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Harekrushna Patnaik and anr. Vs. Damodar Biswal and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty;Limitation
CourtOrissa High Court
Decided On
Case NumberSecond Appeal No. 357 of 1973
Judge
Reported inAIR1978Ori118; 43(1977)CLT498
ActsLimitation Act, 1963 - Schedule - Article 47; Transfer of Property Act - Sections 55(1)
AppellantHarekrushna Patnaik and anr.
RespondentDamodar Biswal and ors.
Appellant AdvocateD.S. Nanda, Adv.
Respondent AdvocateB.K. Pal, Adv.
DispositionAppeal dismissed
Cases Referred(Subbaraya Reddiar v. Rajagoapla Reddiar
Excerpt:
.....of consideration the purchaser had a right to sue at that time to recover back his purchase money. possession given to the purchaser is existing consideration and if afterwards he is dipossessed of the property there would be failure of consideration from the date of dispossession. hanuman mandur, (1892) ilr 19 cal 123 (pc). their lordships of the privy council held that in a case where the sale was not necessarily void but only voidable, article 97 of the old limitation act (corresponding to article 47 of the new act) would be applicable as governing a suit to recover money upon an existing consideration which had afterwards failed and that time would run when the vendee endeavoured to obtain possession of the property and being opposed found himself unable to obtain possession...........consideration which afterwards fails. period of limitation is three years from the date of the failure of consideration. both the courts have held that the failure of consideration was at the date of sale, that is, 7-11-1962 and the suit having been filed on 21-12-1967 it was barred by limitation.6. in order to attract the application of article 47 of the limitation act, 1965 three ingredients must be established. firstly, the suit must be for recovery of money which has been paid by the plaintiff to the defendant; secondly, such money must have been paid upon a consideration which was in existence at the time of the payment, and thirdly, the consideration should have afterwards failed. it is not disputed in this case that the plaintiffs paid money to defendant no. 2 on 7-11-1962.....
Judgment:

P.K. Mohanti, J.

1. The plaintiffs are in appeal against a decree of affirmance.

2. The suit lands originally belonged to one Pandab Rout. On 5-11-55 he executed a sale deed in respect of the same in favour of defendant No. 1 Damodar Biswal who was then a minor. Defendant No. 2 Nilamani Biswal, acting as the father-guardian of defendant No. 1, sold the suit lands to the plaintiffs by a registered sale deed dated 7-11-62 for a consideration of Rs. 250/-. On 21-12-67 plaintiffs filed the suit for declaration of title and for recovery of possession and damages. In the alternative, they prayed for a decree for refund of consideration together with interest at the rate of 12 per cent per annum. Their contention was that defendant No. 2 was the real owner of the suit lands and that defendant No. 1 was only a name lender under the sale deed dated 5-11-55 executed by Pandab Rout. Their further contention was that while they were in possession of the suit lands, they were dispossessed from the same on 15-12-56.

During the pendency of the suit defendant No. 1, on attaining majority, sold the suit lands to defendant No. 3 by a registered sale deed dated 15-11-70.

3. Defendants denied the plea of benami They asserted that defendant No. 1 was the real owner of the suit lands and that the plaintiffs never possessed the same by virtue of the sale deed dated 7-11-62. They challenged the validity of the sale deed and denied the passing of consideration thereunder.

4. Both the courts below negatived the plea of benami. They came to the findings that the sale by defendant No. 2 in favour of the plaintiffs being in contravention of S. 8 of the Hindu Minority and Guardianship Act, 1956 was voidable and that the plaintiffs never obtained possession of the suit lands. They also found that the plaintiffs' claim for refund of consideration was barred by limitation,

5. The only question which was seriously argued at the time of hearing of this appeal is whether the claim for refund of consideration is barred by limitation. The learned counsel appearing for both the parties conceded, and in my opinion they did so rightly, that Article 47 of the Indian Limitation Act, 1963 is the proper Article to be applied to this case. That Article deals with a suit for recovery of money paid on an existing consideration which afterwards fails. Period of limitation is three years from the date of the failure of consideration. Both the courts have held that the failure of consideration was at the date of sale, that is, 7-11-1962 and the suit having been filed on 21-12-1967 it was barred by limitation.

6. In order to attract the application of Article 47 of the Limitation Act, 1965 three ingredients must be established. Firstly, the suit must be for recovery of money which has been paid by the plaintiff to the defendant; secondly, such money must have been paid upon a consideration which was in existence at the time of the payment, and thirdly, the consideration should have afterwards failed. It is not disputed in this case that the plaintiffs paid money to defendant No. 2 on 7-11-1962 upon existing consideration, namely, the consideration for delivery of the property sold. Consideration which existed at the time when the money was paid may later fail for variety of reasons. It may fail because the vendor commits breach of the contract in pursuance of which the money was paid. Where the consideration consists of promise to do something for the purchaser and the promise is repudiated there would both occur breach of contract and failure of consideration. The date of failure of consideration in such cases would be the same as the date of breach and the purchaser's right to claim refund of money arises at that point of time. Under Section 55(1)(f) of the Transfer of Property Act the vendor is bound to deliver possession of the land to the purchaser and when the vendor fails to deliver such possession there is breach of contract and immediate failure of consideration. If there was a failure of consideration the purchaser had a right to sue at that time to recover back his purchase money. Therefore time began to run from the date of sale. But where actual possession of the property sold is given to the purchaser, different consideration would arise. Possession given to the purchaser is existing consideration and if afterwards he is dipossessed of the property there would be failure of consideration from the date of dispossession. This view finds support from the following reported cases.

7. In Hanuman Kamat v. Hanuman Mandur, (1892) ILR 19 Cal 123 (PC). their Lordships of the Privy Council held that in a case where the sale was not necessarily void but only voidable, Article 97 of the old Limitation Act (corresponding to Article 47 of the new Act) would be applicable as governing a suit to recover money upon an existing consideration which had afterwards failed and that time would run when the vendee endeavoured to obtain possession of the property and being opposed found himself unable to obtain possession.

8. The Privy Council decision in AIR 1918 PC 151 (Juscurn Boid v. Pirthichand Lal Choudhury) also affords some assistance in deciding the present case. At page 152 of the Report their Lordships observed:

'There may be circumstances in which a failure to get or retain possession may be regarded as the time from which the limitation period should run, but that is not the case here.'

9. In AIR 1955 Orissa 11 (N.V. Jagannadhayya v. Ramanatha) a Bench of this court while pointing out the distinction between Articles 115 and 97 of the old Limitation Act observed as follows:--

'Article 115, Limitation Act would apply to a case of damages for breach of contract by the defendant, and Article 97 would apply to a case where that which is to pass from one contracting party to the other cannot, by reason of circumstances since the contract pass to the other party and therefore the plaintiff calls upon the defendant to fulfil the terms of his contract either expressly or impliedly that he will in such circumstances return anything which has been al-ready paid on account of the contract.'

Reliance was placed on AIR 1934 Cal 148 (Sudha Mukhi Debi v. Chairman of Commissioners of the Tollygunge Municipality) and AIR 1934 Pat 148 (Lalji Singh v. Ramrup Singh).

10. In AIR 1935 All 759 (Abdul Shakur Khan v. Rajendra Kishore Saran Singh) thefacts were that the plaintiff paid consideration money for defendant's promise to execute the lease of his land. The defendant broke the promise and refused to execute the lease. The plaintiff sued for refund of money paid by him for the defendant's promise. The Court held that it was either a claim for money paid on existing consideration which afterwards failed in that the payments were made in consideration of promise to execute the lease and the promise was later repudiated or it was a claim for compensation for breach of contract express or implied not in writing registered and not specifically provided for.

This case suggests that where the consideration consists of promise to do something for the plaintiff and the promise is repudiated, there is a breach of contract and also a failure of consideration and the date of failure of consideration would be the same as the date of breach.

11. In AIR 1915 Mad 708 (Subbaraya Reddiar v. Rajagoapla Reddiar), Seshagiri Aiyar, J. classified under the following three heads several cases cited before him,

'(a) Where from the inception the vendor had no title to convey and the vendee has not been placed in possession of the property;

(b) Where the sale is voidable on the objection of the third parties and possession is taken under the voidable sale; and

(c) Where though the title is known to be imperfect the contract is in part carried out by giving possession of the property.'

The learned Judge held that in the first class of cases the starting point of limitation would be the date of sale, while with regard to the other two classes the cause of action to claim damages would arise only when the vendor's possession is disturbed.

12. No decision was cited at the Bar which would apply with better force to the facts of the present case. But the decisions that I could find referred to above, give ample support to the view that I have taken. Accordingly I hold that there was failure of consideration on the date of sale when the defendant no. 2 was in breach to perform his part of the contract in delivering possession of the property, Once this view is taken that the period of limitation started running in this case on 7-11-1962 when the consideration fell through, the suit instituted on 21-12-67 obviously beyond three years, the period fixed for such suit, must be held to be barred by limitation.

13. The result therefore is that the appeal fails and is dismissed but in the circum-stances, the parties are directed to bear their own costs throughout.


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