Dismissed

Nav Nirman Developers Pvt. Ltd. v. Mohan Sajan Yadav and 2 Ors.

Bombay HC5 Sept 2014S/1443/2010

Case brief

AI extract

What is this about?

In a suit for specific performance of 1995 agreements, the court held the suit to be barred by limitation. The agreement specified a nine-month period for completion, which had vested in 1998. The court rejected the plaintiff's argument that the defendants' failure to obtain a now-repealed income tax certificate excused performance.

What did the court decide?

Notice of Motion and Suit dismissed as barred by limitation. No order as to costs.

Nav Nirman Developers Pvt. Ltd. Vs Mohan… — Contract and Commercial Disputes | Bombay HC (2014)

nms 1578-2010.doc

1/6

sat

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

¶5

ORDINARY ORIGINAL CIVIL JURISDICTION

¶6

NOTICE OF MOTION NO. 1578 OF 2010 AND SUIT NO. 1443 OF 2010

¶7

Nav Nirman Developers Pvt. Ltd. ...Plaintiff vs Mohan Sajan Yadav & Ors. ...Defendants

¶8

Mr.Sandeep Parikh with Mr.Deepak Shukla i/b. M/s.Vinod Mistry & Co. for Plaintiff.

¶9

Mr.Snehal Shah, Senior Advocate with Ms.Deepti Panda i/b. M/s.AKS Legal Consultants for Defendant No.1.

¶10

Mr.Nikhil Karnawat with Ms.Jinal Gogri and Mr.Tushar Ingale i/b. M/s.Maniar Srivastava Associates for Defendant No.3.

¶11

CORAM : S.C. GUPTE, J.

¶12

4 / 5 SEPTEMBER 2014

¶13

P.C. :

¶14

This Notice of Motion seeks an interim relief of injunction and appointment of Court Receiver in a specific performance suit. At the hearing of the Notice of Motion, an objection to the maintenability of the suit was raised by the Defendants on account of the bar of limitation. Accordingly, the following issue was framed as a preliminary issue :

¶15

“Is the suit barred by limitation ? ”

¶16

Evidence is led on this preliminary issue and now the matter is brought on for hearing.

¶17

2 The suit is filed by the Plaintiff for specific performance of two agreements, one dated 23 February 1995 and other dated 1 March 1995. The suit properties consist of two pieces of land owned by Defendant Nos.1 and 2, one by way of inheritance from the father of Defendant No.1, who, in turn, held

nms 1578-2010.doc

2/6

sat

the property as a registered owner and the other by way of adverse possession. The agreements provide for transfer of the suit properties at or for a lump-sum consideration of Rs.18 lacs to be paid in the manner stated therein. The schedule of payment contemplates payment of Rs.2 lacs, as and by way of earnest money, on or before the execution of the agreements and the balance amount of Rs.16 lacs at the time of completion of sale, as provided in the agreements. The agreements contemplate delivery of documents of title deeds and relevant papers by the vendor, within a period of 15 days of the agreements. The agreements also contemplate that the purchasers would be entitled, at their own costs, to give a public notice inviting claims, if any, in respect of the suit property. Clauses 5 and 6 of the agreement, which are relevant for the purpose of the present Notice of Motion, provide for the vender's liability to make out a clear and marketable title and the purchasers' liability to pay the balance consideration and complete the sale, subject of course to the vendor making out a clear and marketable title, within a period of nine months from the date of the agreements. Clause 7 of the agreement contemplates simultaneous execution of Power of Attorney, in favour of the purchasers or their nominee or nominees. Clause 12 of the agreement provides that in the event of the sale not being completed due to any default on the part of the vendor, the purchasers shall have the right either to require the specific performance by the vendor of the agreements, or in the alternative, terminate the agreements and require refund of the earnest money paid under the agreements.

¶22

3 After the execution of these agreements, respectively, on 23 February 1995 and 1 March 1995, the Plaintiff claims to have paid a further sum of Rs.25,000/- each to Defendant Nos.1 and 2 by two separate cheques. The Plaintiff thereafter claims to have approached the tenants for getting vacant possession of the respective structures in their occupation. The Plaintiff claims that he was able to obtain the possession from three tenants / occupants of three rooms. The Plaintiff claims to have negotiated with the remaining tenants thereafter, as also made inquiries with the City Survey office and office of the Tahasildar to find out whether the names of Defendant Nos.1 and 2 were brought on record, as owners, in respect of the property to which Defendant Nos.1 and 2

nms 1578-2010.doc

3/6

sat

had possessory title (by way of adverse possession).The Plaintiff also claims to have paid property taxes in June 1999 in respect of the property on behalf of Defendant Nos.1 and 2. It is the Plaintiff's case that on 4 September 2008, the Plaintiff learnt that Defendant Nos.1 and 2 had fraudulently and illegally purported to execute a Deed of Conveyance on 28 June 2007 in favour of Defendant No.3 in respect of a portion of the suit property. In the premises, the Plaintiff filed the present suit on 3 May 2010.

¶27

4 On the aspect of limitation, the Plaintiff has averred that though the suit agreements were executed in 1995, the same were kept alive by conduct of the parties set out above; that the agreements were never terminated by Defendant Nos.1 and 2; that only when Defendant Nos.1 and 2 executed a purported a conveyance in favour of Defendant No.3 that Defendant Nos.1 and 2 could be said to have refused the performance of the suit agreements; and that the cause of action, thus, arose on 28 June 2007 when Defendant Nos.1 and 2 executed the purported conveyance. It is submitted that, accordingly, the suit is within time.

¶28

5 The suit is for specific performance of an agreement. Article 54 of the Schedule to the Limitation Act, 1963 provides for a limitation period of three years for such a suit, such period beginning to run from (i) the date fixed for the performance, or, (ii) if no such date is fixed, when the plaintiff has a notice that the performance is refused by the defendant. The Plaintiff's case in this suit on the issue of limitation rests on the date of notice by the Plaintiff of refusal of performance on the part of the Defendant. The Plaintiff claims the date of execution of conveyance in favour of Defendant No.3, namely, 28 June 2007 as the date of refusal on the part of Defendants No.1 and 2. He claims to have knowledge of such refusal on 4 September 2008. On the other hand, the Defendants' case on the issue of limitation is that the period of limitation begins to run from the expiry of nine months from the date of the suit agreement for sale, which is the time fixed for completing the sale. This then is the contest between the parties on the issue of limitation.

nms 1578-2010.doc

4/6

sat

6 Under Article 54 of the Schedule to the Limitation Act, the date of notice of refusal of performance is relevant only when the contract does not specify a date for its performance. In the present case, the relevant clause of the contract, namely, clause 6 stipulates the date of completion as “within a period of nine months from the date hereof”. The clause is in the following words :

¶33

“6. Subject to the Vendor making out a clear and marketable title in respect of his undivided 50% share in the said property and also subject to his obtaining his certificate under Section 230 A of the Income Tax Act the sale shall be completed within a period of nine months from the date hereof.”

¶34

7 The submission of the Plaintiff is that this period of completion was subject to the vendor, namely, Defendant Nos.1 and 2, making out a clear and marketable title in respect of the suit property and also subject to obtaining a certificate under Section 230A of the Income-tax Act. It is submitted that Defendant Nos.1 and 2 having failed to make out a clear and marketable title in respect of the suit property or produce the requisite certificate under Section 230A, the date for performance has not yet arrived.

¶35

8 The relevant clause of the suit agreements providing for the vendor's duty to make out a clear and marketable title, viz. Clause No.5, may now be noted. The clause provides as follows :

¶36

“5. Save as aforesaid the Vendor shall make out a clear and marketable title to his undivided 50% share in the aforesaid property free from all encumbrances, claims, demands and doubts and shall at her own cost obtain all necessary orders including orders declaring him and his sister the said Shakuntala Bhatankar as the owners of the said portions from the Talathi, Collector or court or any other appropriate authority regarding the portions of the said property in respect of which he at present has only a Possessory title. The Vendor shall subject as aforesaid also at his own cost and before the payment of second instalment becomes due, get in and clear all outstanding estates and defects in title, if any, including those by way of sale, exchange, trust, lease, maintenance, possession, lien, licence or otherwise.

5/6

nms 1578-2010.doc

sat

9 The question to be considered is, whether or not Defendant Nos.1 and 2 have fulfilled their obligations under Clause 5. At the trial of the preliminary issue, the Plaintiff has led evidence of his witness, one Sudhir Vasant Naik, the Director of the Plaintiff company. It is admitted by the Plaintiff's witness in answer to Question 30 of his cross-examination that as far as the property inherited by the Defendants from their predecessor-in-title is concerned, the title of the Defendants to that property was marketable on the date of the suit agreements. Effectively, there is no contest between the parties that as far as this particular property is concerned, the title of Defendant Nos.1 and 2 was clear and marketable. As for the other property, to which a possessory title is claimed by Defendant Nos.1 and 2, the Plaintiff's witness has admitted that there was a public notice issued on 16 February 1995 inviting objections to the title of Defendant Nos.1 and 2 to this property. Admittedly, no objections to the title of Defendant Nos.1 and 2 to this property were received in response to the public notice. In answer to Question No.56, the Plaintiff's witness has admitted that the Plaintiff's Advocate had not received any objection after the notice was issued and that accordingly, no one was disputing the title of Defendant Nos.1 and 2 to the property claimed by them by adverse possession. Secondly, it needs to be noted that under the Power of Attorney executed by Defendant Nos.1 and 2 in favour of the Directors of the Plaintiff, the Defendants have authorized the Plaintiff to protect their title in respect of the suit property and make the title clear and marketable and free from all encumbrances and reasonable doubts, so as to enable the sale to be completed in all respects. In the case of a possessory title, based on adverse possession, it is difficult to see what evidence of clear and marketable title, the Defendants could have produced besides what is already available on record. The Plaintiff's witness has also admitted that there were structures existing on the suit property which were as old as 40 years; that the Plaintiff had made enquiries with the tenants of these structures regarding their landlord, whereupon Defendant Nos.1 and 2 were found to be landlords of the suit property; that only after such verification, the Plaintiff entered into the suit agreements; that enquiries were made by the Plaintiff regarding payment of property taxes in respect of this suit property and that it was verified that the property tax receipts were all in the name of Defendant Nos.1 and 2. In the face

¶41

6/6 nms 1578-2010.doc

¶42

sat

¶43

of this evidence, it is clear that the Defendants have discharged their liability to make out a clear and marketable title to the suit property free from all encumbrances and reasonable doubts.

¶44

10 There is nothing on record to show that any doubt was ever raised between the date of the suit agreements and the filing of the present suit. No requisition on the marketability of the title made any time after the execution of the suit agreements has been placed on record by the Plaintiff. After the execution of the suit agreements, all that the Plaintiff claims to have done is, payment of a further amount of Rs.50,000/- sometime in 1997 and payment of taxes on behalf of the Defendants sometime in 1999 (for this later act, there is no evidence on record). In these premises, and in the facts and circumstances noted above, it is not possible to accept the Plaintiff’s contention that agreement was kept alive for all these years, i.e., between 1999 and 2007, by any act or conduct on the part of the parties.

¶45

11 As far as the liability of Defendant Nos.1 and 2 to obtain a certificate under Section 230A of the Income-tax Act is concerned, that provision was repealed with effect from 1 June 2001 and it was no longer necessary to obtain any certificate thereunder. The Plaintiff, accordingly, cannot rely on the nonsubmission of such certificate as an excuse to avoid completion of the sale by payment of the balance consideration. There is no substance in the submission that the period of limitation, with reference to Clause 6 of the agreements, has not begun to run for want of such certificate.

¶46

12 In that view of the matter, the Plaintiff’s suit is clearly barred by the law of limitation. Accordingly, the preliminary issue is answered against the Plaintiff and the suit is dismissed as barred by limitation.

¶47

13 Having regard to the dismissal of the suit, the Notice of Motion is also dismissed. There shall be no order as to costs.

¶48

(S.C. Gupte, J.)

Nav Nirman Developers Pvt. Ltd. v. Mohan Sajan Yadav and 2 Ors.

Case brief

What is this about?

What did the court decide?

Nav Nirman Developers Pvt. Ltd. v. Mohan Sajan Yadav and 2 Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Coram

Case details

Similar cases

Kishore P. Mashruwala and 6 Ors. Vs Harish P. Mashruwala and 11 Ors.

Kokila Jitendra Doshi and Anr. Vs Jignesh Jitendra Doshi and Anr.

Kamgar Panchganga Chs. Ltd. Vs Neptune Builders and Developers and 3 Ors. and Mr. Sunderlal Aklinglal Jain ..Applicant

m/s. lokhandwala infrastructures Pvt. Ltd. Vs odean theatres Pvt. Ltd.

Dentsu Marcom Pvt. Ltd. Vs Bilawal Exports Pvt. Ltd.

Mayfair Housing Pvt. Ltd. Vs Mohinder Kaur Koacher and 4 Others