Smt. Kamlesh Agarwal And Anr. vs E.C.E. Industries Ltd
2009 Latest Caselaw 3954 Del

                                                        REPORTABLE

*      IN THE HIGH COURT OF DELHI AT NEW DELHI


                          R.F.A. No.223/2000

                            Date of Decision: September 25, 2009


       SMT. KAMLESH AGARWAL AND ANR.
                                                   ..... Appellants
                         Through Dr. Anurag Kumar Agarwal, Advocate
                         with Mr. Umesh Mishra, Advocate

                               versus


       E.C.E. INDUSTRIES LTD                          ..... Respondent
                      Through None

       CORAM:
       HON'BLE MISS JUSTICE REKHA SHARMA

1.     Whether the reporters of local papers may be allowed to see the
       judgment? Yes
2.     To be referred to the reporter or not? Yes
3.     Whether the judgment should be reported in the „Digest‟? Yes

REKHA SHARMA, J.

The short question which arises in this appeal is whether the

suit filed by the appellants primarily for specific performance of an

`Agreement to Sell‟ was barred by the law of limitation. The learned

Additional District Judge who tried the suit has held the same to have

been instituted after the expiry of the period of limitation. The

appellants feel it was filed within limitation.

Before I come to the point in issue, it is necessary to refer to a

few facts:

It is not in dispute between the parties that an „Agreement to

Sell‟ dated June 15, 1977 was entered into between them and thereby

the respondent had agreed to sell and transfer to the appellants flat

measuring 634 Sq. ft. on the first floor of building known as ECE

House (Main Building) situated at 28, Kasturba Gandhi Marg, New

Delhi inclusive of 49.70 Sq. ft. of proportionate area in the passage

and WC together with all manners or rights, liberties, easements,

privileges, advantages, emoluments, appendages and appurtenances

whatsoever but subject to the tenancy of M/s. Macneill and Magor

Limited. It is also not in dispute that the entire sale consideration of

the flat amounting to Rs. 1,80,690/- was paid in full to the respondent

at the time of execution of the „Agreement to Sell‟ and that as the flat

was under the tenancy of M/s. Macneill and Magor Limited only

symbolic possession of the same was delivered to the appellants. It

transpires from the averments made in the plaint that the respondent

had not only entered into an „Agreement to Sell‟ with the appellants,

but also with 41 other persons in respect of the entire first floor of the

aforementioned premises. It also transpires that the respondent had

been acting as Estate Manager to all the purchasers including the

appellants inasmuch as it was collecting rent on their behalf and had

been disbursing the same in proportionate shares to each one of

them. The respondent in the written statement filed by it did not

dispute this fact but denied that it was acting as an Estate Manager.

As per the respondent, since it had only entered into „Agreements to

Sell‟, it remained the absolute owner of the property and thus could

not be referred to as Estate Manager.

It is the case of the appellants that they had approached the

respondent on various occasions to execute the sale deed in their

favour but to no avail. Initially, the respondent avoided on the pretext

that permission was required to be obtained under the provisions of

the Urban Land (Ceiling and Regulation) Act, but subsequently it

conceded that no such permission was required. And yet, no sale deed

was executed. On September 01, 1989 the appellants were told by

means of a letter from the respondent that since they had not

purchased proportionate land of their flat, the sale deed could not be

executed immediately. Nothing much happened thereafter till

February 28, 1995 when the appellants sent a legal notice to the

respondent calling upon it to approve the draft sale deed annexed

thereto and take further necessary steps for execution and

registration of the sale deed. The notice so given evoked no response

from the respondent. Hence, the suit for specific performance of the

agreement to sell dated June 15, 1977 as well as for a decree of

declaration that the appellants were the sole and absolute owners of

the aforementioned flats and a decree for permanent and mandatory

injunction restraining the respondent from selling, disposing of,

transferring or alienating the flat in question. In the alternative,

appellants claimed the relief for refund of the entire sale

consideration of Rs.1,80,690/- along with interest @ 18% per annum

and the difference between the agreed price and market price of the

flat on the date of passing of the decree. The suit was filed on

July 07, 1995.

The learned Additional District Judge on the pleadings of parties

framed the following issues:-

1) Whether the plaint has been signed, verified and suit is instituted by duly authorized persons? OPP

(2) Whether the plaintiff has entered into agreement with the defendant on 15.6.1977? OPP

(3) Whether the plaintiff is in formal possession of the suit property? OPP

(4) Whether the plaintiff has paid the entire consideration to the defendant in respect of the suit property? OPP

(5) Whether the defendant has been collecting rent from M/s.

Macneill and Magor Limited in lumpsum and disbursing the same to the plaintiff @ Rs. 10 per sq ft.? OPP

(6) Whether defendant has been acting as Estate Manager of the property? OPP

(7) Whether the suit is time barred? OPD

(8) Whether the defendant has acknowledged the ownership of plaintiff from time to time of suit property? OPP

(9) Whether the plaintiff is stopped from filing the present suit? OPD

(10) Whether the plaintiff is entitled for the relief of specific performance, declaration, or injunction as prayed? OPP

(11) Relief.

All the issues except issues No.6, 8 and issues No.10 & 11 which

were in the nature of reliefs were decided in favour of the appellants.

In so far as issues no. 6 and 8 are concerned, the appellants had

alleged that the respondent was acting as their Estate Manger as it

had been collecting rent on their behalf from the tenant M/s. Macneill

and Magor Limited and had been negotiating with the said tenant in

respect of the renewal of their lease or to take other steps to get the

premises vacated from the tenant. The appellants thus further

alleged that the respondent virtually treated them as owners and

hence, they were entitled to be declared as such. The learned

Additional District Judge has not found the averments so made to be

false and yet has denied the relief to the appellants on the ground that

as no sale deed has been executed in their favour by the respondent,

it continues to be the owner of the premises and as such, neither it

can be said to be acting as Estate Manager on behalf of the appellants

nor the appellants could be declared as owners. Hence, these two

issues were decided against the appellants and in my view, rightly.

The appellants could not have acquired the status of owners and the

respondent could not be reduced to the status of an Estate Manager

till such time the sale deed was executed for it is only then that the

title of ownership of flat would have passed on from the respondent to

the appellants. Hence, no fault can be found with the decision of the

trial Judge on these issues.

Before I proceed to deal with issue No.7, which is the core

issue, it may be noticed that the respondent has neither challenged

the findings which have gone against it nor it has come forward to

contest the appeal filed by the appellants.

Now, coming to the question of limitation, which is the subject

matter of issue No.7, I find that the learned trial Judge while holding

that the suit filed by the appellants was barred by the law of limitation

has solely relied upon exhibit PW-1/M which as noticed above was a

letter from the respondent to the appellants dated

September 01, 1989. As per the trial Judge, by means of the said

letter the respondent refused to act upon the „Agreement to Sell‟

dated June 15, 1977 and, therefore, in terms of Article 54 of the

Limitation Act, 1963, the appellants ought to have filed the suit within

three years of such refusal which they did not do and hence, the suit

was barred by time.

The period of limitation for filing a suit for specific performance

of contract as provided in Article 54 of the Limitation Act is three

years and this period of three years is to be calculated "from the

date fixed for the performance, or, if no such date is fixed,

when the plaintiff has notice that performance is refused."

There is no dispute that in so far as the present „Agreement to Sell‟ is

concerned, no date was fixed for performance. Therefore, it is the

later part of Article 54 which will govern the period of limitation, i.e.,

"when the plaintiff has notice that performance is refused." In this

view of the matter, the question that arises for consideration is

whether the letter dated September 01, 1989 constitutes refusal on

the part of the respondent. The relevant part of the letter in question

reads as under: -

"Further please note that since you have not purchased the proportionate land of your flat, your registration of sale deed cannot be executed immediately."

It will be seen from the aforequoted paragraph that the

respondent did not specify as to which was that proportionate land of

their flat which the appellants had not purchased and in so far as the

„Agreement to Sell‟ is concerned, it does not talk of any proportionate

land that the appellants were required to purchase. Hence, what was

stated in the letter dated September 01, 1989 Ex.PW-1/M was outside

the terms and scope of the „Agreement to Sell‟. It was, therefore, not

open to the respondent to put any pre-condition to the execution of

the sale deed which was not borne out from the terms of „Agreement

to Sell‟. Be that as it may, the letter in question could not be

construed as refusal on the part of the respondent to execute the

„Agreement to Sell‟. It simply stated that the execution could not be

done immediately. It did not rule out execution at a future date and

time. Therefore, it did not tantamount to refusal. A refusal has to be

clear, unequivocal, cut and dry. The letter gave no such signal or

indication. The learned trial Judge, thus, misconstrued the text of the

letter and wrongly held that the respondent thereby refused to

execute the „Agreement to Sell‟.

It will not be out of place to mention that as per the learned

counsel for the appellants, even after the appellants had sent legal

notice to the respondent calling upon it to execute the sale deed in

their favour, respondent till date is collecting rent on their behalf

from the tenant and depositing the same in their bank account. What

does this show? It shows that the letter dated September 01, 1989

was not intended to be a refusal even from the point of view of the

respondent.

As noticed above, the appellants had sent a legal notice to the

respondent on February 28, 1995 and as it evoked no response, they

filed the suit on July 05, 1995 much before the expiry of the period of

three years from the date of the notice. In this view of the matter, the

finding of the trial Judge is not sustainable and accordingly, it is held

that the suit was filed within the period of limitation.

Since there is no dispute between the parties with regard to the

execution of the „Agreement to Sell‟, I feel the appellants are entitled

to the relief of specific performance. Hence, I pass a decree for

specific performance of the „Agreement to Sell‟ dated June 15, 1977

and direct the respondent to execute the sale deed in favour of the

appellants within three months from today. I further direct that in the

event of respondent not executing the sale deed as directed the

Registrar General of this Court shall depute an officer of Court to

carry out execution of the sale deed for and on behalf of the

respondent before the concerned Sub-Registrar.

The appeal is allowed in terms of the above order.

REKHA SHARMA, J.

SEPTEMBER 25, 2009 G