (Rs. Thirty Lacs only) in the Court of the 19th Additional District Judge, Indore, within (three) months from today, under intimation to the appellant - Society. The Society, through its authorised Office bearer or representative shall be entitled to withdraw this amount, after its deposit. If the amount aforesaid is not deposited within 3 months, the amount shall carry interest at the rate of eighteen per cent per annum. The appeal is thus disposed of with aforesaid direction to the respondents to deposit the amount to be paid to the appellant. There shall be no order as to the costs.
Order accordingly.
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