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Dhapai Vs. Dalla and ors. - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtAllahabad High Court
Decided On
Case NumberCivil Revn. No. 1024 of 1965
Judge
Reported inAIR1970All206
ActsLimitation Act, 1908 - Articles 113, 115 and 120; Contract Act, 1872 - Sections 73
AppellantDhapai
RespondentDalla and ors.
Advocates:Jagdish Misra, Adv.
Excerpt:
.....where the district board had leased out the right to collect tolls in the market of a village to the defendant and the defendant had failed to pay three-fourths of the money due, which was to be paid in three equal instalments on due dates, the suit by the government against the contractor for the recovery of the balance due was a suit for compensation for breach of contract, governed by article 115. 22. with great respect we are, therefore, of the opinion that the case of air1962all438 (supra) which was for the enforcement of the agreement to pay theka money payable in instalments and to which article 120 of the first schedule to the indian limitation act was applied was not decided correctly......has become due to a party after the contract has been breached.21. the orissa high court held in the case of govinda sabat v. state of orissa : air1964ori189 that where the district board had leased out the right to collect tolls in the market of a village to the defendant and the defendant had failed to pay three-fourths of the money due, which was to be paid in three equal instalments on due dates, the suit by the government against the contractor for the recovery of the balance due was a suit for compensation for breach of contract, governed by article 115.22. with great respect we are, therefore, of the opinion that the case of : air1962all438 (supra) which was for the enforcement of the agreement to pay theka money payable in instalments and to which article 120 of the first.....
Judgment:

S.D. Khare, J.

1. The question which has been referred for the consideration of this Full Bench is as follows:--

'On the facts of the present case which Article of the Limitation Act applies.'

2. The facts of this case are very simple. The suit was for the recovery of Rs. 850 from the defendants. On 32th January, 1959, the plaintiff had taken the theka of fishery rights in a certain tankfor the year 1959, and had paid the full theka money of Rs. 1,700. He did not find it possible to work the entire theka, and, therefore, he took the defendants as his partners. The shares of all the defendants separately defined, aggregated to one-half of the theka and therefore, they were required to pay half the theka money to the plaintiff. According to the allegations made in the plaint the time fixed for payment was upto 31st July, 1959. However, the finding of the learned Munsif was that the defendants had agreed to pay their share of the theka money by 31st January, 1959. The learned Munsif, applying Article 115 of the First Schedule to the Limitation Act held that the suit, which was instituted on 26th July, 1962, was barred by time.

3. The plaintiff preferred an appeal, and the learned Civil Judge, who heard the appeal, allowed it on the finding that Article 120 of the First Schedule to the Limitation Act applied, and under that Article the limitation was six years. The learned Civil Judge neither confirmed nor disturbed the findings of fact arrived at by the learned Munsif regarding the date on which the money became payable.

4. The revision filed against the appellate Court judgment was heard by a learned single Judge of this Court. It was contended before him that the case of Town Area Committee, Rava v. Budh Sen, : AIR1962All438 relied upon by the learned Civil Judge, had not been correctly decided, because neither Article 115 nor Article 120 of the First Schedule tp the Limitation Act could apply to the facts of the case and the suit should have been governed by Article 113.

5. Article 120 is a residuary Article, and in case Article 113 or Article 115 of the First Schedule to the Indian Limitation Act could apply it is obvious that Article 120 will not apply (vide Full Bench case of Zila Parishad v. Sm. Shanti Devi : AIR1965All590 .

6. Articles 113, 115 and 120 read as follows:

Description of suit.

Period of

limitation.

Time from which period begins to run.

113.

For specific performance of contract.

Three years

The date fixed for the performance or, if no suchdate is fixed, when the plaintiff has notice that performance is refused.

115.

For compensation for the breach of any contract, express or implied, not in writing registered and not herein speciallyprovided.

Three years

When the contract is broken, or (where there are successive breaches)when the breach in respect of which the suit is instituted occurs or (wherethe breach is continuing) when it ceases.

120.Suit for which no period of limitation is provided elsewhere in this Schedule.

Six years.

When the right to sue accrues.

7. It has been contended by the learned counsel for the applicant that Article 113 of the First Schedule to the Limitation Act should apply, as the claim is nothing but for specific performance of a contract.

8. In our opinion there is no force in this argument. It is true that there was a contract between the parties inasmuch as the plaintiff gave to the defendants one-half of the fishery rights in the tank on the condition that they would pay him half the theka money. The allegations made in the plaint show that the defendants had already worked out the theka in respect of their share of it. All that remained to be done was to pay the proportionate theka money to the plaintiff. In such circumstances no suit for specific performance of contract could be filed: only a suit to enforce the agreement so far as it related to the payment of the proportionate theka money could be. and has been filed.

9. The relevant portion of Section 12 of the Specific Relief Act (Act 1 of 1877) reads as follows:

'.....the specific performance of anycontract may in the discretion of the Court be enforced-

(a) When the act agreed to be done is in the performance, wholly or partly, of a trust;

(b) When there exists no standard for ascertaining the actual damages caused by the non-performance of the act agreed to be done;

(c) When the act agreed to be done is such that pecuniary compensation for its non-performance would not afford adequate relief, or

(d) When it is probable that pecuniary compensation cannot be got for the non-performance of the act agreed to be done.....'

10. A suit for the recovery of a specified sum under a contract cannot be said to be a suit of the nature where pecuniary compensation would not afford adequate relief. We are, therefore, of the opinion that the suit out of which this civil revision arises cannot be said to be a suit for the specific performance of a contract and will not be governed by Article 113 of the First Schedule to the Indian Limitation Act, 1908.

11. The learned counsel for the applicant has further contended that in case it is held that Article 113 cannot apply, the Article of the First Schedule to the Limitation Act which should have been applied was Article 53, which reads as follows:--

Description of suit.Period of limitation.Time from which period begins

to run.

53.For the price of goods sold and delivered to bepaid for after the expiry of a fixed period of credit.

Three years

When the period of credit expires.

12. Again, looking to the facts of the case we find that the suit is not for the price of goods sold and delivered, but for the recovery of money which was agreed to be paid as proportionate share of the theka money. The plaintiff, by this suit, sought to enforce the agreement. He did not sell or deliver any goods, and, therefore. Article 53 could not apply.

13. We now proceed to consider why Article 115 of the First Schedule to the Limitation Act should apply to the facts of the present case. Article 115 applies when there is a breach of contract and the suit is for compensation for the loss suffered by the innocent party. A breach of contract 'occurs where a party repudiates or fails to perform one or more of the obligations imposed upon him by the contract': (vide Cheshire and Fifoot, p. 484). 'If one of two parties to a contract breaks the obligation which the contract imposes, a new obligation will in every case arise --a right of action conferred upon the party injured by the breach': (vide Anson's Law of Contract, p. 412). Admittedly in the present case there was acontract and according to the plaintiff and the findings of the Court a breach of contract had occurred inasmuch as the defendants failed to pay the stipulated amount upon the date fixed under the contract.

14. Difficulty can, however, be caused by the word 'compensation' used in Article 115. It can be argued that the words 'compensation for breach of contract' point rather to a claim for unliquidated damages than to the payment of a certain sum, and, therefore, where the suit is for the recovery of a specified sum, and not for the determination of unliquidated damages, this Article should not apply. In our opinion this contention would be wholly untenable because it was not accepted by this Court in the Full Bench case of Husain Ali Khan v. Hafiz Ali Khan, (1881) ILR 3 All 600 (FB) and by the Privy Council in the case of Tricomdas Cooverji Bhoja v. Sri Gopinath Jiu, AIR 1916 PC 182. In the case of Husain Ali Khan, (1881) ILR 3 All 600 (FB), Article 116 of Schedule II of the Limitation Act (Act 15 of 1877) was the subject of interpretation. Articles 115 and 116 of Schedule II ofAct 15 of 1877 have been reproduced verbatim in the Indian Limitation Act, 1908. Article 115 deals with the breach of contracts not in writing and registered while Article 116 provided for breach of contracts in writing and registered. It is, therefore, obvious that the meaning which has to be given to the words 'compensation for breach of contract' occurring in both the Articles will have to be the same.

15. The question for consideration in the case of Husain Ali Khan, (1881) ILR 3 All 600 (FB) (Supra) was whether in a case for the recovery of money on the basis of a bond Article 59 (providing for three years' limitation) or Article 116 (providing for six years' limitation) should apply. There is nothing in Article 59 to indicate that it could not apply to the case of a registered bond. However, if Article 116 could also apply to the case of a registered bond the Courts could say that because the latter Article speaks about registration it should be the appropriate Article to be applied in the case of the breach of the contract contained in a registered money bond. The question whether a registered money bond comes under Article 116 of Schedule II of Act 15 of 1877 was answered by the Full Bench of this Court in the affirmative.

16. In the case of Tricomdas Cooverji Bhoja, AIR 1916 PC 182 (Supra) the argument that the words 'compensation for breach of a contract' point rather to a claim of unliquidated damages than to the claim of payment of certain sum was not accepted because the word 'compensation' has been used in the Indian Contract Act in a very wide sense.

The relevant portion of Section 73 of the Indian Contract Act (No. 9 of 1872)reads as follows:--

'73. When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.

Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.....

Illustrations

.....

(n) A contracts to pay a sum of money to B on a day specified. A does not pay the money on that day; B, in consequence of not receiving the money on that day is unable to pay his debts, and is totally ruined. A is not liable to make good to B anything except the principal sum he contracted to pay, together with interest upto the day of payment.'

It is, therefore, clear that the word 'compensation' has been used in Section 73 of the Indian Contract Act in a very wide sense and the present case would be covered by it.

17. We see no reason why the words 'compensation for breach of contract' as used in Article 115 should be given a meaning different from the same words as used in Article 116. Article 115 being a residuary article for suits based on breach of contract, it is obvious that the suit out of which this revision arises would be governed by the said Article.

18. Other High Courts in India have also interpreted the words 'compensation for breach of contract' occurring in these Articles in the wider sense of the term 'compensation.' The Lahore High Court in the Full Bench case of Mahomed Ghasita v. Siraj-ud-din, ATR 1922 Lah 198 (FB) held that the word 'compensation' in Article 115 as well as in Article 116 has the same meaning as it has in Section 73 of the Indian Contract Act and denotes a sum of money payable to a person on account of the loss or damage caused to him by the breach of a contract.

19. The Patna High Court in the Division Bench case of Chairman and Commissioners of Chaibassa Municipality v. Govind Sao, AIR 1937 Pat 3GO held 'that Article 115 and not Article 120 of the Limitation Act applied to the suit brought by the Municipality for the recovery of the balance of money due under a contract by which the right to collect the tolls in the murket was settled.

20. The view of the Patna High Court was followed by the High Court of Jammu and Kashmir in the case of Municipal Council v. Mohd. Shaban, AIR 1962 J & K 12. Article 86 of the Jammu and Kashmir Limitation Act corresponded exact to Article 115 of the First Schedule to the Indian Limitation Act, 1908. It was held by the Jammu and Kashmir High Court in that case that the word 'compensation' used in Article 86 of the Jammu and Kashmir Act has wide meaning and it includes a claim for money which has become due to a party after the contract has been breached.

21. The Orissa High Court held in the case of Govinda Sabat v. State of Orissa : AIR1964Ori189 that where the District Board had leased out the right to collect tolls in the market of a village to the defendant and the defendant had failed to pay three-fourths of the money due, which was to be paid in three equal instalments on due dates, the suit by the Government against the contractor for the recovery of the balance due was a suit for compensation for breach of contract, governed by Article 115.

22. With great respect we are, therefore, of the opinion that the case of : AIR1962All438 (Supra) which was for the enforcement of the agreement to pay theka money payable in instalments and to which Article 120 of the First Schedule to the Indian Limitation Act was applied was not decided correctly.

23. Our answer to the question framed by the Division Bench, therefore, is-

'On the facts of the present case Article 115 of the First Schedule to the Indian Limitation Act, 1908, would apply.'

24. The record of the revision case will now be sent back to the learned single Judge with the above answer to the question referred.


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