Ashok Kaura & Ors. v. S. Shalu Constructions

16. Per contra, learned counsel appearing on behalf of the Respondent supports the impugned order and contend that the same does not warrant any interference by this Court.

17. We have heard learned counsel for the parties and perused the material placed on record.

18. The questions that arise for consideration before this Court are as follows: a. Whether, on a meaningful reading of the plaint and the documents accompanying it, the suit is ex facie barred by limitation so as to warrant rejection of the plaint under Order VII Rule 11(d) of the CPC? b. Whether the suit is liable to be rejected for alleged non-compliance with Section 12A of the Commercial Courts Act, 2015?

19. The principal submission advanced on behalf of the Appellants is that the suit, having been instituted in December 2023, is clearly barred by limitation. According to the Appellants, the Collaboration Agreement was executed on 01.02.2013 and one of the receipt dated 01.11.2013 relied upon by the Respondent itself stipulates that possession of the Suit Property was to be handed over on or before 05.02.2014. It is, therefore, contended that the period of limitation commenced, at the latest, from the said date.

20. A suit for specific performance is governed by Article 54 of the Limitation Act, 1963, which prescribes a period of three years. The limitation begins to run either from the date fixed for performance or, where no such date has been fixed, from the date on which the plaintiff has notice that performance has been refused.

21. In Ahmadsahab Abdul Mulla (2) v. Bibijan & Ors., (2009) 5 SCC 462, the Supreme Court explained that the expression “date fixed for the performance” occurring in Article 54 of the Limitation Act contemplates a definite and ascertainable date agreed upon between the parties for performance of the contract. Where the contract does not specify such a fixed date, the second part of Article 54 comes into operation, and the period of limitation begins only when the plaintiff has notice that the defendant has refused to perform the contract. It has been held as under:

22. The plaint in the present case does not merely plead the execution of the Collaboration Agreement. It also avers that, under the terms of the agreement, the Appellants were first required to fulfil certain obligations before the Respondent could proceed with the redevelopment of the Suit Property. The relevant para of the plaint as mentioned below-

23. As per the plaint, the Respondent does not treat delivery of possession as an independent obligation. Rather, the plaint avers that possession was to be handed over only after completion of the partition proceedings, mutation of the Suit Property, and its conversion from leasehold to freehold as mentioned above. Whether these obligations were intended by the parties to operate as conditions precedent to redevelopment is not an issue that can be answered at this stage. It necessarily requires a proper construction of the Collaboration Agreement in the light of the surrounding facts and, the evidence that may be adduced by the parties.

24. The legal position is fortified by the decision of the Supreme Court in Panchanan Dhara & Ors. v. Monmatha Nath Maity & Anr., (2006) 5 SCC 340, while considering when limitation under Article 54 of the Limitation Act begins to run where performance of the contract depends upon fulfilment of certain preconditions or reciprocal obligations, the Supreme Court held: “22. A bare perusal of Article 54 of the Limitation Act would show that the period of limitation begins to run from the date on which the contract was to be specifically performed. In terms of Article 54 of the Limitation Act, the period prescribed therein shall begin from the date fixed for the performance of the contract. The contract is to be performed by both the parties to the agreement. In this case, the first respondent was to offer the balance amount to the Company, which would be subject to its showing that it had a perfect title over the property. We have noticed hereinbefore that the courts below arrived at a finding of fact that the period of performance of the agreement has been extended. Extension of (sic time for performance of a) contract is not necessarily to be inferred from written document. It could be implied also. The conduct of the parties in this behalf is relevant. Once a finding of fact has been arrived at, that the time for performance of the said contract had been extended by the parties, the time to file a suit shall be deemed to start running only when the plaintiff had notice that performance had been refused. Performance of the said contract was refused by the Company only on 21-8-1985. The suit was filed soon thereafter. The submission of Mr Mishra that the time fixed for completion of the transaction was determinable with reference to the event of perfection of title of the second respondent cannot be accepted. The said plea had never been raised before the courts below. Had such a plea been raised, an appropriate issue could have been framed. The parties could have adduced evidence thereupon. Such a plea for the first time before this Court cannot be allowed to be raised. Even otherwise on a bare perusal of the agreement for sale dated 18-4-1971, it does not appear that it was intended by the parties that the limitation would begin to run from the date of perfection of title. *******

27. Performance of a contract may be dependent upon several factors including grant of permission by the statutory authority in appropriate cases. If a certain statutory formality is required to be complied with or permission is required to be obtained, a deed of sale cannot be registered till the said requirements are complied with. In a given situation, the vendor may not be permitted to take advantage of his own wrong in not taking steps for complying with the statutory provisions and then to raise a plea of limitation.” (emphasis supplied)

25. At this stage, this Court is unable to accept the submission of the Appellants that the limitation for filing the suit commenced in the year 2013. As the plaint claims that the Appellants had themselves stated that they would hand over the possession of the Suit Property only after settlement of the pending litigations, obtaining mutation of the Suit Property in their favour and conversion thereof from leasehold to freehold. The plaint further specifically avers that the proceedings attained finality only in the year 2022, whereafter the Appellants became obliged to perform their part of the contract. On the basis of the averments in the plaint, as is mandatory while considering an application under Order VII Rule 11 CPC, the cause of action to seek specific performance cannot be said to have arisen prior to 2022 as the pending partition proceedings became final in 2022 only. While considering an application under Order VII Rule 11 of the CPC, the Court is required to proceed on the assumption that the averments made in the plaint are correct. On such an assumption, it cannot be said that the Respondent's right to seek specific performance had arisen before the partition proceedings attained finality in the year 2022. The plaint further states, that, thereafter, the Respondent issued a legal notice dated 08.11.2023 calling upon the Appellants to discharge their obligations under the Collaboration Agreement by handing over possession of the Suit Property within fifteen days, but the Appellants failed to perform their obligations. In view of these averments, it cannot be said, on a meaningful reading of the plaint, that at this stage, the suit instituted in the year 2023 is ex facie barred by limitation under Article 54 of the Limitation Act, 1963.

26. Whether these obligations were, in fact, conditions precedent to the Respondent's performance is plainly a matter that can be determined only after a full-fledged trial. Equally, whether the Respondent was justified in awaiting fulfilment of those obligations before seeking enforcement of the agreement cannot be decided solely on the basis of the plaint while considering an application under Order VII Rule 11 of the Code. At this stage, any conclusive interpretation of the Collaboration Agreement and surrounding circumstances would be premature. The true import of its terms and the sequence in which the parties were required to perform their respective obligations, are matters that fall for determination by the learned Trial Court after issues have been framed and the parties have led evidence.

27. The scope of enquiry under Order VII Rule 11 of the CPC is well settled. At this stage, the Court is required to examine only the averments contained in the plaint and the documents filed along with the plaint. It is a settled principle of law that the plaint must be read as a whole and in a meaningful manner to ascertain whether the suit is barred by law. Also, while considering an application under Order VII Rule 11 of CPC, the Court must proceed on the assumption that the averments contained in the plaint are correct, without embarking upon an enquiry into their truthfulness or otherwise. In Popat and Kotecha Property v. State Bank of India Staff Association, (2005) 7 SCC 510, where the Supreme Court held as under:

28. In Urvashiben & Anr. v. Krishnakant Manuprasad Trivedi, (2019) 13 SCC 372, the Supreme Court held:

29. In Balasaria Construction (P) Ltd. v. Hanuman Seva Trus & Ors., (2006) 5 SCC 658, the Supreme Court held that where the question of limitation is a mixed question of law and fact, the plaint cannot be rejected under Order VII Rule 11 CPC. The relevant extract is reproduced as under:

30. The principles that emerge from the aforesaid decisions make it clear that the expression “mixed question of law and fact” is not to be employed as a matter of routine. Before declining to examine a plea of limitation at the threshold, the Court must first determine whether the plaint, on its own showing, unequivocally discloses that the suit is barred by limitation. If it does, the plaint may be rejected under Order VII Rule 11(d) of the Code. However, where the issue of limitation turns on disputed questions concerning the conduct of the parties, the nature and sequence of their reciprocal obligations, waiver, extension of time, readiness and willingness to perform, or the point at which the plaintiff first had notice of refusal, the matter necessarily requires adjudication on evidence. In such a situation, rejection of the plaint at the threshold would be wholly unwarranted.

31. Applying the aforesaid principles to the facts of the present case, we are unable to accept the contention that the plaint admits of only one conclusion, namely, that the suit is barred by limitation.

32. Another aspect that remains for consideration is with respect to the non-compliance with Section 12A of the Commercial Courts Act, 2015. The Appellants contend that the present dispute arises out of a Collaboration Agreement involving redevelopment of property for consideration and, therefore, falls within the ambit of a “Commercial dispute” under Section 2(1)(c) of the Commercial Courts Act, 2015, which is disputed by the Respondent.

33. The Division Bench of this Court in Asif Ali Khan v. Manoj Kumar,

“11. The learned counsel appearing for the appellant submits that the disputes involved in the present petition would also be covered as a commercial dispute under Clause (vi) of Section 2(1)(c) of the CC Act. The said clause reads as under: “(vi) construction and infrastructure contracts, including tenders;”

12. The Agreement to Sell is in the nature of a contract for sale and purchase of immovable property; it is not a construction contract as contemplated under Clause 2(1)(vi) of the CC Act. Merely, because the payment of instalments of the purchase consideration is linked to the stage of construction, does not change the nature of the Agreement to Sell to a construction contract. A plain reading of the Agreement to Sell indicates that it is an agreement for purchase of a flat. In terms of the Agreement to Sell, the respondent had agreed to deliver the possession of the said flat on or before December, 2017 in a semi furnished stage - with fan, light, geyser, exhaust fan, Kent RO, chimney, modular kitchen, one wardrobe extra. Notwithstanding the clear terms of the Agreement to Sell, the learned counsel submits that since the Collaboration Agreement was for redevelopment of the subject property, the Agreement to Sell is required to be considered in the same light. The said contention is insubstantial. It is the appellant's case that the respondent was entitled to sell a portion of the property, which was agreed to be redeveloped in terms of the Collaboration Agreement.

13. The learned counsel appearing for the appellant, at this stage, seeks to advance the contention, which is in variation with the pleadings in the plaint. He submits that since the first floor of the property fell into the share of the owners, the Agreement to Sell must be considered as a construction contract. He submits that as the Collaboration Agreement was for development of the subject property and the respondent was merely acting as an agent of the owners. This contention is also insubstantial apart from being in variation with the pleadings. Whether the said flat would fall to the share of the developer (the respondent) or the owner of the subject property makes little difference to the nature of the dispute involved. As noted above, the Agreement to Sell is a contract for sale and purchase of a residential flat; not a construction contract.”

34. The aforesaid ratio laid down by the Division Bench of this Court in Asif Ali Khan (supra) squarely applies to the present case.The Collaboration Agreement in the present case bears the same essential features. The Respondent was not engaged merely to undertake construction for monetary consideration. Under the terms of the agreement, it was to receive specified portions of the building, together with a proportionate undivided interest in the land appurtenant thereto. The rights so created are proprietary in character and extend beyond those ordinarily arising under a pure construction contract. The transaction, therefore, cannot be brought within the ambit of a construction contract contemplated under Section 2(1)(c)(vi) of the Commercial Courts Act. Once it is found that the dispute does not fall within the scope of a "commercial dispute" as defined under Section 2(1)(c) of the Commercial Courts Act, 2015, the mandate of pre-institution mediation under Section 12A of the Act has no application.

35. We are, therefore, of the considered opinion that the learned Single Judge committed no error in declining to reject the plaint under Order VII Rule 11 CPC. The impugned order does not warrant interference in appeal.

36. The appeal is accordingly dismissed, along with all pending applications, if any.

VIVEK CHAUDHARY (JUDGE)

RENU BHATNAGAR (JUDGE) JULY 24, 2026/kp/ss