In a significant ruling, the Supreme Court has clarified that the limitation period for filing a specific performance suit begins from the date fixed for the performance of the contract, rather than from the expiry of the agreement’s validity.
This decision came as the bench, comprising Justices Vikram Nath and Prasanna B Varale, set aside the concurrent findings of both the High Court and the First Appellate Court. The courts below had incorrectly relied on a clause that stated the agreement would remain valid for five years from the date of execution. However, the Supreme Court emphasized that this clause was irrelevant to determining the date of performance.
The bench observed:
“The First Appellate Court and the High Court went on the consideration that the agreement further recorded that this agreement would remain valid for a period of five years from today’s date i.e., date of the execution of the agreement to sell. Placing reliance on this clause, in our considered opinion, is totally irrelevant. The performance was to take place within one month. The validity of the agreement is something different and does not change the date of performance. What was the reason for incorporating this clause of validating the agreement for five years is not spelled out in the agreement, but in any case, it does not change the date fixed for the performance.”
The court referred to Article 54 of the Limitation Act, 1963, in reaching its conclusion. In the present case, the sale deed was supposed to be executed within one month from the date of the agreement, dated 17.12.1989. This meant the performance should have occurred by 16.01.1990, and therefore, the limitation period for filing a suit would expire three years later on 16.01.1993.
However, the respondent filed the suit for specific performance in September 1993, well beyond the three-year limitation period. The respondent contended that the limitation period should be counted from the expiry of the agreement’s five-year validity, but the Supreme Court rejected this argument, reiterating that the date of performance, not the validity period, determines the start of the limitation period.
In conclusion, the court held that the period of limitation is to be calculated from the date fixed for performance as outlined in the agreement. The appeal was accordingly allowed, and the lower courts’ judgments were set aside.
Case Details:
– Case Name: Usha Devi & Ors. versus Ram Kumar Singh & Ors.
– Civil Appeal No.: 8446 of 2024