Unregistered Agreement to Sell: Limitation, Registration and Readiness
The plaintiff, a 48-year-old cultivator, and the defendant, his cousin, signed an unregistered agreement to sell on 12 January 2019 for 2 acres of irrigated agricultural land at Sehore, Madhya Pradesh, for ₹12,00,000. The plaintiff paid ₹2,00,000 as advance and a further ₹3,00,000 in February 2019, when the defendant handed over possession. The sale deed was to be executed by 30 June 2019. The defendant did not execute it. On 18 November 2019 the plaintiff sent a registered notice demanding execution. The defendant replied on 5 March 2021 admitting the agreement and asking for eight more months 'to settle family matters'. No sale deed followed. The plaintiff filed a suit for specific performance and permanent injunction on 10 March 2023. The defendant raises limitation under Article 54 of the Limitation Act, the unregistered agreement's admissibility, and the plaintiff's alleged lack of readiness and willingness. The plaintiff has produced bank statements showing he held ₹9,00,000 throughout 2019 and has remained in possession.
1. Is the suit for specific performance barred by limitation? Discuss Article 54 of the Limitation Act and the effect of the defendant's reply dated 5 March 2021.
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Framing the period. Article 54 gives three years from the date fixed for performance, or, where no date is fixed, from the date the plaintiff has notice of refusal. Here a date is fixed (30 June 2019), so the period ordinarily expires on 30 June 2022. A plaint filed on 10 March 2023 is therefore prima facie barred, and Order 7 Rule 6 CPC requires the plaintiff to plead the ground of exemption.
The acknowledgment. Section 18 of the Limitation Act gives a fresh period from the date of a written acknowledgment of liability signed by the party against whom the right is claimed, provided it is made before the original period expires. The reply of 5 March 2021 is before 30 June 2022, is signed by the defendant, and admits the agreement and the obligation to execute it; the request for eight months is a plea for time, not a denial of liability. It therefore yields a fresh three-year period running to 5 March 2024, and the suit is within time.
Points to test in argument. The acknowledgment must identify the right or liability with reasonable certainty; loose references to 'family matters' alone would not suffice. The defendant may contend the letter was conditional and amounted only to an offer to negotiate, which would not extend limitation. The court must read the letter as a whole. The notice of 18 November 2019 is irrelevant to limitation, since it precedes expiry but is not an acknowledgment by the defendant; it is relevant only to refusal and to readiness.
2. The agreement is unregistered but possession was delivered. What is its evidentiary status and what consequence follows for the relief of specific performance?
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Section 17(1A) Registration Act. Since the 2001 amendment, an agreement to sell immovable property for consideration, where the transferee is put in possession, requires registration. This agreement falls squarely within it.
Section 49 bar. An unregistered document required to be registered cannot affect the immovable property and cannot be received as evidence of any transaction affecting it. Its use is confined to collateral purposes, such as explaining the character or continuity of possession. The plaintiff cannot, on the strength of this document alone, prove a binding contract to convey.
The proviso to Section 49. The proviso permits an unregistered document to be received as evidence of a contract in a suit for specific performance. There is a genuine conflict in authority on whether this proviso rescues a document that is compulsorily registrable under Section 17(1A). The safer view, and the one a trial court should adopt, is that the proviso does not displace the specific requirement of Section 17(1A), and the document cannot be used to establish the very transaction of transfer of possession for which registration was compulsory. The plaintiff should plead and prove the agreement through other admissible material, such as the defendant's reply of 5 March 2021, which is itself a written admission of the contract and is not compulsorily registrable.
Fallback. Independently, the plaintiff may invoke Section 53A of the Transfer of Property Act to defend his possession: there is a written contract signed by the defendant, part payment, delivery of possession and willingness to perform. The defendant's reply supplies the writing if the agreement itself is excluded.
3. How should the court assess readiness and willingness under Section 16(c) of the Specific Relief Act on these facts?
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The requirement. Section 16(c) requires the plaintiff to aver and prove that he has always been ready and willing to perform the essential terms of the contract. This is not a formality: the averment must be supported by conduct, and readiness must be continuous from the date of the contract to the date of the decree.
Applying it. The plaintiff can rely on (i) payment of ₹5,00,000 out of ₹12,00,000, (ii) possession taken and retained, (iii) the notice of 18 November 2019 calling upon the defendant to execute, and (iv) bank statements showing ₹9,00,000 available, which covers the balance of ₹7,00,000 plus registration charges. The defendant's reply of March 2021 itself shows the plaintiff pressing for execution.
Weaknesses to weigh. The four-year gap between the notice and the suit is unexplained; the plaintiff never deposited or tendered the balance; and no evidence shows a fresh demand after 2021. The court will not infer readiness from possession alone, because possession is equally consistent with part performance. The plaintiff should be examined on why he waited. If the court finds readiness proved, it will ordinarily decree specific performance subject to deposit of the balance within a fixed time, since the 2018 amendment has narrowed but not eliminated the court's discretion. If readiness fails, the suit must be dismissed, though the plaintiff may be left to his remedy for refund.