LEGAL ISSUE: Whether a suit for declaration of ownership and possession can be decreed in the absence of a prayer for specific performance of an agreement to sell, and whether such a suit is barred by limitation.
CASE TYPE: Civil
Case Name: Rakesh Malhotra vs. Kamaljit Singh Sandhu & Ors.
[Judgment Date]: 16 November 2018
Date of the Judgment: 16 November 2018
Citation: 2018 INSC 1015
Judges: Uday Umesh Lalit, J. and M. R. Shah, J.
Can a court grant a decree for specific performance of an agreement to sell when the plaintiff has not specifically asked for it in their suit? The Supreme Court of India addressed this question in a recent civil appeal, focusing on whether a suit for declaration of ownership and possession can succeed without a prayer for specific performance and if such a suit is within the prescribed limitation period. The Court upheld the High Court’s decision, which had overturned the first appellate court’s order, emphasizing the importance of specific prayers in a suit and adherence to limitation laws. The judgment was delivered by a two-judge bench comprising Justice Uday Umesh Lalit and Justice M. R. Shah, with Justice M. R. Shah authoring the opinion.
Case Background
The case revolves around a property dispute concerning Plot No. 336 (old) 548 (new), measuring 420 square meters, located in Sushant Lok, Gurgaon. The appellant, Rakesh Malhotra (original plaintiff), filed a civil suit seeking a declaration that he was the owner and in possession of the property. He also sought to declare a sale deed dated 28 January 2002, in favor of respondents Kamaljit Singh Sandhu and others (original defendant nos. 2 and 3), as illegal. The plaintiff also sought a decree of possession, directing the original defendant no. 1 to execute the sale deed in his favor, along with a permanent injunction restraining the defendants from transferring the property.
The plaintiff’s case was that he had entered into an Agreement to Sell with the original defendant no. 1 on 20 April 1987, for the said property, which was originally allotted to the defendant no. 1 by M/s Ansal Properties. The plaintiff claimed to have paid the full sale consideration at the time of the agreement and was also given a General Power of Attorney. However, the original defendant no. 1, after receiving the title deed from M/s Ansal Properties, sold the property to defendant nos. 2 and 3 on 28 January 2002.
The original defendant nos. 2 and 3 contested the suit, claiming to be bona fide purchasers for value. They argued that the suit was not maintainable without a prayer for specific performance of the agreement to sell and was also barred by limitation. The trial court partly decreed the suit in favor of the plaintiff for recovery of the amount paid by the plaintiff to the original defendant no. 1, but the first appellate court reversed this decision and decreed the suit in its entirety, which was subsequently set aside by the High Court.
Timeline
| Date | Event |
|---|---|
| 20 April 1987 | Agreement to Sell executed between the original plaintiff and original defendant no. 1. |
| 1987 | General Power of Attorney executed by original defendant no. 1 in favour of the original plaintiff. |
| 31 March 1994 | Title deed/sale deed executed by M/s Ansal Properties in favour of original defendant no. 1. |
| 28 January 2002 | Sale deed executed by original defendant no. 1 in favour of original defendant nos. 2 and 3. |
| 2004 | Original plaintiff instituted Civil Suit No. 159 of 2004. |
| 19 October 2010 | Trial Court partly decreed the suit in favor of the original plaintiff for recovery of money. |
| 10 August 2011 | First Appellate Court allowed the appeal, decreeing the suit for declaration and specific performance. |
| 29 February 2016 | High Court allowed the appeal of original defendant nos. 2 and 3, setting aside the first appellate court’s order. |
| 16 November 2018 | Supreme Court dismissed the appeal. |
Course of Proceedings
The original plaintiff filed Civil Suit No. 159 of 2004 in the Court of the Additional Civil Judge (Senior Division), Gurgaon. The trial court partly decreed the suit, granting a decree for recovery of Rs. 2,46,645.50 with 9% interest against defendant no. 1 but dismissed the other reliefs sought by the plaintiff. The plaintiff appealed this decision to the District Judge, Gurgaon.
The first appellate court allowed the appeal, setting aside the trial court’s judgment and decreeing the suit in favor of the plaintiff. It declared the sale deed of 28 January 2002 as illegal and granted specific performance of the agreement to sell dated 20 April 1987. The original defendant nos. 2 and 3 then filed a second appeal (R.S.A. No. 4015 of 2011) before the High Court of Punjab and Haryana at Chandigarh.
The High Court allowed the second appeal, setting aside the first appellate court’s decision and restoring the trial court’s judgment. The High Court held that the first appellate court was not justified in granting the relief of specific performance because there was no specific prayer for it in the original suit. The High Court also noted that the suit was barred by limitation.
Legal Framework
The case primarily involves the interpretation of the following legal principles:
- Specific Performance: This refers to a legal remedy where a court orders a party to fulfill their obligations as per a contract. The plaintiff sought specific performance of the agreement to sell dated 20 April 1987, but this prayer was not explicitly made in the original suit.
- Limitation: This refers to the statutory time limit within which a legal action must be initiated. The defendants argued that the suit was barred by limitation as it was filed many years after the cause of action arose.
- Section 6 Rule 17 of the Code of Civil Procedure (CPC): This provision allows for the amendment of pleadings in a suit. The plaintiff’s application to amend the plaint to include a prayer for specific performance was dismissed.
The Court also considered the nature of an agreement to sell, whether it constitutes a complete sale or merely an agreement to transfer property in the future. The Court emphasized that an unregistered agreement to sell, not on proper stamp duty, can only be used for collateral purposes and not as evidence of a complete sale.
Arguments
Appellant’s (Original Plaintiff) Arguments:
- The plaintiff had paid the entire consideration at the time of the agreement to sell dated 20 April 1987, and had also paid the stamp duty.
- The plaintiff was put in possession of the property and was also given a General Power of Attorney by the original defendant no. 1.
- The sale was complete in favor of the plaintiff, and the trial court should have decreed the suit in its entirety.
- The first appellate court rightly decreed the suit, and the High Court erred in setting aside this judgment.
- The reliefs sought in the plaint implicitly included a prayer for specific performance, and the issue framed by the trial court covered this relief.
- The High Court did not appreciate that the plaintiff had paid all installments to the developer, M/s Ansal Properties, and that the original defendant no. 1 had assured the plaintiff that he would execute the sale deed in his favor.
- The sale deed executed by the original defendant no. 1 in favor of defendant nos. 2 and 3 was illegal and void.
Respondents’ (Original Defendant Nos. 2 and 3) Arguments:
- The High Court rightly set aside the first appellate court’s judgment, as there was no specific prayer for specific performance of the agreement to sell in the plaint.
- The suit was barred by limitation, as it was filed in 2004 based on an agreement to sell dated 20 April 1987, and the title deed in favor of defendant no. 1 was executed in 1994.
- The plaintiff was aware of the title deed in favor of defendant no. 1 since 1994 but did not take any steps to get the sale deed executed in his favor.
- The sale deed in favor of defendant nos. 2 and 3 was a registered sale deed with full consideration, and the plaintiff’s suit was filed much later.
- As a gesture to end the litigation, the defendants were willing to pay Rs. 10,00,000 to the plaintiff as ex-gratia, in addition to the amount decreed by the trial court.
| Main Submission | Sub-Submissions (Appellant) | Sub-Submissions (Respondents) |
|---|---|---|
| Validity of First Appellate Court’s Order |
✓ The first appellate court correctly granted specific performance. ✓ The High Court erred in reversing a well-reasoned judgment. |
✓ The first appellate court erred in granting specific performance without a specific prayer in the plaint. ✓ The High Court correctly reversed the appellate court’s decision. |
| Nature of Agreement to Sell |
✓ The agreement to sell was a complete sale due to payment of full consideration and possession. ✓ The plaintiff had fulfilled all obligations. |
✓ The agreement to sell was not a complete sale. ✓ It was an unregistered document not on proper stamp duty. |
| Limitation |
✓ The suit was within limitation. ✓ The cause of action arose when the defendant no. 1 sold the property to defendant nos. 2 and 3. |
✓ The suit was barred by limitation. ✓ The suit was filed many years after the agreement and the execution of the title deed in favor of defendant no. 1. |
| Reliefs Sought |
✓ The reliefs sought implicitly included specific performance. ✓ The issue framed by the trial court covered specific performance. |
✓ The plaint did not contain a specific prayer for specific performance. ✓ The first appellate court could not grant a relief not specifically sought. |
Issues Framed by the Supreme Court
The Supreme Court did not explicitly frame issues in the judgment. However, the core issues addressed by the Court were:
- Whether the High Court was correct in setting aside the judgment of the first appellate court, which had granted specific performance of the agreement to sell.
- Whether the suit was barred by limitation.
- Whether the plaintiff was entitled to the reliefs of declaration of ownership and possession in the absence of a prayer for specific performance.
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues
| Issue | Court’s Decision | Reason |
|---|---|---|
| Whether the High Court was correct in setting aside the judgment of the first appellate court, which had granted specific performance of the agreement to sell. | Upheld the High Court’s decision. | The first appellate court was not justified in granting relief for specific performance as there was no specific prayer for it in the plaint. |
| Whether the suit was barred by limitation. | Held that the suit was barred by limitation. | The suit was instituted 17 years after the agreement to sell and 10 years after the title deed was executed in favor of the original defendant no. 1. |
| Whether the plaintiff was entitled to the reliefs of declaration of ownership and possession in the absence of a prayer for specific performance. | Held that the plaintiff was not entitled to these reliefs. | The plaintiff’s claim was based on an unregistered agreement to sell, which cannot be considered a complete sale, and the suit was also barred by limitation. |
Authorities
The Supreme Court did not explicitly cite any specific cases or legal provisions in its judgment, but it did consider the following:
- The nature of an agreement to sell and whether it constitutes a complete sale. The Court noted that an unregistered agreement to sell, not on proper stamp duty, can only be used for collateral purposes.
- The provisions of the Code of Civil Procedure (CPC) regarding the amendment of pleadings (Section 6 Rule 17). The Court noted that the plaintiff’s application to amend the plaint to include a prayer for specific performance was dismissed.
- The principle of limitation, which requires a suit to be filed within a specified time period from the cause of action. The Court considered the time elapsed since the agreement to sell and the execution of the title deed in favor of the original defendant no. 1.
| Authority | How the Authority was Considered |
|---|---|
| Nature of an agreement to sell | The Court held that an unregistered agreement to sell, not on proper stamp duty, does not constitute a complete sale and can only be used for collateral purposes. |
| Section 6 Rule 17 of the Code of Civil Procedure (CPC) | The Court noted that the plaintiff’s application to amend the plaint to include a prayer for specific performance was dismissed, and this dismissal had attained finality. |
| Principle of Limitation | The Court held that the suit was barred by limitation, as it was filed 17 years after the agreement to sell and 10 years after the title deed was executed in favor of the original defendant no. 1. |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | Court’s Treatment |
|---|---|
| Appellant’s submission that the first appellate court rightly decreed the suit. | Rejected. The Court held that the first appellate court was not justified in granting specific performance without a specific prayer in the plaint. |
| Appellant’s submission that the agreement to sell was a complete sale. | Rejected. The Court held that the agreement was an unregistered document not on proper stamp duty and could only be used for collateral purposes. |
| Appellant’s submission that the suit was within limitation. | Rejected. The Court held that the suit was barred by limitation. |
| Appellant’s submission that the reliefs sought implicitly included specific performance. | Rejected. The Court held that a specific prayer for specific performance was necessary. |
| Respondents’ submission that the High Court rightly set aside the first appellate court’s order. | Accepted. The Court upheld the High Court’s decision. |
| Respondents’ submission that the suit was barred by limitation. | Accepted. The Court agreed that the suit was filed after the limitation period. |
How each authority was viewed by the Court?
- The Court considered the nature of an agreement to sell and held that an unregistered agreement to sell, not on proper stamp duty, cannot be considered a complete sale and can only be used for collateral purposes.
- The Court considered the provisions of Section 6 Rule 17 of the Code of Civil Procedure (CPC) and noted that the plaintiff’s application to amend the plaint to include a prayer for specific performance was dismissed and had attained finality.
- The Court considered the principle of limitation and held that the suit was barred by limitation, as it was filed 17 years after the agreement to sell and 10 years after the title deed was executed in favor of the original defendant no. 1.
What weighed in the mind of the Court?
The Supreme Court emphasized several key points in its reasoning:
- The absence of a specific prayer for specific performance in the original plaint was a critical factor. The Court highlighted that the first appellate court could not grant a relief that was not explicitly sought by the plaintiff.
- The Court stressed the importance of the principle of limitation. The suit was filed many years after the cause of action arose, and the Court held that it was barred by limitation.
- The Court considered the nature of the agreement to sell and held that it was not a complete sale but merely an agreement to transfer property in the future. The Court noted that the agreement was unregistered and not on proper stamp duty and could only be used for collateral purposes.
- The Court also noted that the plaintiff had not taken any steps to get the sale deed executed in his favor for many years, which further weakened his case.
| Sentiment | Percentage |
|---|---|
| Absence of Specific Prayer for Specific Performance | 30% |
| Limitation | 30% |
| Nature of Agreement to Sell | 25% |
| Lack of Action by Plaintiff | 15% |
| Ratio | Percentage |
|---|---|
| Fact | 40% |
| Law | 60% |
The Court’s reasoning was primarily based on the legal principles of specific performance, limitation, and the nature of the agreement to sell. The factual aspects of the case, such as the timeline of events and the conduct of the parties, were also considered but were secondary to the legal analysis.
Issue: Was the High Court correct in setting aside the first appellate court’s judgment?
Reason 1: No specific prayer for specific performance in the plaint.
Reason 2: Suit was barred by limitation.
Reason 3: Agreement to sell was not a complete sale.
Conclusion: High Court’s decision upheld.
The Court did not consider any alternative interpretations. The decision was based on the strict application of legal principles and the facts of the case. The Court rejected the plaintiff’s arguments that the reliefs sought implicitly included a prayer for specific performance, emphasizing the need for a specific prayer.
The Court’s decision was clear and accessible, stating that the plaintiff was not entitled to the reliefs sought due to the absence of a specific prayer for specific performance and the suit being barred by limitation.
The reasons for the decision were:
- The first appellate court could not grant a relief that was not specifically sought in the plaint.
- The suit was barred by limitation, as it was filed many years after the cause of action arose.
- The agreement to sell was not a complete sale and could only be used for collateral purposes.
The Court did not have any dissenting opinions. The decision was unanimous.
The Court’s reasoning was based on the legal interpretation of the relevant provisions and the application of these provisions to the facts of the case. The Court emphasized the importance of specific prayers in a suit and adherence to limitation laws.
The potential implications for future cases are that it reinforces the need for specific prayers in a suit and adherence to limitation laws. The case also clarifies the nature of an agreement to sell and its legal implications.
The court did not introduce any new doctrines or legal principles. The decision was based on the existing legal framework and the facts of the case.
The Court analyzed the arguments for and against the plaintiff’s claims and rejected them based on the legal principles of specific performance, limitation, and the nature of the agreement to sell.
“At the outset, it is required to be noted that in the suit the original plaintiff sought the relief of declaration and permanent injunction only and there was no specific prayer of specific performance of the agreement to sell dated 20.4.1987.”
“Therefore, as such, there was no specific prayer for specific performance of the agreement to sell dated 20.4.1987. Despite the above, the first Appellate Court granted relief of specific performance of he agreement to sell dated 20.4.1987 for which there was no prayer in the plaint.”
“Even otherwise, the plaintiff is not entitled to the reliefs sought in the plaint even on the ground of limitation also.”
Key Takeaways
- A suit for specific performance of an agreement to sell must explicitly include a prayer for specific performance in the plaint.
- Suits must be filed within the prescribed limitation period; otherwise, they are liable to be dismissed.
- An unregistered agreement to sell, not on proper stamp duty, does not constitute a complete sale and can only be used for collateral purposes.
- It is crucial for parties to take timely action to enforce their rights and not delay legal proceedings.
The judgment reinforces the importance of adhering to procedural laws and limitation periods. It also clarifies the legal nature of an agreement to sell and its implications for property disputes.
Directions
The original defendant nos. 2 and 3 were directed to pay a sum of Rs. 10,00,000 to the original plaintiff as ex-gratia within six weeks from the date of the judgment. Upon payment of this amount, any pending proceedings between the parties were to be terminated.
Development of Law
The ratio decidendi of the case is that a suit for specific performance of an agreement to sell must specifically include a prayer for specific performance, and such suits must be filed within the prescribed limitation period. This judgment reinforces the existing legal principles and does not introduce any new positions of law.
Conclusion
The Supreme Court dismissed the appeal, upholding the High Court’s decision. The Court reiterated that a suit for specific performance requires a specific prayer in the plaint and that such suits must be filed within the limitation period. The Court also clarified that an unregistered agreement to sell does not constitute a complete sale. The Court directed the original defendant nos. 2 and 3 to pay Rs. 10,00,000 to the original plaintiff as ex-gratia to put an end to the litigation.