Refund of Sale Consideration Under Unperformed ATS Constitutes a Statutory Charge Subject to Twelve-Year Limitation

The Appellant (SNG Developers) owned 5 acres of land in Greater Noida and entered into an Agreement to Sell (ATS) dated 04.04.2011 to sell 2.929 acres to the Respondent for Rs. 7.50 crores

The Respondent paid the full consideration, but the ATS could not be performed as the Greater Noida Industrial Development Authority (GNIDA) refused to grant permission for land partition

On 13.05.2013, the Appellant emailed the Respondent stating the ATS was null and void and offered a refund

The Respondent invoked arbitration on 30.07.2018, initially seeking specific performance but later restricting the claim to a refund of Rs. 7.50 crores

The Arbitrator awarded the refund with 10% interest, which was upheld by a Single Judge under Section 34

The Appellant challenged this on grounds of limitation and the inadmissibility of the unregistered ATS

1. Whether the claim for refund of sale consideration was barred by limitation under the Limitation Act, 1963

2. Whether an unregistered Agreement to Sell (ATS) is admissible as evidence to prove the receipt of sale consideration and a claim for refund

3. Whether the Respondent was entitled to a statutory charge on the property under Section 55(6)(b) of the Transfer of Property Act, 1882

The court applied Section 18 of the Limitation Act, 1963, regarding the extension of the limitation period through written acknowledgment of liability

It relied on Section 55(6)(b) of the Transfer of Property Act, 1882, which creates a statutory charge on the property for the buyer to the extent of the purchase money paid, provided the buyer has not improperly declined delivery

This invoked Article 62 of the Schedule to the Limitation Act, 1963, providing a 12-year limitation period for enforcing a charge on immovable property

the court applied the proviso to Section 49 of the Registration Act, 1908, which permits unregistered documents to be used as evidence for collateral transactions not requiring registration

The Court rejected the Appellant’s contention that the 3-year limitation period had expired. It held that since the Respondent had paid the full consideration and the contract failed due to non-grant of statutory approvals (not the buyer’s breach), a statutory charge was created under Section 55(6)(b) of the TPA

Consequently, under Article 62 of the Limitation Act, the Respondent had 12 years from 2013 to seek a refund, making the 2019 claim timely

Independently, the Court found that the Appellant’s balance sheets for FY 2013-14 through 2016-17, which listed the amount as an "advance against sale," constituted a valid acknowledgment of debt under Section 18

Regarding the unregistered ATS, the Court reasoned that while it could not be used for specific performance in Uttar Pradesh, it was admissible for the "collateral purpose" of proving the payment of money and the nature of the underlying transaction

The Court found the appeal to be an "abuse of process" and a "frivolous" attempt to wrongfully withhold money

The Appellant was ordered to refund Rs. 7.50 crores with 10% pendente lite and future interest, and the Court further imposed costs of Rs. 1 lakh on the Appellant for filing a meritless appeal