Source: Supreme Court

Why in News?

The Supreme Court (SC) has held that the limitation period for initiating a specific performance suit, in accordance with Article 54 of the Schedule to the Limitation Act, 1963, is 3 years.

• This period begins either from the date when performance was originally set to take place or if no specific date was decided for performance, it commences when the plaintiff becomes aware that the performance has been declined in the matter of Sabbir (Dead) Through LRS v. Anjuman (Since Deceased) Through LRS.

What is the Background of the Sabbir (Dead) Through LRS v. Anjuman (Since Deceased) Through LRS. Case?

• An Agreement to Sell (ATS) was executed in favour of the respondents by the appellants on 31^st July 1975.
• ATS mentioned that appellants had to apply for permission to sell the property within eight days.
  • Upon permission being received, the same was to be intimated to the respondents.
• The Sale Deed was to be executed within 15 days from receipt of such intimation by the respondents.
• The appellants did not apply for any permission to sell, which led to the respondents filing the suit in 1981 for specific performance of the ATS.
• The suit was decreed by judgment dated 8^th March 1982.
• An appeal was filed by appellants which was allowed by the First Appellate Court judgment dated 09^th May 1984.
• Respondents thereafter filed a Second Appeal which was allowed by the High Court (HC) on 2^nd April 2010.
• The appellants then filed the case in the SC, which further remanded the matter to the HC.
• Upon remand, the HC granted approval for the Second Appeal through its decision in 2018, overturning the conclusions reached by the First Appellate Court.
• Hence, the present appeal lies in the SC.

What were the Court’s Observations?

• Justices Vikram Nath and Ahsanuddin Amanullah observed that failing to fulfill the obligation of submitting an application within 8 days or failing to notify the permission being granted would result in certain consequences. In both scenarios, the respondents were entitled to seek redress in court.
• The SC further stated that “In this background, the respondents cannot take the plea that they would be entitled to indefinitely wait till the appellants informed them about the permission. As soon as the first eight days expired, the respondents had to show due diligence by being vigilant and conscious of their rights and were required to act promptly.”
• Court further opined that a conjoint and harmonious reading of the relevant Clauses clearly indicated that the onus was on the appellants to apply within 8 days for permission from the ninth (9^th) day onwards, the onus would shift on the respondents, if within 8 days the appellants had not even applied for permission.

What is the Difference between an Agreement to Sell and Sale?

• Section 4 of the Sale of Goods Act, 1930 defines it as

Section 4 - Sale and agreement to sell —

• • (1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another.
  • (2) A contract of sale may be absolute or conditional.
  • (3) Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.
  • (4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.

What is the Specific Performance of a Contract?

• Specific Performance is an equitable remedy that obliges one party to carry out, to the greatest extent possible, the obligations stipulated in the contract.
  • It is typically used in cases where monetary damages are not considered an adequate remedy for the aggrieved party.
• Section 10 of the Specific Relief Act, 1963 provides for the contracts that can be specifically performed.
  • Section 10 - Specific performance in respect of contracts —The specific performance of a contract shall be enforced by the court subject to the provisions contained in sub-section (2) of section 11, section 14 and section 16.
  • Section 11 - Cases in which specific performance of contracts connected with trusts enforceable -
    • (2) A contract made by a trustee in excess of his powers or in breach of trust cannot be specifically enforced.
  • Section 14 - Contracts not specifically enforceable — The following contracts cannot be specifically enforced, namely —
    • (a) where a party to the contract has obtained substituted performance of contract in accordance with the provisions of section 20;
    • (b) a contract, the performance of which involves the performance of a continuous duty which the court cannot supervise;
    • (c) a contract which is so dependent on the personal qualifications of the parties that the court cannot enforce specific performance of its material terms; and
    • (d) a contract which is in its nature determinable.
  • Section 16 - Personal bars to relief — Specific performance of a contract cannot be enforced in favour of a person—
    • (a) who has obtained substituted performance of contract under section 20; or
    • (b) who has become incapable of performing, or violates any essential term of, the contract that on his part remains to be performed, or acts in fraud of the contract, or wilfully acts at variance with, or in subversion of, the relation intended to be established by the contract; or
    • (c) who fails to prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant.
    • Explanation — For the purposes of clause (c),— (i) where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendant or to deposit in court any money except when so directed by the court; (ii) the plaintiff 4 [must prove] performance of, or readiness and willingness to perform, the contract according to its true construction