The Supreme Court has clarified that the validity of the sale agreement is distinct from the date of specific performance, ruling that the suit in question was barred by limitation.

A bench comprising Justices Vikram Nath and Prasanna Bhalachandra Varale allowed an appeal by Usha Devi and others, overturning a 2022 order from the Jharkhand High Court that had confirmed the judgment and decree of the first appellate court, which favored Ram Kumar Singh and others in their suit for specific performance.

The case originated from an agreement made by Bihari Lal with the plaintiffs on July 22, 1983, to sell a plot of land and its superstructure for ₹70,000, with an initial advance of ₹1,000. According to the agreement, the remaining ₹69,000 was to be paid within nine months, but the sale deed was not executed in that timeframe.

The respondents claimed they paid the remaining amount on September 20, 1985, leading to an endorsement on the agreement that the sale deed would be executed by November 30, 1985. However, the deed was still not executed, and a new agreement was made on December 17, 1989, with an initial payment of ₹10,000, leaving a balance of ₹1,000 due at the time of execution. This new agreement stipulated that the sale deed should be executed within one month, specifically by January 16, 1990. Notably, the agreement included a clause stating it would remain valid for five years.

When the sale deed was not executed, the respondents filed a suit for specific performance in September 1993. The defendants argued that the agreement was forged and claimed the suit was time-barred as it was filed more than three years after the agreed performance date.

The Trial Court dismissed the suit on June 13, 2004, ruling it was barred by limitation. Although the plaintiffs appealed successfully in 2005, leading to a decree for specific performance, the defendants challenged this in the High Court, which dismissed their appeal.

The Supreme Court bench determined that the suit was indeed barred by limitation, referencing Article 54 of the Limitation Act, 1963, which allows three years from the fixed performance date for such suits. The Court noted that the agreement of December 17, 1989, clearly stated the sale deed should be executed within one month, with the limitation period expiring on January 16, 1993.

While the First Appellate Court and the High Court focused on the five-year validity clause in the agreement, the Supreme Court found this irrelevant, asserting that the performance timeline was fixed and could not be altered by the validity clause. The bench emphasized that this aspect of the agreement did not change the established performance date, leading to the conclusion that the suit was subject to dismissal based solely on limitation.

Consequently, the Supreme Court set aside the High Court's order but instructed the appellants to return the advance amount of ₹80,000 with interest at 12% per annum within three months to ensure complete justice. The bench clarified that it did not address other issues regarding the validity of the agreement to sell.