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TMI Blog2013 (9) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... t Court, Erode by the first respondent/first defendant, the learned lower appellate Judge (First Additional District Judge, Erode) allowed the appeal, reversed the judgment of the trial Court, set aside the decree of the trial Court and dismissed the suit without costs. Hence, the plaintiffs have preferred the present second appeal. For the sake of convenience, the parties are referred to in accordance with their ranks in the original suit. One Pavayammal was the owner of the suit properties, having derived title to the same under a registered sale deed dated 27.08.1986 and partition deed dated 30.03.1995. The said sale deed and the partition deed have been produced and marked as Exs. A1 and A2 respectively. The first defendant Samiappan is her son and the deceased Chinnasamy Gounder was her husband. Pavayammal is no more and while she was alive, she along with her son Samiappan (first defendant) entered into an agreement with the plaintiffs under Ex. A3 dated 12.04.1995 agreeing to sell the suit properties to the plaintiffs for a sale consideration of Rs. 10,61,000/- and received a sum of Rs. 2,50,000/- on the date of agreement as advance and part payment of the sale price. At t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge over the suit properties. 3. Defendants 3 to 8 did not file any written statement and they remained ex parte. Defendants 1 and 2 alone contested the suit by filing a written statement admitting the execution of Ex. A3 sale agreement and receipt of a sum of Rs. 2,50,000/- as advance. However, they contended that the time stipulated in the agreement was an essential condition of the contract. Contending further that they (defendants 1 and 2) suffered heavy loss due to the removal of the soil, removal of the fence, leveling of the land and conversion of the same into house sites and also due to the removal of the trees that stood in the land, they claimed to be entitled to a sum of Rs. 3,50,000/- towards damages and since the advance amount paid by the plaintiffs was less than the said amount, they had prayed for the dismissal of the suit. It was also their contention that the plaintiffs, who had committed breach of contract by termination of the agreement, were not entitled to the refund of the advance amount and that the suit claim was also hopelessly barred by limitation. 4. Based on the above said pleadings, three issues were framed in the trial Court, which are as follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned counsel for the appellants and by Mr. Sampathkumar, learned counsel for the contesting respondent, namely, the first respondent were heard. The materials available on record were also perused. 10. It is an admitted fact that the properties described in plaint schedule belonged to one Pavayammal, the mother of the first defendant Samiappan. It is also not in dispute that the said Pavayammal got the property by virtue of a sale deed dated 27.08.1976, marked as Ex. A1 and a partition deed dated 30.03.1995 marked as Ex. A2. Though the properties belonged to Pavayammal, both Pavayammal and her son Samiappan (first defendant) chose to enter into an agreement with the plaintiffs for the sale of the said properties to the plaintiffs for a sum of Rs. 10,61,000/-. The said agreement dated 12.04.1995 between the plaintiffs on one hand and the first defendant and his mother Pavayammal on the other hand has been produced as Ex. A3. A sum of Rs. 2,50,000/- was paid as advance and part payment of sale consideration. The above said facts have not been disputed and on the other hand, admitted by the contesting parties. It is also an admitted fact that after the execution of Ex. A3 agreement, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y issued another notice dated 30.05.2011 under Ex. A6 and thereafter filed the suit on 17.09.2001. Besides the plea that the plaintiffs were the persons who committed breach of contract and hence the advance amount paid under the agreement was liable to be forfeited and that the said amount could be adjusted towards the damages for the loss occasioned to the defendants 1 and 2, they had also taken a plea that the suit for refund of advance amount filed after a lapse of 3 years from the date of expiry of the period stipulated in the agreement for the completion of the transaction, was hopelessly barred by limitation. 12. The learned trial Judge took a view that the limitation for filing a suit for specific performance of the agreement was three years from the date of expiry of the time stipulated in the agreement; that only on the expiry of the period of limitation for filing a suit for specific performance, the right to sue for refund of advance amount would arise and that hence, the limitation for filing of the suit for refund of the advance amount should be counted only from the date of expiry of 3 years after the expiry of the period stipulated in the agreement for performance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... performance has to be filed within 3 years from the date fixed in the agreement for performance or in case no date is fixed, then three years from the date on which plaintiff has notice that performance is refused. 15. For the purpose of Article 54, agreements can be divided into two categories as follows: 1) Agreements wherein time has been prescribed for performance or a date is mentioned on the date on or before which the performance is to be made; and 2) Agreements wherein no such time or date is prescribed for performance. In the first category of agreements, the limitation for filing the suit for specific performance shall start from the date of expiry of the period stipulated in the agreement or the date mentioned in the agreement as the date on or before which performance is to be made. In the second category of cases, limitation shall not start running till performance is refused and the plaintiff gets notice of such refusal to perform. Only from the date of getting notice that the performance is refused, limitation for filing suit for specific performance in the second category of cases will start running. In this case, one year period has been prescribed in Ex. A3 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refusal of the other party to perform. In both cases, the limitation shall be three years and the starting point of limitation alone differs. 17. In this case, no doubt a time for performance has been prescribed in Ex. A3. Therefore, the limitation for filing a suit for specific performance started running from 12.04.1996. Such suit should have been filed within three years i.e., on or before 12.04.1998. If it is a case that comes under Article 54, then the suit shall be definitely barred by limitation. The present suit has not been filed for specifically enforcing the transaction. On the other hand, it has been filed for refund of the advance amount. Of course, as in a suit for specific performance limitation for suing for refund of advance amount would start either from the date of expiry of the time stipulated in the agreement or in case no time has been stipulated, from the date on which the plaintiff gets knowledge of refusal on the part of the other party to perform. In addition, when a party which refuses to perform his part of the obligations under the agreement opts to cancel the agreement, then, for him the limitation for seeking refund of advance amount and/or damages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r specific performance, is totally erroneous and untenable. The learned lower appellate Judge has rightly interfered with the same. But at the same time, the learned lower appellate Judge has also committed an error in holding that the limitation for filing a suit for refund of advance amount shall be governed by Article 54 of the Limitation Act and shall be three years. 19. In this regard, the learned counsel for the appellant relied on the following judgments: 1) Videocon Properties Ltd., Vs. Dr. Bhalchandra Laboratries and others (2004) 3 SCC 711; and 2) Delhi Development Authority Vs. Skipper Construction Co. (P) Ltd., and others 2000(I) CTC 507; 20. In Videocon Properties Ltd., Vs. Dr. Bhalchandra Laboratries and others (2004) 3 SCC 711, cited first above, it was held that the buyer under an agreement for sale of an immovable property was entitled to a charge on the property as against the seller to the extent of the seller's interest in the property for the amount of any purchase money paid and for the interest on such amount and that as per Section 55(6)(b) of the Transfer of Property Act, 1882, the buyer under the agreement for sale was entitled to a charge even a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Chettiar, AIR 1941 P.C. 47. No charge is available unless the agreement is genuine. T.N. Hardas v. Babulal, AIR 1973 SC 1363. As pointed out in Mulla's Commentary on Transfer of Property Act, 8th Ed (P.411), the charge on the property under Section 55(6)(b) is enforceable not only against the seller but against all persons claiming under him. Before the amending Act of 1929, the words 'with notice of payment' occurred after the words "all the persons claiming under him". These words were omitted as they allowed a transferee without notice to escape. After the Amendment of 1929, notice to the purchaser has not become irrelevant. 30. When the property upon which the charge is created gets converted into another form, the buyer will be entitled to proceed against the substituted security. This is a general principle of law and Section 73 of the Transfer of Property Act is only an example of the said principle. The above principle has been applied to enforce mortgage on substituted securities (see Barham Deo Prasad v. Tara Chand, 1913 (41) I.A.45 (PC) and Muniappa v. Subbaiah, AIR 1917 Mad. 880. The same principle which is applicable mortgages applies to cases of statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear period expired on 12.04.1996. Thereafter, the plaintiff/appellant shall have 12 years period as per Article 62 of the Limitation Act for filing the suit for refund of advance amount. 12 years period would expire on 12.04.2008. The suit was filed on 26.08.2001. Hence the filing of the suit was well within the period of limitation. Accordingly, this Court holds that the first appellate Court has committed an error in law in dismissing the suit as barred by limitation, when Article 62 of the Limitation Act provides a period of 12 years, to enforce payment of money charged upon an immovable property, as the period of limitation. The said error committed by the learned lower appellate Judge is bound to be corrected. Accordingly, the substantial question of law is answered in favour of the appellants and against the respondents. It has been held that the lower appellate Court has committed an error in holding that the limitation for filing a suit for refund of advance amount is governed by Article 54 and the period shall be three years; that on the other hand such suit shall be governed by Article 62 of the Limitation Act as the buyer shall have a charge over the immovable property t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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