Non-avoidance of voidable agreements and performance of related contracts render specific performance of pre-FERA agreements enforceable.

In brief

The question

1. Whether the suit for specific performance was barred by the law of limitation under Article 54 of the Limitation Act, 1963

The court held

The Court decided all issues in favor of the Plaintiffs, holding that the six agreements dated August 5, 1987, are valid and enforceable

It also directed

The Court granted a decree of specific performance in favor of the Plaintiffs and exercised its equitable jurisdiction by appointing a Chartered Valuer to determine the current market value of the property, which the Plaintiffs agreed to pay

01Facts

The Plaintiffs (real estate developers) entered into six agreements for sale and one development agreement with the Defendants (mother and daughter) on August 5, 1987, regarding premises at 215 and 217 Netaji Subhas Chandra Bose Road, Kolkata

pp. 2-4

The Plaintiffs paid earnest money via twelve banker’s cheques

p. 4

Following delays due to municipal law changes and a 1995 refusal by the Defendants to proceed, the Plaintiffs filed a suit for specific performance in 1996

p. 5, 11

During the penetration of the suit, Defendant No. 1 (the mother) entered into a compromise decree with the Plaintiffs in 2014

p. 10

Defendant No. 2 (the daughter) contested the suit, alleging the agreements were obtained through coercion, were barred by limitation, and violated Section 31 of the Foreign Exchange Regulation Act (FERA), 1973, as her mother was a Japanese citizen

p. 8, 11, 13

02Issues

i.1. Whether the suit for specific performance was barred by the law of limitation under Article 54 of the Limitation Act, 1963

p. 11

ii.2. Whether the agreements were void ab initio due to non-compliance with Section 31 of FERA, 1973

p. 13

iii.3. Whether the agreements were vitiated by coercion or undue influence exercised upon Defendant No. 2

p. 14

iv.4. Whether the Plaintiffs demonstrated readiness and willingness to perform their contractual obligations under Section 16(c) of the Specific Relief Act

p. 20, 22

03Law Applied

Article 54 of the Limitation Act, 1963, which prescribes a three-year period for specific performance from the date fixed for performance or the date of notice of refusal

p. 11

Section 31 of the Foreign Exchange Regulation Act (FERA), 1973, noting it restricts the "transfer" of property by foreign nationals but does not necessarily void an "agreement for sale" ab initio

pp. 13-14

Sections 15 and 16 of the Indian Contract Act, 1872, establishing that contracts made under coercion or undue influence are voidable at the option of the party whose consent was so caused, provided they are timeously avoided

pp. 15-16

Section 16(c) of the Specific Relief Act, 1963, requiring the plaintiff to aver and prove continuous readiness and willingness, as interpreted in U.N. Krishnamurthy v. A.M. Krishnamurthy

p. 22

Provisions in the judgment · 4 · Linked ones open on LawLens

calcutta municipal corporation act, 1980 Section 98

Limitation Act, 1963 Section 1

Registration Act, 1908 Section 17

Specific Relief Act, 1963 Section 16

04Reasoning

The Court found the suit was within the limitation period as the Defendants' refusal was only clearly communicated in 1995, and the suit followed in 1996

pp. 12-13

It rejected the FERA defense, noting that FERA did not bar the execution of agreements for sale and had since been repealed; furthermore, Defendant No. 2 is an Indian citizen

p. 14

On coercion, the Court observed that Defendant No. 2 failed to lodge any police complaint or take legal steps to avoid the "voidable" contracts between 1987 and 1996, rendering her defense of non-voluntary consent untrustworthy

p. 16

Regarding readiness and willingness, the Court determined that the Plaintiffs' actions—including obtaining municipal sanctions, pursuing amalgamation of plots, and successfully concluding a compromise for half the property with Defendant No. 1—constituted sufficient evidence of financial capacity and intent

pp. 21-23