Knowledge About Sale Deed Can't Be Presumed From Date Of Its Registration; Limitation Period Starts From Date Of Knowledge : Supreme Court

While dealing with dismissal of a suit, seeking cancellation of a sale deed, on the ground of limitation, the Supreme Court recently reiterated that the period of limitation in such cases begins from the date when knowledge of fraud (underlying the challenged sale deed) is acquired, and not the date of registration.

"While the High Court came to the correct conclusion that under Article 59 of the Limitation Act, a suit can be instituted within 3 years of the knowledge, it proceeded to return a finding that in cases where the document is registered, the knowledge must be presumed from the date of registration...there was no justification for the High Court in allowing the application under Order 7 Rule 11, on issues that were not evident from the plaint averments itself. The High Court was also not justified in holding that the limitation period commences from the date of registration itself", said a bench of Justices PS Narasimha and Manoj Misra.

In arriving at its decision, the Court relied on judicial precedents including Chhotanben v. Kirtibhai Jalkrushnabhai Thakkar. This was a case where a suit for cancellation of sale deed was opposed through an application under Order 7 Rule 11 CPC on the ground of limitation and the Supreme Court specifically held that limitation in all such cases shall arise from date of knowledge.

To briefly state facts of the present case, the appellants-plaintiffs instituted a suit for cancellation of a registered sale deed of 2004 stated to have been executed by them conveying the plaint scheduled property in favor of the respondents-defendants.

As per the appellants, the said sale deed was brought about through fraudulent means and they came to know of it only in 2017, when they were issued notice on an application filed by the respondents for correction of revenue entries. Having found that their signatures were forged, the appellants instituted the suit in 2017 for a declaration and cancellation of the sale deed.

The suit was opposed by the respondents by an application under Order 7 Rule 11 CPC on grounds including that the suit was barred by limitation, having been filed after a gap of 13 years since the execution of the sale deed. In 2018, the Trial Court allowed the application and dismissed the suit. In appeal, the First Appellate Court ruled in favor of the appellants.

Aggrieved, the respondents approached the Gujarat High Court, which allowed their appeal. Against the High Court decision, the appellants filed the present appeal before the Supreme Court. Going through the material, the Supreme Court observed that the High Court proceeded to decide the case on merits, instead of restricting its scrutiny to the averments in the plaint while dealing with O7R11 CPC.

"we are of the opinion that the findings of the High Court are primarily factual. The High Court seems to have got carried away by the fact that the suit was filed 13 years after the execution of the sale deed. The question is whether the plaintiffs had the knowledge of the execution of the sale deed."

Finding fault with the impugned judgment, the Court added,

"While the High Court came to the correct conclusion that under Article 59 of the Limitation Act, a suit can be instituted within 3 years of the knowledge, it proceeded to return a finding that in cases where the document is registered, the knowledge must be presumed from the date of registration."

Besides, since the High Court examined the issue while exercising jurisdiction under Section 100 CPC, the Supreme Court said that reversal of the judgment of the first Appellate Court on facts was impermissible.

Accordingly, the appellants' appeal was allowed. The High Court judgment was set aside and that of the First Appellate Court restored. Since the suit was of the year 2017, the Court directed the trial Court to dispose of the suit as expeditiously as possible.

Case Title: DALIBEN VALJIBHAI v. PRAJAPATI KODARBHAI KACHRABHAI, C.A. No. 14293/2024

Citation : 2024 LiveLaw (SC) 1056

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