# M/s Siddamsetty Infra Projects Pvt. Ltd v. Katta Sujatha Reddy & Ors

- **Citation:** 2024 INSC 861
- **Court:** Supreme Court of India
- **Decided:** 2024-11-08
- **Bench:** Dr Dhananjaya Y Chandrachud, J.B. Pardiwala, Manoj Misra
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-siddamsetty-infra-projects-pvt-ltd-v-katta-sujatha-reddy-ors-37256
- **Pages:** 33

## Headnote

Issue arose, whether the judgment of this Court suffers from
an error apparent on the face of the record which warrants the
exercise of the review jurisdiction; whether the suit instituted by
the petitioner was barred by limitation; and whether the suit for
specific performance must be decreed.
Headnotes†
Constitution of India - Art. 137 - Supreme Court Rules,
2013 - Ord. XLVII r.1 - Review of judgments of Supreme
Court - Suit fo specific performance - Suit instituted, if
barred by limitation - Agreement to sell land between the
original owners and vendors - Sale deed not executed,
though the full sale consideration paid - However, execution
of irrevocable power of attorney in favour of the vendors -
Three years later, vendors executed agreement to sell in
favour of the petitioner - Issuance of two legal notices by the
petitioner to the respondents calling upon them to execute
the sale deed upon receipt of the balance consideration -
Thereafter, petitioners filed suit for specific performance of
the agreement to sell, which was dismissed - High Court
partly allowed the appeal decreeing the suit in favour of the
petitioner only to the extent of the consideration paid by the
petitioner - In appeal thereagainst, this Court held that the
suit was barred by limitation - Review petition filed seeking
review of the judgment - Exercise of review jurisdiction, if
warranted:
* Author
668
[2024] 11 S.C.R.
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Held: Petitioner had notice that performance is refused only by the
reply dated 14.04.2000 to the first legal notice of the petitioner -
Limitation prescribed by Art. 54 sets in from the date when the
petitioner received the reply refusing performance - Irrespective
of whether the suit was instituted on 9.08.2002 (as concluded
by trial court) or 30.07.2002 (as concluded by the High Court),
it was within limitation - Further, doctrine of lis pendens applies
where the petition for review was lying in the registry in a defective
state - Review proceedings were "instituted" within the period of
limitation of thirty days - Doctrine of lis pendens kicks in at the
stage of "institution" and not at the stage when notice is issued
by this Court - Thus, s. 52 of the Transfer of Property Act would
apply to the third-party purchaser once the sale was executed
after the review petition was instituted before this Court - Any
transfer made during the pendency is subject to the final result
of the litigation - Furthermore, even assuming that the grant of
relief of specific performance continued to be discretionary to a
suit instituted before the date of the amendment to s. 10 of the
Specific Relief Act, this Court erred in its analysis of whether
the Court ought to use its discretionary power in this matter - It
cannot be concluded that the petitioner was not ready or willing
to perform his part of the contract merely because the balance
sale consideration was due to be paid - Petitioner with the
payment of the additional sum above the earnest money, has
proved his readiness and willingness to perform the contract -
On application of the facts to the principles in ss. 10 and 16 of
the Specific Relief Act, it is a fit case for this Court to exercise
its discretion to direct specific performance - Thus, in view of
the errors apparent, both on the issues of limitation and specific
performance, the judgment of this Court recalled and that of the
High Court restored. [Paras 30, 31, 41, 42, 49-52]
Transfer of Property Act, 1882 - s. 52 - Doctrine of lis pendens -
Application of - Conditions to be fulfilled:
Held: There must be a pending suit or proceeding; suit or
proceeding must be pending in a competent court; suit or proceeding
must not be collusive; right to immovable property must be directly
and specifically in question in the suit or proceeding; property
must be transferred by a party to the litigation; and the alienation
must affect the rights of any other party to the dispute - Doctrine
of lis pendens that s. 52 encap

## Text

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[2024] 11 S.C.R. 667 : 2024 INSC 861
M/s Siddamsetty Infra Projects Pvt. Ltd.
v.
Katta Sujatha Reddy & Ors.
Review Petition (C) No. 1565 of 2022
in
C.A. No. 5822 of 2022
08 November 2024
[Dr Dhananjaya Y Chandrachud, CJI,*
J.B. Pardiwala and Manoj Misra, JJ.]
Issue for Consideration
Issue arose, whether the judgment of this Court suffers from
an error apparent on the face of the record which warrants the
exercise of the review jurisdiction; whether the suit instituted by
the petitioner was barred by limitation; and whether the suit for
specific performance must be decreed.
Headnotes†
Constitution of India - Art. 137 - Supreme Court Rules,
2013 - Ord. XLVII r.1 - Review of judgments of Supreme
Court - Suit fo specific performance - Suit instituted, if
barred by limitation - Agreement to sell land between the
original owners and vendors - Sale deed not executed,
though the full sale consideration paid - However, execution
of irrevocable power of attorney in favour of the vendors -
Three years later, vendors executed agreement to sell in
favour of the petitioner - Issuance of two legal notices by the
petitioner to the respondents calling upon them to execute
the sale deed upon receipt of the balance consideration -
Thereafter, petitioners filed suit for specific performance of
the agreement to sell, which was dismissed - High Court
partly allowed the appeal decreeing the suit in favour of the
petitioner only to the extent of the consideration paid by the
petitioner - In appeal thereagainst, this Court held that the
suit was barred by limitation - Review petition filed seeking
review of the judgment - Exercise of review jurisdiction, if
warranted:
* Author
668
[2024] 11 S.C.R.
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Held: Petitioner had notice that performance is refused only by the
reply dated 14.04.2000 to the first legal notice of the petitioner -
Limitation prescribed by Art. 54 sets in from the date when the
petitioner received the reply refusing performance - Irrespective
of whether the suit was instituted on 9.08.2002 (as concluded
by trial court) or 30.07.2002 (as concluded by the High Court),
it was within limitation - Further, doctrine of lis pendens applies
where the petition for review was lying in the registry in a defective
state - Review proceedings were "instituted" within the period of
limitation of thirty days - Doctrine of lis pendens kicks in at the
stage of "institution" and not at the stage when notice is issued
by this Court - Thus, s. 52 of the Transfer of Property Act would
apply to the third-party purchaser once the sale was executed
after the review petition was instituted before this Court - Any
transfer made during the pendency is subject to the final result
of the litigation - Furthermore, even assuming that the grant of
relief of specific performance continued to be discretionary to a
suit instituted before the date of the amendment to s. 10 of the
Specific Relief Act, this Court erred in its analysis of whether
the Court ought to use its discretionary power in this matter - It
cannot be concluded that the petitioner was not ready or willing
to perform his part of the contract merely because the balance
sale consideration was due to be paid - Petitioner with the
payment of the additional sum above the earnest money, has
proved his readiness and willingness to perform the contract -
On application of the facts to the principles in ss. 10 and 16 of
the Specific Relief Act, it is a fit case for this Court to exercise
its discretion to direct specific performance - Thus, in view of
the errors apparent, both on the issues of limitation and specific
performance, the judgment of this Court recalled and that of the
High Court restored. [Paras 30, 31, 41, 42, 49-52]
Transfer of Property Act, 1882 - s. 52 - Doctrine of lis pendens -
Application of - Conditions to be fulfilled:
Held: There must be a pending suit or proceeding; suit or
proceeding must be pending in a competent court; suit or proceeding
must not be collusive; right to immovable property must be directly
and specifically in question in the suit or proceeding; property
must be transferred by a party to the litigation; and the alienation
must affect the rights of any other party to the dispute - Doctrine
of lis pendens that s. 52 encapsulates, bars the transfer of a suit
[2024] 11 S.C.R.
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M/s Siddamsetty Infra Projects Pvt. Ltd. v. Katta Sujatha Reddy & Ors.
property during the pendency of litigation - Only exception to the
principle is when it is transferred under the authority of the court
and on terms imposed by it - Where one of the parties to the suit
transfers the suit property (or a part of it) to a third-party, the latter
is bound by the result of the proceedings even if he did not have
notice of the suit or proceeding - Purpose of lis pendens is to
ensure that the process of the court is not subverted and rendered
infructuous - In the absence of the doctrine of lis pendens, a
defendant could defeat the purpose of the suit by alienating the
suit property - This purpose of the provision is clearly elucidated
in the explanation clause to s. 52 which defines "pendency" -
Amending Act 20 of 1929 substituted the word "pendency" in
place of "active prosecution" - Amending Act also included
the Explanation defining the expression "pendency of suit or
proceeding" - "Pendency" is defined to commence from the "date
of institution" until the "disposal". [Paras 46, 47, 49]
Review - Review jurisdiction - Grounds for exercising review
jurisdiction - Principles on the exercise of review jurisdiction -
Stated - Supreme Court Rules, 2013 - Order XLVII - Code of
Civil Procedure, 1908 - Ord. XLVII r. 1. [Paras 18, 19]
Case Law Cited
Babulal v. Hajarilal Kishorilal [1982] 3 SCR 94 : (1982) 1 SCC 525;
R Lakshmi Kantham v. Devaraji (2019) 8 SCC 62; Mademsetty
Satyanarayana v. G. Yelloji Rao AIR 1965 SC 1405; Chand Rani
v. Kamal Rani [1992] Supp. 3 SCR 798 : (1993) 1 SCC 519;
Saradamani kandappan v. S. Rajalakshmi [2011] 8 SCR 874 :
(2011) 12 SCC 18; Jaswinder Kaur v. Gurmeet Singh [2017] 5 SCR
430 : (2017) 12 SCC 810; Murali Sundaram v. Jothibai Kannan
[2023] 3 SCR 47 : 2023 SCC OnLine SC 185; Karnail Singh v.
State of Haryana 2021 SCC OnLine SC 961; Kamlesh Verma v.
Mayawati [2013] 11 SCR 25 : (2013) 8 SCC 320; Sanjay Kumar
Agarwal v. State Tax Officer [2023] 15 SCR 225 : (2024) 2 SCC
362; Nagubai Ammal v. B Shama Rao [1956] 1 SCR 451 : 1956
SCC 321; Amit Kumar Shaw v. Farida Khatoon [2005] 3 SCR
509 : (2005) 11 SCC 403; Jayaram Mudaliar v. Ayyaswami [1973]
1 SCR 139 : AIR 1973 SC 569; GT Girish v. Y Subba Raju 2022
8 SCR 991 - referred to.
Bellamy v. Sabine (1857) 1 De G&J 566 - referred to.
670
[2024] 11 S.C.R.
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List of Acts
Limitation Act 1963; Transfer of Property Act 1882; Specific Relief
Act 1963; Constitution of India; Supreme Court Rules 2013.
List of Keywords
Review of judgments of Supreme Court; Suit for specific
performance; Bar by limitation; Agreement to sell; Non-execution
of Sale deed; Sale consideration; Execution of irrevocable power
of attorney; Receipt of balance consideration; Suit barred by
limitation; Limitation; Doctrine of lis pendens; Petition for review
lying in registry in defective state; Review proceedings; Period of
limitation of thirty days; Third-party purchaser; Discretionary power;
Earnest money; Readiness and willingness to perform contract;
Pendency; Active prosecution; Pendency to commence from date
of institution until disposal; Review; Review jurisdiction; Grounds
for exercising review jurisdiction; Principles on exercise of review
jurisdiction.
Case Arising From
INHERENT JURISDICTION: Review Petition (C) No. 1565 of 2022
In
Civil Appeal No. 5822 of 2022
From the Judgment and Order dated 25.08.2022 of the Supreme
Court of India in C.A. No. 5822 of 2022
With
Review Petition (C) No. 1839 of 2024 In C.A. No. 5823 of 2022
Appearances for Parties
Neeraj Kishan Kaul, Harin P Raval, Naveen Kumar Pahwa,
Sr. Advs., Mohan Rao, S Uadaya Kumar Sagar, Ms. Bina Madhavan,
Tushar Singh, Ms. Lavanya Goinka, Ms. Urmi H Raval, Ms. Shreya
Bansal, Ms. Shrestha Narayan, Siddharth H Raval, Krishna Kumar
Singh, Advs. for the Petitioner.
Mukul Rohatgi, Rakesh Dwivedi, Sr. Advs., Mahesh Agarwal,
Rishi Agrawala, Ankur Saigal, Ms. Madhavi Agarwal, Divyanshu
Srivastava, Ms. Deepsikha Mishra, Yash Jain, E.C. Agrawala,
Advs. for the Respondents.
[2024] 11 S.C.R.
671
M/s Siddamsetty Infra Projects Pvt. Ltd. v. Katta Sujatha Reddy & Ors.
Judgment / Order of the Supreme Court
Judgment
Dr Dhananjaya Y Chandrachud, CJI
Table of Contents*
A.
Background ........................................................................
3
B.
Judgments of the Trial Court, High Court and this Court ......
7
C.
Submissions .......................................................................
16
D.
Grounds for exercising review jurisdiction ..........................
17
E.
Limitation ...........................................................................
19
F.
Specific performance .........................................................
25
G.
Lis pendens .......................................................................
32
H.
Relief .................................................................................
36
1.
The petitioner has instituted proceedings under Article 137 of the
Constitution read with Order XLVII Rule 1 of the Supreme Court Rules
2013 seeking a review oft he judgment of a three-Judge Bench of
this Court dated 25 August 2022. By the judgment, this Court allowed
the appeal against the judgment of the High Court of Telangana
dated 23 April 2021 by which the suit for specific performance was
partially decreed by directing the registration of the suit property in
favour of the petitioner proportionate to the extent of the consideration
paid. The issue for the consideration of this Court is whether the
judgment of this Court dated 25 August 2022 suffers from an error
apparent on the face of the record which warrants the exercise of
the review jurisdiction.
A.
Background
2.
On 19 March 1994, Shri Debbad Narayana, Shri Vishweswara Rao
(represented by the tenth to twelfth respondents who are his legal
representatives), the third respondent, fourth respondent and fifth
respondent ("original owners") entered into an agreement to sell a land
admeasuring 127.29 acs to the first, second, sixth, seventh and eight
respondents ("vendors"). On the date of the agreement, possession
* Ed. Note: Pagination as per the original Judgment.
672
[2024] 11 S.C.R.
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to the extent of 65.23 acs was delivered to the vendors. Upon the
payment of the balance sale consideration, the possession of the
entire property was delivered. A sale deed was not executed, though
the full sale consideration was paid. However, on 28 March 1994, an
irrevocable power of attorney was executed in favour of the vendors.
3.
On 26 March 1997,the vendors executed an agreement to sell in
favour of the petitioner. This agreement will be referred to as the
"first agreement to sell". By the agreement, the first and the second
respondents offered to alienate the scheduled property of 38.15 acs1
for a sale consideration of Rs. 38,37,500. The agreement notes that
the petitioner paid a sum of Rs. 5,30,000 in cash and Rs. 6,00,000
in cheque as advance and earnest money. The relevant clauses of
the agreement to sell are extracted below:
"3. The purchaser shall pay a sum of Rs. 27,07,200/-
(Rupees Twenty Seven Lakhs seven thousand five hundred
only) towards the balance sale consideration within three
months from this date to the parties of the second part
herein and if the purchaser does not honour to pay the
balance sale consideration of Rs. 27,07,500/- (Rupees
Twenty Seven Lakhs Seven Thousand and Five Hundred
Only) within a period of three months from the date of
this date, the advance amount paid will be forfeited and
this agreement of sale will be cancelled if the vendors
fail to furnish the non-encumbrance certificate, income
tax exemption certificate, agricultural certificates to the
purchaser within three months.
[...]
6. The parties of the first part and the parties of the second
part herein undertake that they will execute a registered sale
deed or deeds or any other nature of documents as desired
by the purchaser in favour of the purchaser or its nominee
or nominees, after receiving the balance sale consideration.
1
"All that the agriculture land bearing Sy. Nos. 301 part, 302, 303, 304 part totally admeasuring Ac. 3815 guntas situated at Budwel village, the then Hyderabad West Tq., now Rajendernagar Mandar, R.R.
District, which is bounded by as under:-
East: Sy. No. 381, 380 and 326
West: Sy. No. 54 Village boundary of Irsalgandi
North: Sy. No. 381, 380 and 326
South: Sy. No. 300 and 306"
[2024] 11 S.C.R.
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M/s Siddamsetty Infra Projects Pvt. Ltd. v. Katta Sujatha Reddy & Ors.
[...]
20. The parties of the first part and the second part herein
undertake to execute the documents either registered or
un-registered as desired by the purchaser after receiving
the balance sale consideration to the extent to the schedule
property.
[...]
21. The parties of the first part are not at all concerned to
the sale consideration agreed by the parties of the second
part herein with the purchaser as already they received the
agreed sale consideration from the parties of the second
part herein as per the agreement dated 19th March 1994.
[...]
23. The parties of the second part herein undertake on
any pretext they will not make any claim for enhancing
the agreed sale consideration."
(emphasis supplied)
4.
The first agreement to sell refers to the "original owners" as the
"parties of the first part". The agreement refers to the "vendors" as
the "parties to the second part". The petitioner is referred to as the
"purchaser". It must also be noted that the recital to the first sale
agreement states that the "parties of the first part and parties 1,3,5
and 6 of the parties of the second part" have been made a party to
the agreement only to ensure that there is no "cloud over the title".
5.
On 27 March 1997, an agreement to sell was executed by the
first and second respondents in favour of the petitioner to sell the
scheduled property of 1.33 Acs2 for a consideration of Rs. 1,82,500.
This agreement will be referred to as the second agreement to sell.
6.
On 8 February 2000, the petitioner issued a legal notice ("first legal
notice") to the first and second respondents calling upon them to
2
"All that the agricultural land bearing Sy. Nos. 304 part totally admeasuring Ac. 1.33 guntas situated
at Budwel village, the then Hyderabad West Tq. Now Rajendernagar mandal, R.R. District, which is
bounded by as under:-
East: Sy. No. 308
West: Sy. No. 3030
North: Sy. No. 326
South: Sy. No. 305".
674
[2024] 11 S.C.R.
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receive the balance sale consideration and execute the sale deed.
On 14 April 2000, the second respondent responded to the legal
notice claiming to not have received the part-payment and refusing
to execute a sale deed in the petitioner's favour. On 6 July 2002,
the petitioner issued another legal notice ("second legal notice")
to all the respondents calling upon them to execute the sale deed
upon the receipt of the balance consideration. The first and second
respondents replied to the legal notice by a letter dated 22 July
2002 claiming that (a) the execution is barred by limitation; (b) they
were ready with the documents required under Clause 3 of the first
agreement to sell but the petitioner was not willing to pay the balance
consideration; and (c) the first legal notice dated 8 February 2000
was ante-dated to overcome limitation. The first legal notice was
posted on 30 March 2000 by registered post.
7.
On 9 August 2002, the petitioner instituted a suit seeking a decree
for specific performance of the first and the second agreements to
sell. The case of the petitioner in the suit was:
a.
Rs.34,70,000 towards the sale consideration for the first
agreement and Rs. 10,850 as advance for the second agreement
was paid. Thus, of the aggregate sale consideration of Rs.
40,20,000, Rs., 34,80,850 was paid and only a balance of Rs.
5,39,150 remained outstanding;
b.
The possession of the suit land was delivered under the
agreement; and
c.
The petitioner has always been ready and willing to perform
his part of the agreements. Both the agreements required the
respondents to furnish the petitioner with necessary permissions
and certificates,which they failed to do.
8.
The petitioner prayed for a decree for specific performance upon
the receipt of the balance sale consideration of Rs. 5,39,150. The
petitioner sought alternative reliefs of (a) delivery of possession
of the suit land; or (b) a direction to refund the consideration of
Rs. 34,80,850 paid with interest of 36% per annum.
B.
Judgments of the Trial Court, High Court and this Court
9.
By a judgment dated 12 December 2010, the Additional District Judge
dismissed the suit instituted by the petitioner. The Trial Court held
[2024] 11 S.C.R.
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that the petitioner is not entitled to a decree or specific performance
for the following reasons:
a.
The respondents did not dispute the execution of the two
agreements to sell. There is also no dispute over the identity
of the property. The petitioner is only required to prove that he
was always willing to perform his part of the agreement;
b.
It can be inferred from the evidence on record that the petitioner
does not have possession of the suit property and that a false
plea that possession has been delivered has been made
because:
i.
The alternative prayer of the petitioner in the suit was to
put him in possession of the property if, for any reason, the
Court concludes that the possession of the suit property
was not delivered. The petitioner would not have sought
the alternative prayer if he were confident about being in
possession of the suit property;
ii.
The petitioner did not plead when he was put in possession
of the property. PW-1 (the petitioner) was not able to
respond to a question during cross-examination on when
he was put in possession of property;
iii.
Though PW-2 (the owner of the land adjacent to the suit
property) deposed that the petitioner developed the suit
property by fencing it and constructing internal roads, these
aspects did not find a mention in either the deposition of
PW-1 or the plaint. Further, the photographs of the suit
property also did not reflect these developments;
iv.
The sale agreements also did not conclusively indicate that
the petitioner was put in possession of the suit property;
v.
The first legal notice issued by the petitioner does not
mention that possession was delivered. The claim is only
made in the second legal notice; and
vi.
The draft sale deed that the petitioner allegedly prepared
and sent to the respondents also does not mention that
possession was delivered.
c.
A cheque of Rs. 5,40,000 issued by the petitioner towards
consideration was dishonoured. So, the petitioner paid Rs.
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29,30,000 towards the sale consideration and not Rs. 34,70,000,
as claimed by him. The petitioner made a false plea that he had
paid Rs. 34,70,000. The table indicating the payments made
by the petitioner is below:
26.3.1997
Rs. 5,40,000 (cheque dated 2.4.1997 which
was dishonoured)
26.3.1997
Rs. 11,30,000 (Rs. 5,30,00 by cash and Rs.
6,00,00 by cheque)
26.3.1997
Rs. 13,00,000 by cheque
9.4.1997
Rs. 5,00,000 by cheque
d.
Clause 3 of the sale agreements states that the petitioner is
required to pay the balance consideration and the respondents
must furnish certificates within three months. The clause
prescribes a consequence for non-payment, that the agreement
would be cancelled. However, the clause does not prescribe any
consequence if the respondents fail to furnish the necessary
certificates within three months. It cannot be concluded that
time is of the essence only because the agreement requires
the petitioner to pay the balance consideration within three
months. The respondents had not obtained the permissions
and certifications required under Clause 3 and they did not
inform the petitioner about any steps taken to obtain them. The
cross-examination of DW-1 (first respondent) indicates this.
Thus, time is not of essence in the agreement;
e.
The petitioner claims that he issued the first legal notice on 8
February 2000. However, the postal cover and postal certificate
indicate that it was registered on 31 March 2000. Thus, the
petitioner ante-dated the legal notice to overcome limitation;
f.
The petitioner is not entitled to the discretionary relief of specific
performance if a false plea is made. In this case, the petitioner
made three false pleas;
g.
The petitioner has been unable to prove that he was willing to
perform his part of the contract within three years from the sale
agreements and specifically, within three months according to
the agreement. If the petitioner was able to perform his part,
a notice would have been issued earlier or the balance would
have been deposited in the bank;
[2024] 11 S.C.R.
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h.
The first part of Article 54 of the Schedule to the Limitation
Act 1963 applies to the facts of the case. The petitioner was
required to pay the balance consideration within three months
from the date of the sale agreement. The suit should have been
filed on or before 26 June 2000 (three years from the date fixed
for the performance). However, the suit was filed on 9 August
2002, nearly two years after the limitation expired. Thus, the
suit was time barred; and
i.
The suit was barred by time for recovery of the advance amount
in terms of Article 47 of Schedule to the Limitation Act.
10. The petitioner preferred an appeal before the High Court against the
judgment of the Additional District Judge. By a judgment dated 23
April 2021, the High Court partly allowed the appeal for the following
reasons:
a.
The Trial Court did not distinguish between the time fixed for
payment of sale consideration and the time for the performance
of the contract. The first part of Clause 3 of the agreements
only fixes the time for the payment of sale consideration.
The performance of the contract hinges on the respondents
furnishing the documents. The agreements do not fix a time
for the performance of the contract. Thus, the second part of
Article 54 of the schedule to the Limitation Act applies. The
limitation begins from the date of refusal of performance. The
suit was filed on 30 July 2002, which is within three months
of 14 April 2000 (the date when the respondents' responded
to the first legal notice). Even if the first legal notice issued by
the petitioner was ante-dated, it would not affect the merits of
the issue since limitation ought to be calculated from the date
of refusal. Further, the conclusion that the petitioner did not
file a suit immediately after the issuance of the second legal
notice is erroneous. The second legal notice was issued on 6
July 2002. The suit was filed on 30 July 2002. The suit was
numbered on 9 August 2002;
b.
It cannot be concluded that possession was not delivered merely
because there was no mention of it in the sale agreements or
the first legal notice. The finding of the Trial Court on the aspect
of possession and that the petitioner made a false plea in this
regard is erroneous. Even otherwise,the issue of whether the
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petitioner has possession of the suit property is immaterial for
the relief of specific performance. The delivery of possession
is inherent and ancillary to the relief of specific performance
under Section 55 of the Transfer of Property Act 1882. (Relied
on Babulal v. Hajarilal Kishorilal3);
c.
The respondents received a substantial amount of the sale
consideration of Rs. 38,80,850 out of the total sale consideration
of Rs. 40,20,000. The respondents failed to provide the
certificates. The first respondent admitted that she received the
amount in her cross-examination though she had denied the
same earlier in her written statement and chief examination.
The sale deed could not be executed because of the fault of
the respondents. It cannot be concluded that the petitioner
did not approach the respondents for the payment of the
balance consideration merely because he could not depose the
particulars of when he approached them. Further, though the
first and the second respondents pleaded that they had obtained
the necessary documentation as required by Clause 3 of the
sale agreement in both the written statement and evidence, this
version was denied during the cross-examination of DW-1 and
DW-2 (husband of DW-1). The Trial Court concluded that the
respondents were not ready with the certifications. This finding
was not assailed by the counsel for the respondents;
d.
The petitioner would not benefit from not performing the
remainder of the contract when he already paid 90 percent
of the sale consideration. The petitioner filed an Interlocutory
Application to deposit the balance sale consideration of Rs.
5,39,150 which was allowed. The petitioner has shown bona fides
by depositing the balance consideration. Thus, the oral evidence
of the petitioner (PW-1) that he approached the respondents
to fulfil the contract cannot be disbelieved. The petitioner has
proven his readiness and willingness to perform the contract;
e.
The conclusion of the Trial Court that the petitioner made a
false plea that he paid Rs. 34,70,000 when he has only paid
Rs., 29,30,000 is erroneous. DW-1 in her deposition admitted
the payments of the petitioner and admitted that the balance
3
[1982] 3 SCR 94 : (1982) 1 SCC 525
[2024] 11 S.C.R.
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M/s Siddamsetty Infra Projects Pvt. Ltd. v. Katta Sujatha Reddy & Ors.
amount of Rs.5,39,150 was deposited in the Court in her crossexamination. Upon the dishonour of the cheque dated 2 April
1997, the plaintiff issued a Demand Draft of Rs. 5,00,000 on
9 April 1997;
f.
Merely because the plaintiff did not institute a suit immediately
after the reply to the first legal notice in 2000, it cannot be inferred
that he was not willing to perform his part of the contract. The
suit was filed within limitation (relied on R Lakshmi Kantham
v. Devaraji (2019) 8 SCC 62; Mademsetty Satyanarayana v.
G. Yelloji Rao (AIR 1965 SC 1405));
g.
Time is not of essence to the contract for the reasons recorded
in the Trial Court's judgment; and
h.
Section 10 of the Specific Relief Act 1963 was amended in
2018, by which the relief of specific performance is no longer
a discretionary power. Section 10 is a procedural provision.
All procedural laws are retrospective. The amended provision
applies to all pending proceedings.
The High Court directed that since the petitioner had paid 90 percent
of the sale consideration, the suit for specific performance can be
decreed in favour of the petitioner to the extent proportionate to the
consideration paid. The High Court further directed that the amount of
Rs. 5,39,150 deposited by the petitioner pursuant to the Interlocutory
Application must be refunded along with any interest that is accrued.
11. Proceedings under Article 136 were instituted against the judgment of
the High Court. By a judgment dated 25 August 2022, a three-Judge
Bench consisting of Chief Justice NV Ramana, Justice Krishna Murari
and Justice Hima Kohli allowed the appeal. This Court referred to
the judgment in Chand Rani v. Kamal Rani,4 in which it was held
that there is no presumption that time is of essence in a contract
for a sale of immovable property and the Court may infer if it was
of essence based on (a) the express terms of the contract; (b) the
nature of the property; and (c) surrounding circumstances such
as the object of the contract. Relying on the judgment, this Court
held that in the facts of the present case, time is of essence for the
following reasons:
4
[1992] Supp. 3 SCR 798 : (1993) 1 SCC 519
680
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a.
Both the vendors' and the purchaser's obligations in Clause 3
of the sale agreements were required to be completed within
the stipulated time period of three months. The consequences
of (in)actions are different. There are no consequences if
the vendors do not produce the certificates and permissions.
However, the clause spells out a consequence of forfeiture of
the advance amount if the purchaser does not pay the balance
consideration; and
b.
According to Clause 21 of the sale agreements, the parties
had entered into an earlier agreement to sell dated 19 March
1994. This agreement did not materialize and the agreed price
was no longer applicable. Fresh agreements were entered
into "to provide a last opportunity to successfully enter into a
sale-purchase agreement." This intention of the parties is also
clear from Clause 23 of the agreement.
12. This Court held that the suit was barred by limitation since the suit
had to be instituted within three years of the time fixed for completing
the performance (which was three months from the sale agreements).
The three years ended in June 2000 and the suit ought to have been
instituted within that period to not be barred by limitation.
13. This Court also held the following on merits:
a.
Section 10 of the Specific Relief Act is not procedural but
substantive. Thus, the 2018 amendment to the provision does
not apply retrospectively to pending proceedings;
b.
Under the unamended provision, the Court's power to grant
specific performance was discretionary. This discretion ought
not to be exercised arbitrarily.5 The purchaser must be vigilant
to enforce his right. Clause 3 of the agreements was drafted to
provide "one last opportunity for the purchaser to make good
their lapse which had happened on the earlier occasion." The
time for performance of the contract, including payment lasted
till June 1997;
c.
The plaintiff was not ready and willing to perform the contract.
The purchaser did not voluntarily adhere to the time stipulated
under the contract. However, the vendors fulfilled their obligation
5
Saradamanikandappan v. S. Rajalakshmi (2011) 12 SCC 18
[2024] 11 S.C.R.
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to provide documentation. DW-1 averred that all documents were
available and that the petitioner entered into an agreement only
after he was satisfied with the title. Specific performance cannot
be enforced in favour of a party who has not proven that he
was always ready and willing to perform his part of the contract;
d.
The Trial Court's reasoning on the question of whether the
petitioner has possession of the suit property is correct; and
e.
Section 12 of the Specific Relief Act does not apply to situations
where the inability to perform the contract arises out of the
party's own conduct.6 In the instant case, there was no inability
on the part of the parties to perform the contract. The petitioner
was not willing to perform the contract after entering into a
"time-sensitive agreement".
14. This Court directed the respondents/vendors to repay the sale
consideration received with an interest of 7.5 percent from the date
on which the payment was made till the time the entire amount is
paid back. The payment was directed to be made within six months.
15. The petitioner filed a review petition against the judgment of this Court.
C.
Submissions
16. Mr Neeraj Kishan Kaul, senior counsel submitted that the judgment
of this Court suffers from the following apparent errors that warrants
the exercise of the review jurisdiction:
a.
Clause 21 of the agreements to sell refers to the sale agreement
executed by the original owners in favour of the vendors in
1994. Though petitioner was not a party to that agreement, this
court has proceeded on the incorrect premise that the 1994
agreement was between the parties;
b.
The Trial Court, after analysing the evidence on record, concluded
that the vendors did not produce certificates and permissions
as required by Clause 3 of the sale agreements. This finding
was not challenged before the High Court. This Court wrongly
records that the vendors produced the certificates without
referring to the direct evidence on record to the contrary; and
6
Jaswinder Kaur v. Gurmeet Singh, (2017) 12 SCC 810
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c.
Clause 3 does not state that the agreement will be cancelled
if the petitioner does not pay the balance amount within three
months.
17. Mr Rakesh Dwivedi and Mr. Mukul Rohatgi, senior counsel for the
respondents argued that this is not a fit case for the exercise of review
jurisdiction. It was submitted that the judgment of this Court was
sound,independent of the (mis)reference to the 1994 agreement. The
learned counsel further submitted that the suit property was alienated
after the judgment of this Court and before the review petition was
registered. It was argued that the doctrine of lis pendens does not
apply when the petition was in the registry in a defective state.
D.
Grounds for exercising review jurisdiction
18. Before proceeding with the analysis, we will refer to the grounds
for exercising review jurisdiction. Order XLVII of the Supreme Court
Rules 2013 states that an application for review must be filed on
the grounds mentioned in Order XLVII Rule 1 of the Code of Civil
Procedure 1908 ("CPC"). Order XLVII Rule 1 of CPC lays down the
following grounds for review:
a.
Discovery of new and important matter or evidence, which after
the exercise of due diligence was not within their knowledge or
could not be produced by them at the time the decree was passed;
b.
Mistake or error apparent on the face of the record; and
c.
Any other sufficient reason.
19. This Court has laid down the following principles on the exercise of
review jurisdiction7:
a.
Review proceedings are not by way of appeal and have to be
strictly confined to the scope and ambit of Order 47 Rule 1 CPC;
b.
Error on the face of record must be an error which must strike
one on a mere perusal and must not on a long drawn process;
c.
The power of review must not be exercised on the ground that
the decision was erroneous on merits;
7
See Murali Sundaram v. Jothibai Kannan, 2023 SCC OnLine SC 185; Karnail Singh v. State of Haryana,
2021 SCC OnLine SC 961; Kamlesh Verma v. Mayawati, (2013) 8 SCC 320; Sanjay Kumar Agarwal v.
State Tax Officer, (2024) 2 SCC 362
[2024] 11 S.C.R.
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M/s Siddamsetty Infra Projects Pvt. Ltd. v. Katta Sujatha Reddy & Ors.
d.
The phrase "any other sufficient reason" means a reason that is
analogous to the grounds specified in Order 47 Rule 1 CPC; and
e.
The mere possibility of two views on the subject cannot be a
ground for review.
20. Let us proceed to analyse if the judgment of this Court satisfies the
grounds for review. The issues which arose for the consideration
of this Court were two-fold: first, whether the suit instituted by the
petitioner was barred by limitation; and second, whether the suit for
specific performance must be decreed. The finding that time was
of essence to the contract was central to the Court's reasoning on
both the issues.
E.
Limitation
21. The Schedule to the Limitation Act 1963 prescribes the period of
limitation. Article 54 of the Schedule prescribes the period of limitation
for a suit for specific performance of a contract:
Description of suit
Period of limitation
Time from which period
begins to run
54. For specific
performance of a
contract
Three years
The date fixed for the
performance, or, if no such
date is fixed, when the
plaintiff has notice that
performance is refused.
22. The provision has two parts. The first part deals with situations where
the contract fixes a date for performance. The period of limitation of
three years runs from the date fixed for completion of performance.
The second part deals with situations where the contract does not
fix a date for the performance of the contract. In such situations, the
period of limitation runs from the date when the plaintiff has notice
that the defendant has refused performance.
23. The issue for consideration was whether the sale agreements fix a
date for the performance of the agreement. This Court referred to
Clauses 3, 21, and 23 to hold that the agreement fixes a date of three
months for performance. This Court interpreted Clause 3 as follows:
"31. At the outset, this Court has perused Clause 3 of
the agreements, which is in two parts. The first part
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provides for the purchaser's obligations, while the second
part details the obligation of the vendors to provide the
requisite certificates. Although both the obligations were
required to be completed within the stipulated period of
three months, there is a substantive difference between
these two sets of obligations. The obligation upon the
vendors concerned was production of certain certificates,
such as income tax exemption certificate and agriculture
certificate. No consequences were spelt out for
non-performance of such obligations. Whereas the
obligation on the purchaser, was to make the complete
payment of the sale consideration within three months.
The clause further mandates forfeiture of the advance
amount if the payment obligation is not met within the
time period stipulated therein."
(emphasis supplied)
24. This Court observed that Clause 3 casts two obligations: one on
the petitioner/purchaser and the other on the respondents/vendors.
To this extent, we find no error. However, the conclusion that
the Clause only provides consequences for the non-payment of
the balance consideration by the purchaser and not for the nonproduction of certificates by the vendors is an error apparent on
the face of the record. The judgment correctly notes that Clause
3 prescribes that the advance amount paid will be forfeited if the
balance is not paid by the petitioner in three months. However,
this Court missed that the Clause also provides a consequence
for not producing the documents within three months, which is the
cancellation of the sale agreements. This Court seems to have
missed the phrase "and this agreement of sale will be cancelled..".
If this Court had read "and this agreement of sale will be cancelled"
as a consequence of the non-fulfilment of the obligation cast on the
purchaser, it could still be argued that it was a probable (though
in our opinion, erroneous) view and not an error apparent on the
face of the record. However, the judgment completely disregards
the phrase "and this agreement of sale will be cancelled" in Clause
3. In paragraph 32 of the judgement, this Court further notes that
non-payment of the balance consideration would lead to a severe
consequence of "forfeiture":
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"33. Coming to the aforesaid indicators, the language of
the agreements makes it clear that severe consequences
of forfeiture would ensue if the payment is not made within
three months of the date of the agreements."
25. Clause 3 has two parts. The first part casts an obligation on the
purchaser/petitioner and prescribes consequences for it, that is,
the forfeiture of the advance paid. The word "and" disjuncts this
part from the second part which casts an obligation on the vendors.
The second part prescribes the consequence if the vendors do not
furnish the documents.
26. This Court further noted that the "language of the agreements" ensures
severe consequences of forfeiture if the balance consideration is not
paid within three months. This Court further referred to Clauses 21
and 23 to substantiate this interpretation:
"32.