1989 JTR(SC) 606
1990 AIR(SC) 529 ; 1990 AllCJ 159 ; 1990 CivCC 398 ; 1989 3 CurCC(SC) 646 ; 1990 1 CurLJ 299 ; 1989 Supp JT 354 ; 1990 RD 463 ; 1989 2 Scale 1310 ; 1990 1 SCC 104 ; 1989 Supp2 SCR 287
SUPREME COURT OF INDIA
L.M. SHARMA AND T.K. THOMMEN, JJ.
Ramzan, Appellant
Versus
Smt. Hussaini, Respondent
Civil Appeal No. 4754 of 1989, D/-24-11-1989.
Advocates appeared :
Mr. V.M. Tarkunde, Sr. Advocate, Mr. B.L. Kachhawan and Mr. Badridas Sharma Advocates with him, for Appellant; Mr. Aruneshwar Gupta and Mr. S. Kumar, Advocates, for Respondent.
Act
Referred
:CONTRACT ACT : S.31
LIMITATION ACT : Art.54, Art.113
SPECIFIC RELIEF ACT : S.5, S.6
(A) The appeal involves the application of the Limitation Act, specifically Article 54 read with Article 113, governing the period for instituting a suit for specific performance. It also invokes the Contract Act, Section 31, and the Specific Relief Act, Section 5 and Section 6, to analyze a contingent contract. Article 54(third column) applies where performance is dependent on a future uncertain event, with the period starting when the event occurs. Article 113 requires that the event fixing the time be ascertainable from the instrument itself. Sections 31 and 5 recognize that a contract to sell becomes enforceable only upon the happening of a contingency, such as the redemption of a mortgage. The suit, filed after mortgage redemption, is thus governed by the date of redemption as the starting point for limitation, provided the date is ascertainable.
(B) The core legal principle is the doctrine of certum est quod certum reddi potest, where a date fixed by reference to a future event is considered ascertained once that event occurs, making the obligation definite. A contingent contract under Section 31 of the Indian Contract Act becomes enforceable upon fulfillment of the condition precedent. The period of limitation commences from the date the event fixing performance occurs, not from the contract date, if no fixed date is mentioned.
Facts of the case:
The respondent filed a suit against her brother for specific performance of a contract of sale dated 23-6-1965 involving a mortgaged house. The agreement stipulated that the deed of sale would be executed upon redemption of the mortgage by the plaintiff, which she accomplished in 1970. Despite demands, the defendant failed to execute the deed, prompting the suit. The defendant contested on grounds of limitation, arguing the suit was filed after more than 14 years, well beyond the three-year period under Article 54.
Findings of Court:
The trial and High Court held that no fixed date was mentioned in the agreement, but since the cause of action depended on mortgage redemption and no period was fixed for redemption, the doctrine of certum est quod certum reddi potest applied. Upon redemption in 1970, the date for performance became ascertainable, and the limitation period of three years began to run from that date. The notice served in July 1984 was within the limitation period. The High Court correctly rejected the plea of limitation.
Issues:
Whether a date for performance is fixed when the agreement depends on a future event, and whether the doctrine certum est quod certum reddi potest applies to fix the limitation period commencement date. Whether the suit is barred by limitation if filed more than 14 years after the event relied upon.
Ratio Decidendi:
Under Article 54(third column), a date for performance is fixed if it becomes ascertainable upon the happening of a specified event, even if not mentioned in the document. The limitation period commences from the date the event occurs. Here, redemption of the mortgage in 1970 fixed the date for performance, and the suit filed thereafter was within limitation.
Result:
Appeal allowed. The suit is not barred by limitation, and the case is remanded with directions for the trial court to proceed on the merits, subject to cost bearing by the parties.
(A) The appeal involves the application of the Limitation Act, specifically Article 54 read with Article 113, governing the period for instituting a suit for specific performance. It also invokes the Contract Act, Section 31, and the Specific Relief Act, Section 5 and Section 6, to analyze a contingent contract. Article 54(third column) applies where performance is dependent on a future uncertain event, with the period starting when the event occurs. Article 113 requires that the event fixing the time be ascertainable from the instrument itself. Sections 31 and 5 recognize that a contract to sell becomes enforceable only upon the happening of a contingency, such as the redemption of a mortgage. The suit, filed after mortgage redemption, is thus governed by the date of redemption as the starting point for limitation, provided the date is ascertainable.
(B) The core legal principle is the doctrine of certum est quod certum reddi potest, where a date fixed by reference to a future event is considered ascertained once that event occurs, making the obligation definite. A contingent contract under Section 31 of the Indian Contract Act becomes enforceable upon fulfillment of the condition precedent. The period of limitation commences from the date the event fixing performance occurs, not from the contract date, if no fixed date is mentioned.
Facts of the case:
The respondent filed a suit against her brother for specific performance of a contract of sale dated 23-6-1965 involving a mortgaged house. The agreement stipulated that the deed of sale would be executed upon redemption of the mortgage by the plaintiff, which she accomplished in 1970. Despite demands, the defendant failed to execute the deed, prompting the suit. The defendant contested on grounds of limitation, arguing the suit was filed after more than 14 years, well beyond the three-year period under Article 54.
Findings of Court:
The trial and High Court held that no fixed date was mentioned in the agreement, but since the cause of action depended on mortgage redemption and no period was fixed for redemption, the doctrine of certum est quod certum reddi potest applied. Upon redemption in 1970, the date for performance became ascertainable, and the limitation period of three years began to run from that date. The notice served in July 1984 was within the limitation period. The High Court correctly rejected the plea of limitation.
Issues:
Whether a date for performance is fixed when the agreement depends on a future event, and whether the doctrine certum est quod certum reddi potest applies to fix the limitation period commencement date. Whether the suit is barred by limitation if filed more than 14 years after the event relied upon.
Ratio Decidendi:
Under Article 54(third column), a date for performance is fixed if it becomes ascertainable upon the happening of a specified event, even if not mentioned in the document. The limitation period commences from the date the event occurs. Here, redemption of the mortgage in 1970 fixed the date for performance, and the suit filed thereafter was within limitation.
Result:
Appeal allowed. The suit is not barred by limitation, and the case is remanded with directions for the trial court to proceed on the merits, subject to cost bearing by the parties.
ARUNESHVAR GUPTA, B.L.KACHHAVAN, Badri Das Sharma, S.Kumar, V.M.TARKUNDE
JUDGMENT
SHARMA, J.:- Special leave is granted.
2. This appeal arises out of a suit filed by the respondent against her brother, the appellant, for specific performance of an alleged contract of sale dated 23-6-1965 in respect of a house. The property was under a mortgage and according to the plaintiff, case, the defendant had agreed to execute a deed of sale on the redemption of the mortgage by her, which she did in 1970. In spite of her repeated demands the defendant failed to respect the agreement which necessitated the institution of the suit.
3. The defendant-appellant, besides pleading limitation, denied the agreement as also the plaintiffs allegation that she had redeemed the mortgage.
4. The question of limitation was taken up by the trial Court as a preliminary issue and decided in favour of the plaintiff. The order has been confirmed by the High Court by the impugned judgment.
5. The plaintiff served a notice in July 1984 demanding specific performance before filing the suit. It has been contended on behalf of the appellant that since the alleged agreement is said to have been executed in June 1965, the suit is barred by limitation, and alternatively, even counting the period of limitation from the alleged redemption in 1970, the suit has been filed after more than 14 years, that is, long after the expiry of three years period prescribed under Article 54 of the Limitation Act. The High Court has rejected the argument holding that since the cause of action of the suit was dependent on the redemption of the mortgage and no period was fixed within which it was necessary for the respondent to have redeemed the mortgage, it cannot be said that a date was fixed within the meaning of the third column of Article 54, which reads thus.-
Description of suit Period of limitation Time from which period begins to run
"54. For specific performance three years The date fixed for the performance, or, if no such date is fixed, when the plaintiff has notice that performance is refused."
As the notice preceding the suit was admittedly served within three years, the defendants plea of limitation was rejected.
6. The relevant provisions in the alleged agreement of sale as quoted in the judgment, of the trial Court reads as follows :-
"This house is under mortgage with Jethmal Bastimal for Rs. 1000/-. When you will get this house, the description of which is given below, redeemed from M/s. Jeth Mal Bastimal and take the papers of the registry in your possession, on that day I will have the sale deed of the said house, written executed and registered in your favour."
(Emphasis supplied)
The question is whether a date was fixed for the performance of the agreement and in our view the answer is in the affirmative. It is true that a particular date from the calander was not mentioned in the document and the date was not ascertainable originally, but as soon as the plaintiff redeemed the mortgage, it became an ascertained date. If the plaintiff had, immeditely after the redemption, filed the suit, could it be thrown out on the ground that she was not entitled to the specific performance asked for? We do not think so. She would have been within her rights to assert that she had performed her part of the contract and was entitled to insist that her brother should complete his part. The agreement is a typical illustration of a contingent contract within the meaning of S. 31 of the Indian Contract Act, 1872 and became enforceable as soon as the event of redemption (by the plaintiff herself) happened. We agree with the view of the Madras High Court in R. Muniswami Goundar v. B. M. Shamanna Gounda, AIR 1950 Mad 820 expressed in slightly different circumstances. The doctrine of id certum est quod certum reddi potest is clearly applicable to the case before us which in the language of Herbert Broom (in his book dealing with legal maxims) is that certainty need not be ascertained at the time; for if, in the fluxion of time, a day will arrive which will make it certain, that is sufficient. A similar question had arisen in Duncombe v. The Brighton Club and Norfolk Hotel Company (1875) 10 QB 371, relied upon in the Madras case. Under an agreement, the plaintiff had supplied some furniture to the defendant for which payment was made but after some delay. He claimed interest. The rule at Common Law did not allow interest in such a case, and the plaintiff in support of his claim relied upon a statutory provision which could come to his aid only if the price was payable at a certain time. Blackburn, J. observed that he did not have the slightest hesitation in saying that the agreement contemplated a particular day. which when the goods were delivered would be ascertained, and then the money would be payable at a certain time; but rejected the plaintiffs demand on the ground that the price did not become payable by the written instrument at a certain time. The other learned Judges did not agree with him, and held that the statute did not require that the document should specify the time of payment by mentioning the day of payment. If it specified the event upon which the payment was to be made, and if the time of event was capable of being ascertained, the requirements of the section were satisfied. The same is the position in the case before us. The requirement of Article 113 is not that the actual day should necessarily be ascertained upon the face of the deed, but that the basis of the calculation which was to make it certain should be found therein. We, accordingly, hold that under the agreement the date for the defendant to execute the sale deed was fixed, although not by mentioning a certain date but by a reference to the happening of a certain event, namely, the redemption of the mortgage; and, immediately after the redemption by the plaintiff, the defendant became liable to execute the sale deed which the plaintiff was entitled to enforce. The period of limitation thus started running on that date. The case is, therefore, covered by the first part of Article 54 (third column) and not the second part.
7. The learned counsel for the respondent relied on several decisions in support of the opinion of the High Court in the impugned judgment but they do not appear to help him. In Sathula Venkanna v. Namuduri Venkatakrishnayya, AIR 1918 Mad 492. it was observed that in cases where a right to enforce specific performance vests in a third party to whom the ascertainment of the date on which performance becomes due need not necesarily be known, the doctrine certum est quod certum reddi potest does not apply. Without expressing their final opinion the learned Judges observed that it might be right to apply the doctrine between the actual parties to the contract who would get the benefit and be subject to the liabilities under that contract; "but in cases where a person is entitled to bring a suit on the contract who may not and need not, and very likely may not be aware of the date becoming fixed," the doctrine could not apply. In Kruttiventi Mallikharjuria Rao v. Vemuri Pardhasaradhirao, AIR 1944 Mad 218, the vendor promised to execute the sale deed when both of his brothers, who were studying elsewhere, returned to the village. It was held that it was not a case where it could be said that a date was fixed for the performance of the contract as the event mentioned therein was too indefinite to be regarded as fixing a date. The performance was dependant on both the brothers of the vendor coming to the village, in which the intending purchaser had no say at all. Apart from the question of limitation, the defendant could not effectively rely upon such a clause to defeat the very contract. In Kashi Prasad v. Chhabi Lal, AIR 1933 All 410(2), the plaintiff created two usufructuary mortgages and thereafter a third mortgage in favour of the defendants for a sum of Rs. 8,500/-, Out of this sum an amount of Rs. 6,000/ - was left with the mortgagees for payment to the earlier creditors. The suit was instituted on the allegation that the defendants had failed to redeem the earlier mortgages. The plaintiff prayed for a direction to the defendants to redeem the mortgages. The document did not indicate as to the time when the defendants were obliged to redeem the earlier mortgages, and a plea of limitation was taken on the ground that the date was fixed by necessary implication and could be ascertained by reference to the surrounding circumstances. In this background the court observed that the use of the word fixed implies that it should be fixed definitely and should not be left to be gathered from surrounding circumstances of the case. All these are clearly distinguishable.
8. For the reasons mentioned above, the impugned judgments of the High Court and the trial court are set aside and the suit is dismissed. The appeal is accordingly allowed, but the parties are directed to bear their own costs throughout.
Appeal allowed.
For Citation : AIR 1990 SC 529