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Kishore and Co. Vs. Karsanbhai Desalbhai - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation;Limitation
CourtGujarat High Court
Decided On
Case NumberCivil Revn. Appln. No. 339 of 1982
Judge
Reported inAIR1984Guj123; (1984)2GLR1136
ActsLimitation Act, 1963 - Schedule - Articles 18 and 113;
AppellantKishore and Co.
RespondentKarsanbhai Desalbhai
Appellant Advocate Suresh M. Shah, Adv.
Respondent Advocate N.D. Nanavaty, Adv.
Excerpt:
- - 1750/-.the bill said to have been prepared on 26-12-1978 is said to have been given to the respondent is said to have failed to pay the same for a pretty long time. 6.this brings its to the more interesting question, the significance, of which has been thoroughly lost sight of by the court below but is quite relevant in determining the question of limitation .evidently, the court has not bothered to understand the nature of the work that an incometax practitioner has to undertake......suit was filed on 20-6-1980. though the case of the defendant that he had paid off the fee from time to time was not accepted, evidently the. court did not also accept the case of settlement for in that event, the suit would be within three years and. therefore, there would be no scope for dismissal. it, therefore, found that the claim being beyond three years from the date when the work was done was time barred.3. the question arises as to, what article of the limitation act applies. the case of the revision petitioner is that no specific article in the schedule to the limitation act, 1963, (36 of 1963) would apply to the case in question and, therefore, the residuary article 113 should apply and if that be so, the right to sue will survive for a period of three years from the date.....
Judgment:
ORDER

1. The revision petitioner before me is a partnership Firm of Income-tax and Sales-tax Practitioners functioning at Rajkot and the respondent was admittedly doing transport business at Rajkot. The revision arises out of the dismissal of a suit filed by the revision petitioner as plaintiff for recovery of a sum of Rs. 1,750/- claimed as due to the plaintiff firm by way of fees from his client- the defendant. It has been found that the claim to the fees has been proved but the plea of limitation set up by the defendant has been accepted and the suit dismissed. So, the sole question that arises in this revision concerns the question of limitation.

2.The Small Cause Suit by the petitioner firm was one claiming that the firm had attended to the income-tax work of its client - the respondent -for the assessment years 1963-64 to 1976- 77in all for 14 years, and for such professional work done by the firm accounts are to have been settled by the respondent with the petitioner on 26-12-1978 at Rs. 125/- per year, thus, in all ,amounting to Rs.1750/-. The bill said to have been prepared on 26-12-1978 is said to have been given to the respondent is said to have failed to pay the same for a pretty long time. There after there was registered notice on 14-4-1979 demanding payment the suit was filed on 20-6-1980. Though the case of the defendant that he had paid off the fee from time to time was not accepted, evidently the. Court did not also accept the case of settlement for in that event, the suit would be within three years and. therefore, there would be no scope for dismissal. It, therefore, found that the claim being beyond three years from the date when the work was done was time barred.

3. The question arises as to, what Article of the Limitation Act applies. The case of the revision petitioner is that no specific Article in the Schedule to the Limitation Act, 1963, (36 of 1963) would apply to the case in question and, therefore, the residuary Article 113 should apply and if that be so, the right to sue will survive for a period of three years from the date when the right to sue accrues. He has further stated that the right to sue accrues only when the demand for payment for the work done was made and such demand was refused and in this case the bill having been served only in 1978 and that having been not honoured thereafter, a suit filed in IRO would be within the period of three years. The case of the respondent is that Article 18 of the Schedule would apply in this case since this is a case where the plaintiff is suing for the price of work done for the defendant at the defendant's request and no time had been fixed between the parties for payment. In such a case, the period would be three years from the date when the work was done.

4. The residuary Article would come in for application only if no other Article would suit the facts of those case. It is not that the application of the residuary Article would ultimately make any difference in this case, for, assuming the residuary Article applies, it would certainly be not right to say that the cause of action accrues only when the plaintiff chooses to present the bill, arid thereupon the defendant refuses. If, say for a period of 30 or 4o years, a person does not demand an amount which is due to 'him but chooses to make his demand thereafter and it is not respected, it does not mean that the cause of action would arise then. That would mean that the plaintiff could keep his cause of action alive for all time, by postponing making a demand. Cause of action. In case where there are rnutual obligations arises on such mutual obligations coinjag. Into existence If, 'A' expressly or impliedly agrees to pay 'B' for services done by him on 'A' performing his services, the obligation of 13, to pay arises unless it be that parties stipulate to postpone payment to some other date or on demand. It may be that parties of one party by the other only all the happening of a contingency, in which case it would arise on the happening of such contingency, But, it will be senseless to pay That wherever no time for payment is fixed, cause of action would arise despite mutual obligations having already arisen only or, demand being made by one party and that could be at any point of time. Therefore, even assuming that Article 113 is the Article appropriately applicable to the case, the commencement of the cause of action would not be oil the issue of the bill as contended but on the obligation to pay arising as against the defendant. Under Article 18 of the Schedule also, the starting point would be identical except in a case where parties stipulate as to time for payment. There is no case that there is any such stipulation or agreement here. Therefore, if the case falls under Article 18, the cause of action would arise 'where the work is done' by the plaintiff, for, it would give rise to the obligation on the defendant lo pay in ,he absence of a stipulation of time for payment. That would be the time the cause (if action would arise even under the residuary Article. Therefore ' in effect, it would make no difference

5. Al I the same, I must say that, on the facts of the case, Article 18 would apply. That is because the plaintiff fact as one practicing incometax and attending to matters concerning incometax relating to the defendant agrees to take up the responsibility of piloting the affairs of the defendant's assessment with the Incometax Officer year after year, for which the firm expects to be remunerated it is not a case where the work is on any specific day but work is done continuously and unless the law provides that payment must be made at stages or the parties agree that payments would be made at stages, it would be natural to expect the , party doing the work to claim payment on performance of the full work. In other words, so long as there is no special agreement, remunerate for part performance, it would normally be that when the work for an assessment of a year is over, the Incometax practitioner could make claim for payment and that should be respected.

6.This brings its to the more interesting question, the significance, of which has been thoroughly lost sight of by the Court below but is quite relevant in determining the question of limitation .Evidently, the Court has not bothered to understand the nature of the work that an incometax practitioner has to undertake. The fact that the Incometax Officer is handling the assessment files of an assessee for the year 197677 does not mean that his work is during the Course of that year. In fact, his work would normally commence only after the expiry of the year. The obligation to file return is after the expiry of the year. This would be followed up by the obligation to substantiate the returns, if called for, to respond to all notices issued. to appear before the Incometax Officer and attend to all matters until the assessment is finalized and the practitioner tells his client that his assessment for that year is over. The services of the Incometax practitioner covers, much of it is within the time and hoe much of it is beyond time cannot be determined on the tax practitioner in respect of specific years if such completion of assessment work by him as I have detailed above in respect of any year falls within the three years of the suit ,he would certainly be entitled to make a claim, for his work is done within three years and his claim for remuneration, arises there on and such claim is within time.. Only in cases where his assessment work is over before a period of three years prior to the date of the suit, does his claim become barred by limitation. Therefore, merely by reference to the years 19641397i, the Court could not have said that the suit is barred by limitation. The parties too have not understood the matter in this way as I see that the evidence has not been adduced in this perspective despite the fact that the plaintiff firm is an incometax practitioner.

7. Hence I set aside the decree of the Court below and remit the case back for considering the question of limitation keeping in view what I have said about the approach to the case made as to the date of commencement of the cause of action. The determination should be whether in the case of any particular year for which claim is made for fee, the claim has arisen more than three years prior to the date of suit. The claim would so arise, not merely by the assessment year being over, which , in fact, is irrelevant, but, plaintiff's services in connection with the assessment year would be complete in 'that plaintiff would have done whatever is expected to be done ' the incometax practitioner for that year for the assessee. What part of the claim is barred arid what part of the claim is not. is to be decided after remand. If parties so desire, they may adduce fresh evidence in the case.The case is posted before the trial Court for appearance of !he parties on 3rd May, 1984. Return the records to the Court below immediately.

8. Rule made absolute to that extent, The parties will suffer cost up to this stage.

9. Order accordingly.


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