* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 11th MARCH, 2026
IN THE MATTER OF:
+ I.A. 8516/2024
IN
CS(OS) 813/2023
S SHALU CONSTRUCTIONS .....Plaintiff
Through: Mr. Jai Sahai Endlaw & Ms.
Shambhavi Kala, Advs.
versus
ASHOK KAURA AND ORS. .....Defendants
Through: Mr. Anupam Srivastava, Sr. Adv.
Mr. Archit Singh, Mr. Vasuh Misra,
Ms. Shreya Kunwar & Mr. Devesh
Bhatia , Advs.
CORAM:
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
JUDGMENT
1. The present suit has been filed by the Plaintiff seeking specific
performance of the Collaboration Agreement dated 01.02.2013 in respect of
property bearing No. A-72, New Friends Colony, New Delhi measuring 492
sq. yds. (hereinafter referred to as "the Suit Property").
2. Shorn of unnecessary details, the facts of the case are as under:
a. It is stated that in January, 2013, the Defendants approached the
Plaintiff claiming themselves to be joint owners of the Suit
Property and disclosed that two litigations concerning the Suit
property were pending before this Court. The first litigation
was CS(OS) No. 649/2010 titled "Ashok Kaura & Ors. v.
Shashi Kaura & Ors.", which was a partition suit between the
family members i.e., the Defendants herein (hereinafter
referred to as „the partition suit‟). The second was CS(OS) No.
1448/2010, a suit for specific performance filed by one Mr. Ajit
Pal Singh against Defendant Nos. 2 and 3 (hereinafter referred
to as „the specific performance suit‟).
b. It is stated that the Defendants allegedly represented that they
were facing pressure in the specific performance suit and
required funds to settle the dispute, assuring the Plaintiff that
upon such assistance, they would execute a favourable
collaboration arrangement with the Plaintiff based on the
preliminary decree dated 09.07.2010 in the partition suit.
c. Relying on these representations, the parties executed the
Collaboration Agreement on 01.02.2013. Under the agreement,
the Plaintiff undertook to demolish the existing superstructure
and construct a new building comprising basement, stilt,
ground floor, first floor, second floor, third floor and terrace(s).
In consideration of the development rights and allocation of
built-up area, the Plaintiff agreed to pay a total monetary
consideration of Rs.7.5 crores to the Defendants. It is stated
that with the execution of the agreement, the Plaintiff paid a
sum of Rs.2 crores in cash to Defendant Nos. 2 and 3, which
was acknowledged through receipts and recorded in the
Collaboration Agreement. The agreement further provided for
division of the constructed property whereby the Plaintiff was
to receive the entire first and second floors along with one
servant quarter with WC on each floor, 50% of the stilt parking
and proportionate undivided rights in the land and common
areas. Defendants No. 2 and 3 were to receive the entire
basement and ground floor along with one servant quarter with
WC on the ground floor and 25% of the stilt parking, while
Defendant No. 1 was to receive the entire third floor with
terrace rights, one servant quarter with WC on the third floor
and the remaining 25% of the stilt parking, each with
proportionate undivided ownership rights in the land.
d. It is stated that under the terms of the arrangement, the Plaintiff
was responsible for undertaking redevelopment, applying for
sanction plans and making agreed payments, whereas the
Defendants were obliged to settle the pending litigations
relating to the property, obtain mutation in their favour, secure
conversion of the property from leasehold to freehold and
thereafter, hand over vacant and peaceful possession of the Suit
Property to the Plaintiff to enable redevelopment. The Plaintiff
asserts that in furtherance of the agreement it applied for
sanction plans with the SDMC and paid approximately
Rs.12.38 lakhs towards municipal charges, and additionally
paid Rs.20 lakhs on 16.03.2013 and Rs.12 lakhs on 01.11.2013
in cash to the Defendants at their request to facilitate disposal
of the pending litigations.
e. It is stated that CS (OS) No. 1448/2010 i.e., the specific
performance suit, was unconditionally withdrawn on
11.07.2013.
f. It is stated that the partition Suit i.e., CS (OS) No. 649/2010
continued on issues including valuation and preparation of the
decree sheet and was ultimately disposed of on 14.07.2022 with
directions to prepare the decree sheet.
g. According to the Plaintiff, throughout this period the
Defendants repeatedly assured that possession would be handed
over after completion of these formalities, including mutation
and conversion of the property from leasehold to freehold.
h. The Plaintiff alleges that despite disposal of the earlier
proceedings in July, 2022 and repeated follow-ups, the
Defendants failed to hand over possession or perform their
contractual obligations. It is stated that in October, 2023, the
Defendants allegedly stopped responding and their family
members threatened legal action, leading the Plaintiff to
suspect that the Defendants intended to sell the property to a
third party for higher consideration.
i. Consequently, the Plaintiff published a public notice on
04.11.2023 and issued a legal notice dated 08.11.2023
demanding performance within fifteen days.
j. Paragraph No.15 of the Plaint, which brings out the cause of
action, reads as under:
"15. That the cause of action for the relief of specific
performance arose in favour of the Plaintiff and against
the Defendants on 01.02.2013 when the Collaboration
Agreement was executed between the Plaintiff and the
Defendants. The cause of action thereafter arose on
25.09.2013 when the Plaintiff applied for the Sanction
Plan qua the Suit Property before the South Delhi
Municipal Corporation (SDMC) vide Application dated
25.09.2013 on behalf of the Defendants. The cause of
action further arose on 09.10.2013 and 10.10.2013 when
the SDMC acknowledged the payment made by the
Plaintiff on behalf of the Defendant and granted the
Sanction Plan. The cause of action arose when the
Plaintiff paid a further sum of Rs. 30 lakhs to the
Defendants on 16.03.2013 and 01.11.2013. The cause of
action thereafter arose on each successive day when the
Plaintiff would request the Defendants for the performance
under the Collaboration Agreement but would be informed
by the Defendants that the valuation of the Suit Property is
taking time and the decree sheet is not being drawn up and
as such, the Suit Property cannot be mutated in their
names and nor can it be converted from leasehold to
freehold. The cause of action arose on 03.09.2016 when
the Registry had sought for the valuation report of the Suit
Property and on 28.09.2018, when court notice was issued
to the Principal Secretary (Revenue) and the concerned
SDM to furnish the valuation reports of the Suit Property.
The cause of action continued when the valuation report
was not filed and the proceedings remained pending
before this Hon‟ble High Court. That The cause of action
for the relief of specific performance arose in favour of the
Plaintiff and against the Defendants on 14.07.2022, i.e.
when CS (OS) 649 of 2010 was disposed off by this
Hon‟ble Court. The cause of action further arose on
03.10.2022, when the Plaintiff was provided a copy of the
notice from the office of collector of stamp/ SDM (Defence
Colony) by the Defendants stating that the stamp duty
payable on the settlement deed was deficient and the
Plaintiff kept following up with the Defendants regarding
the same. The cause of action thereafter arose when the
Plaintiff was informed that the Defendant No. 1 was not
keeping well and was therefore communicating with the
wife and son of Defendant No. 1. The cause of action
thereafter arose when despite repeated requests of the
Plaintiff to meet with the Defendants on 16.10.2023, Ms.
Anjali Kaura, wife of the Defendant No. 1 stopped
responding to the messages of the Plaintiff and on
threatened the Plaintiff with legal action without any
rhyme or reason. The cause of action further arose when
despite delivery of legal notice dated 08.11.2023 to the
Defendants, they failed to act in terms thereof. However, it
is pertinent to mention that till date, the Defendants have
not refused performance of the contract. The cause of
action for the alternative relief of recovery of money also
arose similar to the relief of specific performance on all
the dates as stated above and on 14.07.2022, i.e. when CS
(OS) 649 of 2010 was disposed off by this Hon‟ble Court
and the Defendants failed to perform their obligations
under the Collaboration Agreement. The cause of action is
a subsisting and continuing one."
k. When the Defendants failed to perform their obligations under
the Agreement, the Plaintiff has filed the present Suit seeking
the following reliefs:
"Therefore, in the light of the above-mentioned facts and
circumstances, this Hon‟ble Court may kindly be pleased
to pass a decree:
(a) Of Specific Performance of the Collaboration
Agreement dated 01.02.2013;
(i) By directing and commanding the Defendants to
handover the possession of the Suit Property to the
Plaintiff for redevelopment;
(ii) On the completion of redevelopment, to execute and
register a sale deed in respect of Plaintiff‟s share in
favour of the Plaintiff; and
(iii) By directing and commanding the Defendants to
cooperate in all aspects in redevelopment of the Suit
Property, including but not limited to, applying for
necessary permissions and sanctions and any other
obligations under the Collaboration Agreement;
(b) Of permanent injunction in favour of the Plaintiff and
against the Defendants restraining the Defendants and
their agents and representatives, from selling, assigning,
alienating, transferring, encumbering, creating third party
rights or disposing of the Suit Property being A-72, New
Friends Colony, New Delhi admeasuring 492 sq. yds. in
whole or in part or from parting with possession thereof in
any manner whatsoever;
ALTERNATIVELY AND WITHOUT PREJUDICE
(c) Of recovery of Rs. 2,44,38,350/- (Rupees Two Crores
Forty-Two Lakhs Thirty-Eight Thousand Three Hundred
and Fifty only) already paid to the Defendants;
(d) Awarding pre-suit interest at the rate of 18% per
annum on the principal amount of Rs. 2,44,38,350/-
(Rupees Two Crores Forty-Two Lakhs Thirty-Eight
Thousand Three Hundred and Fifty only) amounting to Rs.
4,76,54,782.50/- (Rupees Four Crores Seventy-Six Lakhs
Fifty-Four Thousand Seven Hundred and Eighty-Two
point Five Zero only) from date of payment, i.e.
01.02.2013, till the date of filing of the Suit;
(e) Awarding pendente lite and future interest at the rate
of 18% per annum on the principal amount of Rs.
2,44,38,350/- (Rupees Two Crores Forty-Two Lakhs
Thirty-Eight Thousand Three Hundred and Fifty only)
from the date of filing of the Suit till the date of actual
payment;
(f) Awarding cost of the present Suit in favour of the
Plaintiff and against the Defendants; and
(g) Pass such other Order(s) as this Hon‟ble Court may
deem fit and proper in the interest of justice and equity."
3. The present Application under Order VII Rule 11 of the CPC has been
filed by the Defendants contending that the present Suit for specific
performance is barred by limitation under Article 54 of the Limitation Act,
1963. As per the Defendants, the entire cause of action pleaded by the
Plaintiff arises from events of 2013-2014, particularly the Collaboration
Agreement dated 01.02.2013 and the alleged obligation to hand over
possession by 05.02.2014 as reflected in the Plaintiff's own documents. It is
stated that once a specific date for performance is fixed, limitation begins to
run from that date, and the suit filed on 01.12.2023 is nearly seven years
beyond the prescribed three-year limitation period. The Defendants further
contend that even if the Plaintiff's case is accepted at face value, the last
possible accrual of cause of action would be either (i) on 01.02.2013
(execution of the Collaboration Agreement), (ii) on 11.07.2013 (when the
earlier suits CS(OS) 649/2010 and CS(OS) 1448/2010 were disposed of), or
at the latest (iii) on 05.02.2014 (the agreed date for handing over
possession). It is further stated that the Plaint discloses no legally sustainable
cause of action beyond that date.
4. Learned Counsel for the Defendants has drawn the attention of this
Court to Article 54 of the Limitation Act, 1963 which deals with the period
of limitation for filing a Suit for specific performance of a contract. He
states that as per Article 54 of the Limitation Act, 1963, a Suit for specific
performance of a contract must be filed within three years from the date
fixed for the performance or from the date of refusal of such performance.
Learned Counsel for the Defendant further draws the attention of this Court
to Clause 2(1) of the Collaboration Agreement to state that the last of the
payment was to be made within 15 months of the date of the Agreement and,
therefore, the time period for executing the Agreement can be ascertained
and the Suit ought to have been filed within three years of the said date. He
states that clever drafting cannot enable the Plaintiff to get over the period of
limitation. He places reliance on the Judgment of the Apex Court in Fatehji
& Co. v. L.M. Nagpal, (2015) 8 SCC 390, wherein the Apex Court has held
as under:
"6. The fact that the plaintiffs were put in possession of
the property agreed to be sold on the date of agreement
itself would not make any difference with regard to the
limitation of filing the suit for specific performance. In
fact both the courts below have rightly held that Article
54 of the Limitation Act does not make any difference
between a case where possession of the property has
been delivered in part-performance of the agreement
or otherwise. In the same way the courts below have
also concurrently held even if any permission is to be
obtained prior to the performance/completion of the
contract, the mere fact that the defendants have not
obtained the said permission would not lead to
inference that no cause of action for filing the suit for
specific performance would arise. Further it is also not
the case for postponing the performance to a future
date without fixing any further date for performance.
The last extension for a period of six months w.e.f. 1-8-
1976 sought for by the defendants expired on 1-2-1977.
The present suit seeking for specific performance was
filed by the plaintiffs on 29-4-1994, much beyond the
period of three years.
7. Yet another circumstance was pointed out to prove
the laches on the part of the plaintiffs. The sons of the
second defendant filed a suit in July 1985 against
Defendants 2, 3 and the plaintiffs seeking for
declaration that the present suit property is their
ancestral joint family property and the sale made by
the defendants in favour of the plaintiffs be declared as
null and void. The plaintiffs herein contested the said
suit and it came to be dismissed on 5-4-1989. The suit
for specific performance was not filed within three
years from the said date also.
8. The plaintiffs averred in the plaint that the last and
final cause of action accrued and arose to them after
August 1991 when the defendants succeeded in hiding
themselves and started avoiding the plaintiffs and the
cause of action being recurring and continuous one,
they filed the suit on 29-4-1994. As already seen the
original cause of action became available to the
plaintiffs on 2-12-1973, the date fixed for the
performance of the contract and thereafter the same
stood extended till 1-2-1977 as requested by the
defendants. Though the plaintiffs claimed that oral
extension of time was given, no particulars as to when
and how long, were not mentioned in the plaint. On the
other hand even after knowing the dishonest intention
of the sons of the second defendant with regard to the
suit property in the year 1985, the plaintiffs did not file
the suit immediately. The suit having been filed in the
year 1994 is barred by limitation under Article 54 of
the Limitation Act."
5. Relying on the said Judgment, learned Counsel for the Defendant
contends that the cause of action would arise at the end of the 15th month
from the date of the Collaboration Agreement. He also draws the attention of
this Court to a Judgment of the Co-ordinate Bench of this Court in Vipin
Wadhwa v. Prashant Enterprises, 2025 SCC OnLine Del 7708, wherein the
co-ordinate Bench of this Court, has also placed reliance on the Judgment of
the Apex Court in Fatehji (supra) and has held as under:
"42. In a suit for specific performance of the
Agreement, the limitation is prescribed under Article
54 of the Limitation Act, 1963, which reads as
under:--
For specific performance of a contract
Three years
The date fixed for the performance, or, if no such
date is fixed, when the plaintiff has notice that
performance is refused.
43. The essential aspect that needs to be considered is
whether the suit for specific performance is within the
limitation prescribed under Article 54 of the Limitation
Act, 1963. The limitation period for such a suit is three
years, which begins from either:
a. The date fixed for performance in the
agreement; or
b. If no such date is fixed, from the date when the
plaintiff has noticed that performance has been
refused.
44. The key question for determination is whether any
action or conduct by the defendant or the plaintiff
extended or revived the limitation period, thereby
keeping the right of the plaintiff to seek specific
performance alive. Mere silence or inaction on the part
of the defendant does not extend the limitation period
unless there is a clear acknowledgement of liability
within the meaning of Section 18 of the Limitation Act,
1963.
45. It is settled law that as per Section 9 of the
Limitation Act, 1963, once the period of limitation
starts running, it continues to run irrespective of any
subsequent disability or inability to institute a suit or
make an application.
46. On the interpretation of Article 54, the Supreme
Court in Pachanan Dhara v. Monmatha Nath Maity9,
has held that for determining applicability of the first
or the second part, the Court will have to see whether
any time was fixed for performance of the agreement to
sell and if so fixed, whether the suit was filed beyond
the prescribed period, unless a case for extension of
time or performance was pleaded or established.
However, when no time is fixed for performance, the
Court will have to determine the date on which the
plaintiff had notice of refusal on the part of the
defendant to perform the contract."
6. Apart from limitation, the Defendants have raised another issue of
non-compliance with Section 12A of the Commercial Courts Act, 2015. It is
contended that the dispute arising from a collaboration agreement for
redevelopment is a "commercial dispute" of specified value and therefore,
mandatory pre-institution mediation was a condition precedent to filing the
suit and since the Plaintiff instituted the suit on 01.12.2023 without
exhausting the pre-institution mediation remedy and without pleading urgent
interim relief, the Suit is alleged to be non-est in law and liable to be
rejected under Order VII Rule 11(d) of the CPC. In support of his
contention, learned Counsel for the Defendants places reliance on the
Judgment of the co-ordinate Bench of this Court in Raj Kumar Gupta v.
Jagan Nath Bajaj, 2022 SCC OnLine Del 2995, wherein it has been held
that a collaboration agreement is a joint venture business undertaken by two
or more persons engaged in a single defined project.
7. Per contra, learned Counsel for the Plaintiff states that while
deciding an Application under Order VII Rule 11 of the CPC, the Court has
to only see the averments made in the Plaint. He states that the Collaboration
Agreement consists of a reciprocal relationship between the parties. He
states that the Defendants have not made payments according to the
schedule. He also states that apart from that, it was also the obligation of the
Defendant No.1 to get the properties mutated and the properties could not be
mutated till the final decree was passed by this Court. He states that the final
decree was finally passed only in 2022 and, therefore, it could not be said
that Article 54 of the Limitation Act, 1963 would apply to the present case.
He further states that since the Defendants have paid the entire money and
since mutation could not have been effected till the preparation of decree, it
cannot be said that the Suit is not within time.
8. On the second aspect, learned Counsel for the Plaintiff places reliance
on the Judgment passed by the Division Bench of this Court in Asif Ali
Khan v. Manoj Kumar, 2024 SCC OnLine Del 2083, wherein the Division
Bench has held that a Collaboration Agreement wherein the
collaborator/builder is to be given a portion of the property along with the
rights of the land beneath, would not be a commercial dispute and, therefore,
the present case cannot be said to be a Commercial dispute.
9. Heard the learned Counsels for the parties and perused the material on
record.
10. As rightly contended by the learned Counsel for the Plaintiff, while
deciding an Application under Order VII Rule 11 of the CPC, the Court only
have to look at the averments made in the Plaint and the documents filed
along with the Plaint to substantiate those averments.
11. Material on record discloses that it was the duty of the Defendants to
get the suit property mutated. Relevant portion of the Collaboration
Agreement reads as under:
SINGH
Signing Date:17.03.2026
10:52:41
12. As rightly contended by the learned Counsel for the Plaintiff that the
obligation of the Plaintiff could have been carried out only after the final
decree is passed. The final decree was passed only in 2022 and, therefore, it
cannot be said that the present Suit is belated. In any event, as rightly
pointed out by the learned Counsel for the Plaintiff that the Agreement
contains reciprocal obligations and unless it is shown that the reciprocal
obligations have been carried out it cannot be said that the date is
ascertainable. It is trite law that limitation is a mixed question of law and
fact and until and unless it can be clearly demonstrated that the Suit is barred
by limitation, courts ordinarily do not reject the Plaint under Order VII Rule
11 of the CPC on the ground that the Suit is barred by limitation.
13. The Apex Court in Panchanan Dhara v. Monmatha Nath Maity,
(2006) 5 SCC 340, while considering the applicability of Article 54 of the
Limitation Act, 1963 in cases where permission is to be obtained from the
authorities, has observed as under:
"22. A bare perusal of Article 54 of the Limitation Act
would show that the period of limitation begins to run
from the date on which the contract was to be specifically
performed. In terms of Article 54 of the Limitation Act,
the period prescribed therein shall begin from the date
fixed for the performance of the contract. The contract is
to be performed by both the parties to the agreement. In
this case, the first respondent was to offer the balance
amount to the Company, which would be subject to its
showing that it had a perfect title over the property. We
have noticed hereinbefore that the courts below arrived
at a finding of fact that the period of performance of the
agreement has been extended. Extension of (sic time for
performance of a) contract is not necessarily to be
inferred from written document. It could be implied also.
The conduct of the parties in this behalf is relevant. Once
a finding of fact has been arrived at, that the time for
performance of the said contract had been extended by
the parties, the time to file a suit shall be deemed to start
running only when the plaintiff had notice that
performance had been refused. Performance of the said
contract was refused by the Company only on 21-8-1985.
The suit was filed soon thereafter. The submission of Mr
Mishra that the time fixed for completion of the
transaction was determinable with reference to the event
of perfection of title of the second respondent cannot be
accepted. The said plea had never been raised before the
courts below. Had such a plea been raised, an
appropriate issue could have been framed. The parties
could have adduced evidence thereupon. Such a plea for
the first time before this Court cannot be allowed to be
raised. Even otherwise on a bare perusal of the
agreement for sale dated 18-4-1971, it does not appear
that it was intended by the parties that the limitation
would begin to run from the date of perfection of title.
27. Performance of a contract may be dependent upon
several factors including grant of permission by the
statutory authority in appropriate cases. If a certain
statutory formality is required to be complied with or
permission is required to be obtained, a deed of sale
cannot be registered till the said requirements are
complied with. In a given situation, the vendor may not
be permitted to take advantage of his own wrong in not
taking steps for complying with the statutory provisions
and then to raise a plea of limitation."
14. Similarly, in Urvashiben v. Krishnakant Manuprasad Trivedi, (2019)
13 SCC 372, the Apex Court, while considering Article 54 of the Limitation
Act, 1963 in a suit for specific performance in context to Order VII Rule 11
of the CPC, has observed as under:
"15. It is fairly well settled that, so far as the issue of limitation
is concerned, it is a mixed question of fact and law. It is true
that limitation can be the ground for rejection of plaint in
exercise of powers under Order 7 Rule 11(d)CPC. Equally, it is
well settled that for the purpose of deciding application filed
under Order 7 Rule 11 only averments stated in the plaint
a
l Description Period of Time from which period
o of suit limitation begins to run
n * * *
54. For 3 years The date fixed for the
specific performance, or, if
performanc no such date is fixed,
e of a when the plaintiff
contract has notice that
SINGH performance is
Signing Date:17.03.2026
10:52:41 refused.
e can bbe looked into, merits and demerits of the matter and the
allegations by the parties cannot be gone into. Article 54 of the
Limitation Act, 1963 prescribes the limitation of three years,
for suits for specific performance. The said Article reads as
under:
From a reading of the aforesaid Article, it is clear that
when the date is fixed for performance, limitation is three
years from such date. If no such date is fixed, the period
of three years is to be computed from the date when the
plaintiff, has notice of refusal. When rejection of plaint is
sought in an application filed under Order 7 Rule 11,
same is to be considered from the facts of each case,
looking at the averments made in the plaint, for the
purpose of adjudicating such application.
*****
17. The counsel for the appellants has placed reliance
on the judgment in Prabhakar [Prabhakar v. Sericulture
Deptt., (2015) 15 SCC 1 : (2016) 2 SCC (L&S) 149] . In
the abovesaid case, this Court has held that, even where
no limitation period is prescribed by the statute, courts
apply doctrine of delay/laches/acquiescence and non-suit
litigants who approach the court belatedly without
justifiable explanation. Delay and laches are to be
examined with reference to facts of each case and the
said judgment is not helpful to support the case of the
appellant inasmuch as this matter arises out of an
application filed under Order 7 Rule 11(d)CPC. The
judgment in T. Arivandandam [T. Arivandandam v. T.V.
Satyapal, (1977) 4 SCC 467] pertains to eviction from
tenanted premises which was contested by the tenant. In
the said case where rejection of the plaint under Order 7
Rule 11(d) was considered on the ground that the plaint
does not disclose cause of action but not a case for
rejection of plaint on the ground of limitation.
In Hardesh Ores [Hardesh Ores (P) Ltd. v. Hede and
Co., (2007) 5 SCC 614] it was the case falling in the first
limb of Article 54 of the Limitation Act, 1963 but not a
case falling under the second limb, where the time is not
the essence of the contract. In the judgment
in Dilboo [Dilboo v. Dhanraji, (2000) 7 SCC 702] this
Court has considered relevant principles of applicability
of Order 7 Rule 11CPC. Equally, I.T.C. Ltd. [I.T.C.
Ltd. v. Debts Recovery Appellate Tribunal, (1998) 2 SCC
70] is a case concerning rejection of plaint under Order
7 Rule 11(a) but not case of rejection on the ground of
limitation. In Raj Narain Sarin [Raj Narain
Sarin v. Laxmi Devi, (2002) 10 SCC 501] the suit was
filed after 40 years after execution of the sale deed and
as a fact it was found that sale deed was to the
knowledge of the plaintiff and he had not taken any steps
to declare the sale deed invalid. In that context, the order
passed under Order 7 Rule 11 was confirmed by this
Court. In N.V. Srinivasa [N.V. Srinivasa
Murthy v. Mariyamma, (2005) 5 SCC 548] the suit is for
declaration but not for specific performance and in the
said suit having regard to the facts of the case this Court
has held that suit for declaration filed by the plaintiff is
not maintainable. In Madanuri Rama [Madanuri Sri
Rama Chandra Murthy v. Syed Jalal, (2017) 13 SCC 174
: (2017) 5 SCC (Civ) 602] the suit was filed seeking
cancellation of sale deed on the ground that property in
question is a waqf property which cannot be sold to a
private party. The aforesaid case is a case not
concerning limitation under Article 54 of the Limitation
Act, 1963.
18. On the other hand, in the judgment
in Gunwantbhai [Gunwantbhai Mulchand Shah v. Anton
Elis Farel, (2006) 3 SCC 634] this Court has held as
under: (SCC p. 639, para 8)
"8. We may straightaway say that the manner in
which the question of limitation has been dealt with by
the courts below is highly unsatisfactory. It was rightly
noticed that the suit was governed by Article 54 of the
Limitation Act, 1963. Then, the enquiry should have
been, first, whether any time was fixed for performance
in the agreement for sale, and if it was so fixed, to hold
that a suit filed beyond three years of the date was barred
by limitation unless any case of extension was pleaded
and established. But in a case where no time for
performance was fixed, the court had to find the date on
which the plaintiff had notice that the performance was
refused and on finding that date, to see whether the suit
was filed within three years thereof. We have explained
the position in the recent decision in R.K. Parvatharaj
Gupta v. K.C. Jayadeva Reddy [R.K. Parvatharaj
Gupta v. K.C. Jayadeva Reddy, (2006) 2 SCC 428] . In
the case on hand, there is no dispute that no date for
performance is fixed in the agreement and if so, the suit
could be held to be barred by limitation only on a finding
that the plaintiffs had notice that the defendants were
refusing performance of the agreement. In a case of that
nature normally, the question of limitation could be
decided only after taking evidence and recording a
finding as to the date on which the plaintiff had such
notice. We are not unmindful of the fact that a statement
appears to have been filed on behalf of the plaintiffs that
they did not want to lead any evidence. The defendants,
of course, took the stand that they also did not want to
lead any evidence. As we see it, the trial court should
have insisted on the parties leading evidence on this
question or the court ought to have postponed the
consideration of the issue of limitation along with the
other issues arising in the suit, after a trial."
In the aforesaid case, it is clearly held that in cases
falling in second limb of Article 54 finding can be
recorded only after recording evidence. The said view
expressed by this Court supports the case of the
respondent-plaintiff.
19. In the judgment
in Rathnavathi [Rathnavathi v. Kavita Ganashamdas,
(2015) 5 SCC 223 : (2015) 2 SCC (Civ) 736] in paras 42
and 43 it was clearly held that when the time is not fixed
in the agreement, the limitation of three years to file a
suit for specific performance would begin when the
plaintiff has noticed that the defendant has refused the
performance of the agreement. In the judgment
in Ahmadsahab Abdul Mulla (2) v. Bibijan [Ahmadsahab
Abdul Mulla (2) v. Bibijan, (2009) 5 SCC 462 : (2009) 2
SCC (Civ) 555] while interpreting Article 54 of the
Limitation Act, it is held that the words "date fixed for
the performance" is a crystallised notion. The second
part "time from which period begins to run" refers to a
case where no such date is fixed.
In BalasariaConstruction (P) Ltd. v. Hanuman Seva
Trust [Balasaria Construction (P) Ltd. v. Hanuman Seva
Trust, (2006) 5 SCC 658]
and Chhotanben [Chhotanben v. Kiritbhai
Jalkrushnabhai Thakkar, (2018) 6 SCC 422 : (2018) 3
SCC (Civ) 524] this Court clearly held that issue of
limitation, being a mixed question of fact and law, is to
be decided only after evidence is adduced.
20. By applying the aforesaid principles in the
judgments relied on by Shri Dushyant A. Dave, learned
Senior Counsel appearing for the respondent, we are of
the considered view that merits and demerits of the
matter cannot be gone into at this stage, while deciding
an application filed under Order 7 Rule 11CPC. It is
fairly well settled that at this stage only averments in the
plaint are to be looked into and from a reading of the
averments in the plaint in the case on hand, it cannot be
said that the suit is barred by limitation. The issue as to
when the plaintiff had noticed refusal, is an issue which
can be adjudicated after trial. Even assuming that there
is inordinate delay and laches on the part of the plaintiff,
same cannot be a ground for rejection of plaint under
Order 7 Rule 11(d)CPC."
15. The second issue pertains to the objection regarding non-compliance
with Section 12A of the Commercial Courts Act, 2015. The Defendants
contend that the present dispute arises out of a Collaboration Agreement
and, therefore, falls within the ambit of a "commercial dispute" under
Section 2(1)(c) of the Commercial Courts Act, 2015.
16. The question whether a collaboration agreement for redevelopment
constitutes a "commercial dispute" is no longer res integra. The Division
Bench of this Court in Asif Ali Khan (supra) has held as under:
"11. The learned counsel appearing for the appellant
submits that the disputes involved in the present petition
would also be covered as a commercial dispute under
Clause (vi) of Section 2(1)(c) of the CC Act. The said
clause reads as under:
"(vi) construction and infrastructure contracts, including
tenders;"
12. The Agreement to Sell is in the nature of a contract
for sale and purchase of immovable property; it is not a
construction contract as contemplated under Clause
2(1)(vi) of the CC Act. Merely, because the payment of
instalments of the purchase consideration is linked to the
stage of construction, does not change the nature of the
Agreement to Sell to a construction contract. A plain
reading of the Agreement to Sell indicates that it is an
agreement for purchase of a flat. In terms of the
Agreement to Sell, the respondent had agreed to deliver
the possession of the said flat on or before December,
2017 in a semi furnished stage - with fan, light, geyser,
exhaust fan, Kent RO, chimney, modular kitchen, one
wardrobe extra. Notwithstanding the clear terms of the
Agreement to Sell, the learned counsel submits that since
the Collaboration Agreement was for redevelopment of
the subject property, the Agreement to Sell is required to
be considered in the same light. The said contention is
insubstantial. It is the appellant's case that the
respondent was entitled to sell a portion of the property,
which was agreed to be redeveloped in terms of the
Collaboration Agreement.
13. The learned counsel appearing for the appellant, at
this stage, seeks to advance the contention, which is in
variation with the pleadings in the plaint. He submits that
since the first floor of the property fell into the share of
the owners, the Agreement to Sell must be considered as
a construction contract. He submits that as the
Collaboration Agreement was for development of the
subject property and the respondent was merely acting as
an agent of the owners. This contention is also
insubstantial apart from being in variation with the
pleadings. Whether the said flat would fall to the share of
the developer (the respondent) or the owner of the
subject property makes little difference to the nature of
the dispute involved. As noted above, the Agreement to
Sell is a contract for sale and purchase of a residential
flat; not a construction contract."
17. In the abovementioned Judgment, the Division Bench has clarified
that merely because an agreement relates to redevelopment of property, it
does not ipso facto become a construction or infrastructure contract within
the meaning of Section 2(1)(c)(vi) of the Act. The Division Bench held that
where the substance of the transaction is transfer of immovable property or
allocation of developed portions of the property, the dispute remains one
relating to immovable property and does not assume the character of a
commercial dispute.
18. The Division Bench further observed that the nature of the agreement
must be determined from its substance and not from incidental clauses
linking payment or delivery to stages of construction. An agreement for sale
or allocation of built-up area, even if arising out of a redevelopment
arrangement, does not become a "construction contract" merely because
construction activity is contemplated.
19. Applying the law laid down by the Division Bench of this Court in
Asif Ali Khan (supra) to the facts of this case, it is seen that Collaboration
Agreement reveals that the Developer i.e., Plaintiff was to pay a sum of
Rs.7,50,00,000/- to the Defendants/owners and the Defendants/owners is not
spending any money for construction of the property. Upon construction, the
Plaintiff/Developer is entitled to the entire first floor, entire second floor and
other areas and impartible ownership rights in the land underneath. Though
the Agreement is a Collaboration Agreement, however, in fact, it is an
Agreement to Sell of portion of the property and the cost of purchase is the
construction of the property. Therefore, the Judgment - Asif Ali Khan
(supra) fully applies to the facts of the present case. The present case is not
one where the owner has employed a contractor to construct the property
and is paying amount towards construction of the property, rather it is a case
where Developer is purchasing the property at a price which is discernible
from the construction and, therefore, makes the contract for sale of the
property which will not come within the ambit of a commercial dispute.
20. In the present case, the Collaboration Agreement provides for
redevelopment of the Suit Property and allocation of specific built-up
portions to the Plaintiff in consideration of monetary payments and
development rights. The dispute essentially concerns enforcement of rights
in immovable property and reciprocal contractual obligations between
private parties. It is not a contract for execution of construction works
simpliciter, nor does it involve any commercial infrastructure project as
contemplated under Section 2(1)(c)(vi).
21. In view of the ratio laid down in Asif Ali Khan (supra), the present
suit cannot be categorised as a commercial dispute. Consequently, the
objection regarding non-compliance with Section 12A of the Commercial
Courts Act, 2015 is devoid of merit.
22. In view of the above, the Application is dismissed.
CS(OS) 813/2023
List on 10.08.2026.
SUBRAMONIUM PRASAD, J
MARCH 11, 2026
Rahul
