2022 (7) TMI 1462 - HC - Companies Law

Plaintiff's Suit Dismissed as Time-Barred under Limitation Act - Understanding Fraud and Conveyance Deeds

M/s Trienity Prime Property Projects LLP & Ors. ; Ramesh Mali Versus M/s Samrat Associates & Ors. ; Amrishchandra Agarwal

The court dismissed the plaintiff's suit, ruling it time-barred under the Limitation Act as the plaintiff was aware of the alleged fraud within the ... Seeking rejection of plaint on the ground that the Suit is barred by limitation - Order VII Rule 11 (d) of the Code of Civil Procedure, 1908 - HELD THAT:- It can be seen from the averments in the plaint, in particular paragraphs 27, 28, 29, 33 and 35 that the Plaintiff had challenged the impugned Conveyance Deeds on two main grounds one that the Plaintiff thought he was executing documents in furtherance of and for transferring his right, title and interest in favour of Defendant Nos.1 to 7 and thought that even Defendant Nos.8 to 12 are also transferring their rights in favour of Defendant Nos.1 to 7 simultaneously. The other ground of challenge to the Conveyance Deeds is that though Defendant Nos.10 to 12 approached the Plaintiff for settlement and agreed to pay consideration price for purchasing the suit properties, Defendant Nos.10 to 12 had not paid full consideration and hence there was no settlement. From reading of the plaint, it is apparent that the Plaintiff was aware that he was executing the documents/Conveyance Deeds to transfer his rights in the suit property in favour of another. He was thus conscious that the character of the documents was one, by which he was to receive consideration and he would to transfer his right, title and interest favour of another. If the Plaintiff were at all aggrieved by the Conveyance Deeds as to there being fraud as to the contents of the Conveyance Deeds, the Plaintiff was obligated to file a Suit for setting aside of the conveyance deeds and for which limitation of three years under Article 59 of the Limitation Act would be applicable. At the latest the present suit should have been filed within a period of three years from such knowledge which would be at the latest three years from 14.02.2017 when the Plaintiff had filed the affidavit in reply to the Chamber Summons and the three years period expired on 15.02.2020. It is clear from the decisions relied upon by the Plaintiff, in particular NINGAWWA VERSUS BYRAPPA AND ORS. [1968 (1) TMI 51 - SUPREME COURT] and Dularia Devi [1990 (3) TMI 381 - SUPREME COURT] that where there is no fraud with regard to character of the documents, but fraud with regard to contents of the documents, the documents are voidable and accordingly Suit will have to be filed within the time prescribed under Article 59 of the Limitation Act. The Plaintiff’s contention that since the impugned Conveyance Deeds are void ab initio there is no need for their cancellation and Article 59 of the Limitation Act would have no application cannot be accepted. The prayer in the plaint of possession clearly would follow the Conveyance Deeds having to be set aside and absent the setting aside of the Conveyance Deeds, the Suit for possession cannot stand on its own. Hence, Article 65 which provides a period of limitation of 12 years in the event the Plaintiff is seeking possession is not applicable and cannot save the Suit from being barred by the law of limitation. The decisions relied upon by the Defendants where the Plaintiff would have to sue for cancellation of the document and Article 59 of the Limitation Act being applicable are apposite. The learned Counsel for the Defendants are are correct in their submission that in the present case the issue raised by the Plaintiff in the present Suit is only as to “fraud with regard to the contents of the document” which in light of the settled law would require the Plaintiff to seek appropriate relief for setting aside and/or cancelling the document which in the present case are the Deeds of Conveyance, and that too within the prescribed period of three years from their learning of such alleged fraud with regard to the contents of the document. Further, it is well settled that fraud with regard to the contents of the document only make a document voidable and would have to be avoided by the person seeking to do the same - the decision of the Supreme Court in VEENA SINGH (DEAD) THROUGH L.R. VERSUS THE DISTRICT REGISTRAR/ADDITIONAL COLLECTOR (F/R) AND ORS. [2022 (5) TMI 1578 - SUPREME COURT] would not support the Plaintiff’s case. Plaintiff’s have in the Plaint admitted that it would be necessary for the Plaintiff to seek cancellation of the impugned Conveyance Deeds. The Plaintiff cannot rely on the suspension of limitation applicable to Suits by the Supreme Court in its orders in light of corona virus pandemic since March, 2020. This is in view of my finding that the present Suit would have to be filed latest by 15.02.2020 - Section 31 of the Specific Relief Act would be applicable for setting aside of the Conveyance Deeds. The period of limitation would undoubtedly be a period of three years for setting aside the impugned conveyance deeds and which period has in my view expired, prior to the filing of the present Suit. The Plaint filed in the captioned Suit is rejected under Order VII Rule 11(d) on the ground that the Suit appears from the statement in the plaint to be barred by the law of limitation - Application rejected. Issues Involved:1. Whether the suit is barred by the law of limitation.2. Whether the conveyance deeds were executed fraudulently and are void ab initio.3. Whether the plaintiff was aware of the contents of the conveyance deeds.4. Whether the conveyance deeds were executed in violation of an injunction order.5. Whether the plaintiff is entitled to possession of the suit properties.Issue-Wise Detailed Analysis:1. Whether the suit is barred by the law of limitation:The defendants argued that the suit is barred by the law of limitation as the plaintiff had knowledge of the alleged fraud by 22.08.2016 or at the latest by 14.02.2017. According to the defendants, the suit should have been filed within three years from this knowledge, i.e., by 15.02.2020. The suit was filed on 14.12.2021, making it time-barred under Article 59 of the Limitation Act, which prescribes a three-year limitation period for seeking cancellation of documents.2. Whether the conveyance deeds were executed fraudulently and are void ab initio:The plaintiff claimed that the conveyance deeds were executed under misrepresentation and fraud, believing them to be related to a Memorandum of Understanding (MoU) from 2008. The plaintiff argued that the deeds are void ab initio and do not require cancellation. However, the court noted that the plaintiff was aware that he was executing documents to transfer his rights in the property, indicating fraud regarding the contents, not the character of the documents. The court emphasized the distinction between fraud as to the character of a document (which makes it void) and fraud as to the contents (which makes it voidable).3. Whether the plaintiff was aware of the contents of the conveyance deeds:The court found that the plaintiff was aware of the nature of the conveyance deeds, as evidenced by his reply to the City Survey Officer and his affidavit in response to Chamber Summons No.1741 of 2016. These documents indicated that the plaintiff knew the deeds transferred rights to the suit properties and only objected to the non-payment of full consideration.4. Whether the conveyance deeds were executed in violation of an injunction order:The plaintiff contended that the deeds were void as they were executed in violation of an injunction order dated 26.11.1982. The court rejected this argument, noting that the injunction was in favor of the predecessors of Defendant Nos.10 to 12 and did not operate against them. The court also referred to the Supreme Court's decision in Thompson Press (India) Ltd., which held that a sale in violation of an injunction order is not void ab initio but remains valid between the parties to the transaction.5. Whether the plaintiff is entitled to possession of the suit properties:The court held that the plaintiff's claim for possession is consequential upon the cancellation of the conveyance deeds. Since the deeds were found to be voidable and not void ab initio, the plaintiff would need to seek their cancellation within the prescribed limitation period. The court concluded that the suit for possession could not stand on its own without setting aside the conveyance deeds.Conclusion:The court rejected the plaint under Order VII Rule 11(d) of the Code of Civil Procedure, 1908, on the ground that the suit is barred by the law of limitation. The court emphasized that the plaintiff was aware of the alleged fraud by 22.08.2016 or at the latest by 14.02.2017, and the suit should have been filed by 15.02.2020. The court also noted that the conveyance deeds were voidable due to fraud as to their contents and required cancellation within the limitation period. The plaintiff's plea that the deeds were void ab initio and did not require cancellation was rejected. The court found no merit in the plaintiff's arguments and dismissed the suit accordingly.