A bench of Supreme Court consisting Justice Vikram Nath and Justice Prasanna B. Varale set aside the judgement of High Court of Jharkhand which decreed the Specific Performance of Contract beyond the period of limitation.  The bench while holding that the limitation period for institution of a suit for Specific performance will run from the date of default and not from the date of expiry of Contract.

An agreement to sell was executed between the parties on 17.12.1989 specifically mentioning that the sale would be executed within one month from the date of said agreement. The Agreement further recorded that the agreement would remain valid for a period of five years from the date of its execution.

The plaintiff filed a suit in September 1993 seeking specific performance of Contract which was dismissed by the trial court as being time barred. The First Appellate Court and the High Court decreed the Specific Performance on the consideration that the agreement further recorded that this agreement would remain valid for a period of five years from date of the execution of the agreement to sell. Supreme Court while setting aside the order of High Court held that Placing reliance on this clause is totally irrelevant. It further held that the validity of the agreement is something different and does not change the date of performance.

Relying upon Article 54 of the Limitation Act, 1963 which provides the limitation period of three years for instituting a suit for specific performance of a Contract from the date fixed for the performance, or, where no such date is fixed, when the plaintiff has notice that performance is refused. 

The Court held that once there is a specific date fixed for performance, the limitation would be three years from the said date and not from the date of expiry of contract.