M/S Ascot Estates Pvt.Ltd. vs Lala Diwan Chand Trust & Another
2009 Latest Caselaw 2213 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI
15.

+      ARB.P. 302/2008


       M/S ASCOT ESTATES PVT.LTD                 ..... Petitioner
                      Through: Mr. Mukul Talwar, Mr. Shivaji Shukla, Advs.

                  versus


       LALA DIWAN CHAND TRUST & ANOTHER           ..... Respondent
                     Through: Mr. H.S. Phoolka, Sr. Adv. with Mr. Sharat
                     Kapoor, Mr. Mohit, Mr. Kunwar Faisal, Advs.

        CORAM:
        HON'BLE THE CHIEF JUSTICE


                          ORDER

% 22.05.2009

This petition is filed under Section 11(5) of the Arbitration and

Conciliation Act, 1996 for appointment of a sole arbitrator to adjudicate upon

the disputes between the parties.

2. The facts are that an agreement to sell dated 6.7.1999 was entered

into between the parties whereby the petitioner had agreed to purchase

from the respondent the property bearing Shop No. 12, Ground Floor, Block

No. 172, Jor Bagh, New Delhi, for a sum of Rs.49,90,000/. Out of the total

consideration of Rs.49,90,000/-, the petitioner paid a sum of Rs.5,00,000/- as

earnest money at the time of execution of the agreement to sell. According

to the petitioner, the balance amount of Rs.44,90,000/- was to be paid upon

fulfillment of certain conditions by the respondent mentioned in Clause 2(b)

of the Agreement. It is the case of the petitioner that those conditions have

not been fulfilled by the respondent till date.

3. The petitioner has annexed to the petition the letter of the respondent

dated 13.12.2006 whereby the petitioner was informed that the agreement

to sell had been terminated by the respondent vide their letter dated

22.8.2003. The petitioner in the petition has disputed the receipt of the

letter dated 22.8.2003. However, the respondent has placed on record the

Registered Post Acknowledgement Receipt and submitted that the petitioner

had also replied to the letter dated 22.8.2003. The petitioner had invoked

the arbitration vide letter dated 17.3.2008. The question is whether the

claim is barred by limitation.

4. On behalf of the petitioner, reliance was placed upon the first part of

Article 54 of the Limitation Act. It was contended by learned counsel for the

petitioner that the words "date fixed for the performance" do not require

that a particular date from the calendar must be mentioned in the document.

If such date can be ascertained on the basis of contents of document, the

first part of Article 54 will be attracted. He relied upon Clause 2(b) of the

Agreement which provides that the sale deed shall be executed within 90

days of fulfillment of three conditions, namely, (i) getting the mutation of the

property done in their favour in the records of the L&DO; (ii) obtaining the

income tax clearance in Form 34(a) from the Income Tax Authorities under

Section 230(a) of the Income Tax Act, 1961; and (iii) getting the eviction

suits pending before the court of Additional Rent Controller and the Rent

Tribunal decided. The argument is that though no definite date had been

fixed in so many words in the agreement, it was capable of ascertainment by

application of the maxim certum est quod certum reddi potest and that date

would be on expiry of 90 days of happening of three events mentioned in

Clause 2(b). In support of his submission, learned counsel relied upon the

decision of the Supreme Court in Ramzan v. Smt. Hussaini AIR 1990 SC

529. In that case, the Supreme Court held that the words "date fixed for the

performance" in Article 54 do not require that a particular date from the

calendar must be mentioned in the document. It is sufficient if the basis of

calculating the date fixed for performance is found in the document. The

doctrine of id certum est quod certum reddi potest which means that

certainty need not be ascertained at the time; for if, in the fluxion of time, a

day will arrive which will make it certain, that is sufficient is applicable. In

that case, the contract of sale was in respect of a house. The house was

under mortgage. The defendant-seller under the contract had agreed to

execute a deed of sale on the day the purchaser redeemed the mortgage.

The suit for specific performance of the contract was filed by the purchaser

some 14 years after redemption of the mortgage. In view of these facts, the

Court held that under the agreement, the date for the defendant-seller to

execute the sale deed was fixed, although not by mentioning a certain date

but by reference to the happening of a certain event, namely, the

redemption of the mortgage; and, immediately after the redemption by the

plaintiff purchaser, the defendant became liable to execute the sale which

the plaintiff was entitled to enforce. The case was therefore held to be

covered by first part of Article 54.

5. Learned counsel also referred to a decision of Sat Pal, J. in Tosh

Apartments Pvt. Ltd. v. Shri Pradeep Kumar Khanna & Ors. 54

(1994) Delhi Law Times 318, wherein it was held that where form the

agreement it is clear that the transaction was to be completed within 45

days from the date, the defendant obtained the requisite clearance and till

date of filing of suit, the defendant had not informed the plaintiff that he had

obtained the requisite sanctions, and on the contrary two months prior to the

filing of the suit, he had informed the plaintiff that the said sanctions, no

objections and clearances were not obtained by him. Even the defendant

from his conduct had understood that the time was not the essence of the

contract. The suit was therefore held to be not barred by limitation in view

of Article 54. In that case, Sat Pal, J. was dealing with an application under

Order 7 Rule 11(d) for dismissal of the plaint. The doctrine of id certum est

quod certum reddi potest was not discussed by the learned Judge.

6. In the present case, there is no dispute that no definite date had been

fixed in so many words in the agreement. The question is whether maxim

certum est quod certum reddi potest would apply. Clause 2(b) of the

Agreement speaks of not one event but of several events which, looking to

the nature of conditions, could not possibly have happened simultaneously.

Surely maxim certum est quod certum reddi potest cannot apply to such a

case. In this regard, I may quote the observations of a Division Bench of the

Lahore High Court in Waryam Singh v. Gopi Chand AIR 1930 Lahor 34,

wherein Tek Chand, J speaking for the bench, observed:

"Before deciding whether on this finding a decree for specific performance for the whole or a part of the contract should be passed in favour of the plaintiffs, it is necessary to determine whether the suit is within time. It is common ground between the parties that the caseis governed by Art.113, Lim. Act, which provides a period of three years for suits of this nature from (a) the date fixed for the performance of the contract, or (b) if no such date is fixed when the plaintiff has notice that performance is refused. It was admitted on behalf of the defendants that no definite date had been fixed in so many words in agreement. But it was contended that it was capable of ascertainment by application of the maxim certum est quod certum reddi potest and that this date was 30th August 1920 when the proprietary rights were acquired by the defendants. It was accordingly urged that the suit which was brought more than three years after this date was time barred. In my judgment this maxim cannot be invoked in reference to a loosely worded document like the agreement in question in which the promisor undertook to execute the sale deed not on the happening of a particular event but after payment of the last instalment in the Government Treasury and after the acquisition of proprietary rights - events which, under the conditions of the grant, could not possibly have happened simultaneously. The case does not, therefore, fall within first part of Col.3, Art. 113."

7. Under the circumstances, the case would not fall under first part of

Article 54.

8. Learned counsel appearing for the petitioner next argued that the

notice dated 22.8.2003 merely states that in case the entire balance

consideration is not paid within 15 days, the agreement shall come to an end

and the earnest money shall stand forfeited. According to him, on a correct

reading of the notice, it would not be a case of a repudiation of the contract

but on the other hand, it shows that respondent has been acting pursuant to

the contract and under the circumstances, the notice cannot be treated as a

refusal to perform the contract. He relied upon the following observations of

the House of Lords in Woodar Investment Development Ltd. v. Wimpey

Construction [1980] (1) All ER 571:

"In this case the contract provided for the possibility of rescission by Wimpey. But the notice of rescission, which Wimpey gave, was not, in the circumstances which existed when it was given, one which Wimpey had any contractual right to give. But they honestly believed the contract did give them the right. When one examines the totality of their conduct and its impact on Mr. Cornwell, it is plain, as shown by my noble and learned friend Lord Wilberforce's analysis of the facts, that Wimpey, though claiming mistakenly to exercise a power given them by the contract to bring it to an end, were not evincing an intention not to be bound by the contract. On the contrary, they believed they were acting pursuant to the contract. And Mr.Cornwell well understood the situation. As he put it in his final letter to Sir Godfrey Mitchell, the president of Wimpey:'.... all I need say now is that we will retire to our battle stations and it goes without saying I am sure that you will abide by the result as I will.' It never occurred to Mr. Cornwell that Wimpey, if held not to have been entitled to give notice of rescission, would refuse to perform the contract. In fact, it would seem that he believed exactly the contrary. Such was the impact on him of Wimpey's conduct.

It being the view of the majority of the House that there was no repudiation, the appeal must be allowed, with the result that there is no need to consider the other issues raised."

9. I am unable to accept the submission of the learned counsel. The

notice dated 22.8.2003 clearly states that in case the balance consideration

is not paid within 15 days, the earnest money shall stand forfeited. On a

plain reading of the notice, it is clear that the respondent wanted to bring an

end to the contract on account of non-payment of balance consideration. By

reply dated 16.9.2003, the petitioner had contended that the balance

amount would be payable only in terms of Clause 2(b) of the agreement and

called upon the respondent to withdraw the notice under reply. The notice

was not withdrawn by the respondent. In these circumstances, it is difficult

to accept the submission that there was no refusal of the performance. The

contract was repudiated vide notice dated 22.8.2003. The arbitration clause

was invoked on 17.3.2008, i.e. beyond the period of limitation and thus the

claim is barred under Article 54 of the Limitation Act. The arbitration petition

is dismissed with costs.

CHIEF JUSTICE MAY 22, 2009 pk