Recently, the Supreme Court dealt with a case where the appellants, as plaintiffs, sought cancellation of a sale deed executed in 2004, which they claimed was forged. The plaintiffs alleged that they were unaware of the sale deed until 2017, when they received a notice from the Deputy Collector regarding a request by the defendants for correcting the revenue records. The Court's crucial observation emphasised the importance of whether the plaintiffs had knowledge of the sale deed within the prescribed limitation period for filing the suit.
In the present case, the appellants filed a suit on 18th April 2017, seeking cancellation of a sale deed allegedly executed on 4th December 2004. They claimed that their signatures were forged, and they had no knowledge of the deed’s existence until 31st March 2017, when the Deputy Collector issued a notice regarding an application filed by the defendants. The suit was filed by the defendants. The suit was filed over 13 years after the execution of the sale deed, leading to a dispute over the suit’s maintainability due to the limitation period.
The appellants contended that they were unaware of the sale deed's execution until they received the notice from the Deputy Collector in 2017. They argued that their signatures and thumb impressions were forged on the document, and they were never present during the registration process. The appellants further stated that they obtained a true copy of the sale deed in April 2017, realizing the forgery and immediately filing the suit for cancellation. Whereas, the defendants filed an application under Order 7 Rule 11, CPC, seeking rejection of the plaint on two grounds: first, that the suit was barred by limitation as it was filed more than 13 years after the execution of the sale deed, and second, that the plaintiffs had not joined the Sub-Registrar as a party to the suit. The defendants argued that the limitation under the Limitation Act for filing such a suit is 3 years from the date of knowledge, and the plaintiffs' claim was outside this period.
The Court examined whether the plaintiffs' suit was barred by the limitation period, particularly focusing on when they had knowledge of the sale deed. The court observed that the High Court had relied on the premise that knowledge must be presumed from the date of registration. However, the Court clarified that under Section 59 of the Limitation Act, a suit for cancellation of a sale deed can be filed within three years from the date the plaintiff acquires knowledge of the fraudulent act. The Court also emphasised that the plaintiffs' allegations of fraud and forgery must be substantiated with adequate particulars in the plaint. The Court stressed that at the stage of considering an application under Order 7 Rule 11, the material facts in the plaint must be accepted as correct, and it is only if the plaint ex facie shows that the suit is barred by limitation that it can be rejected.
The Court further cited precedents, including P.V. Guru Raj Reddy v. P. Neeradha Reddy and Chhotanben v. Kirtibhai Jalkrushnabhai Thakkar, to support the view that the question of limitation arises from the date the plaintiff gains knowledge of the fraud. The Court noted that the High Court's reliance on the date of registration to presume knowledge was incorrect. The Court emphasised that limitation begins when the plaintiff gains actual knowledge, not simply from the date of registration.
The Top Court allowed the appeal, setting aside the High Court's judgment. The Court restored the decision of the First Appellate Court, holding that the suit was not barred by limitation as the plaintiffs had filed it within three years from the date they acquired knowledge of the fraud. The Court directed that the case be remanded for further proceedings, including examination of evidence on the merits.
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