Supreme Court Ruling on Rejection of Plaint and Limitation in Specific Performance Suits

The case of Urvashiben & Anr. v. Krishnakant Manuprasad Trivedi presents an important judgment regarding the issue of limitation in suits for specific performance, particularly when there is no date fixed for performance of the agreement. The appellant challenged the High Court’s decision to reverse the trial court’s order, which had rejected the plaint on the grounds of limitation. The Supreme Court’s ruling clarified how limitation should be determined in such cases, particularly when the plaintiff alleges that the defendant has refused performance.

Background of the Case

The dispute revolves around an agreement to sell property between the respondent, Krishnakant Manuprasad Trivedi, and the appellants, Urvashiben and her daughter. The agreement was executed on 13th March 1992, with the respondent agreeing to sell the property for Rs. 32 lakhs. The appellants made payments over time between 15th January 1990 and 5th September 1991, which were acknowledged through vouchers.

However, the sale deed was not executed due to the respondent’s financial difficulties, and the appellants were assured that the deed would be executed at a later time. It was only when the appellants visited the property on 25th May 2017 that they learned the property had been sold to third parties. They then filed a suit for specific performance in 2017. The respondent argued that the suit was time-barred as the contract was executed more than 25 years ago, and no action had been taken by the appellants in between. The trial court agreed and rejected the plaint. However, the High Court reversed the decision, leading to the appeal before the Supreme Court.

Key Issues in the Case

• Whether the suit for specific performance was barred by limitation.
• Whether the rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure was justified.
• Whether the High Court was correct in allowing the appeal and reversing the trial court’s decision.

Arguments by the Appellant

The appellants, represented by Senior Advocate Mr. Dushyant Dave, contended:

• The appellant had made full payment for the property as per the agreement, but due to the respondent’s financial issues, the sale deed was never executed.
• The appellant filed the suit after discovering that the property was sold to third parties in May 2017, and therefore the suit was filed within three years from the refusal of performance by the respondent.
• Article 54 of the Limitation Act provides for a limitation period of three years for suits involving specific performance, starting from the date when the plaintiff knows the performance has been refused.
• The trial court erred in rejecting the plaint solely on the grounds of limitation without considering the merits of the case.

Arguments by the Respondent

The respondent, represented by Senior Advocate Mr. Anshin Desai, argued:

• The contract was executed in 1992, and no action was taken by the appellants for over 25 years. This delay should result in the rejection of the suit based on the doctrine of delay and laches.
• The agreement did not fix any time for performance, and the appellants did not raise any demand until 2017, showing their lack of genuine intent to enforce the agreement.
• The appellants’ suit was time-barred under Article 54 of the Limitation Act and should be rejected under Order VII Rule 11 of the CPC.

Supreme Court’s Observations

The Supreme Court made the following observations:

1. Nature of Limitation for Specific Performance

The Court clarified that for suits involving specific performance under Article 54 of the Limitation Act, the limitation period is three years from the date fixed for the performance of the agreement, or if no date is fixed, from the date when the plaintiff knows that the defendant has refused to perform the contract. The Court noted:

“Where no time for performance is fixed in the agreement, the limitation for filing the suit shall begin from the date when the plaintiff has notice that the performance is refused by the defendant.”

2. Applicability of Order VII Rule 11 of the CPC

The Court also discussed the applicability of Order VII Rule 11 of the CPC, which allows the rejection of a plaint if the suit is barred by limitation. The Court stated:

“The question of limitation must be considered based on the averments in the plaint. At this stage, the merits of the case should not be considered. The trial court should not reject the plaint merely on the assumption that the suit is time-barred without a full trial.”

3. The Role of Evidence in Determining Limitation

The Court emphasized that limitation is a mixed question of fact and law. The issue of whether the suit is within the limitation period must be determined after considering the evidence. The Court observed:

“When the plaintiff alleges that they came to know of the refusal only in 2017, this is a matter for trial. The trial court must examine the evidence to determine the correctness of this claim.”

The Court relied on earlier rulings, particularly in Gunwantbhai Mulchand Shah v. Anton Elis Farel, which laid down that the question of limitation can only be conclusively determined after examining the facts of the case at trial.

4. The High Court’s Decision

The Court also addressed the High Court’s decision to reverse the trial court’s ruling. The Supreme Court found that the High Court had correctly allowed the appeal, as the issue of limitation required a full trial to resolve. The Court held:

“The High Court was right in reversing the trial court’s order. The question of limitation in specific performance suits is a triable issue that must be decided after examining the evidence, not at the stage of Order VII Rule 11 of the CPC.”

Supreme Court’s Judgment

The Supreme Court ruled:

• The trial court’s rejection of the plaint was set aside.
• The High Court’s decision to allow the appeal was upheld, and the matter was remitted back to the trial court for adjudication on the merits.
• The issue of limitation is a triable issue that must be decided based on the facts of the case after a full trial.
• The trial court was directed to expedite the proceedings and dispose of the matter at the earliest.

Impact of the Judgment

This ruling has significant implications for how limitation is assessed in specific performance suits and the use of Order VII Rule 11 of the CPC:

• Clarity on Limitation for Specific Performance: The judgment clarifies that in cases where no time is fixed for the performance of a contract, the limitation period begins when the plaintiff learns of the defendant’s refusal to perform the contract.
• Reinforcing the Right to Trial: The Court emphasized that limitation issues should not lead to premature dismissal of suits. The case reinforces the right to a fair trial and the need to consider the full factual context.
• Guidance on Rejection of Plaint: This ruling establishes that the rejection of a plaint on the grounds of limitation should not be automatic, and it must be considered with the facts of the case at hand.

Conclusion

The Supreme Court’s judgment in Urvashiben & Anr. v. Krishnakant Manuprasad Trivedi highlights the importance of a thorough examination of facts before dismissing a suit on the grounds of limitation. The Court reaffirmed that limitation is a mixed question of law and fact, which must be resolved after trial. This ruling serves as an important precedent in the interpretation of specific performance suits and provides clarity on the application of limitation under Article 54 of the Limitation Act.

Petitioner Name: Urvashiben & Anr..
Respondent Name: Krishnakant Manuprasad Trivedi.
Judgment By: Justice Uday Umesh Lalit, Justice R. Subhash Reddy.
Place Of Incident: Ahmedabad, Gujarat.
Judgment Date: 14-12-2018.

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