The Supreme Court, in a significant ruling, has held that a lawsuit for possession of immovable property based on title, where the underlying sale deed is void ab initio due to fraud or lack of consideration, is governed by the 12-year limitation period prescribed under Article 65 of the Limitation Act, 1963. The Court clarified that the shorter three-year period under Article 59, which applies to suits for cancelling or setting aside voidable instruments, is not applicable in such cases.
A Division Bench of Justice J.B. Pardiwala and Justice R. Mahadevan dismissed an appeal against a Punjab & Haryana High Court judgment, thereby affirming the decree in favour of the original plaintiffs. While upholding the High Court’s ultimate decision, the Supreme Court corrected its reasoning on the applicable provision of the Limitation Act.
The legal dispute concerned whether a suit filed approximately 11 years after the execution of a fraudulent sale deed was barred by time.
Background of the Case
The case originated from a Civil Suit filed in 1984 by the original plaintiff, who claimed ownership and possession of a one-third share in agricultural land in Gurgaon. She sought a permanent injunction against the defendant, Shanti Devi, and, in the alternative, a decree for joint possession. The core of her claim was that a sale deed dated June 14, 1973, purportedly executed by her and her brother in favour of the defendant, was “fraudulent, concocted and thereby, void.”
In her plaint, she asserted:
- That she never executed or registered the sale deed.
- That the defendant must have procured the deed through impersonation and fraud.
- That she “never got any sale consideration” for the alleged sale.
- That she discovered the fraudulent transaction only in February 1984.
The Trial Court dismissed the suit in 1991, holding it to be barred by limitation. However, the First Appellate Court reversed this decision in 1996. It found the sale deed to be a “void transaction” as the plaintiff had never executed it. Consequently, it applied Article 65 of the Limitation Act (providing 12 years for a suit for possession) and held the suit to be within time.
The defendant then appealed to the High Court of Punjab & Haryana, which dismissed the appeal in 2018. The High Court affirmed the finding that the sale deed was fraudulent but opined that Article 59 of the Limitation Act (three years from the date of knowledge) would be applicable. The legal heirs of the defendant subsequently challenged this decision before the Supreme Court.
Arguments Before the Supreme Court
The appellant (original defendant) argued that the suit was filed after a delay of more than 11 years from the date of the sale deed and was thus hopelessly barred by time. It was contended that a registered document carries a presumption of valid execution, and the plaintiff had failed to discharge the heavy burden of proving the transaction to be fraudulent.
The respondents (original plaintiffs) countered that both the First Appellate Court and the High Court had recorded concurrent findings that the sale deed was void ab initio because the plaintiff had never executed it. They submitted that for a void instrument, there is no legal requirement to seek its cancellation. Therefore, the suit for possession based on title was correctly governed by the 12-year limitation period under Article 65.
Supreme Court’s Analysis and Ruling
The Supreme Court first addressed whether the sale deed was void or merely voidable. The Bench noted the concurrent factual finding that the plaintiff’s thumb impression was not on the document, meaning she had “never executed the said sale deed in the first place.” The Court held that this finding goes to the very “character of the sale deed and thereby, renders it void/void ab initio.”
Placing reliance on its previous judgment in Prem Singh v. Birbal, the Court reiterated the distinction between fraud as to the character of a document (which makes it void) and fraud as to its contents (which makes it voidable). The Court observed, “Article 59 of the Limitation Act applies specially when a relief is claimed on the ground of fraud or mistake. It only encompasses within its fold fraudulent transactions which are voidable transactions.” Since the transaction in this case was void, Article 59 had no application.
The Court further explained, “When a document is void ab initio, a decree for setting aside the same would not be necessary as the same is non est in the eye of the law, as it would be a nullity.”
The Bench also analyzed the issue from the perspective of sale consideration. The plaintiff had explicitly pleaded that she received no payment. The sale deed mentioned a consideration of Rs. 15,000, of which Rs. 6,000 was allegedly paid before the Sub-Registrar. However, the defendant failed to produce any credible witness to substantiate this payment. Citing its decision in Kewal Krishnan v. Rajesh Kumar, the Court held that under Section 54 of the Transfer of Property Act, 1882, payment of price is essential for a sale.
“If a sale deed in respect of an immovable property is executed without payment of price and if it does not provide for the payment of price at a future date, it is not a sale at all in the eye of the law. It is of no legal effect. Therefore, such a sale will be void,” the judgment stated.
Concluding that the sale deed was void for both fraud and lack of consideration, the Supreme Court held that the suit was fundamentally one for possession based on title. The Court stated:
“To put it simply, in the eyes of the law, the plaintiff could not be said to have executed the sale deed. Therefore, the plaintiff could indeed have maintained an action to obtain possession of the property on the basis of her title and filed the same within the period of 12 years from the date of knowledge that the possession of the defendant was adverse to that of the plaintiff. Even if the date of execution of the sale deed, i.e., 14.06.1973 is considered, the suit having been filed on 28.02.1984, i.e., almost 11 years later, could be said to be well within limitation as stipulated under Article 65.”
While noting that the High Court had committed an error in applying Article 59, the Supreme Court found no infirmity in its final conclusion. The appeal was accordingly dismissed.
