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Kunwar Unkar Singh and anr. Vs. Kashi Prasad - Court Judgment

LegalCrystal Citation
SubjectLimitation
CourtAllahabad
Decided On
Reported inAIR1933All386
AppellantKunwar Unkar Singh and anr.
RespondentKashi Prasad
Excerpt:
.....sale-deed for the payment of the amount, the vendee's failure to make the payment constituted a breach on his part on the date when the sale-deed was executed, and limitation for a suit to recover damages from the vendee for the breach commenced from that date. it cannot be disputed that the actual damage was suffered by the plaintiffs-appellants on the date on which they, in consequence of the failure of the defendant to make payment to chiranji lal, had to pay the amount due to him. the suit by a vendor in such cases is not for the return of the unpaid purchase money that the vendee failed to pay. in the former class of cases, the vendor, irrespective of any damage being suffered by him, claims from the vendee the money that belongs to him and that was in deposit with the vendee and..........date of the sale-deed. even if the vendor claims a simple money decree for the amount against the vendee time begins to run against him from the date of the sale-deed. when however the suit by the vendor is for damages that the vendor has suffered by being himself compelled to pay the amount to a third party for whose payment a portion of the sale consideration was left with the vendee and which the vendee failed to pay, time does not begin to run against the vendor till the damage has actually been suffered by him, i.e., till the date that he' has made the payment. but it is to be remembered in this connexion that the payment to the third party that can entitle the vendor to sue the vendee for damages must not be gratuitous and must be made by the vendor before the claim of the third.....
Judgment:

Iqbal Ahmad, J.

1. This is a second' appeal by the plaintiffs whose suit for recovery of Rs. 2,500 principal and Rs. 1,015-10-0 interest, in all for a. sum of Rs. 3,515-10-0, has been dismissed by the lower appellate Court. The facts are admitted and are as follows: Jaswant Singh, the father of the plaintiffs, held a simple money decree against one Lalhans. He sold the decree to Kashi Prasad, defendant-respondent on 1st March 1923, for a sum of Rs. 2,500. The entire consideration was left with the defendant for payment to one Chiranji Lal, who held a decree against Jaswant Singh, the vendor. The defendant did not pay the amount left in deposit with him to Chiranji Lal, and Jaswant Singh, borrowed money from a third person by executing a mortgage-deed on 10th. December 1926, for discharging the decree of Chiranji Lal. Jaswant Singh died and, after his death, the plaintiffs brought the suit, giving rise to the present appeal, for recovery of the amount that was left in deposit with, the defendant for payment to Chiranji. Lal and which he had failed to pay. The plaintiffs claimed interest on the amount at the rate of 6 per cent per annum from the date of the sale-deed in favour of the defendant. The date of the cause of action alleged in the plaint was 12th December 1926, the date on which the mortgage-deed, mentioned above was executed by Jaswant Singh. The suit was filed oil.. 9th December 1929. The defendant resisted the suit inter alia on two grounds: That the sale-deed executed by Jaswant Singh in favour of the defendant was fictitious and without consideration, and was executed with a view to defraud certain creditors of Jaswant Singh. (2) That the suit was barred by limitation.

2. Both the Courts below held that the sale-deed executed by Jaswant Singh was for consideration and that the plea of the defendant-respondent that it was fictitious and without consideration was without substance. The finding of the lower appellate Court on the point is a finding on a question of fact and is binding on us in second appeal. The Courts below however have differed on the question of limitation. The trial Court held that the suit was governed by Article 61, Sch Limitation Act, (Act 9 of 1908), and, as it was filed within three years from the date of the payment of the decretal amount to Chi-ranji Lal by Jaswant Singh, the suit was within time. The lower appellate Court, on the other hand, without deciding which article of Sch'. 1, Limitation Act, was applicable, held that the suit was not a suit for damage's but was 'for recovery of sale-money as stated in para. 6 of the plaint,' and that time began to run against Jaswant Singh from the date of the execution of the sale-deed in favour of the defendant, and that the suit was barred by limitation. The learned Judge of the lower appellate Court relied on the decisions of this Court in Raghubar Rai v. Jai Rai (1912) 34 All 429 and Ram Narain v. Nihal Singh : AIR1925All488 , in support of the conclusion arrived at by him, that time for the recovery of the amount claimed in the present suit began to run against the plaintiffs from the date of the execution of the sale-deed by Jaswant Singh, viz., from 1st March 1923. It was held in the case of Raghubar Rai that upon the failure of a vendee to pay money due by a vendor to a third party which the vendee agreed to pay and no time was fixed for payment, the breach is committed on the date when the sale-deed is executed:

and there is no 'continuing breach' within the meaning of Section 23, Lim. Act, nor 'successive breaches' within the meaning o Article 115.

3. It was further observed by the learned Judges in that case that a breach of a contract can furnish only a cause of action and no more and that:

actual loss when it occurs is only one of the results of the breach and is not an act of the party who breaks a contract and can therefore create no second cause of action.

4. It is to be noted however that the determination of the question, whether consequential damage that results to a vendor,. who has himself to pay the amount that he left with the vendee to pay to a third party and which the vendee failed to pay, does or does not give a fresh cause of action to the vendor to recover damages, was not necessary for the decision in Raghubar Rai's case (1912) 34 All 429. In that case the suit was brought by the vendor before he had made the payment to the third party for payment to whom some amount was left with the vendee, and it is clear therefore that the observation of the learned Judges that payment of money by a vendor to a third party which the vendee agreed to pay does not give a cause of action to the vendor, was obiter dictuixu Indeed the learned Judges themselves observed in the course of the judgment that:

the point, that the date on which actual damage was sustained gave the plaintiffs a second cause of action, does not arise inasmuch as the plaintiffs have not yet paid any money to the heirs of Sanchi Earn.

5. In the case of Ram Narain v. Nihal Singh : AIR1925All488 , also the suit was brought by the vendor before he had. himself paid the' amount that was left with the vendee for payment to one of his creditors, and it was held that, no time having been fixed in the sale-deed for the payment of the amount, the vendee's failure to make the payment constituted a breach on his part on the date when the sale-deed was executed, and limitation for a suit to recover damages from the vendee for the breach commenced from that date. In that case Sulaiman, J., while noticing the case of Raghubar Rai (1912) 34 All 429 and others observed that: ' the observations in that case suggesting that even if subsequently the plaintiffs have themselves to pay off the mortgage money and redeem the property, they may not have a fresh cause of action to recover from the defendants' were' mere obiter dicta. The two cases noted above are distinguishable from the case before us on the broad ground that in those cases the vendor had sued the vendee for the unpaid purchase money before making any payment to the person to whom the vendee had covenanted to pay the amount left with him. In the case before us the suit was brought by the plaintiffs-appellants after Jaswant Singh, their predecessor-in-title had actually paid the amount that was left with the defendant for payment of Chiranji Lal. It cannot be disputed that the actual damage was suffered by the plaintiffs-appellants on the date on which they, in consequence of the failure of the defendant to make payment to Chiranji Lal, had to pay the amount due to him. In the sale-deed in favour of the defendant no time was fixed for payment to Chiranji La] and therefore it should be presumed that the parties to the transaction intended that the defendant should make payment to Chiranji Lal forthwith or within a reasonable time. If a portion of the purchase money is left with a vendee for payment to a creditor of the vendor, and no time is fixed for payment, there is an implied agreement on the part of the vendee to pay the amount due to the creditor either forthwith or within a reasonable time. If the vendee commits a breach of the implied agreement by failing to pay the amount left with him by the vendor for payment of the third party, he is bound by law to indemnify the vendor for any damage sustained by the vendor, in consequence of the breach of agreement on his part. The suit by a vendor in such cases is not for the return of the unpaid purchase money that the vendee failed to pay. but is to enforce the implied contract of idemnity the breach of which was committed by the vendee by failing to pay to the third party for whose payment the vendor had left a portion of the purchase money with the vendee, and the suit comes within the purview of Article 83, Schedule 1, Limitation Act. The time against the plaintiff in such a suit does not begin to run till he 'is actually damnified.' This was the view taken by this Court in Kedar Nath v. Har Gobind : AIR1926All605 , and Sarju Misra v. Shaikh Ghulam Husain

6. The distinction between a suit for recovery of unpaid purchase money and a suit for recovery of damages that result to a vendor, in consequence of the breach by the vendee of a covenant to pay the amount that was left with him by the vendor for payment to a third party, is obvious. In the former class of cases, the vendor, irrespective of any damage being suffered by him, claims from the vendee the money that belongs to him and that was in deposit with the vendee and which the vendee failed to pay. If the sale is of immovable property and the vendor sues for the unpaid purchase money by enforcement of the statutory charge created in favour of a vendor by Section 55, T.P. Act, the period of limitation for such a suit is 12 years from the date of the sale-deed. Even if the vendor claims a simple money decree for the amount against the vendee time begins to run against him from the date of the sale-deed. When however the suit by the vendor is for damages that the vendor has suffered by being himself compelled to pay the amount to a third party for whose payment a portion of the sale consideration was left with the vendee and which the vendee failed to pay, time does not begin to run against the vendor till the damage has actually been suffered by him, i.e., till the date that he' has made the payment. But it is to be remembered in this connexion that the payment to the third party that can entitle the vendor to sue the vendee for damages must not be gratuitous and must be made by the vendor before the claim of the third party against the vendor has become unenforceable in law. For instance, if the vendor makes the payment to the third party after his claim against the vendor was time-barred a suit for damages against the vendee cannot lie.

7. In the case before us on the date on which Jaswant Singh made the payment to Chiranji Lal, Chiranji Lai's claim was enforceable at law, and therefore time began to run against the plaintiffs from the date of the payment. The suit was admittedly filed within 3 years of that date and was within time. We hold therefore that the lower appellate Court was wrong in holding that the suit was barred by limitation. Accordingly we allow this appeal, set aside the decree of the lower appellate Court and modifying the decree of the trial Court decree the plaintiffs' suit with costs in all Courts.


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