Suit for specific performance although within limitation may not be decreed for reasons of delay

The article discusses the Supreme Court's judgment in Rajesh Kumar Vs Anand Kumar & Ors. where the apex court touched upon a number of issues especially concerning suits for specific performance of a contract.
Royzz & Co - Mahua Roy Chowdhury, Angel Mary Aju
Royzz & Co - Mahua Roy Chowdhury, Angel Mary Aju

By way of the present judgement in Rajesh Kumar Vs Anand Kumar & Ors. (Civil Appeal No. 7840 Of 2023), the Supreme Court touched upon a number of issues especially concerning suits for the specific performance of a contract.  

The instant decision dealt with two important positions of law. Firstly, a power of attorney holder acting on behalf of the appellant/ plaintiff in a suit for specific performance of contract cannot depose as a witness for the appellant/ plaintiff to prove the plaintiff’s readiness and willingness to perform the contract. Secondly, a suit for specific performance of contract even if filed within the prescribed limitation may still not be entertained or decreed if the suit is not filed immediately after the breach/ refusal.

The decision was rendered in an appeal against the order of the High Court of Madhya Pradesh in First Appeal No. 340 of 2003 vide which the High Court had set aside the judgement and decree passed by the trial court in favour of the appellant/ plaintiff in his suit for specific performance.  

The facts of the case are outlined as under. 

The appellant/ plaintiff entered into an agreement to sell the suit land with one of the co-owners who was acting as the power of attorney holder for all owners. The appellant/ plaintiff paid the earnest money on the date of the said agreement and it was agreed that the remaining amount would be paid upon registration of the sale deed. The execution was to take place within six months from the date of agreement. Meanwhile, the appellant/ plaintiff paid certain additional amounts with respect to which endorsements were made on the backside of the agreement. Thereafter, another agreement was executed between the appellant/ plaintiff and the said co-owner for extending the time for execution of the sale deed. After extending the period twice by way of making entries in the subsequent agreement, it was finally agreed that the agreement to sell shall come to an end on May 31, 1997. However, by that time the said co-owner executed the sale deed in favour of third parties. Thereafter, the appellant/ plaintiff sent a legal notice to the owners calling upon them to be present in the Registrar’s office on the agreed extended date being May 31, 1997 for executing the sale deed. However, no one turned up for the same. The subsequent purchaser, who purchased the suit land moved an application for mutation of the same in their name which application was objected by the appellant/ plaintiff.

Subsequently, the Gram Panchayat during a meeting assured the appellant/ plaintiff that the sale deed would be executed in favour of the appellant/ plaintiff. Hence no legal action was initiated by the appellant/ plaintiff. However, on the last date of limitation, the appellant/ plaintiff preferred the present suit for specific performance

The trial court decreed the suit in favour of the appellant/ plaintiff upon finding that the agreement to sell was executed between the appellant/ plaintiff and the power of attorney holder of all owners of the suit land and that the time agreed between the parties of execution of sale deed was extended twice and that the appellant/ plaintiff also paid earnest money. In view of the same, the appellant/ plaintiff was ready and willing to perform his part of the contract. Further, since the suit was filed on the last date of limitation, the same was held to be within the limitation prescribed of three years.

Aggrieved by the decision of the trial court, the subsequent buyers of the suit land preferred an appeal before the Madhya Pradesh High Court. The Court noted that the initial agreement to sell the suit land which was a coparcenary property was not signed by all coparceners. Further, during the trial, the appellant/ plaintiff did not appear as a witness in the witness box. Instead, his power of attorney holder testified on his behalf which the High Court opined cannot be deemed as a statement of the appellant/ plaintiff in a civil suit of this nature.  Accordingly, the High Court set aside the judgement and decree of the trial court. 

As a result, the matter came up for consideration of the Supreme Court in the present appeal filed by the appellant/ plaintiff.

The Supreme Court after considering the arguments from both sides held that in a suit for specific performance, where an appellant/ plaintiff is required to aver and prove that he has performed or has always been ready and willing to perform his part of the contract, it is necessary for the appellant/ plaintiff to step into the witness box and depose the same and face the cross examination himself. In such circumstances, his Power of Attorney holder could not depose on behalf of him. In other words, a Power of Attorney holder cannot depose for the principal in respect of acts done by the principal of which only the principal can have personal knowledge and only the principal is entitled to be cross-examined. Further, the Court emphasised on the term ‘readiness and willingness’ and observed that the same stands for a state of mind and conduct of the purchaser as well as his capacity and preparedness and hence a power of attorney holder was not in a position to  depose on the readiness and willingness of the principal, having no personal knowledge of the transaction. In view of the above, the Bench observed that the appellant/ plaintiff had failed to enter into the witness box and subject himself to cross-examination.

Thereafter, the Court dealt with the aspect of delay involved in filing the present suit. The Court pointed out that the original agreement contained a definite time for the execution of the sale deed which was later on extended, but the suit was filed on the last date of limitation. The Bench took into consideration the conduct of the appellant/ plaintiff in filing the present suit after a long delay. The Court placed reliance on its judgements in KS Vidyanadam vs. Vairavan (1997) 3 SCC 1, Azhar Sultana vs. B Rajamani & Ors [(2009) 17 SCC 27], Saradamani Kandappan vs. S Rajalakshmi & Ors. [(2011) 12 SCC 18 ] and Atma Ram vs. Charanjit Singh [(2020) 3 SCC 311] and held that since the suit was preferred after a long delay, the appellant/ plaintiff was not entitled for specific performance.

The Court while clarifying the position with regard to the competency of a Power of Attorney holder to depose on behalf of the appellant/ plaintiff in the aforesaid circumstances, placed reliance on inter alia its judgement in Janki Vashdeo Bhojwani & Anr. vs. Indusind Bank Ltd. & Ors. [(2005) 2 SCC 217] (Janaki Vashdeo). Interestingly, by way of the said Janaki Vashdeo decision, the Supreme Court had overruled a judgement by the Bombay High Court in Humberto Luis v. Floriano Armando Luis [(2002) 2 Bom CR 754] wherein it was held that a Power of Attorney holder was entitled to depose on behalf of the principal and that the word “act” as appearing in Order 3 Rule 2 of the Code of Civil Procedure also includes within its ambit, to “depose.” The Janaki Vashdeo decision was thereafter upheld in a number of judicial decisions, including the present judgement. Thus, the position of law with respect to competency of a Power of Attorney holder to depose on behalf of principal for acts of the principal, is clear and well settled  in view of the present judgement of the Division Bench of Supreme Court being in line with its precedents.

Further, since the present judgement has dealt with the effects of filing a suit for specific performance after a long delay although within the limitation period, it is worth mentioning a prior decision of the Supreme Court in P Daivasigamani vs S Sambandan (2022 SCC OnLine SC 1391) wherein the Division Bench noted that the rule of equity which exists in England, does not apply in India, and so long as a suit for specific performance is filed within the prescribed limitation, the relief of specific performance cannot be refused to the appellant/ plaintiff on the ground of delay. In the said case, it was held that a mere delay alone in filing the suit for specific performance, without reference to the conduct of the plaintiff, could not be a ground for refusing the said relief, when the suit was filed within the statutory time limit.

In the present case, the Court delved into the merits of the case and the conduct of the appellant/ plaintiff in addition to the aspect of delay in filing the case. Accordingly, the apex court upheld the order of the High Court and dismissed the appeal for lack of substance.

About the authors: Mahua Roy Chowdhury is the Managing Partner of Royzz & Co. Angel Mary Aju is an Associate at the Firm.

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