TaxTMI 
TaxTMI 
2016 (11) TMI 1768
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.... parties agreed that the time was not essence of the contract. When the plaintiff was always ready and willing to pay the balance amount, the first defendant was postponing the execution of the sale deed. On 06.01.2004, the plaintiff issued a registered notice expressing his readiness and willingness. It was received by the first defendant on 12.01.2004. On receipt of such notice, the first defendant sought extension of time. Accordingly, the time was extended till the end of May 2004. However, the first defendant went back on his promise and has not executed the sale deed. The second and third defendants are the sons of the first defendant. Again on 20.04.2007, the plaintiff sent another notice to the first defendant intimating about his readiness and willingness. It was served on the first defendant on 28.04.2007. However, he has not come forward to execute the sale deed. Hence, all the defendants are bound to execute the sale deed as per the suit agreement. If for any reason, the court comes to the conclusion that the relief of specific performance cannot be granted, the plaintiff is entitled to get back the advance amount with interest. The suit is filed within time under Artic....
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....ed. Thus, the dismissal of such prayer by the trial court has become final and conclusive. 7. The First Appellate Court found that the plaintiff has miserably failed to prove the suit sale agreement and the passing of consideration. It is also found that when the suit is clearly barred by limitation under Article 54 of the Limitation Act, the other relief of refund of the advance amount is also barred by limitation. Accordingly, the First Appellate Court allowed the appeal by setting aside the judgment and decree of the trial court, thereby dismissing the suit in its entirety. 8. Challenging the judgment and decree of the lower appellate court, the plaintiff filed the present second appeal. This Court while admitting the second appeal has raised the following substantial questions of law: "a) Whether the first Appellate Court is right in law in refusing to grant the decree for refund of advance amount on the ground of bar of limitation particularly when the suit for refund can be filed within 12 years as per Article 62 of the Limitation Act as held in 2000(1) CTC 507? b) Whether the first Appellate Court has committed an error in disbelieving the execution of the sale agreem....
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....d before this court. 13. The appellant is the plaintiff in a suit for specific performance or in alternative for refund of advance amount. The trial court rejected the relief of specific performance and granted the relief of refund of advance amount. The plaintiff has not challenged the refusal of the relief of specific performance by filing any appeal before the first appellate court. On the other hand, it is only the first defendant, challenged the decree for refund of the advance amount. Therefore, in so far as the plaintiff is concerned, he cannot canvass the correctness or otherwise of the judgment rendered by the trial court refusing the relief of specific performance before this court, while challenging the judgment and decree of the lower appellate court dismissing the suit in its entirety. Fairly, the learned counsel for the appellant has also conceded that the relief of specific performance is barred by limitation, since the suit itself came to be filed after the period of three years. However, it is his contention that for refund of the advance amount, Article 62 of the Limitation Act alone is to be applied, since a charge is created over the suit property under Section....
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....his section, paragraph (1), clause (a) and paragraph (5), clause (a), is fraudulent." 20. While dealing with the provisions in Section 55(6)(b) of the Transfer of Property Act and Article 62 of the Limitation Act, the Apex Court in its decision reported in 2000(1) CTC 507, Delhi Development Authority vs Skipper Construction Co.(P) Ltd., has observed at paragraph Nos. 29 to 33 as follows: "29. These points depend upon the effect of the provisions in Sub-clause (6) of Section 55 of the Transfer of Property Act. That Section starts with the words "In the absence of a contract to the contrary", and reads thus (insofar as it is material for our purpose): "Section 55 (6)(b): The buyer is entitled (a) ................. (b) unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, to the extent of the seller's interest in the property, for the amount of any purchase-money property paid by the buyer in anticipation of the delivery and for interest on such amount; and, when he properly declines to accept the delivery, also for the earnest (if any) and for the costs (if any....
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....of purchase money paid. Interest is payable from the date of payment of the purchase money to the seller till date of delivery of property to the purchaser or till the execution of the sale deed, whichever is earlier. Points 1 and 2 are decided accordingly in favour of the buyers. POINT 3: 32. Article 62 of the L imitation Act, 1963 ( which co rresponds to A rticle 132 of the L imitation Act 1908) provides a period of 12 years "to enforce payment of money secured by a mortgagee or otherwise charged upon immovable property". Time runs from the date "when money becomes due". 33. From the above Article, it is clear that the period of limitation for enforcement of the statutory charge created under Section 55(6)(b) is 12 years from the date when becomes due and not 3 years. The period remains the same even for enforcement of the charge on the substituted security. Point 3 is decided accordingly." (emphasis supplied) 21. Similarly in another decision reported in 2004(SCC) 711, Videocon Properties Ltd. Vs Dr Bhalchandra Laboratories, while considering the scope of Section 55(6)(b) of the Transfer of Property Act, the Apex Court has observed at paragraph No. 13 as follows:....
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.... the claim of the purchaser for refund of earnest money deposit will not arise for being asserted." 22. By following the above two decisions of the Apex Court, the learned Single Judge of this court in a decision reported in 2013(6) CTC 28, K.Shanmugam vs C. Samiappan has observed at paragraph No. 23 as follows: "23. The ratio laid down by the Supreme Court is that the the buyer shall have a statutory charge over the immovable property under Section 55 (6)(b) of the Transfer of Property Act, 1882. The said view has been followed by various High Courts including the Division benches of this Court. Citing all those decisions shall not be necessary. Suffice to state that now it is a settled position of law that limitation for refund of advance money with interest under an agreement for sale of immovable property is governed by Article 62 of the Limitation Act as the buyer has got a statutory charge over the property to the extent of interest of the seller and that hence the period of limitation shall be 12 years from the date on which the right to sue for the refund of advance amount accrues. Therefore, the lower appellate Court is definitely wrong in holding that the limitat....
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....ncerned, Article 62 of the Limitation Act alone has to be applied and not the limitation period fixed for specific performance. Article 62 of the Limitation Act grants 12 years time for enforcing payment of money secured by a mortgage or otherwise charged upon immovable property. 26. Further, it is to be noted that in respect of an advance payment made under an agreement for sale, if not disputed by the vendor regarding the quantum or the nature of transaction between the parties, there is no liability fastened on the vendor for repayment of the said sum on the date of the agreement itself. Only under certain eventualities, the liability to repay such advance amount by the vendor would arise. On the other hand, such advance amount paid creates an interest over the property agreed to be sold as discussed hereunder. 27. The question, that in an agreement for sale in respect of an immovable property, whether a statutory charge is created on such property in favour of the buyer/the agreement holder is answered by the relevant statute itself under Section 55(6)(b) of the Transfer of Property Act, which I have extracted supra. Under the said provision of law, the statutory charge is cr....