PANCHANAN OHARA AND ORS. versus MONMATHA NATH MAITY (DEAD) TH. LRS. & ANR.

Citation: [2006] SUPP. 2 S.C.R. 520 · Decided: 12-05-2006 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Dismissed

Judgment (excerpt)

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PANCHANAN OHARA AND ORS. 
v. 
MONMATHA NA TH MAITY (DEAD) TH. LRS. & ANR. 
MAY 12, 2006 
[S.B. SINHA AND P.P. NAOLEKAR, JJ.] 
Limitation Act, 1963-Article 54-Agreement for sale of immoveable 
property-Vendee requesting vendor to execute and register a sale deed in 
its favour and latter in response assuring them that it would do so--However, 
thereafter execution refused on the plea that it was barred by limitation---
Vendee filing suit for specific performance of agreement for sale-Bar of 
limitation-Held-Suit was not barred by limitation as courts below had 
given a finding of fact that period of performance of agreement has been 
extended, and in such a case, the time to file a suit shall be deemed to start 
running only when plaintiff had notice that performance had been refused- -
In facts of the case, the suit was filed soon after notice by plaintiff of such 
refusal. 
Contract-Extension of time for performance-Held-It need not 
necessarily be inferred from written document-It could be implied also-
Conduct of parties in this behalf is relevant. 
Companies Act, 1956-Sections 46 and 48-Mode of signing contract 
on behalf of company-Requirement of resolution and seal--Held-In their 
absence contract cannot be held to be invalid or illegal as the Company may 
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still be liable having regard to nature of transaction and authority of those 
who executed the contract-If act of Directors is not ultra vires or no public 
policy is involved, the parties acting thereupon cannot be left at large-It 
was more so as an oral agreement is permissible in law--lnfacts of the case, 
companyfound bound by agreement signed by all of its directors with further 
evidence that all of them were aware of it and never disputed its correctness 
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or contents. 
Respondent No. 2, a company held the suit property and intending 
to sell it, entered into an agreement for sale thereof with Respondent 
no.I wherefor an amcunt was paid to it as advance, and balance amount 
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was to be paid within a period of fourteen months. Respondent No. I 
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PANCHANAN OHARA v. MONMATHA NATH MAITY 
521 
issued several letters asking Respondent No.2 to execute and register a 
sale deed in his favour, and latter in response thereto had all along been 
assuring them that it would do so. However, thereafter Respondent No. 
2 refused to execute and register a deed of sale on the plea that the same 
became barred by limitation. Respondent No. 1 filed a s1•it for specific 
performance of the said agreement for sale. Appellant is a subsequent 
purchaser having purchased the property with full notice of the agreement 
for sale. He had filed a caveat in the above suit. 
Trial Judge decreed the suit holding that it was not barred by 
limitation, and as all the Directors of Respondent No. 2 were parties to 
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the said agreement, rejected the contention that in executing the said 
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agreement the provisions of Section 46 and 48 of the Companies Act had 
not been complied with. A deed of sale was executed in favour of 
Respondent no. 1 in execution of the decree. Appeal against decree was 
dismissed by the First Appellate Court. In Second Appeal before the 
High Court, though neither the substantial question of law was framed 
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nor the question as regards the applicability of the first part or the 
second part of Article 54 oft.he Limitation Act was raised, the appeal 
was dismissed. Hence the present appeal. 
Appellant contended (i) the suit was not barred by limitation as 
second part of Article 54 of the Limitation Act was attracted, and not 
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the first part (ii) the provisions of Sections 46 and 48 of the Companies 
Act having not been complied with, the said agreement could not have 
been enforced. 
Respondents contended that (i) the contention that the first part 
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of Article 54 of the Limitation Act would not be attracted in this case 
should not be permitted to be raised having not been raised before the 
courts below (ii) non-compliance of the provisions of Sections 46 and 48 
of the Companies Act was irrelevant as all the Directors signed the 
agreement of sale on behalf of the Company and in any event they had 
sufficient authority to do so under its articles of Association. 
Dismissing the appeal, the Court 
HELD : 1.1. Contention regarding the applicability of the first or 
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the second part of Article 54 of the Limitation Act will have to be judged 
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SUPREME COURT REPORTS [2006] SUPP. 2 S.C.R. 
having regard to 

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