Mahabir Choudhary and Others vs Gajadhar Sahu and Another

Raj Kishore Prasad, J.—Plaintiffs are the appellants. The sole question for determination is, whether the plaintiffs are entitled to a refund of the consideration money against defendant 2, who was defendant-second party and is respondent 2 to this appeal.

Plaintiffs sued for declaration of title to the structure in question as purchasers from defendant 2-second party, Rani Krishna Bati Sahiba of Krishnagarh estate and for ejectment of the defendant-first party and for damages and mesne profits. These reliefs of the plaintiffs were refused by both the courts below. The plaintiffs further claimed, in the alternative, for a decree for refund of the consideration money of Rs. 800/- with interest at 1 per cent per mensem against defendant 2-defendant-second party. This claim of the plaintiffs for refund has been refused by both the courts below. The court of appeal below held that the plaintiffs were entitled to a refund of the consideration money, but as the claim was barred by limitation under Article 97 of the Indian Limitation Act (hereinafter referred to as the Act), no decree could be passed.

As in the present appeal the only point pressed is regarding the alternative claim of the plaintiffs, it is not necessary to refer to the case of the defendant-first party, who actually contested the suit. Defendant 2, defendant-second party did not appear at any stage and did not contest the suit at all and in this Court also she has not appeared and is not represented by anyone.

Mr. J.C. Sinha, appeared for the defendant 1-defendant-first party-respondent, but it was not necessary to hear him as the judgment and decree in favour of the defendant-first party have not been assailed and as such they shall stand confirmed.

In order to decide the question raised in this appeal, it is necessary to state the material facts having bearing on this question:

On 30-11-1954, defendant 2, Rani Sahiba, executed a sale deed in respect of the structure in question in favour of the plaintiffs for Rs. 800/-. The consideration money, on the finding of the court of appeal below, was paid to Rani Sahiba through Parmeshwar Jha, her agent and Mukhtaream under special power of attorney No. 19 of 1951, as mentioned on the back of the first page of the sale deed, Ext. I. In paragraph 7 of the said sale deed, there is a provision that if the plaintiffs, the purchasers, are dispossessed or in any way their title is affected, then the vendor, namely, defendant 2-defendant-second party, Rani Sahiba. shall pay back the entire consideration money of Rs. 800/-with interest at one per cent per mensem from the date of dispossession till the date of satisfaction. Defendant 1 was a tenant in respect of these structures originally under defendant 2, but defendantLtd. ed to pay the rent to the plaintiffs after they had purchased the land in suit. Defendant 1, however, did not pay the rent, and, therefore, the plaintiffs brought a suit for recovery of arrears of rent on 12-9-1955 against the defendant-first party. That suit came up, ultimately, to this Court in Second Appeal No. 141 of 1959 and was dismissed on 16-3-1959 and the plaintiffs'' suit for recovery of arrears of rent was dismissed. Thereafter, the plaintiffs brought the present suit on 15-7-1961 against the, defendant-first party and also against the defendant-second party.

The court of appeal below held that in view of the terms in the sale deed, Ext. I, Rani Sahiba, defendant 2, was bound to refund the consideration money to the plaintiffs in case they are dispossessed or there is any defect in the property or terms thereof, and, therefore, it held that ordinarily there would have been no difficulty in plaintiffs getting a decree against defendant 2 for refund of the consideration money of the sale deed; but, in view of Article 97 of the Indian Limitation Act, the suit having been brought after three years from the date when the plaintiffs failed to, recover possession in persuauce of the sale deed, the suit was barred by limitation. In my opinion, the learned Judge of the court of appeal below is wrong in law in holding that the suit is barred by limitation.

It is conceded by Mr. Prem Shankar Sahay, who appeared for the appellants, that Article 97 of the Act applies here. Let us, therefore, read Article 97. Article 97 of the Act is in these terms:

For money paid upon Three years. The date of an existing consideration the failure. which after wards fails.

Mr. Sahay contended that, no doubt, the period of limitation for the present suit is three years from "the date of the failure", but this limitation will run from 16-3-1959, when the plaintiffs'' suit for recovery of arrears of rent was dismissed by this Court, and, as such, the present suit having been brought on 15-7-1961, within three years, is not barred by limitation under Article 97 of the Act.

The words of Article 97, "for money paid upon the existing consideration which afterwards fails", clearly raises the question as to what is the terninus a quo?, or, in other words, what, on the facts of the case, would be "the date of failure"? In Lalji Singh and Others Vs. Ramrup Singh and Another, a Bench of this Court, presided over by Courtney Terrell, C.J. and Kulwant Sahay, J., held that Article 97 applies when the plaintiff says the contract is still good and subsisting and an event contemplated by the contracting parties has happened, that is to say, the possible future inability of the plaintiff to enjoy the property, and the plaintiff relies upon the express or implied contract on the part of the defendant that in the happening of such circumstances the defendant will pay back the money which he has already received. In Mussnmmat Basso Kuer and Ors. v. Lala Dhum Singh L.R. XV I.A. 211 : ILR 11 Alld. 47 it was held that the decree dismissing the respondent''s suit was the starting point of limitation, and, that imposed, u/s 65 of the Indian Contract Act, a fresh obligation on the respondent to pay his debt; in the alternative it ''imported, within the meaning of Article 97 of Act XV of 1877, a failure of the consideration which entitled him to retain it.

As a result of a survey of the above cases, it is clear, I think, that an action for money paid upon an existing consideration which afterwards fails, is not barred till three years after the date of failure. There is an implied contract between the contracting parties to refund the amount on failure of consideration. The right to recover money on failure of consideration is based on the principle that it is inequitable for the payee to retain the money in such a case. Failure of the consideration will occur whew the Court refuses to enforce the contract. Here the consideration failed when the plaintiffs'' suit for arrears of rent against defendant-first party was dismissed. Here there was an express contract between the plaintiffs and the defendant 2-defendant second party to refund the consideration money as will appear from paragraph 7 of the sale deed, Ext. I on the happening of certain events. One such event happened when the plaintiffs'' suit for rent was dismissed.

It is plain, therefore, that the starting point of limitation would be 16-3-1959, when the plaintiffs'' claim for rent against the defendant-first party was dismissed, although they were entitled to the rent from the defendant-first party who was in possession of the land in suit and who had agreed to pay rent to the plaintiffs and thus the plaintiffs were deprived from getting khas possession over the land in suit. In this view of the matter, counting from 16-3-1959, which must be taken to be the "date of the failure of the consideration", the suit having been instituted on 15-7-1961 is obviously within three years, and, as such, it is not barred by limitation.

The question of resjudicata arose between the plaintiffs and the defendant-first party and, therefore, it is not necessary to consider whether the decision of the court of appeal below on that question is correct or not.

For the reasons given above, the appeal is allowed, the judgments and decrees of the courts below dismissing the plaintiffs'' suit for refund of the consideration money are set aside and the plaintiffs'' suit is decreed as against defendant 2-defendant second party only for Rs. 800/- with interest. The interest stipulated between the parties as mentioned in the sale deed, Ext. I, is one per cent per mensem, but I think it is very excessive, and, therefore, I allow interest at the rate of 6 per cent per annum from 30-11-1954, the date of the purchase till the date of the suit (15-7-1961) and, thereafter, pendenle lite interest and future interest will both be at the same rate. The appeal as against the defendant-first party is dismissed; but without costs. The plaintiffs, however, will not be entitled to any costs of this Court as their claim has not been contested by respondent 2.