Contract Law

Ramzan v. Hussaini

AIR 1990 SC 529; (1990) 1 SCC 104

Facts

Ramzan and Hussaini were brother and sister.
Ramzan agreed to sell a house to Hussaini after she redeemed the property from an existing mortgage.
The agreement did not state a specific calendar date for execution of the sale deed.
Instead, performance was linked to a future event: redemption of the mortgage.
Hussaini redeemed the property in 1970.
Ramzan nevertheless failed to execute the sale deed.
Hussaini served notice and later filed a suit for specific performance.
Ramzan argued that the suit was barred by limitation because it was filed many years after redemption.
Hussaini contended that no date had been fixed and limitation began only when Ramzan expressly refused performance.

Whether the agreement was a contingent contract.
Whether linking performance to redemption of the mortgage amounted to fixing a date for performance under Article 54 of the Limitation Act.

Under Section 31, a contingent contract is one to do or not do something if an uncertain future collateral event happens or does not happen.
Under Section 32, such a contract becomes enforceable when the specified event occurs.
A date for performance need not be expressed as a calendar date.
A date may be considered fixed where the contract provides an ascertainable event from which the date can be calculated.
Article 54 gives three years for specific performance:
from the date fixed for performance; or
if no date is fixed, from notice of refusal.

The obligation to execute the sale deed depended on redemption of the mortgage.
Until redemption occurred, Ramzan’s obligation could not be enforced.
The agreement was therefore a typical contingent contract.
Once Hussaini redeemed the mortgage, the uncertain event occurred.
At that moment:
the contingency was fulfilled;
Ramzan’s obligation became enforceable;
the time for seeking performance began.
The Court rejected the argument that only an expressly written calendar date can be a “date fixed.”
A contractual event may provide a definite basis for identifying the date.
Here, redemption was a definite and objectively ascertainable occurrence.
Hussaini redeemed the property in 1970.
Therefore, limitation began at that time, not when she later issued notice in 1984.
A party cannot indefinitely postpone limitation by delaying a formal demand after the contractual event has already occurred.
Although the contract was valid and contingent, the enforcement action was brought too late.

The Supreme Court held that the contract became enforceable immediately upon redemption.
The date of redemption was the date fixed for performance for limitation purposes.
The suit filed more than three years later was barred.
Use this case for: a contingent contract becomes enforceable when the event occurs, and an event-based date may constitute a fixed date for performance.