Source: Supreme Court 

Why in News? 

A bench of Justice Vikram Nath and Justice PB Varale held that a suit filed after the period of limitation is liable to be dismissed.    

• The Supreme Court held this in the case of Usha Devi & Ors v. Ram Kumar Singh & Ors. 

What is the Background of Usha Devi & Ors v. Ram Kumar Singh & Ors. Case? 

• The dispute in this case relates to a plot situated in District Ranchi. 
• During his lifetime Bihari Lal entered into an agreement with the plaintiff on 22nd July 1983 for sale consideration of Rs. 70,000, out of which Rs. 1000 was paid in advance. 
• This sale deed was to be executed within 9 months. However, the sale deed was not executed within the stipulated time. 
• The amount of 69,000 was later paid and the plaintiffs- respondents were put in possession of the property at that stage. 
  • The sale deed was not executed, in fact, a fresh agreement came to be executed between the parties on 17th December 1989. 
  • A clause in the agreement provided that the sale deed with respect to the fresh agreement was to be executed within one month i.e. upto 16th January 1990. 
• Since the sale deed was not executed a suit for specific performance was filed in September 1993. 
• The High Court decreed the suit confirming the judgment and decree of the First Appellate Court, decreeing the suit of specific performance filed by the respondents 

What were the Court’s Observations? 

• There were several issues in this case but the Court limited itself to the issue of whether the suit was barred by limitation. 
• The Court observed that Article 54 of The Limitation Act, 1963 provides that period of limitation for filing the suit of specific performance.  
• As per the facts the sale deed was to be executed within one month i.e. till 16th January 1990.  
• Once the specific performance date has expired, the period of limitation shall start running. Thus, here the suit could have been filed till 16th January 1993. 
• However, in the present facts the suit was filed on September 1993. 
• Thus, the Court dismissed the suit on the grounds of limitation.   

What is a Suit of Specific Performance? 

• Meaning: 
  • Specific performance is a remedy provided under the Specific Relief Act, 1963 (SRA). 
  • It aims at the exact fulfillment of an obligation that is promised. 
  • Section 10 of SRA provides that the specific performance of contract shall be enforced subject to provisions contained in Section 11 (2), Section 14, Section 16 of SRA. 
  • Section 11 (2) provides that any contract made by a trustee cannot be enforced if it is:  
    • In excess of his powers, or 
    • In breach of trust 
  • Section 14 provides that the following contracts are not enforceable: 
    • Where there is substituted performance under Section 20 
    • The contract is determinable in nature 
    • The contract is so dependent on personal qualifications of the party that it cannot be specifically enforced in it’s material terms 
  • The contract involves continuous performance of a duty which Court cannot supervise. 
  • Section 16 of SRA provides for personal bars to relief. Specific performance cannot be allowed in favour of following person: 
    • Who has obtained substituted performance under Section 20 
    • Who : 
      • Has become incapable of performing  
      • Violates any essential term of contract 
      • Contract on his part remains to be performed 
      • Acts in fraud of the contract 
      • Wilfully acts in variance with the contract 
      • Acts in subversion of relation intended to be established by the contract. 
    • 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.  
  • For the purpose of this clause: 
  • 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; 
  • the plaintiff must prove performance of, or readiness and willingness to perform, the contract according to its true construction. 
• Relief of Specific Performance Mandatory or Discretionary: 
  • The SRA was amended in 2018 which brought some of the major changes to the Act. 
  • The primary reason behind this Amendment was to introduce a greater certainty in the enforcement of contract and consequently improve the ranking of India in “Enforcement of Contracts” and “Ease of Doing Business”. 
  • In the case of Global Music Junction Pvt. Ltd v. Shatrughan Kumar AKA Kheshari Lal Yadav & Ors. (2023) the Delhi High Court held that with the introduction of amendment in the year 2018 specific performance of contract is a general rule rather than exception. 
    • The Court held that the nature of specific relief has been converted from a equitable, discretionary remedy to a statutory remedy.   
• 2018 Amendment Retrospective or Prospective 
  • A 3-judge Bench comprising of Chief Justice of India NV Ramana, Justice Krishna Murari and Justice Hima Kohli held that the 2018 Amendment is prospective in the case of Katta Sujatha Reddy v. Siddamsetty Infra Projects (2022).  
  • Thus, the Court held that the 2018 amendment shall not apply to transactions that took place prior to coming into force of the 2018 Amendment (1st October 2018). 
  • The Court held that the amendment is retrospective as it is not a mere procedural enactment, rather it has substantive principles built into it’s working. Thus, the Court held that the amendment is not retrospective.
• Readiness and Willingness 
  • One of the most important things to be proved in a suit of specific performance is “readiness” and “willingness” to perform the contract on the pliantiff. 
  • Section 16 of SRA lays down personal bars to relief. 
  • Section 16 (c) provides that specific performance cannot be performed in favour of a person who fails to prove that he has been ready and willing to perform his part of the contract. 
  • The Supreme Court in the case of UN Krishnamurthy v. AM Krishnamurthy (2022) held that  
    • Readiness means the capacity of the party to perform the contract 
    • Willingness would imply the conduct of the plaintiff

What is the Period of Limitation? 

• Section 2(j) of the Limitation Act, 1963 defines “period of limitation” means the period of limitation prescribed for any suit, appeal or application by the Schedule.  
• Section 3 of Limitation Act, 1963 provides that every suit instituted, appeal preferred, and application made after the prescribed period shall be dismissed, although limitation has not been set up as a defence.

What is Period of Limitation of a Suit of Specific Performance? 

• Article 54 of Limitation Act, 1963 provides that the period of limitation for filing a suit for specific performance of contract is 3 years. The time from which the period shall be calculated is 
  • The date fixed for performance, or 
  • If no such date is fixed when the plaintiff has notice that the performance is refused.

What are the Case Laws on Period of Limitation of a Suit of Specific Performance? 

• Rajesh Kumar v. Anand Kumar & Ors. (2024) 
  • The Supreme Court in this case held that all suits of specific performance will not be decreed merely because it is filed within the limitation period ignoring the time limits stipulated in the agreement. 
  • The fact that the limitation is three years does not mean that a purchaser can wait for one or two years to file a suit. 
  • The Court held that a limitation period of three years does not grant liberty to the plaintiff to file a suit at the last moment and obtain specific performance despite knowing about the breach of contract.   
• Sabbir (Dead) Through LR’s v. Anjuman (Since Deceased) Through Lr’s (2023) 
  • The Court held that the period of limitation of filing a suit of specific performance as per Article 54 of the Schedule is 3 years from the “date fixed by the contract” or if no such date is fixed when the plaintiff has “notice that performance is refused” 
• A. Valliammai v. K.P. Murali (2023) 
  • The Supreme Court held that where time of performance is not fixed by the contract then as per Article 54 Part II of the Schedule the limitation period will run from the date on which the plaintiff had notice of refusal on part of the defendant to perform the contract to determine the period of limitation.