2011 (6) TMI 1037 - HC - Indian Laws

Second defendant lacked authority to assign property rights after sale agreement was validly terminated under Article 54 Limitation Act

Gladys Devavaram Versus S. Subbiah

The HC allowed the appeal, finding that the second defendant had no right in the suit property at the time of assignment to the plaintiff. The court ... Sale of the suit property - time of the execution of the sale agreement - ready and willing to perform his part of the contract - agreement or assignation - Whether the alleged assignment of the suit sale agreement by the second Defendant in favor of the Plaintiff binds the first Defendant - Period of limitation - HELD THAT:- On taking into consideration of the submissions made on behalf of the first Defendant and on considering the submissions made on behalf of the Plaintiff has concluded that the second Defendant had No. right in the suit property at the time of assignation of suit sale agreement in favour of the Plaintiff under Ex.A2. This Court has also gone through the judgment of the trial Court and found that the trial Court has failed to see that when the agreement dated 10.04.1997 was not in force on 21.03.2000, the second Defendant could not have assigned his right under the sale agreement in favour of the Plaintiff. It is substantiated that the first Defendant had terminated the suit sale agreement as early as on 28.07.1997. Ex.B4, true copy of the telegram would ratify this factum. This suit appears to have been filed on 24.08.2000. According to the first Defendant the suit is hopelessly barred as it has been filed beyond the period of limitation. As evident from Ex.B4 true Xerox copy of the telegram, the sale agreement was terminated on 28.07.1997. Admittedly the suit is filed on 24.08.2000. Article 54 of the Limitation Act contemplates that; for filing a suit for the relief of specific performance of a contract, the period of limitation is three years. The period of limitation shall be reckoned from the date fixed for the performance, or of No. such date is fixed, when the Plaintiff has notice that performance is refused. Even in spite of receipt of the telegram, the second Defendant did not come forward to reply. The Plaintiff has also not chosen to summon the second Defendant to disprove the fact that the suit is barred by limitation. On a perusal of Ex.A1, suit sale agreement the schedule of payment has been stipulated stage by stage. But this has not been followed by the second Defendant. As adumbrated supra, the Plaintiff has also admitted the latches on the part of the second Defendant in his evidence. Further the averments of E.A1 would go to show the intention of the parties to the contract, that time is the essence of the contract. Since, the second Defendant had failed to adhered to the norms and conditions stipulated in the suit sale agreement, the first Defendant had proceeded to terminate the contract of sale and therefore, as rightly observed in M.Mohar Ali v. Md. MamudAli reported in 1998 (3) CCC 328 (Gau) the suit itself is barred by limitation and this has also not been considered by the trial Court. Further the second Defendant was never ready and willing to perform his part of the contract. On the date of assignation of suit sale agreement i.e., under Ex.A2 on 21.03.2000, the second Defendant was not having any right or interest over the suit property so as to enable him to assign the suit sale agreement in favour of the Plaintiff. In the result the appeal is allowed. Issues Involved:1. Whether the alleged assignment of the suit sale agreement by the second Defendant in favor of the Plaintiff binds the first Defendant.2. Whether the second Defendant had any right in the suit property to assign the suit sale agreement in favor of the Plaintiff.3. Whether the suit is barred by the limitation period.Issue-wise Detailed Analysis:1. Binding Nature of the Assignment:The court examined Ex.A2, the document allegedly assigning the suit sale agreement from the second Defendant to the Plaintiff. The document was ambiguous, creating confusion about whether it was an agreement or an assignment. The first Defendant denied knowledge or consent regarding this assignment, contending that the second Defendant had no right to assign the agreement since he failed to perform his part of the contract. The court found that the Plaintiff failed to prove the first Defendant's consent to the assignment. The second Defendant, who remained ex parte, did not substantiate the Plaintiff's claims. The court concluded that the assignment did not bind the first Defendant as she had no knowledge or consented to it.2. Right of the Second Defendant to Assign:The court noted that the second Defendant had issued a post-dated cheque for Rs. 3 lakhs, which was dishonored due to insufficient funds. The first Defendant received only Rs. 3 lakhs in cash. As per Ex.A1, the second Defendant was required to pay additional amounts by specified dates, which he failed to do. Consequently, the first Defendant sent a telegram and legal notice on 01.08.1997, canceling the sale agreement and forfeiting the advance amount. The court found that the second Defendant had no right or interest in the suit property at the time of the alleged assignment to the Plaintiff, as the agreement was already canceled. Thus, the second Defendant could not assign a right that did not exist.3. Limitation Period:The court established that the suit sale agreement was terminated on 28.07.1997, as evidenced by Ex.B4, a telegram. The suit was filed on 24.08.2000, beyond the three-year limitation period stipulated under Article 54 of the Limitation Act. The Plaintiff failed to prove that the suit was filed within the limitation period. The court emphasized that the second Defendant's failure to adhere to the payment schedule indicated that time was of the essence in the contract. Consequently, the suit was deemed barred by limitation.Conclusion:The court allowed the appeal, setting aside the judgment and decree dated 12.04.2006, and dismissed the suit in O.S. No. 17 of 2004 with costs. The court concluded that the alleged assignment did not bind the first Defendant, the second Defendant had no right to assign the agreement, and the suit was barred by the limitation period.