Time Limits Stipulated In Agreement Cannot Be Ignored Merely Because Suit For Specific Performance Is Filed Within Limitation Period: Karnataka HC

The Karnataka High Court has observed that the Courts should exercise greater scrutiny and adhere strictly to time limits stipulated in agreements when considering suits for specific performance, ensuring that the prescribed timeframes are given due significance and not ignored, even if the suit is filed within the limitation period.

In that context, the Bench of Justice Krishna S Dixit and Justice Ramachandra D Huddar observed that, "while exercising discretion in suit for specific performance, the Courts should bear in mind that when the parties prescribed a time for taking certain steps or for completion of the transaction that must have  some significance and therefore, time/period prescribed cannot be ignored. The Courts will apply greater scrutiny and strictness when considering whether purchaser was ready and willing to perform his part of the contract and every such suit for specific performance need not be decreed merely because it is filed within the period of limitation, by ignoring time limits stipulated in the agreement."

The appellants-defendants challenged the judgment rendered by the Senior Civil Judge, Channarayapatna, on October 20, 2012, in OS No. 4/2008. The court had decreed in favor of the plaintiff, directing the defendants to execute a registered sale deed for the suit schedule property as per the agreement dated August 2, 2007, within three months, with the plaintiff having already deposited the remaining balance of Rs. 16,00,000/- with the court. If the defendants failed to comply, the plaintiff was granted the liberty to have the sale deed executed by the court through a Commissioner at the defendants' expense.

The defendants were the owners of the suit schedule property and had agreed to sell it to the plaintiff for Rs. 17,00,000/-. They executed an agreement of sale on August 2, 2007, receiving an advance of Rs. 50,000/- from the plaintiff. The agreement stipulated that the defendants would execute the registered sale deed within six months after changing the Khatha and other documents to their name and upon receiving the remaining Rs. 16,50,000/-. In September 2007, the defendants requested an additional Rs. 50,000/-, which the plaintiff paid, and the defendants acknowledged this with an undertaking.

The plaintiff alleged that the defendants did not come forward to execute the sale deed and that she was always ready and willing to perform her part of the contract. She issued a legal notice to the defendants on February 4, 2008, calling them to execute the sale deed, but the defendants refused to receive the notice. The plaintiff learned that the defendants were attempting to sell the property to others, prompting her to file the suit in OS No. 4/2008 seeking specific performance of the sale agreement.

The defendants admitted their ownership of the property and the execution of the sale agreement, including the receipt of the initial Rs. 50,000/- and the subsequent Rs. 50,000/-. However, they denied the plaintiff's claims of readiness and willingness to perform her part of the contract. They contended that they entered the agreement due to financial necessity and that the plaintiff had financial difficulties, causing delays in completing the transaction. The defendants asserted that they had already obtained the necessary documents in their name at the time of the agreement. They argued that the plaintiff's delays caused them significant financial loss and difficulties and that the suit was filed without cause and barred by the law of limitation, thus praying for its dismissal.

The Court observed that, "Here in this case, because of financial difficulties, defendants wanted to sell the property. Inspite of their persistent demand to pay the balance consideration amount, as per the evidence brought on record, the plaintiff has expressed her financial difficulties. Therefore, it cannot be stated that plaintiff was ever ready and willing to perform her part of contract. The fact that limitation is for three years to file such suits does not mean that a purchaser can wait for one or two years or to wait after completion of time stipulated and file a suit and obtain a decree for specific performance."

Subsequently, the Court took the view that the respondent-plaintiff failed to discharge her duty to prove her readiness as well as willingness to perform her part of the contract by adducing cogent evidence. 

Accordingly, the appeal succeeded and the suit of the plaintiff was decreed.

Cause Title: Smt. Lakkamma @ Lakshmamma & Ors vs Smt. Jayamma

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