Daughter’s Challenge to 1974 Gift Deed in Father’s Favour Was Time-Barred After 23 Years, Supreme Court Holds

The respondent sued her father, the appellants’ predecessor-in-interest, to set aside a 1974 gift deed, recover possession and obtain mesne profits.

She alleged that she executed the deed under her father’s undue influence and on his assurances that he would safeguard the property and not remarry.

The trial court and the first appellate court found undue influence and held the suit timely, reasoning that limitation began when the respondent became suspicious in 1995.

The High Court affirmed, holding that she learned of the alleged fraud when her father stopped sharing the property’s usufruct.

The appellants challenged the concurrent judgments, contending that the suit was barred by limitation.

Section 3 of the Limitation Act, 1963 requires dismissal of a suit instituted after the prescribed limitation period, even if limitation is not pleaded as a defence.

Section 10 provides that a suit to follow property vested in trust for a specific purpose, or for an account of that property, is not barred by time; it applies where the property is in fact held in trust for that purpose.

Under Article 59, a suit to cancel or set aside an instrument must be brought within three years from when the facts entitling the plaintiff to that relief first become known.

A voidable gift must be set aside before possession can be obtained; therefore, Article 59, rather than Article 65, governed the suit.

Under Ningawwa v. Byrappa Shiddappa Hireknrabar, limitation runs from when the plaintiff knows the true nature of the instrument, not when the plaintiff later escapes the influence under which it was executed.

Fraud sufficient to vitiate a contract must relate to conduct before or at its formation; a subsequent breach of promise alone does not constitute such fraud (Reliance Salt Ltd. v. Cosmos Enterprises & Another).

The gift deed conveyed the property absolutely to the father and imposed no obligation to hold it for the respondent, safeguard it, or share its proceeds; accordingly, it created no trust and Section 10 did not apply.

The respondent’s own case showed that she knew she was executing a gift deed and understood her father’s influence at the time.

Under Ningawwa, limitation therefore began when she knew the instrument’s true nature, not when she later suspected wrongdoing or ceased to be under his influence.

The suit, filed in 1997, was consequently outside Article 59’s three-year period.

Nor did the father’s later remarriage or cessation of sharing property proceeds establish fraud at the time of the gift: the deed contained no restriction on remarriage or requirement to share proceeds, and no initial fraudulent intention was pleaded with specificity.

It allowed the appeal, set aside the judgments and decrees of the courts below, and dismissed the respondent’s suit.