Holding

The suit for specific performance was barred by limitation because notice of refusal was deemed to have arisen within 20 days of the agreement, and the court should not exercise Section 20 of the Specific Relief Act, awarding monetary compensation instead.

Summary

Janardhanam Prasad (appellant) entered into a sale agreement with M. Manoharan (defendant No.1) for a piece of land. The same land was later agreed to be sold by the same defendant to Ramdas (respondent No.1) without a fixed time for performance. The respondent paid part consideration but, within 20 days of the agreement, learned that the defendant was unwilling to execute the deed. A registered sale deed in favour of the appellant was executed on 4 September 1985. The respondent filed a suit for specific performance only on 22 September 1987, more than three years after the date of notice of refusal. The Supreme Court held that the notice of refusal was deemed to have been given within 20 days of the agreement, that registration and the appellant’s possession gave constructive notice to the respondent, and therefore the suit was barred by limitation. Consequently, the court declined to exercise its discretionary jurisdiction under Section 20 of the Specific Relief Act and substituted the decree with an order for the defendant to refund the advance with interest.

Issues considered

Whether the suit for specific performance is barred by limitation under Article 54 of the Limitation Act, 1963.
Whether notice of refusal of performance arose within 20 days of the agreement, given the registration of the deed and the appellant's possession.
Whether the court should exercise its discretionary jurisdiction under Section 20 of the Specific Relief Act, 1963, or award monetary compensation.
Whether the agreement of sale is valid despite the absence of a time clause for performance.

Legislation cited

Subjects

specific performancelimitation periodnotice of refusaltransfer of property actdiscretionary jurisdictionmonetary compensationsale of landcontract law

Judgment

-;. - JANARDHANAM PRASAD A
v.
RAMDAS

FEBRUARY 2, 2007

[S.B.SINHA AND MARKANDEY KA TJU, JJ.] B

Specific Relief Act, 1963: s.20-Defendant agreed to sell land to
'f-
respondent-No time fixed for performance of contract-Respondent within
.' 20 days of contract came to know that defendant not ready to perform his
part of contract-Sale deed registered in favour of appellant-Suit for specific c
performance filed 3 years after the knowledge that defendant not ready to
perform his part-Appellant in possession of suit land and also dug a well
and made improvement on it-In this view, not fit case to exercise discretionary
jurisdiction under s.20-Defendant directed to refund the advance amount-
Transfer of Property Act, 1882-s.3.
D
Defendant no.1 entered into an agreement to sell the suit property to
the appellant On 11.4.1983, defendant No.1 entered into another agreement
to sell the same property to the respondent. In the former agreement the
1
transaction by way of execution of the deed of sale was to be completed within
three months, whereas in the latter case, no time limit was fixed.
E
Respondent made part payment of the agreed amount. As he was
working in Saudi Arabia, his affairs were managed by his wife and father-in-
law (PW-1). When he came back from Saudi Arabia in August 1983, May
1984, as also in 1985, 1986, he asked for execution of the sale deed on receipt
of the balance amount
F
On 4.9.1985, the defendant no.I executed a registered sale deed in
favour of appellant. Respondent served a notice upon defendant no. I to
perform his part of contract on 15.9.1986. Thereafter, respondent filed a suit
for specific performance of contract.

In the evidence PW-1 stated that within the period of 20 days from the G
day of agreement of sale dated 11.4.1983, he was aware that defendant was
1 not ready to perform his part of contract The suit was dismissed.

On appeal, First appellate Court decreed the suit. High Court upheld
the same. Hence the present appeal.
151 H
152 SUPREME COURT REPORTS [2007] 2 S.C.R.

A Partly allowing the appeal, the Court

HELD: l. The Court, in applying the period of limitation, would first
inquire as to whether any time was fixed for performance of agreement of
sale. [fit is so fixed suit must be filed within the period of three years, failing
which th1: same would be barred by limitation. Here, however, no time for
B performance was fixed. It was for the Courts to find out the date on which the
plaintiff had notice that the performance was refused and on arriving at a
finding in that behalf, to see whether the suit was filed within three years
thereafter. (Para II] (156-E-FJ

Pukhraj D. Jain & Ors. v. G. Gopa!akrishna, [2004] 7 SCC 251, relied
C on.
RK.Parvatharaj Gupta v. K.C.Jayadeva Reddy, [2006] 2 SCC 428 and
Gunwantbhai Mulchand Shah & Ors. v. Anton Elis Fare/ & Ors., (2006] 3
sec 634, referred to.
D 2.1. Registration of a document as well as possession would constitute
notice, as is evident from Section 3 of the Transfer of Property Act, 1882.
Admittedly, father-in-law and wife of the Respondent No.I had been looking
after his affairs. They were, therefore, acting as his agents. They would be ·
deemed to have notice of the registration of the docummt as also the
E possession by the appellant. If they had the requisite notice, Respondent No.
I, having regard thereto, should have filed a suit for specific performance of
contract within the prescribed period. In fact they should have done so
expeditiously having regard to the discretionary nature of relief he may obtain
in the suit. They did not do so. They waited for more than two years from the
date of execution of deed of sale. Even if the suit was not barred by limitation
F on that account, it was a fit case, where the Court should have refused to
exercise its discretionary jurisdiction under s.20 of the Specific Relief Act,
1963. [Paras 13, 14( [157-A; 158-C-Df

2.2. Father-in-law of Respondent No. 1 categorically stated that he, at
G all material times, was aware that thl' defendant no. I had refused to perform
his part of contract. The suit should have, in the aforementioned situation,
been filed within three years from the said date. The performance of a contract
may be dependent upon several factors. The conduct of the parties in this
behalf is also relevant. The parties by their conduct or otherwise may also
extend the time for performance of contract from time to time. In that view
H of the matter, the suit ought to have been filed by 1st May, 1986. The suit was
JANARDHANAM PRASAD v. RAMDAS [S.B.SINHA, J.] 153
filed on 22.9.1987 and therefore, it was barred by limitation. IParas 15, 161 A
1158-F-GI

Panchanan Dhara & Ors. v. Monmatha Nath Maity (Dead) through
LRs. & Anr., (2006) 5 SCC 340, relied on.

3. Furthermore, the appellant is in possession of the said land. He had B
dug a well. He had made improvement on the suit land. Digging of well as
also making improvements was within the notice of the respondent. The
witnesses examined on his behalf had categorically admitted the same. In that
-..,_ view of the matter too, it was a fit case where the discretionary jurisdiction of
the Court under s.20 of the Specific Relief Act should not have been exercised
and, instead, monetary compensation could be granted. (Para 17) C
[158-H; 159-A-B)

MMeenakshi & Ors. v. Metadin Agarwal (Dead) by LRs. & Ors., 120071
7 SCC 470 and Jai Narain Parasrampuria (Dead) & Ors. v. Pushpa Devi
Saraf & Ors., 12006) 7 SCC 756, relied on.
D
4. The judgment passed in favour of respondent no.1 may be substituted
by a decree directing defendant No.1 to refund the sum ofRs.7,700/- with
12% interest thereon from the date of payment till the date of realization.
-1 (Para 19) [159-C-DI

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6141 of2000. E

From the final Judgment and Order dated 23.8.1999 of the High Court
of Judicature at Madras in S.A. No. 245 of 1991.

V. Prabhakar, R. Prasad, Revathy Raghavan, Subramani and Asok K.
Sadhu Khan for the Appellant. F
V. Krishnamurthy, P.R. Kovilan, Prasanth and Vasudevan for the
Respondent.

The Judgment of the Court was delivered by
G
S.B. SINHA, J. I. Appellant herein and one M. Manoharan (1st
Defendant) entered into an agreement for sale in respect of a property in suit.
1 I st Defendant and respondent No. I herein entered into another agreement
for sale on 11.4.1983. In the former agreement the transaction by way of
execution of the deed of sale was to be completed within a period of three
months, whereas in the later case, no time limit was fixed. The 1st Defendant H
154 SUPREME COURT REPORTS [2007) 2 S.C.R.

.. A executed a registered deed of sale in favour of the appellant herein on
4.9.1985.

2. The Ist Defendant contended that he had asked the 2nd Defendant
to execute a deed of sale in his favour and he had gone to the registration
office, but 2nd Defendant did not tum up. As Respondent was working in
B Saudi Arabia, his affairs were being looked after by his father-in-law, Shri
C.M. Raman Chettiar, and his wife, Smt. Vijaya. According to the Ist Defendant,
he had paid Rs.7,700/- by way of part payment of the entire amount of
consideration which was fixed at Rs.17,000/-. When he came back from Saudi
Arabia in August, 1983, May, 1984, 1985 and 1986, he asked the Respondent
C No.2 to execute the deed of sale on receipt of the balance amount, but he
had been avoiding to do the same.

3. The suit for specific performance of contract was thereafter filed. The
said suit was dismissed. However, the First Appellate Court, on an appeal
preferred thereagainst by the Respondent No. I, allowed the appeal and decreed
D the suit. By reason of the impugned judgment, the High Court has dismissed
tlie second appeal.

4. Respondent had served a notice upon said M. Manoharan to perform
his part of contract on 15.9.1986. The Respondent did not examine himself
in the suit. His father-in-law and his wife had been examined on his behalf.
E In his deposition before the Court it is accepted that defendant Nos. I and 2
were friends and, therefore, the stipulations, which are ordinarily made in an
agreement for sale, were not made.

P.W.1, the father-in-law of respondent, in his evidence, stated :

F "... He has assured to come but not come. He has avoided. We have
waited in the Registrar's office. 20 days after Ex.A2. He has not come
as assured. We came to know that he was cheating. He was not
willing to execute the sale deed. I have not given notice immediately ...."

5. Thus, within a period of 20 days from the date of the agreement for
G sale dated 11.4.1983, the father-in-law of the Respondent No. I, was aware that
the defendant No.2 was not 1eady and willing to perform his part of contract
and in fact, "cheating" him. We, therefore, fail to understand as to why a
notice was served for the first time on 15.9.1986 and not soon thereafter.

6. The High Court in the second appeal formulated the following
H
~:
JANARDHANAM PRASAD v. RAMDAS [S.B.SINHA, J.] 155
A
purported substantial questions of law :

"(a) Whether the judgment and decree of the lower appellate Court
are not erroneous in not considering the well known principle of
consensus as idem as lacking in Ex.A- I, the agreement of sale?
(b) Whether the judgment and decree of the lower appellate Court B
are not erroneous in not rejecting the agreement of sale which is
not signed by the plaintiff or his agent in not holding that the
suit is barred by limitation?
~-
(c) Whether the judgment and decree of the lower appellate Court
are not palpably wrong in upholding an incomplete agreement of c
sale, Ex.A-I, produced by the plaintiff in preference to the
agreement of sale, Ex.B-1, a complete sale agreement prior to the
agreement of sale Ex.A-I?
(d) Whether the findings of the lower appellate Court are not correct
in drawing adverse inference against the !st defendant on the D
ground of non-reply to the plaintiffs belated notice?
(e) Whether the judgment and decree of the lower appellate Court
are not palpably wrong in not considering and applying the
-j.
provisions of Contract Act and Specific Relief Act?
(f) Whether the lower appellate Court has not erred in not considering E
the lack of consensus ad idem in the agreement of sale?
(g) Whether the lower appellate Court has not erred in not considering
the suit is barred by limitation?"

7. The High Court further proceeded on the premise that as the original F
.::., deed was produced by the respondent and not by the appellant, the Court
of First Appeal did not commit any illegality in giving preference to the claim
of the defendants. In regard to the period of limitation, the High Court opined
that in terms of Article 54 of the Limitation Act, 1963 the suit was not barred
by limitation, holding :
G
" ... There must be a demand in writing by the person who is entitled
to a right under the document and refusal by the other who is bound
under a document, to execute the same, and only on refusal, the cause
of action, as such, would arise. The contract. being one for agreement
of sale relating to immovable property, as held by the Courts uniformly, H
time cannot be the essence of the contract. Further, in the agreement
156 SUPREME COURT REPORTS (2007) 2 S.C.R.

A in favour of the plaintiff, there is no period mentioned. It is to be
pointed out that it is only in the agreement executed by the second
defendant in favour of the first defendant, there is some period,
namely, three months, has been mentioned"

8. Mr. V. Prabhakar, the learned counsel appearing on behalf of the
B appellant submitted that the applicability of the provisions of Article 54 of the
Limitation Act must be considered having regard to the back drop of events
as noticed hereinbefore.

9. From the records it appears that the appellant herein has been in
possession of the suit land. He has dug a well. He has altered the foundations.
c
10. Applicability of the provisions of Article 54 of the Limitation Act
must, therefore, be determined having regard to the aforementioned factual
matrix in mind. It reads as under :

"For specific Three The date fixed for the
D performance of years performance, or, if no such
a contract date is fixed, when the
plaintiff has notice that
performance is refused."

E 11. The Court, in applying the period of limitation, would first inquire
as to whether any time was fixed for performance of agreement of sale. If it
is so fixed, the suit must be filed within the period of three years, failing which
the same would be barred by limitation. Here, however, no time for performance
was fixed. It was for the Courts to find out the date on which the plaintiff
had notice that the performance was refused and on arriving at a finding in
F that behalf, to see whether the suit was filed within three years thereafter.

12. The question was considered in RK. Parvatharaj Gupta v. K.C.
Jayadeva Reddy, [2006] 2 St::C 428, which in terms was noticed and applied
in Gunwantbhai Mulchand Shah & Ors. v. Anton Elis Fare/ & Ors., [2006]
3 SCC 634. {See abo Pukhraj D. Jain & Ors. v. G. Gopalakrishna, [2004] 7
G SCC251].}
13. The !st Defendant was a friend of the 2nd Defendant. Admittedly,
the usual stipulations were knowingly not made in the agreement of sale
dated 11.4.1983. The 1st Defendant may or may not be aware about the
H agreement entered by and between the respondent herein. But he cannot
JANARDHANAM PRASAD v. RAMDAS [S.B.SINHA, J.] 157

raise a plea of absence of notice of the deed of sale dated 4. 9.1985, which was A
a registered document. Possession of the suit land by the appellant also
stands admitted. Registration of a document as well as possession would
constitute notice, as is evident from Section 3 of the Transfer of Property Act,
1882, which is in the following terms :

" ...."a person is said to have notice" of a fact when he actually knows B
that fact, or when, but for wilful abstention from an enquiry or search
which he ought to have made, or gross negligence, he would have
known it.

Explanaion /.-Where any transaction relating to immovable
property is required by law to be and has been effected by a registered C
instrument, any person acquiring such property or any part of, or
share or interest in, such property shall be deemed to have notice of
such instrument as from the date of registration or, where the property
is not all situated in one sub-district, or where the registered instrument
has been registered under sub-section (2) of section 30 of the Indian D
Registration Act, 1908 (I 6 of 1908), from the earliest date on which
any memorandum of such registered instrument has been filed by any
Sub-Registrar within whose sub-district any part of the property which
is being acquired, or of the property wherein a share or interest is
being acquired, is situated:
E
Provided that-

( l) the instrument has been registered and its registration
compl~ted in the manner prescribed by the Indian Registration Act,
1908 ( 16 of 1908), and the rules made thereunder,
..... (2) the instrument or memorandum has been duly entered or filed, F
as the case may be, in books kept under Section 51 of that Act, and

(3) the particulars regarding the transaction to which the instrument
relates have been correctly entered in the indexes kept under section
55 of that Act.
G
Explanation 11.-Any person acquiring any immovable property
-I or any share or interest in any such property shall be deemed to have
notice of the title, if any, of any person who is for the time being in
actual possession thereof.

Explanation 1//.-A person shall be deemed to have had notice H
158 SUPREME COURT REPORTS [2007) 2 S.C.R.

A of any fact if his agent acquires notice thereof whilst acting on his
behalf in the course of business to which that fact is material:

Provided that, if the agent fraudulently conceals the fact, the
principal shall not be charged with notice thereof as against any
person who was a party to or otherwise cognizant of the fraud."
B
14. Admittedly, father-in-law and wife of the Respondent No. I had been
looking after his affairs. They were, therefore, acting as his agents. They
would be deemed to have notice of the registration of the document as also
the possession of the appellant herein. If they had the requisite notice, in
our opinion, the Respondent No. I., having regard thereto, should have filed
C a suit for specific performance of contract within the prescribed period. In
fact they should have done so expeditiously having regard to the discretionary
nature of relief he may obtain in the suit. They did not do so. They waited
for more than two years from the date of execution of deed of sale. Even if
the suit was not ba•red by limitation on that account, it was a fit case, where
D the Court should have refused to exercise its discretionary jurisdiction under
Section 20 of the Specific Relief Act, 1963.

15. But before we advert to the said question, we may consider the
effect of refusal on the rart of the 2nd Defendant to execute the deed of sale ).
within 20 days from the date of entering into the said agreement for sale. We
E have noticed hereinbefore that father-in-law of the Respondent No. I
categorically stated that he, at all material times, he was aware that the 2nd
Defendant was refusing to execute the agreement of sale. They had, therefore,
the notice, that the defendant no. I had refused to perform his part of
contract. The suit should have, in the aforementioned situation, been filed
within three years from the said date. We are not oblivious of the fact that
F performance of a contract may be dependent upon several factors. The
conduct of the parties in this behalf is also relevant. The parties by their
conduct or otherwise may also extend the time for performance of contract
from time to time, as was noticed by this Court in Panchanan Dhara & Ors.
v. Monmatha Nath Maity (Dead) through LRs. & Anr., [2006] 5 SCC 340].
G
16. In that view of the matter, the suit ought to have been filed by 1st
May, 1986. The suit was filed on 22.9.1987 and therefore, it was barred by
limitation.

17. Furthermore, the appellant is in possession of the said land. He had
H dug a well. He had made improvement on the suit land. Digging of well as
JANARDHANAM PRASAD v. RAMDAS [S.B.SINHA, J.) 159
?" also making improvements was within the notice of the respondent. The A
. , witnesses examined on his behalf had categorically admitted the same. In that
view of the matter too, in our opinion, it was a fit case where the discretionary
jurisdiction of the Court under Section 20 of the Specific Relief Act should
not have been exercised and, instead, monetary compensation could be granted.
{See M. Meenakshi & Ors. v. Metadin Agarwal (Dead) by LRs. & Ors., [2006] B
1sec470].}

18. This question was yet again considered in Jai Narain Parasrampuria
."'t (Dead) & Ors. v. Pushpa Devi Saraf & Ors., [2006] 7 SCC 756, wherein it was
held that for balancing the equities in a given case, compensation can be
awarded in lieu of grant of decree of specific performance of contract. C
I9. We, therefore, are of the opinion that the judgment passed in favour
of the respondent no. I may be substituted by a decree directing defendant
No.I to refund the sum ofRs.7,700/- with 12% interest thereon from the date
of payment till the date of realization.
D
20. The appeal is allowed in part and with the aforementioned
modification. However, the parties shall pay and bear their own costs in this
appeal.

D.G. Appeal partly allowed.