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Lala Shanti Sarup Vs. Janak Singh and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Limitation
CourtAllahabad High Court
Decided On
Case NumberFirst Appeal No. 139 of 1946
Judge
Reported inAIR1958All170
ActsLimitation Act, 1908 - Schedule - Sections 24 - Articles 83, 115 and 116
AppellantLala Shanti Sarup
RespondentJanak Singh and ors.
Appellant AdvocateG.N. Kunzru, Adv.
Respondent AdvocateB.R. Avasthi, Adv.
Excerpt:
.....by learned counsel for the appellants before us that in any case the breach of the contract must be deemed to have been committed when the appellants failed to pay in spite of a suit having been instituted for recovery of money under the mortgage by the mortgagees and the mortgagees obtained their decree on 4-2-1937 under which the property of the plaintiff-respondents was declared to be liable to the mortgage-debt......applicants and the vendees who were also liable for the mortgage debt as purchasers of half of the mortgaged property. as a result of this apportionment, the plaintiff-respondents were held to be liable to a sum which was equal to half of rs. 28.615/3/-. for the remaining half of this sum the present defendant-appellants were held to be liable. in addition, it was laid down that the pl-intiff-respon-dents would be liable to pay interest at 6 per cent per annum from 1-8-1933 to 28-9-1936, and thereafter at 4 1/2 per cent, per annum. in pursuance of the decree passed on apportionment by the special judge against the plaintiff-respondents, proceedings for liquidation of debt were taken by the collector and in those proceedings the plaintiff-respondents were compelled to execute a.....
Judgment:
ORDER

V. Bhargava, J.

1. This is a first appeal arising out of a suit brought by the plaintiff-respondents against the defendant-appellants and certain other defendants who are pro forma respondents, for compensation for breach of a contract. The brief facts of the case are that some of the plaintiff-respondents and predecessor-in-interest of other plaintiff-respondents owned 14 biswas and 11 biswansis share in Mahal Narain Singh village Khetalpur Sahruiya.

They executed a simple mortgage of this property on 9th May 1914 in favour of two persons Bansidhar and Khub Chand, for a sum of Rs. 12,000/-. Subsequently a sale-deed of half or this property which had been mortgaged was executed by the owners (now represented by the plaintiff-respondents) on 9-2-1920, in favour of Shanti Saran, appellant, and three others who are now represented by the remaining appellants.

The consideration for the sale-deed was a sum of Rs. 16,000/-. In the body of the sale-deed it was recited that the consideration had been received by the vendors and the entire amount had been set off in the manner specified below in that sale-deed and that nothing at all out of the consideration remained due from the vendees to the vendors. The specification at the end giving the details of the method of receipt of the consideratiion included one clause with regard to the mortgage of the year 1914, mentioned above.

It was stated that sum of Rs. 13,500/-was left in the hands of the vendees for payment to Bansidhar and others, creditors in respect of the amount including the interest which was due on the mortgage which had been executed on 9-5-1914 and which had been registered on 20-5-1914. Alter the execution of the sale-deed the vendees entered into possession of the property but they did not pay the amount due to the mortgagees in accordance with the terms of the contract.

Since the mortgagees were not paid the amount due to them, they brought a suit for the recovery of the money on the basis of the mortgage which stood in their favour and on 4-2-1937, they obtained a decree for a sum which was a little over Rs. 26,000/-. It was laid down toy the decree that, in execution, the property which had passed to the vendees under the sale-deed of 1920, would be sold first and if any amount still remained due thereafter, then the other half of the property which had continued to remain in the ownership of the vendors would be sold to realise the decretal amount.

Thereafter, the plaintiff-respondents moved an application under the Encumbered Estates Act and, in those proceedings on 22-5-1939, the Special Judge apportioned the liability under the mortgage debt between the vendors or their successors in interest who were landlord applicants and the vendees who were also liable for the mortgage debt as purchasers of half of the mortgaged property.

As a result of this apportionment, the plaintiff-respondents were held to be liable to a sum which was equal to half of Rs. 28.615/3/-. For the remaining half of this sum the present defendant-appellants were held to be liable. In addition, it was laid down that the pl-intiff-respon-dents would be liable to pay interest at 6 per cent per annum from 1-8-1933 to 28-9-1936, and thereafter at 4 1/2 per cent, per annum.

In pursuance of the decree passed on apportionment by the Special Judge against the plaintiff-respondents, proceedings for liquidation of debt were taken by the collector and in those proceedings the plaintiff-respondents were compelled to execute a self-liquidating mortgage of 3/4th of the half share of the property which was owned by them, This self-liquidating mortgage was for a period of 20 years and for a sum of Rs. 20,803/4/3.

The mortgage was executed on 25-2-1943. As a result the plaintiff-respondents had to deliver possession of this share of the property to the mortgagee-decree-holders. Thereupon, this suit was filed by the plaintiil-respondents claiming damages from the defendant-appellants on the ground that they had been deprived of the possession o the property and were being compelled to pay a sum of Rs. 20,803/4/3 as a consequence of the breach of the contract committed by the defendant-respondents in not paying the money to the mortgagees as they had undertaken to do under the sale-deed.

This suit was instituted on 30th July 1943. Among other questions that arose during the trial of the suit, one important question related to limitation. On benalf of the plaintiif-respondents, it was claimed that they had actually suffered loss and injury as a result of the breach of the contract by the defendant-appellants on 25th February 1943 when they were compelled to execute the self-liquidating mortgage and to deliver possession ot the property in the proceedings for liquidation of their debts which had been decreed by the Special Judge in the Encumbered Estates Act proceedings.

On behalf of the defendant-appellants, it was pleaded that the suit was time-barred as the claim of the plaintiff-respondents was a claim for compensation for breach of the contract which was entered into by a registered document so that the period of limitation for the suit was six years form the date on which the breach of the contract had been committed. It was contended that the breach of the contract should be deemed to have been committed in the year 1920 when the defendant-appellants undertook to pay the money to the mortgagees and failed to do so within a reasonable time.

In the alternative it was urged by learned counsel for the appellants before us that in any case the breach of the contract must be deemed to have been committed when the appellants failed to pay in spite of a suit having been instituted for recovery of money under the mortgage by the mortgagees and the mortgagees obtained their decree on 4-2-1937 under which the property of the plaintiff-respondents was declared to be liable to the mortgage-debt.

Lastly, a third alternative was also urged to the effect that the breach of contract was committed in the year 1936, when the plaintiff-respondents instituted the proceedings under the Encumbered Estates Act. It was pleaded that a period of six years for institution of the suit computed for the purpose of Article 116 of the Limitation Act, which would apply to such a suit, from any of the three dates mentioned above would show that the suit was filed beyond time and consequently it ought to have been dismissed, as being barred by limitation.

On behalf of the plaintiff-respondents the suit was sought to be saved from the bar of limitation on two alternative pleas. One plea was that the limitation in a suit of this type was covered by Article 83 read with Article 116 of the Limitation Act, because the contract contained in the sale-deed of which the breach had been committed was a contract of indemnity. In the case of a contract of indemnity under Article 83 of the Limitation Act, the suit could be brought within six years of the date on which the plaintiff-respondents were actually indemnified.

It was contended that, the contract which had been broken by the defendant-appellants was contained in a registered instrument and it being a contract of indemnity, on application of Arts. 83 and 116 of the Limitation Act, the period of limitation should be computed as six years from the date on which the plaintiff-respondents suffered the injury as a result of the breach of the contract and this injury was suffered on 25th February 1943, when the plaintiff-respondents were compelled to execute the self-liquidating mortgage and to deliver 'possession of their property.

2. The second ground that was urged was that, even if Article 83 of the Limitation Act did not apply, the period of limitation had to be computed under Article 116 of the Limitation Act, but subject to Section 24 of the Limitation Act, on the ground that there was no cause of action as a result of the breach of the contract until the plaintiff-respondents had actually suffered the damage or loss on 25th February 1943.

On behalf of the plaintiff-respondents, reliance was placed on several cases in support of the proposition that, in a suit of this nature and on the facts mentioned above, the proper Article of the Limitation Act applicable was Article 83. The principal decision relied upon is that reported in Tilak Ram v. Surat Singh : AIR1938All297 , which is a decision of a Full Bench of three Judges of this Court.

Decisions of some other High Courts were also referred to. but it appears to us to be unnecessary to make a reference to them. In our opinion, which we have formed after hear-ing learned counsel for the parties, this decision of the Full Bench needs reconsideration and in the circumstances we think that this point should be referred for opinion to a Bench of five Judges.

3. The alternative plea taken, for bringing the suit within limitation, on behalf of the plaintiffs that, the limitation should be computed under Article 116 of the Limitation Act after applying the provisions of Section 24 of the Limitation Act, is sought to be supported by a decision of a Division Bench of this Court in Kedar Nath v. Hargovind. : AIR1926All605 . We have examined various other cases on this point but have found that the decision of the Division Bench in the case cited above has not been overruled by any subsequent decision.

We are, however, of the opinion that this decision also requires reconsideration. In the circumstances, we consider it appropriate that a question should be framed on tnis point also-and be referred to the same Full Bench to which the first question indicated above is referred for opinion. We may make it clear that, having gone tnrough the decision of the Full Bench in : AIR1938All297 , and having perused the sale-deed which embodies the contract in question in the present case, we have not been able to find any feature which would distinguish the facts of the two cases, so that the decision of the Full Bench appears to be fully applicable to the facts of the present case and the reference is to be made for the purpose of reconsideration of that decision.

Similarly we have felt that the decision of the Division Bench in : AIR1926All605 , also appears to be fully applicable to the facts of the present case and what is really needed is reconsideration of the case. Consequently we frame the following two questions for a reference to the Full Bench :

1. Whether, on the facts and circumstances. of the case as mentioned in this order earlier, the suit is governed by Article 83 of the Limitation Act, and it so, whether the period for limitation is three years as shown in Article 83 of the Limitation Act, or is six years by virtue of applicability of Article 116 of the Limitation Act and which is the date from which the period of limitation would start running?

2. Whether, on the facts and circumstances of the case as mentioned in this order earlier, the period of limitation is six years under Article 116 of the Limitation Act but this period of limitation of six years is to be computed after applying the provisions of Section 24 of the Limitation Act, and, if. so, from what date this period of limitation would start running?

4. We direct that this case be laid before Hon'ble the Chief Justice for constituting a Full Bench of five Judges for giving their opin-ion on these two questions of law.


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