Specific Performance Cannot Be Denied When Contract Terms Are Clear and Limitation is Satisfied: Calcutta High Court

 "Once Agreement is Admitted and Payments Are Proven, Court Cannot Deny Specific Performance on Hyper-Technical Grounds" – In a crucial ruling Calcutta High Court allowed the appeal of Prasanta Kumar Chakraborty, setting aside the Trial Court’s decision that had dismissed his suit for specific performance of a property sale agreement on limitation grounds. The Court ruled that "when time is not the essence of the contract and payments are substantially made, specific performance cannot be denied based on a misreading of limitation law."
The case arose from an agreement dated October 16, 1995, under which the plaintiff had agreed to purchase a garage space from the defendant’s predecessor-in-interest, Sukumar Dutta. The plaintiff had already paid ₹1,00,000 out of the ₹1,05,000 consideration, but after Sukumar Dutta’s death, the defendant refused to execute the sale deed. The Trial Court dismissed the suit, holding that it was barred by limitation under Article 54 of the Limitation Act, 1963.
Reversing the decision, the Calcutta High Court ruled that the suit was filed within the permissible three-year limitation period, as time was not explicitly fixed in the agreement, and the plaintiff acted diligently.
"Agreement Clearly Showed No Fixed Time for Performance – Trial Court Misapplied Limitation Act"
The plaintiff argued that the agreement did not fix any specific date for execution of the sale deed and that his cause of action arose only after the defendant refused to perform the contract in 1997. The defendant, on the other hand, claimed that the agreement required completion within six months from the date of signing, making the suit time-barred when filed in 1999.
Rejecting the defendant’s interpretation, the High Court ruled that "the six-month period mentioned in the agreement pertained only to construction completion and handover of possession, not to execution of the sale deed itself." The Court held: "When no specific time is fixed for performance, limitation begins to run only when the plaintiff has notice of refusal. Here, the refusal occurred in 1997, and the suit filed in 1999 was well within the three-year period prescribed under Article 54 of the Limitation Act."
The Court referred to Ahmadsahab Abdul Mulla v. Bibijan (2009) 5 SCC 462, which held that: "A definite date must be fixed for performance to invoke the first part of Article 54. Otherwise, limitation begins from the date of refusal, not from an arbitrary assumption of when performance should have occurred."
"When Payments Are Substantially Made, Seller Cannot Evade Execution of the Deed"
The plaintiff had already paid ₹1,00,000 out of ₹1,05,000, including an advance of ₹50,000 on the date of the agreement and prior payments of ₹40,000 and ₹10,000. Two co-owners of the property had executed a sale deed in the plaintiff’s favor for their 2/3rd share, acknowledging the full consideration received, leaving only the 1/3rd share of the contesting defendant.
The Court ruled that "when substantial payment is made and the agreement is admitted, the defendant cannot withhold execution of the sale deed merely to take advantage of legal technicalities." The judgment emphasized: "A seller who has already received 95% of the agreed price cannot turn around and refuse performance, especially when co-owners have acknowledged and executed their part of the agreement."
"Counterclaim for Eviction Does Not Bar Specific Performance"
The defendant contended that since the Trial Court had passed a decree for eviction against the plaintiff in a counterclaim, granting specific performance would be meaningless. The High Court rejected this argument, ruling that: "An eviction decree does not override contractual rights. Once specific performance is granted, the plaintiff will acquire ownership, rendering the eviction decree irrelevant."
The Court further clarified that:"A person in possession under an agreement of sale has an independent right to seek specific performance, regardless of pending eviction proceedings."
Specific Performance Decreed, Defendant Ordered to Execute Sale Deed
Allowing the appeal, the Calcutta High Court ruled: "The judgment and decree dated August 31, 2006, passed by the Trial Court in Title Suit No. 1085 of 1999 is set aside. The defendant is directed to execute a registered sale deed in favor of the plaintiff within one month upon receipt of ₹1,667, the balance of the agreed price."
The Court further ordered that if the defendant failed to comply, the plaintiff could approach the executing court for enforcement of the decree.
The Calcutta High Court’s ruling reinforces the principle that sellers cannot evade contractual obligations when agreements are clear, payments are substantially made, and the buyer is willing to fulfill the remaining conditions.
By rejecting technical defenses based on a misreading of the Limitation Act, the judgment ensures that "contractual obligations are upheld, and buyers who have paid substantial amounts are not unjustly deprived of their rights."

Date of Decision: 06 March 2025