Patna High Court
Jagat Kishore Pd. Narain Singh vs Parmeshwar Singh And Ors. on 23 September, 1949
Equivalent citations: AIR1951PAT348, AIR 1951 PATNA 348
JUDGMENT Meredith, J.
1. This is a defendant's second appeal in a suit for recovery of Rs. 300 and interest, by way of damages, in respect of realisation by the defendant of the decretal dues twice over in two rent suits. These rent suits were decreed in 1935. According to the plaintiff's case and the findings of the Courts below, the sum of Rs. 300 was paid out of Court in the year 1936 under a promise of certification, but in fact the payment was never certified, and execution for the full amount of the decrees was taken out in the year 1937. On 5.4.1937, the plaintiff made an application under Order 21, Rule 2, Civil P. C., for certification of the payment, but this-application was dismissed as barred by limitation under Article 174, Limitation Act, and also as it was held that payment had not been proved. There was an appeal, but the appeal also was dismissed. Subsequently in the execution proceedings the judgment-debtor had to pay over again, paying by instalments from 16-1-1940, onwards. The plaintiff waited for full three years before doing anything about it, and on 19.1-1943, filed the present suit. There were, however, a few days' holidays prior to the 19th of January, and it is conceded that the suit was within time if limitation runs from 16-1-1940. The suit has been decreed for Rs. 300-and interest, cot at the rate claimed, but at 6 per cent. per annum from 16 1-1940.
2. Three points have been raised in appeal, first, that the suit was barred by res judicata owing to the dismissal of the application under Order 21, Rule 2, second, that the suit was barred by limitation, and third, that interest should not have been allowed as there was no contract for payment of interest or damages.
3. I shall take these points in turn. With regard to the first, reliance is placed on a number of cases of which it will suffice to cite Peary Mohan Mukherjee v. Ambica Churn Bandopadhya, 24 Cal. 900, wherein it was held that, though the previous suit failed for lack of notice, there was res judicata because the question of the merits, whether necessary or not, had also been decided and the matter was directly and substantially in issue in the previous litigation.
4. Similarly it is argued that the application under Order 21, Rule 2, was dismissed not only on the score of limitation, but also on the merits. Therefore, the matter of payment had been finally decided. It is not necessary to discuss the legal point involved because there is a short answer. It was for the defendant to establish the plea of res judicata set up by him. The final decision in the application under Order 21, Rule 2, was that of the appellate Court, and the defendant has not filed the judgment of the appellate Court, and we do not know whether the appellate Court decided on the merits or only on the score of limitation. The first contention, therefore, fails.
5. The second, that of limitation is one of some difficulties. It is well settled that a suit like the present is a suit for damages for breach of an implied contract by the decree-holder to get the payments certified and not to execute the decree. Indeed it is only in this light that such a suit has been held to be maintainable despite the provisions of Section 47, Civil P. C. This being so, the article of limitation must be Article 115, or possibly Article 97, Limitation Act. In the first case limitation is three years from the date of the breach, in the second three years from the failure of the consideration. My personal view is that Article 115 is applicable rather than Article 97. But it makes no difference. Limitation is three years, and the question is, what is the terminus a quo? When did the breach take place or when did the consideration fail? Put like this, I think there can be only one answer. The breach took place and the consideration failed as soon as the decree-holder did something inconsistent with the carrying out of the contract--something negativing its performance by him. That would be the date when he filed an application for execution for the full decretal amount ignoring the payment which had been made. In this view the cause of action arose when the application for execution was filed in 1937, and consequently a suit brought in 1943 will be long out of time.
6. There are, I apprehend, only two possible avenues of escape from this conclusion. First, that Section 24, Limitation Act, would be applicable, and, second, that the actual payment of the money twice over by the judgment-debtor gives a fresh cause of action.
7. Section 24, Limitation Act, runs :
"In the case of a suit for compensation for an act which does not give rise to a cause of action unless some specific injury actually results therefrom, the period of limitation shall be computed from the time when the injury results."
In Kedar Nath v. Har Govind, 24 A. L. J. 550: (A. I. R. (18) 1926 ALL. 605), Ashworth J. took the view that under Section 73, Contract Act, a suit can only be brought for an injury or loss already caused, and not for prospective loss. Consequently there is no cause of action until actual loss has been incurred, and Section 24, Limitation Act, will be applicable as it is not confined to suits based on tort. For the latter view he has been severely criticised by Ba U J. in V.M. Gany v. Leong Chye, 166 I. C. 48 : (A. I. R. (23) 1936 Rang. 510) who holds that in a suit for compensation for a breach of contract, the breach of contract per se gives rise to a cause of action, and time begins to run from the date of the breach, and not from the date of actual loss or damage. Section 24, Limitation Act, has no application because it applies only to suits based upon torts, and not to those based on breach of contract. With respect I think the better view is that Section 24 is applicable in the case of actions ex contractu in proper cases. It was so held by a Bench of this Court in Jagannath Marwari v. Kalidas, 8 Pat. 776 : (A. I. R (16) 1929 Pat. 245), though in that particular case the terminus a quo was held to be the date of injury and not the breach of the covenant, because it only became apparent that the removal of pillars of coal amounted to a breach when the plaintiff's tank subsequently subsided.
8. Agreeing, however, that in proper cases Section 24 is applicable to actions on contract, I am clear that it has no application to a case like the present. I do not think Ashworth J. was quite correct in his view of Section 73, Contract Act, and would prefer the view of Ba U J. that the breach of contract per se gives rise to a cause of action, and time begins to run from that date. In many such actions there has been no actual money loss, for example, in an action brought for failure to supply goods on a certain date the plaintiff will be entitled to recover the difference between the price of the goods according to the contract and the market price thereof at the date of failure to supply, even though the plaintiff has not actually subsequently purchased the goods at the higher price.
9. In Halsbury's Laws of England, Vol. 19, p. 42, Section 64 we find, "in an action for a breach of contract the cause of action is the breach. Accordingly such an action must be brought within six years of the breach; after the expiration of that period the action will be barred, although damage may have accrued to the plaintiff within six years of action brought. In such an action it is note necessary to prove actual damage, and special damage is merely alleged as a measure of the damages to be recovered. The time is not extended by the fact that the breach has not been discovered or that damage his not resulted until after the expiration of six years."
Similarly in Rustomji's work on the Law of Limitation, 1938 Edn., vol. II, p. 988, speaking about Article 115, the learned author says:
"Time runs from the breach (i.e. when the contract is broken), after expiration of three years from the breach, the suit will be barred, although damage may have accrued to the plaintiff within three years of action brought, i.e. an action for breach of contract accrues as soon as the contract is broken, though no injury results until afterwards . . . . . . . The time is not extended by the fact that the breach has not been discovered or that damage has not resulted until after expiration of three years."
10. In an action like the present, however, the position seems to me even clearer because here there is definitely damage as soon as the contract was broken by filing an application for execution. This results from the fact, which has, I think, been lost sight of in some of the decisions, that the money has been actually previously paid out by the plaintiff, and as soon as the defendant has converted it to his own independents use instead of setting it off against the decree, that money is lost to the plaintiff, since it can never be applied towards the satisfaction of the decree, as under Order 21, Rule 2, the execution Court is debarred from taking any notice of the uncertified payment. The entire liability under the decree remains untouched, and the money paid previously becomes a complete loss, though of course compensation for that loss may be recovered in a suit like the present. Therefore, I think, limitation must run from the actual breach, and Section 24 has no application.
11. As for the argument that the subsequent second payment gives a fresh cause of action, I am unable to appreciate that contention. It is payment of an amount lawfully due under the decree. The decree-holder is entitled to realise it, and the judgment-debtor must pay it. The breach of the contract has already taken place, and is over and done with. There is no fresh breach by the decree-holder, and indeed the levying of the money follows directly from the application for execution. It is made by the Court, not the decree-holder. In any event a suit for recovery of the money paid on the second occasion in the execration proceedings would be barred under Section 47, Civil P. C.
12. Authority is somewhat scanty. There are two single Bench decisions of this High Court. The first is Ramautar Singh v. Thakur Prasad Singh, A. I. R. (22) 1935 Pat. 65. Fazl Ali J. in that case appears to have held that limitation ran from the date of the original payment, but I think the decision is based on the particular manner in which the plaint was framed since the cause of action was specified to be the receipt by the decree holder to his use. In the other case, Ram Das Sahu v. Sukhdeo Ram, A. I. R. (26) 1939 Pat. 156: (178 I. C. 196) Manohar Lall J. held that the cause of action arose on the date of realisation of the money for the second time in execution, and it was on that date that the plaintiff obtained the right to bring a suit for damages. With respect to the learned Judge, I think he was wrong for the reasons I have already given.
13. There are several Madras cases. The first is Viraraghava Reddi v. Subhakka, 5 Mad. 397 (F.B.), a Full Bench case, in which it was held that a suit like the present is maintainable as a suit to recover damages for the breach of the implied promise to certify the payment to the Court and thereby make it effectual in execution. But the question of limitation was not considered.
14. In T.M. Sriramulu v. R. Dalayya, 16 M. L. J. 54, where, as soon as the notice of the application for execution was served on the judgment-debtor, but before any steps were actually taken to execute the decree, the judgment-debtor instituted the suit, it was held that the suit was not maintainable. But in this cage there is absolutely no discussion of the question. The judgment consists of a single sentence, and it has been subsequently dissented from in the Madras High Court itself. Having regard to the nature of the judgment, it is, in my opinion, no authority.
15. In In the matter of Medai Kaliani Anni, 80 Mad. 545 : (3 M. L. T. 15) a learned Judge laid down that the law casts on the decree-holder receiving payment out of Court, the duty of certifying such payment in satisfaction of the decree under Section 258, Civil P. C. The judgment, debtor has a cause of action against the decree-holder when the latter having received the decree amount not only does not certify, but actually takes out execution. It is not necessary that money should have been actually recovered in execution.
16. Krishna Aiyar v. Savurimuthu Pillai, 42 Mad. 338 : (A. I. R. (6) 1919 Mad. 424) is a case in which, after receiving certain payments, the decree-holder assigned the decree, and the assignee executed it. The Full Bench held that the judgment-debtor has a cause of action for damages only as against the decree-holder, but none against the assignee. That is clearly correct having regard to the fact that there is no contractual relationship between the judgment-debtor and the assignee, and the decree is a good decree and capable of execution so long as the payment is not certified. In such a case it may well be that the application for execution will give no rise to a cause of action. It cannot do so against the assignee, and it is not the act of the decree holder. Hence in such a case the cause of action will arise against the decree-holder as soon as the judgment-debtor has to pay twice over, but that is in no way inconsistent with the view I have taken.
17. In Gopalasami Naick v. Nammalwar Naick, 36 M. L. J. 175 : (A. I. R. (6) 1919 Mad. 773), a Bench held that a cause of action arise a as soon as the application for execution is filed, being a breach of the implied contract, the breach in itself giving rise to the cause of action. Though money may not have been realised, yet successive applications for execution will give rise to successive breaches and fresh cause of action, and, if money is subsequently realised, that will give a fresh cause of action as a further breach of the covenant. With regard to the second proposition, I am unable to agrees with those learned Judges. They are apparently thinking of the fact that under Article 116 limitation runs from the time when the contract is broken or, where there are successive breaches, when the breach, in respect of which the suit is instituted, occurred. But the provision with regard to successive breaches relates to a different type of contrast altogether. A contract of which there may be successive breaches is a contract by which a party to it agrees to do or forbear doing two or more different things. Successive breaches occur in those cases only in which there is promise to perform periodically, as for example, payment of rent or maintenance. A contract such as we are concerned with in the present case, however, is a contract only for a single act, and when that act is rendered impossible of performance or negatived, the breach is complete, and it is over and done with, and there is no question of any further breach. Having wholly repudiated the contract in the first instance, what the decree-holder may do subsequently is merely in consequence of that breach, and is not a fresh breach of the contract to which ho had previously put an end.
18. There is one single Bench decision from Peshawar, Azim Khan v. Mt. Sahib Jan, 205 I. C. 20 : (A. I. R. (30) 1943 Pesh. 13). In that case the learned Judge held that the filing of an execution application by a decree-holder against a judgment-debtor, who alleges that he has paid off the decree-holder privately, in itself gives the judgment-debtor a cause of action to bring a suit for relief, and for doing so the judgment-debtor need not wait until he is made to pay twice over or suffers some damages. I agree with that decision.
19. In my opinion limitation in the present case ran from 1937, and the suit was barred by limitation.
20. In this view there is no need to examine the third contention, but, as it has been argued, I may perhaps state my view briefly. Reliance is placed on J. H. Pattinson v. Sm. Bindhya, Debi, 12 Pat. 216 : (A. I. R. (20) 1933 Pat. 196) and Bengal Nagpur Railway Company Ltd. v. Ruttanji Ramji, 65 I. A. 66 : (A. I. R. (25) 1938 P. O. 67) but what those cases laid down was merely that in a suit for recovery of money due under a contract interest cannot be awarded unless provided for in the contract, and interest cannot be recovered in such a case as damages under Section 73, Contract Act. The reason is given that Section 73 is merely declaratory of the Common Law as to damages, and under the Common Law interest could not be allowed by way of damages for wrongful detention of debt. These cases deal, only with suits for recovery of money due, but the present suit is not for recovery of money due. It is for damages for breach of a contract, and not for recovery of the money paid. The considerations laid down in those cases, in my opinion, have no application to a suit like the present. Under Section 73, Contract Act, the party who suffers by the 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 a breach or which the parties knew, when they made the contract, to be likely to result from the breach of it. Now what damage would naturally arise from the breach in a case such as the present? The payment was made in 1936. Had the decree-holder carried out his implied promise, the decree would have been satisfied in 1936. Owing to his breach the decree was executed in 1940. The execution would no doubt take place for the decretal dues with interest up to 1940, and, therefore, the judgment-debtor would have to pay not only the amount due in 1936, but interest on that amount as well up to 1940, and certainly I know of no principle on which it could be asserted that that loss could not be taken into account in fixing the measure of damages. Alternatively, the judgment-debtor paid Rs. 300 in 1936. Had that money remained with him up to 1940, he could in the usual course of things have earned interest upon it. Therefore, the act of the decree-holder deprived him not only of the money, but the interest which he could earn and again I see no reason why that should no be taken into account. In my view, therefore, the Courts below were not wrong in allowing something by way of interest, though strictly speaking, it should not have been described as interest, but damages, and it should not be interest from the date of the second payment in 1940 up to the date of the suit but interest from 1936 on the amount paid then.
21. As in my view the suit was barred by limitation, I would allow this appeal and dismiss the suit with costs throughout. I see no reason why the defendant should not get costs since there appears no good reason why the plaintiff waited from 1940 until 1943 to bring the suit.
Ramaswami, J.
22. There is a considerable divergence of judicial opinion on the question whether interest can or cannot be recovered as damages under Section 73, Contract Act, where it is not recoverable under the Interest Act. In the Madras case Kamalammal v. Pearu Meera Levvai Rowthen, 20 Mad. 481 : (7 M. L. J. 263), the question arose whether interest could be recovered by way of damages under Section 73, where it was not recoverable under the Interest Act, and it was held that it could not be so recovered. The effect of the judgment in that case is that wherever interest could be claimed by way of damages, it would not be awarded unless either the requirements of the Interest Act are complied with, or interest is recoverable at Common Law. But according to, the Calcutta High Court Khetra Mohan v. Aswni Kumar, 22 C. W. N. 488 : (A. I. R. (5) 1918 Cal. 448) interest may be awarded as damages for wrongful detention of money under Section 73, though there may be no agreement to pay interest and though the case may not be covered by the Interest Act. On the contrary in J.H. Pattinson v. Smt. Bindhya Debi, 12 Pat. 216 : (A. I. R. (20) 1933 Pat 196), a Division Bench of this Court after full review of all the authorities held that Section 73 was merely declaratory of the Common Law as to damages and under the Common Law interest could not be allowed by way of damages for wrongful detention of debt.
23. In this context reference should be made to B.N. Rly. Co., Ltd. v. Ruttanji Ramji, 65 I. A. 66, (A. I. R. (25) 1938 P. C. 67) in which the respondents instituted claim on 29-11-1927, against the appellant railway company for a sum on account of work done by their predecessor in interest under three contracts in connection with the construction of a branch line. It was found that the original contract rates at which payment was to be made for various items of work done had been abandoned during the progress of the work with the consent of both parties, and that the price of the work done, determined on the basis of fair and reasonable rates, was Rs. 66,980-10-6 which the railway company were liable to pay to the respondents on 26-7-1925, after the completion of the work. Upon these facts the Judicial Committee held that in the absence of any usage or contract, express or implied, or of any provision of law to justify the award of interest on the decretal amount for the period before the institution of the suit, interest for that period could not be allowed by way of damages caused to the respondents for the wrongful detention of their money by the railway company. At p. 72, Sir Shadi Lal states, "now Section 73, Contract Act, gives statutory recognition to the general rule that, in the event of a breach of a contract, the party who suffers by such breach is entitled to recover from the party breaking the contract compensation for any loss or damage thereby caused to him. On behalf of the plaintiffs, reliance is placed upon illustration (n) to that section. The illustration, however, does not deal with the right of a creditor to recover interest from his debtor on a loan advanced to the latter by the former. It only shows that if any parson breaks his contract to pay to another person a sum of money on a specific date, and in consequence of that breach the latter is unable to pay his debts and is ruined, the former is not liable to make good to the latter anything except the principal sum which he promised to pay, together with interest up to the date of payment. He is not liable to pay damages of a remote character. The illustration does not confer upon a creditor a right to recover interest upon a debt which is due to him, when he is not entitled to such interest under any provision of the law. Nor can an illustration have the effect of modifying the language of the section which alone forms the enactment."
24. Upon the facts proved in the present case I, therefore, doubt whether the plaintiffs would be entitled to claim interest upon the amount.
25. It is, however, unnecessary to decide this point for I agree with my learned brother that the suit is barred by limitation and that the appeal should be allowed and the suit should be dismissed with costs throughout.