TaxTMI 
TaxTMI 
2019 (3) TMI 1964
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....garwal in 1973, the tenancy of first and second floors of the property was transferred to M/s Vinod Industries Limited (of which the First Plaintiff was a Director). On 05.10.1974, the First Plaintiff and her son Rajiv Chander Aggarwal (since deceased) entered into an agreement with Smt. Suraj Kumari (original Defendant No.1) for the sale of the above property ('Agreement'). The consideration for the sale of the property was fixed at Rs. 1,85,000/-. The relevant conditions pertaining to the payment of the amount of consideration and the other rights that were conferred on the parties were mentioned in the plaint. According to the Plaintiffs, the sale deed had to be executed by the Defendant No.1-Smt. Suraj Kumari after obtaining permission from the Land and Development Office (L&DO) and from the Income Tax Department. It was stated that the Plaintiffs paid an amount of Rs. 20,000/- on 05.10.1974, Rs. 40,000/- on 31.01.1975 and Rs. 10,000/- on 26.12.1975. According to them, they were put in proprietary possession of the premises on payment of Rs. 70,000/- as stipulated in the Agreement. 3. M/s Vinod Industries stopped paying the rent to Smt. Suraj Kumari as it had become a tenant o....
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....on made by the Plaintiffs that inquiries were being made about the status of the application before the L&DO was denied. The Defendants categorically stated in the written statement that the Agreement was never changed, varied, or modified. The Defendants asserted that the Plaintiffs were never put in proprietary possession of any part of the property, the tenant on the ground floor continued to pay the rent to the First Defendant, the house-tax, ground rent etc. were being paid by the First Defendant, and M/s Vinod Industries stopped paying rent to the First Defendant. Apart from the other averments, the Defendants also stated in the written statement that a petition for eviction against the tenant on the ground floor was filed by the Defendants and they ultimately settled the matter with Mrs. Deb who vacated in 1987. Finally, the Defendants pleaded that the Plaintiffs were never ready and willing to perform their part of the contract and hence, the suit was liable to be dismissed. 5. The Trial Court framed the following issues: "1. Whether the suit is within limitation? 2. Whether the suit is not bad for misjoinder of parties in cause of action? 3. Whether the Agreement to....
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....le till December, 1975. A simple interest at the rate of 12% p.a. was payable on the balance amount from January, 1976 every month along with the installments of Rs. 7,000/- per month. The rate of interest was increased from 12% to 24% if all the payments were not made as per the schedule. On payment of the first two installments of Rs. 20,000/- and Rs. 50,000/-, the Plaintiffs were entitled to receive the rents from Shri A.C. Deb who was residing on the ground floor as a tenant and M/s Vinod Industries. The liability for payment of the house tax, ground rent and all other outgoings had to be borne by the Plaintiffs after the Plaintiffs started receiving the rents from Shri A.C. Deb and M/s Vinod Industries. The Plaintiffs were made responsible for taking steps to evict the tenants. The Defendants had to get the necessary permission to sell the property from the L&DO before the date of execution of the sale deed as well as the necessary permission from the Income Tax Authorities. Clause 10 of the Agreement provided that the sale deed shall be executed before 31.03.1975. In case of failure on the part of the Defendants to execute the sale deed, the Plaintiffs were given the right to....
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.... L&DO in the year 1977. Assuming that time is the essence of the Agreement, according to Mr. Bhushan, Section 55 of the Indian Contract Act provides for the contract becoming voidable at the instance of the Plaintiffs which option was not exercised by them. In case, time is not the essence, the Plaintiffs are entitled for damages. He further stated that the Defendants did not terminate the Agreement and did not refund the amount paid by the Plaintiffs toward part of the sale consideration. 9. Mr. Sachin Datta, learned Senior Counsel appearing for the Defendants submitted that the limitation for filing the suit started on 31.03.1975, which was the date fixed for performance of the Agreement. As the suit was not filed within three years from that date, it was barred by limitation. He referred to the findings recorded by the Courts below that the agreement was neither varied nor modified. He further submitted that the non-fulfilment of the condition pertaining to obtaining permission cannot be an excuse for the Plaintiffs to not file a suit for specific performance within the prescribed period of limitation. According to him, the second part of Article 54 of the Schedule to the Limit....
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.... said that the date fixed for performance of the Agreement stood extended. We agree with the findings of the Courts below that the suit ought to have been filed within three years from 31.03.1975 which was the date that was fixed by the Agreement. The submission made on behalf of the Plaintiffs that part II of Article 54 of the Schedule to the Limitation Act applies to this case and that the suit was filed within limitation as the refusal by the Defendants was only in the year 1987 is not acceptable. Moreover, the Plaintiffs have not performed their part of the Agreement within a reasonable period. As per the Agreement, the Plaintiffs were given the right to get the sale deed executed through the Court in case of failure on the part of the Defendants to execute the sale deed by 31.03.1975. The Plaintiffs filed the suit 12 years after the date fixed for performance. It is relevant to refer to the judgment of this Court in K.S.Vidyanadam v. Vairavan (1997) 3 SCC 1 wherein it was held as follows: "Even where time is not of the essence of the contract, the plaintiffs must perform his part of the contract within a reasonable time and reasonable time should be determined by looking at ....