Holding

When no time for performance is fixed, the second limb of Article 54 of the Limitation Act applies, and limitation must be determined based on the date the plaintiff received notice of refusal, which requires evidentiary proof; therefore the suit was not barred by limitation.

Summary

The plaintiffs, successors of a predecessor who had entered into a 1964 agreement to purchase a property, filed a suit on 4 April 1994 for specific performance of that agreement and a perpetual injunction, after a public notice and objections in November 1993. The defendants contended that the suit was barred by limitation. The trial court and the Bombay High Court dismissed the suit, holding it was filed more than 29 years after the agreement. On appeal, the Supreme Court examined whether Article 54 of the Limitation Act, 1963 applies when no time for performance is fixed, and held that the second limb of Article 54 governs, requiring a finding of when the plaintiffs obtained notice of the defendants' refusal—a factual issue that should be decided after evidence. Consequently, the lower courts erred in dismissing the suit as barred. The appeal was allowed, the limitation finding set aside, and the matter remanded to the trial court for a fresh trial of all issues.

Issues considered

Whether the suit for specific performance and injunction is barred by limitation under Article 54 of the Limitation Act, 1963 when no time for performance is fixed in the agreement.
Whether the question of limitation can be tried as a preliminary issue without evidence.
Whether Section 46 of the Indian Contract Act, 1872, is applicable to determine a reasonable time for performance.
Whether the injunction claim is independent of the specific performance claim for limitation purposes.

Legislation cited

Code of Civil Procedure, 1908s. Order XIV Rule 2
Indian Contract Act, 1872s. Section 46
Limitation Act, 1963s. Article 54, s. Section 27, s. Section 3
Specific Relief Act, 1963s. Section 20

Subjects

Specific performanceLimitation ActArticle 54InjunctionContract lawSale agreementBar of limitationCivil procedure

Judgment

f

A GUNWANTBHAI MULCHAND SHAH AND ORS.
v.
ANTON ELIS FAREL AND ORS

MARCH 6, 2006

B [S.B. SINHA AND P.K. BALASUBRAMANY AN, JJ.]

Limitation Act, 1963: Section 27, Articles 54 and I 13.

Specific Perfurmance---lliu time fixed for performance of agreement-
C Suit for permanent injunction---Bar of limitation --Maintainability of suit-·
Predecessor-in-intaest of the plaint!ffe entered into an agreement dated
I 8. I 2. I 964 for purchase of the plaint scheduled property-Possession was
transferred /0 the predecessor uf the plaintiffs in pursuance of the agreement
for sale-An intending purchaser from the plaintiffs issued a public notice on
D. 7. I 1.1993 inviting objections, if any, tu the purchase to be made by him-
Defendants Nos. I to 3 filed objections on 19. I I. I 99 3- -Plaintijjs filed suit on
4. 4. I 994 for 5pecific performwzce uf the agreement dated I 8. I 2.1994 and for
a perpetual injunction restraining the defendants from interfering with their
possession of the suit properoi--Defendant ,Vo. I claimed to have sold the
property and the same had subsequently been purchased by defendant No. 4
E from the vendee- Defendants raised a plea that the suit was barred by
limitation-Both the parties informed the trial court by filing statements in
writing in that behalf that they did not want to lead any evidence on this
issue-Trial court held that the suit for specific performance of the agreement
dated 18.12.1964, filed only on 4.4.1994, more than 29 years after the
F agreement, was barred by limitation-High Court affirmed the decision ofthe
trial court-Correctness of-Held: The suit is governed by Article 54 of the j -
Limitation Act--The enquiry should have been, first, whether any time was
fixed for performance in agreement for sale- If it was so fixed, to hold that
a suit filed beyond three year5 uf the date was barred by limitation unless any
case for extension was pleaded and established-But in a case where no time
G for performance was fixed, the court had to find the date on which the plaintiff
had notice that the performance was refused and on finding that date to see
whether the suit was filed within three years thereof-Jn the instant case, the
second limb of Art. 54 would apply- -Hence, dismissal of the suit as a whole
not justified-The whole matter required reconsideration- -Findings by the

H 886
GUNWANTBHAI MULCHAND SHAH'" ANTON ELIS FAREL 887
> ~ courts below set aside-Matter remitted to trial court for adjudication afresh- A
Contract Act, 1872, S. 46-Specific Performance Act, 1963-Code of Civil
Procedure, 1908, Order XIV, Rule 2.

The predecessor-in-interest of the appellants-plaintiffs entered into
an agreement dated 18.12.1964 for purchase of the plaint scheduled
property. However, no time for performance was fixed in the agreement B
for sale. It was stated that possession was transferred to the predecessor
of the plaintiffs in pursuance of the agreement for sale. An intending
--.
·4 purchaser from the plaintiffs issued a public notice on 7.11.1993 inviting
objections, if any, to the purchase to be made by him. Defendants Nos. 1
to 3 filed objections on 19.11.1993 and, therefore, the plaintiffs filed the C.
suit on 4.4.1994 for specific performance of the agreement dated
18.12.1994 and for a perpetual injunction restraining the defendants from
interfering with their possession of the suit property. Defendant No. 1
claimed to have sold the property and the same had subsequently been
purchased by defendant No. 4 from the vendee.
D
The defendants raised a plea that the suit was barred by limitation.
\
Both the parties informed the trial court by filing statements in writing
> in that behalf that they did not want to lead any evidence on this issue.
The trial court held that the suit for specific performance of the agreement
dated 18.12.1964, filed only on 4.4.1994, more than 29 years after the
agreement, was barred by limitation. The High Court upheld the decision E
of the trial court as affirmed by the first appellate court. Hence the appeal.

On behalf of the appellant-plaintiffs, it was contended that as no time
for performance was fixed in the agreement for sale the first limb of Article
54 of the Limitation Act, 1963 was not applicable; and that the second F
limb of Article 54 was applicable as the suit was filed within six months
of the knowledge of refusal to perform and, therefore, the suit was filed
within limitation.

Allowing the appeal, the Court

HELD: 1. The manner in which the question oflimitation has been dealt
G
with by the courts below is highly unsatisfactory. It was rightly noticed that
-r" the suit was governed by Article 54 of the Limitation Act, 1963. Then, the
enquiry should have been, first, whether any time was fixed for performance,

- in the agreement for sale, and if it was so fixed, to hold that a suit filed beyond
H
888 SUPREME COURT REPORTS (2006] 2 S.C.R.

A three years of the date was barred by limitation unless any case for extension
was pleaded and established. But in a case where no time for performance
...
was fixed, the court had to find the date on which the plaintiff had notice that
the performance was refused and on finding that date to see whether the suit
was filed within three years thereof. [894-E-GJ
B R.K. Parvatharaj Gupta v. K.C. Jayadeva Reddy, (2006) 2 SCALE 156,
relied on.

2. In the case on hand, there is no dispute that no date for
performance is fixed in the agreement and if so, the suit could be held to
be barred by limitation only on a finding that the plaintiffs had notice that
C the defendants were refusing performance of the agreement. In a case of
that nature normally, the question could be decided only after taking
evidence and recording a finding as to the date on which the plaintiff had
such notice. A statement appears to have been filed on behalf of the
plaintiffs that they do no want to lead any evidence. The defendants, of
D course, took the stand that they also did not want to lead any evidence.
The trial court should have insisted on the parties leading evidence, on
this question or the court ought to have postponed the consideration of
the issue of limitation along with the other issues arising in the suit, after
a trial. (894-H; 895-A-CI

E 3. It is seen that the suit was dismissed by the trial court on the
finding that the claim for the relief of specific performance was barred
by limitation. The plaint contains not only a prayer for specific
performance but also a prayer for perpetual injunction restraining the
-
defendants from interfering with the possession of the plaintiffs and from
creating any documents or entering into any transaction in respect of the
F suit property. Of c~mrse, the latter part of that prayer is directly linked
to the claim for specific performance, but the suit as regards the prayer 1 •
for perpetual injunction to protect the possession of the plaintiff over the
suit property on the claim that the pre~cessor of the plaintiffs was put
in possession of the property pursuant to the agreement for sale, on a
G subsequent date, could not have been held to be not maintainable on any
ground. Of course, the grant of the relief of injunction in a sense is
discretionary and the court ultimately might or might not have granted
the relief to the plaintiffs. The defendants could have also shown that the

H
relief of injunction claimed is merely consequential to the relief of specific
performance and was not an independent relief. But that is different from
--
1)--
r

GUNWANTBHA! MULCHAND SHAH 1•_ ANTON ELIS FAREL 889

saying that the suit could be dismissed merely on a finding that the prayer A
for specific performance of the agreement was barred by limitation. In any
event, therefore, the dismissal of the suit as a whole as not maintainable, could
not be justified or said to be correct. [895-C-F)

4. Whether the plaintiffs by themselves could have maintained the
suit for specific performance and, if so, whether they are entitled to specific B
performance and whether even if they are not entitled to a decree for
specific performance, they are entitled to a perpetual injunction based on
their alleged possession are all matters which had to be decided before
the suit could be satisfactorily disposed of. These aspects relating to the
prayer for specific performance, of course, would become relevant, only C
if the suit for that relief is found to be in time and that question requires
investigation, on the terms of the agreement in this case. (896-A-C)

5. The reliance placed on Section 46 of the Contract Act, 1872 by
the defendants would also be an aspect that has to be considered when
finally deciding whether the suit could be held to be in time and whether D
in a suit filed 29 years after the agreement for sale any relief could be
\
granted to the plaintiffs. The applicability of Section 46 of the Contract Act,
and if applicable, what is the reasonable time, in this case has to be determined. ~ ·
The aspect of delay will have relevance while considering whether the plaintiffs-.
would be entitled to the discretionary relief of specific performance, even if E
they satisfy the other requirements of the Specific Relief Act, 1963. But those
aspects can be decided only after taking evidence in the case and giving the
plaintiffs an opportunity to show that they had always been and they are ready
and willing to perform their part of the contract and to show that they had
paid the entire consideration and had been put in possession of the property
and nothing further remained for them to perform and all that remained was F
_i _
.. ~
the execution of the sale deed in their favour and their faiiure to sue earlier
does not disentitle them to the relief of specific performance either on the
ground that the suit was barred by limitation or on the ground of delay and
latches on their part or on the ground that the discre!ion of the court in terms
of Section 20 of the Specific Relief Act was not liable to be exercised in their G
favour in the circumstances of the case. All these pleas available to the
defendants cannot enable the dismissal of the suit as barred by limitation
under Article 54 of the Limitation Act, as things now stand. (896-C-G)

6. The question as to how long a plaintiff, even if he had performed
...
I the whole of his obligations under an agreement for sale, in which a time for H
SUPREME COURT REPORTS (2006] 2 S.C.R.
890
A performance is not fixed, could keep alive his right to specific performance
and to come to court after 29 years seeking to enforce the agreement, may
have also to be considered by the court especially in the context of the fact
that the relief of specific performance is discretionary and is governed by the
relevant provisions of the Specific Relief Act. But again, these questions
cannot be decided as preliminary issues and they are not questions on the
B basis of which the suit could be d.ismissed as barred by limitation. The question
of limitation has to be decided only on the basis of Article 54 of the Limitation
Act and when the case is not covered by the first limb of that Article, normally,
the question of limitation could be dealt with only after evidence is taken and
not as a preliminary issue unless, of course, it is admitted in the plaint that
C the plaintiffs had notice that performance was refused by the defendants and
it is seen that the plaintiffs approached the court beyond three years of the
date of notice. Such is not the case here. (896.. G-H; 897-A-CJ

7. Section 27 of the Limitation Act provides for extinguishment of
right to property only at the determination of the period limited by the
D Limitation Act for instituting a suit for possession. Section 3 of the
Limitation Act provides that subject to Sections 4 to 24 of the Act every
suit instituted after the period prescribed therefor in the Limitation Act
shall be dismissed. When the suit is for specific performance of an
agreement for sale and if one conducts a search in the Limitation Act in
E the context of Section 3 of thi: Act one is obviously confronted only with
Article 54 of the Schedule to the Limitation Act. The scope of Article 54
is already dealt with and in this case it would be the second limb of the
Article that would apply and consequently the suit could not be held to
be barred by limitation, having been filed three years after the agreement
for sale or the date for performance fixed in the agreement for sale. The
F plaintiffs have pleaded that they are in possession of the suit property and
since it is not a suit for possession as such, the applicability of Section 27
of the Limitation Act also may not arise. It is, therefore, a case where in 1 -
the context of Article 54 of the Limitation Act, the question had to be
decided on the pleadings and evidence to be adduced by the parties on
G the aspect of the second limb of Article 54 of the Limitation Act. (897-C-F]

8. The suit insofar as it relates to the prayer for a perpetual injunction
restraining the defendants from interfering with the possession of the
plaintiffs cannot be held to be barred by limitation. Whether the plaintiffs are ,
able to prove that they are in possession of the suit property as on the date of
H suit and establish that they are entitled to the injunction prayed for is a
\ __ _

GUNWANTBHA! MULCHAND SHAH.-. ANTON ELIS FAREL [BALASUBRAMANYAN, J.] 89 J
different matter. There is also the question whether the relief of injunction A
;. .-4_ can be treated as being only a relief consequential to the relief of specific
performance and the denial of one would automatically lead to the denial of
the other or whether it is in independent relief in itself and even if the
plaintiffs are not entitled to a decree for specific performance they would still
be entitled to a decree for injunction, a relief the grant of which is, of course,
in the discretion of the court It may be noticed that a suit for injunction would B
be governed by the residuary article, Article 113 of the Limitation Act and
the cause of action for the said relief arises when the right to sue accrues.
That would depend upon the court deciding when the right accrued on the
pleadings and-the evidence in the case. Therefore, the suit insofar as it relates
to the prayer for a decree for perpetual injunction cannot be held to be barred C
by limitation at the preliminary stage. (897-G-H; 898-A-CJ

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1492 of2006.

From the Final Judgment and Order dated 16.9.2004 of the Bombay
High Court in Second Appeal No. 1037/2004. D
U.U. Lalit, Gaurav Agrawal and Prashant Kumar for the Appellants.
"> Abhay N. Dass, Ms. Arti Mahajan and Goodwill lndeevar for Respondent
No.2.
E
Respondents Nos. 4 and 5 In-Person.

Shekhar Naphade, Vinay Navare and Naresh Kumar for the Respondent
No. 6.

The Judgment of the Court was delivered by
F
J.-.
P.K. BALASUBRAMANYAN, J. Leave granted.
~ \

I. This appeal is by the plaintiffs. Their predecessor-in-interest along
with another entered into an agreement dated 18.12.1964 for purchase of the
plaint scheduled property. The agreement was registered. The agreement was G
to be performed by the predecessor-in-interest of defendants I to 3, the other
party to the agreement, within three months of the date of getting due
permission for such sale, presumably from other co-owners. On 5.10.1968, a
subsequent agreement was executed. It was stated that possession was
transferred to the predecessor of the plaintiffs, in pursuance of the agreement
for sale. An intending purchaser from the plaintiffs issued a public notice on H
892 SUPREME COURT REPORTS [2006] 2 S.C.R.

A 7.11.1993 inviting objections, if any, to the purchase to be made by him.
Defendants I to 3 objected. In the light of this objection dated 19.11.1993, the ...
•
plaintiffs filed the suit on 4.4.1994 for specific performance of the agreement
dated 18.12.1964 and for a perpetual injunction restraining the defendants
from interfering with their possession of the suit property. It may be noted
that defendant No. I claims to have sold the property and the same has
B subsequently been purchased by defendant No. 4 from that vendee.

2. It was averred in the plaint that pursuant to the agreement for sale,
the predecessor-in-interest of the plaintiffs, had paid the entire consideration
in terms of the agreement and he was in possession of the property. The
C plaint implied that there remained nothing to be performed on the part of the
plaintiffs on the terms of the agreement for sale and since on 19.11.1993, the
plaintiffs came to know that the defendants were refusing to perform their
part of the agreement, the suit was being filed. Defendant No. 1 resisted the
suit. She did not admit the agreement. She put the plaintiffs to proof of the
fact that the entire amount due as consideration and as per the agreement, has
D been paid towards the purchase price. She denied the averment to that effect
in the plaint. She pleaded that she had transferred the title and possession
to another and that other had sold the property to defendant No.4. The
pecuniary jurisdiction of the trial court was questioned. A plea was also
raised that the suit was barred by limitation. Defendant No. 4, the assignee,
E also reiterated those contentions.
3. Two other facts to be noted are that according to the plaint, the
father, predecessor of the plaintiffs, died in the year 1972 and according to
-
defendants I to 3 their predecessor, the other party to the agreement, died in
the year 1965.
F 4. The defendants sought a trial of the issue relating to jurisdiction as
a preliminary issue in terms of Section 9A as introduced in Maharashtra and j •
Order XIV Rule 2 of the Code of Civil Procedure. The trial court allowed that
prayer. But before that issue was tried preliminarily, the defendants pleaded
that the issue of limitation also be tried as a preliminary issue. Though the
G plaintiffs opposed the same submitting that evidence was needed for deciding
the question of limitation, the trial court acceded to the plea of the defendants
to try the issue of limitation also as a preliminary issue. It is seen that both
the parties informed the trial court by filing statements in writing in that . ~,..
behalf, that they do not want to lead any evidence on the issues to be tried
H as preliminary issues. The court therefore proceeded to decide those issues
\
}--

GUNWANTBHAI MULCHAND SHAH 1•. ANTON ELIS FAREL [BALASUBRAMANYAN; J.) 893

on the pleadings and the documents filed. A
,t -1.
5. The trial court held that it had jurisdiction to entertain the suit. In fact,
that aspect was not projected before us and, therefore, it is not necessary to
refer to that aspect any further. The trial court held that the suit for specific
perfonnance of the agreement dated 18.12.1964, filed only on 4.4.1994, more
than 29 years after the agreement, was barred by limitation. It, therefore, B
dismissed the suit on the ground of limitation. The plaintiffs filed an appeal
before the lower appellate court. That court, agreed with the trial court in its
conclusion that the suit was barred by limitation. The plaintiffs filed a second
y
~ appeal before the High Court of Bombay. The High Court by the impugned
judgment upheld the decision of the trial court as affinned by the first
appellate court and con finned the dismissal of the suit as barred by limitation.
c
It is this decision of the High Court that is challenged in this appeal at the
instance of the plaintiffs. For convenience, the parties are being referred to
in this judgment with reference to their ranks in the trial court, namely, as the I
plaintiffs and the defendants.
D
6. Learned counsel for the plaintiffs initially argued that the question
of limitation, on the facts and in the circumstances of the case, was a mixed
\.
)
question of fact and law and was not one of those issues which could have
been tried .as a preliminary issue in tenns of Order XIV Rule 2 of the Code
of Civil Procedure. Learned counsel further submitted that on the avennents
in the plaint, it could not be said that the suit was barred by limitation.
E
Obviously, no time for perfonnance was fixed in the agreement for sale and
hence the fir~t limb of Article 54 of the Limitation Act which was the
applicatory article, had no application. It was the second limb of Article 54
of the Limitation Act that had application and the cause of action arose only
when the plaintiffs had notice that performance was refused by the defendants. F
Learned counsel submitted that the plaintiffs had notice of the refusal to
.. !
~'
perfonn only on 19.11.1993, when the defendants objected to the public
notice issued by an intending purchaser from the plaintiffs and the suit having
been filed within six months of the said knowledge of refusal, it could not
be held to be barred by limitation. Learned counsel for the defendants, on the
G
other hand, submitted that a reading of the plaint as a whole would clearly
show that the entire consideration is claimed to have been paid by the
predecessor of the plaintiffs before his death in the year 1972. According to
7 the learned counsel, the agreement had stipulated that on the vendor getting
consent for the sale, the purchase price payable under the agreement would
be paid by the intending purchaser, the predecessor of the plaintiffs and on H
~
-i

SUP$Ja.1E COURT REPORTS (2006] 2 S.C.R
894
A the averments in the plaint, it is clear that the amount was paid prior to 1972.
He pointed out that the further stipulation in the agreement for sale was that
the sale deed would be executed within three months of the paying of the
purchase price in full and that occurred in the year 1972 itself. Twenty one
years had expired thereafter and this is a case to which the first limb of
B Article 54 of the Limitation Act would have application and the plaintiffs
should have sued within three years of payment of the entire consideration
under the agreement to the defendants. Alternatively, learned counsel
contended that when in spite of the payment of the entire consideration the
defendants did not come forward to execute the sale deed in terms of the
agreement for sale, the plaintiffs must be taken to have knowledge of the
C refusal of the defendants to perform their part of the contract and they should
have filed the suit within three years of the payment of the entire consideration
or in any event within three years of the death of their father. Learned counsel
also submitted that in a case where no time was fixed for performance of an
agreement, Section 46 of the Indian Contract Act was attracted and the
D contract had to be performed within a reasonable time. No doubt, the explanation
to Section 46 of the Indian Cor1tract Act showed that what is reasonable time
would depend upon the facts of the case but on the facts of this case, going
by the agreements and by the averrnents in the plaint in the light of the
written statements filed, it was clear that 29 years could not be treated as '
reasonable time within which the obligation under the contract had to be
E performed by the predecessor of the defendants. Learned counsel, therefore.
submitted that there was no reason to interfere with the finding that the suit
was barred by limitation.

7. We may straightaway say that the manner in which the question of
limitation has been dealt with by the courts below is highly unsatisfactory.
F It was rightly noticed that the suit was governed by Article 54 of the Limitation
Act, 1963. Then, the enquiry should have been, first, whether any time was
fixed for performance in the agreement for sale, and if it was so fixed, to hold 1 •

that a suit filed beyond three years of the date was barred by limitation unless
any case of extension was pleaded and established. But in a case where no
G time for performance was fixed, the court had to find the date on which the
plaintiff had notice that the performance was refused and on finding that
date, to see whether the suit was filed within three years thereof. We have
explained the position in the recent decision in R. K. Parvatharaj Gupta v.
K.C. Jayadeva Reddy. (2006) 2 SCALE 156. In the case on hand, there is no
H dispute that no date for performance is fixed in the agreement and if so, the
suit could be held to be barred by limitation only on a finding that the
\ __

GUNWANTBHAI MULCHAND SHAH 1•. ANTON ELIS FAREL [BALASUBRAMANYAN, J.] 895

plaintiffs had notice that the defendants were refusing performance of the A
~ agreement. In a case of that nature normally, the question of limitation could
be decided only after taking evidence and recording a finding as to the date
on which the plaintiff had such notice. We are not unmindful of the fact that
a statement appears to have been filed on behalf of the plaintiffs that they do
not want to lead any evidence. The defendants, of course, took the stand that
they also did not want to lead any evidence. As we see it, the trial court
B
should have insisted on the parties leading evidence, on this question or the
court ought to have postponed the consideration of the issue of limitation
"\ along with the other issues arising in the suit, after a trial.

8. It is seen that the suit was dismissed by the trial court on the finding
that the claim for the relief of specific performance was barred by limitation.
c
The plaint contains not only a prayer for specific performance but also a
prayer for perpetual injunction restraining the defendants from interfering
with the possession of the plaintiffs and from creating any documents or
entering into any transaction in respect of the suit property. Of course, the
latter part of that prayer is directly linked to the claim for specific performance, D
but the suit as regards the prayer for perpetual injunction to protect the
\ possession of the plaintiff over the suit property on the claim that the
)
predecessor of the plaintiffs was put in possession of the property pursuant
to the agreement for sale, on a subsequent date, could not have been held to
be not maintainable on any ground. Of course, the grant of the relief of E
injunction in a sense is discretionary and the court ultimately might or might
not have granted the relief to the plaintiffs. The defendants could have also
shown that the relief of injunction claimed is merely consequential to the
relief of specific performance and was not an independent relief. But that is
different from saying that the suit could be dismissed merely on a finding that
the prayer for specific performance of the agreement was barred by limitation. F
_,_
In any event, therefore, the dismissal of the suit as a whole as not maintainable,
~· '>
could not be justified or said to be correct.

9. It is true, as contended by learned counsel for the defendants that it
might be possible to infer that the entire consideration according to the plaintiff
G
was paid prior to 1972 when their predecessor died. But on going through the
agreement for sale, it is seen that there were certain obligations to be performed
" ..y by the predecessor of the defendants, who allegedly entered into the agreement
for sale and what was the position regarding the fulfillment of those obligations
had to be considered. The subsequent agreement or receipt relied on by the
plaintiffs had also to be proved since the same had been denied by the first H
896 SUPREME COURT REPORTS (2006] 2 S.C.R.

A defendant in her written statement and it had to be decided whether the
possession in fact was handed over to the predecessor of the plaintiffs by
the defendants on receipt of the amount referred to in the subsequent
agreement or receipt dated 5.10.1960. Whether the plaintiffs by themselves
could have maintained the suit for specific performance and, if so, whether
they are entitled to specific performance and whether even if they are not
B entitled to a decree for specific performance, they are entitled to a perpetual
injunction based on their alleged possession are all matters which had to be
decided before the suit could be satisfactorily disposed of. These aspects
relating to the prayer for specific performance, of course, would become
relevant, only ifthe suit for that relief is found to be in time and that question
C requires investigation, on the terms of the agreement in this case.

IO. The reliance placed on Section 46 of the Contract Act by learned
counsel for the defendants would also be an aspect that has to be considered
when finally deciding whether the suit could be held to be in time and
whether in a suit filed 29 years after the agreement for sale any relief could
D be granted to the plaintiffs. The applicability of Section 46 of the Contract
Act, and if applicable, what is the reasonable time, in this case has to be
determined. The aspect of delay will have relevance w.hile considering whether
the plaintiffs would be entitled to the discretionary relief of specific '
performance, even if they satisfy the other requirements of the Specific Relief
E Act. But those aspects can be decided only after taking evidence in the case
and giving the plaintiffs an opportunity to show that they had always been
and they are ready and willing to perform their part of the contract and to
show that they had paid the entire consideration and had been put in possession
of the property, and nothing further remained for them to perform and all that
remained was the execution of the sale deed in their favour and their failure
F to sue earlier does not disentitle them to the relief of specific performance
either on the ground that the suit was barred by limitation or on the ground
of delay and latches on their part or on the ground that the discretion of the
..
court in terms of Section 20 of the Specific was not liable to be exercised in
their favour in the circumstances of the case. All these pleas available to the
G defendants cannot enable the dismissal of the suit as barred by limitation
under Article 54 of the Limitation Act, as things now stand.

11. The question as to how long a plaintiff, even if he had performed
the whole of his obligations under an agreement for sale, in which a time for
performance is not fixed, could keep alive his right to specific performance
H and to come to court after 29 years seeking to enforce the agreement, may
GUNWANTBHAI MULCHAND SHAH 1•. ANTON ELIS FAREL [BALASUBRAMANYAN, J.l 897

have also to be considered by the court especially in the context of the fact A
~ -\. that the relief of specific performance is discretionary and is governed by the
relevant provisions of the Specific Relief Act. But again, these questions
cannot be decided as preliminary issues and they are not questions on the
basis of which the suit could be dismissed as barred by limitation. The
question of limitation has to be decided only on the basis of Article 54 of the
Limitation Act and when the case is not covered by the first limb of that B
Article, normally, the question of limitation could be dealt with only after
evidence is taken and not as a preliminary issue unless, of course, it is
" admitted in the plaint that the plaintiffs had notice that performance was
" refused by the defendants and it is seen that the plaintiffs approached the
court beyond three years of the date of notice. Such is not the case here. c
12. Section 27 of the Limitation Act provides for extinguishment of
right to property only at the determination: of the period limited by the
Limitation Act for instituting a suit for posseslion. Section 3 of the Limitation
Act provides that subject to Sections 4 to 24 .of the Act every suit instituted
after the period prescribed therefor in the Limitation Act shall be dismissed. D
When the suit is for specific performance of an agreement for sale and we
\.
conduct a search in the Limitation Act in the context of Section 3 of the Act,
)
we are obviously confronted only with Article 54 of the Schedule to the
Limitation Act. We have already dealt with the scope of Article 54 and
indicated that in this case it would be the second limb of the Article that
would apply and consequentially the suit could not be held to be barred by
E
limitation, having been filed three years after the agreement for sale or the
date for performance fixed in the agreement for sale. We have also noticed
that the plaintiffs have pleaded that they are in possession of the suit property
and since it is not a suit for possession as such, the applicability of Section
27 of the Limitation Act also may not arise. It is, therefore, a case where in F
~-.

.,, the context of Article 54 of the Limitation Act, the question had to be decided
' on the pleadings and evidence to be adduced by the parties on the aspect of
the second limb of Article 54 of the Limitation Act.

13. We have already indicated that the suit insofar as it relates to the
prayer for a perpetual injunction restraining the defendants from interfering G
with the possession of the plaintiffs cannot be held to be barred by limitation.
Whether the plaintiffs are able to prove that they are in possession of the suit
__, ...y-
property as on the date of suit and establish that they are entitled to the
injunction prayed for, is a different matter. There is also the question whether
the relief of injunction can be treated as being only a relief consequential to
H
898 SUPREME COURT REPORTS [2006] 2 S.C.R.

A the relief of specific perfonnance and the denial of one would automatically ~
lead to the denial of the other, or whether it is an independent relief in itself
and even if the plaintiffs are not entitled to a decree for specific performance
they would still be entitled to a decree for injunction, a relief the grant of
which is, of course, in the discretion of the court. It may be noticed that a
suit for injunction would be governed by the residuary article, Article 113 of
B the Limitation Act and the cause of action for the said relief arises when the
right to sue accrues. That would depend upon the court deciding when the
right accrued, on the pleadings and the evidence in the case. Therefore, the
suit insofar as it relates to the prayer for a decree for perpetual injunction
cannot be held to be barred by limitation at this preliminary stage.
c 14. In such a situation, especially, when the whole matter requires
reconsideration, we do not think it proper to go into the various arguments
urged by learned senior counsel appearing in this case. We think that .all
those arguments require to be kept alive for decision in the suit after a trial.
Suffice it to say that we consider that the interests of justice would be subserved
D by setting aside the finding by the courts below that the suit is barred by
limitation. even while upholding the finding that the trial court had the
jurisdiction to try the suit and remand the suit to the trial court for a decision
of all the issues arising therein, including the issue of limitation, in accordance
with law after giving the parties an opportunity to adduce evidence in support
E of their respective cases.
15. In the result, this appeal is allowed, the finding that the suit is
barred by limitation and the consequential dismissal of it are set aside and the
suit is remanded to the trial court for a proper trial of all the issues (other
than the issue of jurisdiction) arising in the case and for disposal afresh in
F accordance with law. The parties are directed to appear in the trial court on
17.4.2006 so as to receive further orders as to posting. However, in the
circumstances, there will be no order as to costs.
..
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V.S.S. Appeal allowed.