Supreme Court Dismisses Appeal of Defendant in Specific Performance Suit Over Agreement of Reconveyance. Court Holds Time Was Not Essence of Contract and Suit Was Filed Within Limitation Under Article 54 of Limitation Act, 1963, as Defendant Refused to Execute Sale Deed Despite Notice.

Case Note & Summary

The dispute concerned an agreement of reconveyance relating to sale of property. The respondent had executed two sale deeds in favour of the appellant, one dated April 24, 1900 (as per judgment) and the second dated July 20, 1968. On the same day as the later sale deed, the appellant executed an agreement of reconveyance stipulating that if the respondent repaid Rs. 5,000 within eight years from that date in one lump sum, she would be entitled to have the sale deed executed and registered in her favour. Before the expiry of the eight-year period, around June 1976, the respondent approached the appellant seeking reconveyance, but the appellant avoided her. She then instructed her lawyer to issue a notice requiring the appellant to appear before the Sub-Registrar to receive the amount and execute the sale deed. The Sub-Registrar also issued a notice on July 19, 1976, but despite receiving it, the appellant did not appear on July 20, 1976, to receive the amount and facilitate registration. Consequently, the respondent filed a suit for specific performance. The trial court accepted the respondent's plea that she had offered payment within the limitation period but the appellant had avoided receipt. The first appellate court reversed the decree, holding that time was the essence of the contract and that since the respondent had not obtained reconveyance within the eight-year period, the suit was barred by limitation. The High Court of Karnataka, in Second Appeal No. 6 of 1988, by judgment dated January 23, 1995, reversed the appellate court and restored the trial court's decree. The appellant then approached the Supreme Court by special leave. The appellant argued that the specific recital in the reconveyance deed required reconveyance execution within eight years, and since the respondent had not obtained it, the suit was barred by limitation. The Supreme Court rejected this contention. It observed that settled law provides that unless the deed of agreement of sale stipulates a date for performance, time is not always the essence of the contract. The Court noted that the appellant had even denied executing the reconveyance agreement. The High Court had properly examined whether there was an agreement of reconveyance and whether the respondent had performed her part by seeking reconveyance. The Court held that these were material questions relevant to the discretion to enforce specific performance, and the first appellate court had failed to advert to them, merely relying on limitation. The Court further held that under Article 54 of the Schedule to the Limitation Act, 1963, limitation for specific performance begins to run from the date fixed in the contract or from the date of refusal to execute the sale deed. Since time was not the essence of the contract, and the respondent had offered payment before the expiry of the reconveyance period but the appellant refused, the cause of action arose on the date of refusal, i.e., July 19, 1976, when the appellant failed to appear before the Sub-Registrar. The suit was filed on July 20, 1976, the next day, and thus was within limitation. The Supreme Court concluded that this was not a case of appreciation of evidence by the High Court in second appeal but one of drawing proper inference from proved facts, which the first appellate court had failed to do. Accordingly, the Supreme Court dismissed the appeal, holding that the suit was filed within limitation and no error of law warranted interference. No costs were awarded.

Headnote

Issue of Consideration

Final Decision

The Supreme Court dismissed the appeal, holding that time was not the essence of the contract and that the suit for specific performance was filed within limitation under Article 54 of the Schedule to the Limitation Act, 1963. The High Court's judgment and decree dated January 23, 1995 restoring the trial court's decree was upheld. No costs were awarded.

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