Delhi Cloth and General Mills Ltd. vs Union of India (UOI) and Another

K.N. Singh, J.—This appeal, at the instance of the Plaintiff, is directed against the judgment and decree of the II Additional Civil Judge, Meerut, D/-12-3-1975, dismissing the Plaintiff''s claim for recovery of money due from the Defendant-Respondents.

Delhi Cloth and General Mills Ltd., the Plaintiff-Appellant, is the owner of Mowana Sugar Works which carries on business in manufacture and sale of sugar. The Plaintiff filed suit before the trial court on the allegation that on 18-2-1969, the Assistant Director of Purchase for and on behalf of the President of India directed Mowana Sugar Works, Mowana, to supply 713 tons of sugar of C-30 Grade and colour at the rate of Rs. 166.22 per quintal to the Director of Supplies and Transport QMG''s Branch ST/7 Army Headquarters, New Delhi, in pursuance of Government of India Release Order D/- 18-1-1959. The Plaintiff supplied 100 tons of sugar of the said Grade on 27 and 28-2-1969 at the rate, fixed by the Ministry of Food, Agriculture, Community Development and Co-operation under their notification D/- 12-12-1968, which was inclusive of excise duty. Later on, levy of excise duty on sugar was increased. Consequently, the Government of India superseded its earlier notification D/- 12-12-1968, by notification D/- 5-3-1969, and refixed the price of C-30 Grade sugar, manufactured by the Plaintiff factory at Mowana at Rs. 169.21 inclusive of excise duty. The Plaintiff supplied to the Union of India the remaining quantity of 613 tons of sugar to the Defendants between 8-3-1969 to 20-3-1969. The Plaintiff claimed price for the said sugar at the enhanced rate in view of the Government notification D/- 5-3- 1969, 1969 at the rate of Rs. 169.21. The Plaintiff''s claim was for Rs. 12,03,477.30 p. which was paid by the Defendants and the entire amount of price payable to the Plaintiff for the supply of 713 tons of sugar was cleared. The Plaintiff made certain other supplies of sugar. On 5-1-1970 the Defendants informed the Plaintiff that they have deducted an amount of Rs. 18,334.65 p. from the Plaintiffs bill on the ground that they had paid that amount by mistake while clearing the supply of 713 tons of sugar on 5-1- The Plaintiff after serving notice u/s 80, CPC filed suit for recovery of the said amount along with interest, and for a decree for an amount of Rs. 22,188.90 p. The Union of India and other Defendants filed written statement and contested the Plaintiff''s claim mainly on the ground that the Plaintiff was not entitled to pass on the increased burden of excise duty to the Defendants. They, further, pleaded that a sum of Rs. 18,334.65 was over-paid to the Plaintiff by mistake and on coming to know of the correct position that amount was subsequently recovered from the other supplies made by the Plaintiff.

The trial court held that the Plaintiff was entitled to claim the enhanced excise duty from the Defendants and as such the Plaintiff was entitled to recover price of the sugar supplied by it at the rate of Rs. 169.21 p. per quintal from the Defendants and they were not justified in deducting Rs. 18334.65 from the Plaintiff. The trial Court, further, held that the said amount had not been paid by mistake to the Plaintiff; instead, the payment had been made properly by the Defendants to the plantiff having regard to the fixation of price by Central Government at enhanced rate. The trial court, further, held that the Plaintiff was entitled to interest at the rate claimed by it on the amount, which was unjustifiably deducted from its bills but, it did not decree the Plaintiff''s claim in its entirety on the ground of limitation. The trial court held that part of the Plaintiff''s claim was barred by time. Consequently, it passed decree in Plaintiff''s favour for a sum of Rs. 5,747.05 with interest and it rejected the Plaintiff''s claim for Rs. 12,587.60p. on the finding that the same was barred by time.

The sole question which survives for determination in this appeal is as to whether the Plaintiff''s claim for recovery of Rs. 12,587.6o is barred by time. The counsel for the parties conceded that Article 113 of the Limitation Act was applicable to the instant case which (provides) a limitation of three years for filing suit from the date when the right to sue accrues. Article 113 is as under:

(contd. on col. 2) Description of suit Period of Time from which Limitation period begins to run

"Any suit for Three years. When the right to which no period of sue accrues." elsewhere in this Schedule.

Three years'' period of limitation is prescribed for filing a suit under the said article. The material date for computing the limitation is the date when the right to sue accrues. The expression "the right to sue accrues" has been matter of great debate before the Courts of law. In AIR 1930 270 (Privy Council) , the expression "right to sue" was interpreted as under:

There can be no right to sue until there is an accrual of the right asserted in the suit and its infringement or at least clear and unequivocal threat to infringe that right by the Defendants against whom the suit is instituted.

In O. Rm. O.M. Sp. Firm vs. P.L.N.K.M. Nagappa Chettiar , it was held that the decisions in India have established a rule of limitation under Article 120 by which the Plaintiff in the cases to which the rule applies cannot be debarred of his remedy unless with knowledge of his rights he has been guilty of delay. These authorities were considered and followed by Supreme Court in Mst. Rukhmabai Vs. Lala Laxminarayan and Others, The Supreme Court held that "there can be no ''right to sue'' until there is an accrual of the right asserted in the suit and its infringement, or at least a clear and unequivocal threat to infringe that right, by the Defendant against whom the suit is instituted." Proceeding further, the Supreme Court held that "every threat by a party to such a right however ineffective and innocuous it may be, cannot be considered to be a clear and unequivocal threat so as to compel him to file a suit." Instead, the threat should be unequivocal which would amount to the infringement of the Plaintiff''s right.

The question whether a particular threat gives rise to a compulsory cause of action depends upon the question whether that threat effectively invades or jeopardizes the said right which can be determined on the facts of each case. There is, thus, conspectus of high judicial opinion that the point of limitation starts from the date when the right to sue accrues to the Plaintiff. Such right cannot accrue on a mere vague or general threat. Instead the threat must be unequivocal in clear terms and the Plaintiff must have knowledge of his right and its invasion thereof by the Defendants. The emphasis on clear and unequivocal threat is relevant as that would furnish cause of action to the Plaintiff for filing the suit. Cause of action is a bundle of facts which if taken with the law applicable to them gives the Plaintiff a right to relief against the Defendants. It is not limited to the actual infringement of the right sued on but it includes all the material facts on which it is founded. Cause of action in substance denotes and determines the starting point of limitation. Right to sue and the cause of action both are almost synonymous in terms. It there are successive infringements of Plaintiff''s right, the right to sue would accrue when the Defendant clearly and unequivocally threatened to infringe the Plaintiff''s right. The Supreme Court in Rukhma- bai''s case made this clear in the following words:

Where there are successive invasions or denials of a right, the right to sue under Article 120 accrues when the Defendant has clearly and unequivocally threatened to infringe the right asserted by the Plaintiff in the suit. Every threat by a party to such a right, however ineffective and innocuous it may be, cannot be considered to be a clear and unequivocal threat so as to compel him to file a suit. Whether a particular threat gives rise to a compulsory cause of action depends upon the question whether that threat effectively invades or jeopardizes the said right.

Article 120 Limitation Act, 1908 is Article 113 of the Limitation Act 1963. Under Article 120 period of limitation was six years which under Article 113 of the Limitation Act 1963 the period of limitation is three years; but, the principles laid down by the authorities discussed above still hold the field for determining the question as to when the right to sue accrues. Determination of this question is to be made on the facts of each case. In the instant case the trial Court has held that the right to sue accrued to the Plaintiff on receipt of the letter dated 5-1-70 although no finding has been recorded as to when that letter was received by the Plaintiff. Since the suit was filed on 2-7-73, the trial court held the Plaintiff''s claim as barred by time.

Learned Counsel for the Respondents referred to the trial Court''s findings and urged that the Defendants had informed the Plaintiff by the letter D/-5-1-70 relating to the deduction of the amount and, therefore, the date for determining the limitation is 5-1-1970 and as the suit was filed on 2-7-73 it was clearly barred by time. The Appellant''s counsel, on the other hand, referred to the letter dated 5-1-70 (Ex. 11) and urged that under that letter vague information was given to the Plaintiff that a sum of Rs. 12587.60 p. had been deducted from the Plaintiff''s bill. The letter did not disclose any reason for the recovery of the amount from the Plaintiff''s bill. Since the letter did not contain complete information the Plaintiff approached Chief Director of Purchase "Army Purchase Organisation" and made enquiries as to why recovery was being made from his bills. The Chief Director of purchase by his letter dated May 20, 1970, (Ex. 13) informed the Plaintiff that he was required to sell sugar under the supply order dated 18-2-1969 at the price stipulated in Central Government''s notification dt. 12-12- 68. but payment had been made to the Plaintiff at a higher rate by mistake, therefore, recoveries have been made from the Plaintiff''s other bills. There is no dispute between the parties that if 20th May, 1970, is taken as the starting point for the limitation the Plaintiff''s suit would be within time, but, if the starting point of limitation is to be taken from 5-1-70, the suit would be barred by time. The Defendant''s letter dated 5-1-70 did not contain any relevant material to give an idea to the Plaintiff about the reason for the deduction of the amount from his bills. The Plaintiff could not rush to the Court with incomplete information. It was justified in obtaining the reason from the Defendants which was conveyed to it by the letter dated May 20, 1970. It was only on the receipt of that letter that the Plaintiff came to know the stand taken by the Defendants that they had made payment to the Plaintiff by mistake. The letter dated 5-1-70 did not amount to an infringement of the Plaintiff''s right nor it gave a clear and unequivocal threat to the Plaintiff''s right. The letter dated 20-5-1970 contained an unequivocal threat infringing the Plaintiff''s right to obtain the price of the sugar supplied by it. No doubt, the letter dt. 5-1-70 gave a threat to the Plaintiff''s right, but that was not unequivocal and the Plaintiff could not have filed a suit on incomplete set of facts. The Plaintiff''s suit is based on a cause of action which clearly arose again on 20th May, 1970, when he received the letter. These facts clearly show that the right to sue as contemplated by the Article 113. Limitation Act, accrued to the Plaintiff on May 20, 1970. In this view of the matter the Plaintiff''s claim was not barred by Limitation.

In the result, the appeal succeeds and is, accordingly, allowed. The Plaintiff''s claim for Rs. 12,587.60 is decreed with interest at the rate of 6 per cent up to the date of suit and further at the rate of 4 per cent from the date of suit till the same is paid. The Appellant is entitled to its costs.