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One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=461493 https://www.taxtmi.com/caselaws?id=461493 Dismissal of the suit, which has been filed for recovery of the advance amount paid pursuant to the agreement - statutory charge created over the property for the price paid by the buyer (plaintiffs) was continuing on the date of the suit or not - plaintiffs are entitled to recover the suit amount as claimed or not - suit not been filed within a period of three years - HELD THAT:- From the evidence of P.W. 1, it could be easily seen that, after entering into contract on 28.11.1995 and paying a sum of Rs. 5,00,000/- as advance towards the sale consideration, the plaintiffs have not taken any steps to perform their part of the contract. They never shown their readiness and willingness during the relevant period. Whereas the defendants have issued legal notice, Exs. B1, dated 11.09.1996 showing their readiness to execute the sale deed in favour of the plaintiffs. But the plaintiffs except sending legal notice under Ex. B1, have not taken any steps to get the sale registered in their favour. Whereas for the first time, under Ex. A6 dated 30.6.2005, almost after a lapse of 10 years, the plaintiffs have issued notice to the defendants for return of Rs. 5,00,000/-, which has been paid on the date of agreement, and the same was also replied by the defendants. In K. Shamugam and another v. C. Samiappan and Others [2013 (9) TMI 1320 - MADRAS HIGH COURT], the learned single judge of this Court by relying upon the judgment of the Hon'ble Supreme Court, has held that as regards the charge, Art. 62 of the Limitation Act is applicable. In P. Muthusamy v. K. Arumugam [2016 (11) TMI 1768 - MADRAS HIGH COURT] the learned single judge of this Court, after taking into consideration the ratio laid down by the Hon'ble supreme Court in the judgment referred above, has held that limitation to enforce charge is 12 years and for recovery of refund of advance amount would be governed under Article 62 of the Limitation Act. Section 54 of the Transfer of Property Act shows that mere agreement itself does not create any interest or charge in the property. Section 54, in fact, requires an act of parties for creating any right or interest in any such property, meaning thereby, mere simple agreement for sale would not create any charge. Whereas Section 55(6)(b) of the Transfer of Property Act, otherwise creates a statutory charge, which can be said to have been created by the act of parties. The charge created under Section 55(6)(b) also depends upon certain contingencies that when buyer has improperly declined to accept delivery of the property or when he properly declines to accept delivery. Only the plaintiffs have committed default and for the first time, in the year 2005 only they sent a legal notice. Therefore, this Court is of the view that even though statutory charge has been created in respect of the agreement, it has been lost due to subsequent default by the plaintiffs. In fact, they failed to get the sale deed executed in their favour and take delivery, in spite of readiness shown by the respondents. Therefore, it is clear that due to their (plaintiffs) own default, the statutory charge attached with the property has been lost. Therefore, the plaintiffs cannot now contend that they are entitled to recover the amount paid by them. This Court is of the view that finding of the trial Court holding that the limitation to enforce charge is for three years cannot be sustained in law in view of the period of limitation governed under Article 62 of the Limitation Act. Admittedly, Article 62 of the Limitation Act prescribes 12 years period for filing the suit to enforce charge. However, in view of the conduct of the plaintiffs, i.e. in view of their own default the charge created over the property has been lost, the suit for recovery of money has necessarily to fail. In Videocon properties limited case [2003 (12) TMI 592 - SUPREME COURT], the Hon'ble supreme Court has categorically held that the charge gets attracted and attaches to the property for the benefit of the buyer the moment he pays any part of the purchase money and is only lost in case of purchaser's own default or his improper refusal to accept delivery. In any event, the suit for recovery of money cannot be maintainable in view of the fact that statutory charge created for the price money has been lost due to plaintiffs' own default. Conclusion - A statutory charge under Section 55(6)(b) is lost if the buyer defaults or improperly refuses delivery. The limitation period for enforcing such a charge is 12 years under Article 62 of the Limitation Act. Though the finding of the trial Court holding that the limitation to enforce charge is for three years is hereby set aside, the appeal is dismissed and the judgment and decree of the trial Court dismissing the suit is hereby confirmed on the aforesaid factual aspects. Case-Laws Indian Laws Wed, 03 May 2017 00:00:00 +0530