Purshottam vs Ramdayal

Dixit, J.—This is a Plaintiff''s second appeal whose suit for the recovery of Rs. 2850/- from the Defendant-Respondent has been rejected by the Courts below on the ground that the suit was barred by limitation. The Plaintiff alleged that on 4-3-1941 one Raghuwar entered into an agreement with the Plaintiff for the sale of certain zamindari property in consideration of Rs. 900/- which Raghuwar had borrowed from the Plaintiff and also a sum of Rs. 600/- which Raghuwar''s brother owed to the Plaintiff, that after the agreement Raghuwar applied to the Revenue Authorities for permission to sell the property to the Plaintiff. But the Defendants claiming a right of pre-emption over the property filed objections to the intended sale in favour of the Plaintiff; that the proceedings for the sale of the property to the Plaintiff were thus stayed pending the disposal of the said objections; that in the meantime Raghuwar died and the zamindari property was entered in the names of the Defendants, who were his legal representatives, that as the Defendants were not willing to sell the property to the Plaintiff, he gave a notice to the Defendants on 14-7-1948 to sell the property to him or to return the amount which formed the consideration for the agreement to sell, that on 23-7-1948 the Defendants gave a reply refusing to sell the property to the Plaintiff or to pay the amount claimed by the Plaintiff.

On these allegations the Plaintiff sued to recover Rs. 2850/- from the Defendants stating that the cause of action for his suit arose on 23-7-1948. The Plaintiff''s suit was filed on 7-9-1948. The Defendants resisted the suit inter alia on the ground that it was barred by time. The trial Court framed a preliminary issue on the question of limitation and found that according to the agreement of sale which was executed on 4-3-1941, the zamindari property was to be sold to the Plaintiff within four months of the date of the agreement and that as it was not sold within the time fixed by the parties, the cause of action for the recovery of the amount of consideration for the agreement arose on the expiry of that .period, that is, on 4-7-1941 and that as the Plaintiff''s suit was filed more than six years from 4-7-1941 it was barred by lapse of time under Art 20, Gwalior Limitation Act, Samvat 1971. Accordingly, the learned trial Judge dismissed the Plaintiff''s suit. The Plaintiff then appealed to the District Judge, Bhind who agreeing with the (sic) of the trial Court rejected the appeal. The Plaintiff has now filed this appeal against the decision of the District Judge, Bhind.

Mr. Ramkrishna Dikshit learned Counsel the Appellant argued that the Plaintiff''s suit (sic) one for the recovery of money paid on the fail of the consideration for an agreement and (sic) governed by Article 13, Gwalior Limitation Act which prescribed a limitation period of six year from the date of the accrual of the cause of action and that the cause of action for the Plaintiff suit arose on 8-12-1942 when the Naib Suba refused to sanction the sale of the zamindari property to the Plaintiff. In reply Mr. Shivdayal learned Counsel for the Respondent said that the cause of action for the Plaintiff''s suit for a (sic) return of the consideration money arose on the expiry of the period of four months mentioned (sic) the agreement dated 4-3-1941 for the sale of property and that, therefore, the Plaintiff should have filed his suit within six years of 4-7-1941.

In my opinion the Courts below have erred in regarding the Plaintiff''s suit as one for the recovery of money on a bond whereby a day (sic) specified for payment and so treating it in (sic) to the conclusion that it was barred. In the agreement of 4-3-1941 Raghuwar after stating that he had borrowed from Purshottam, the Appellant Rs. 900/- and had accepted the liability for the payment of Rs. 600/- owed by his brother to Purshottam stipulated that this amount of Rs. 1500/- together with interest thereon would be (sic) paid in this manner, that in consideration of the amount he would sell to the Plaintiff certain zamindari property and that the sale would be completed within four months, and that in (sic) event of the sale not taking place or there being any delay in it or a default on his part to (sic) ply with the terms of the agreements, the Plaintiff would have the right to realise the amount with interest thereon from the vendor or to sue him for specific performance of the contract of the sale of the property.

From these terms of the contract, it is clear that it is not a bond stipulating payment (sic) money on a specified date, but it is a contract for sale of the property referred to therein, the (sic) sideration being the debts owed by Raghuwar (sic) the Plaintiff. By the contract what Raghuwar undertook to do principally was the sale of the property and not the return of the loan amounts There was no doubt a clause in the contract that if the sale is not'' completed or if there is (sic) delay in the sale or if there is any failure on the part of the vendor to comply with the conditione of the agreements, then and in such event the Plaintiff would be entitled to recover Rs. 1500/- with interest thereon and costs from Raghuwar But under this term the Plaintiff''s claim to the recovery of the money in the above contingencie was not qua loan but qua-consideration for the sale agreement. Quite independently of such clause, the money was capable of being (sic) to the Plaintiff if the vendor did not fulfil part of the contract, as the money formed consideration for the contract.

The Plaintiff-Appellant has not sued on the original loan transaction. His suit, as the Plaintiff shows, is founded on the contract dated 4-3-1941 (sic) and the Plaintiff, claims that as the sale of the property has not taken place, he is entitled be paid the consideration of amount of 1500/- together with interest thereon from date of the agreement and at the rate mention therein. Under the Indian Limitation Act such a suit would fall under Article 97. The Plaintiff''s suit is, however, governed by the Gwalior State Limitation Act, Samvat 1971, which does not contain a provision corresponding to Article 97, Indian limitation Act it appears to me that the Article applicable to the present case is the residuary Article 13, Gwalior Limitation Act. This prescribes period of six years'' limitation from the date on which the right to sue accrues. Now, it is pain that in a case of this type the right to sue for the recovery of consideration money would arise when the contract for the sale of the property comes to an end either by reason of impossibility of performance or by reason of refusal perform or because the contract is abandoned because the contract is rescinded by one party for the default of the other.

Therefore the precise question for determination is whether the contract came to an end on the expiry of four months from the date of the agreement namely 4-3-1941, or whether it came to an end later. I am clearly of the view that it did not come to an end on the expiry of four months from 4-3-1941. The reason is that the mentioned in the contract was never made of the (sic) of the contract, it was to be a binding condition. This is obvious from the fact that the contract itself gave to the purchaser the right to claim specific performance of the contract even after the four months period and the vendor could not rescind the contract on the ground that the four'' months If period had expired. On the point as to when the contract came to an end later, I find that at present there is no material before me to enable me to decide the question.

In his plaint the Plaintiff stated that at the time of the institution of the suit, the objections lodged by the Defendants before the competent revenue authority to the sale of the property to the Plaintiff had not been decided and that on 23.07.1948 the Defendants in reply to the Plaintiff''s notice of 14-7-1948 refused to sell the property to Plaintiff or to refund the consideration money to The Plaintiff aliened that the cause of Son for his suit arose on ''23-7-1948.

It, however, appeal''s from the judgment of the learned District judge that before him a statement was made on behalf of the Plaintiff that the Defendant''s objection, were decided on 8-12-1942 and on that day the competent revenue authority refused to sanction the sale of the zamindari property in favour of the Appellant. This order has yet been proved in the case and the trial Court has also not tried and determined questions rising on the Plaintiff''s allegations as regards refusal on 23-7-1948 of the Defendants to perform the contract or to pay the consideration money to the Plaintiff. This much must, however, (sic) said that if the sanction of the sale was re(sic) by the Revenue Authority on 8-12-1942, then I contract came to an end on that date by reason of impossibility of performance and the limitation of the Plaintiff''s suit commenced on 8-13-1942 Thus the Plaintiff''s suit filed on 7-9-1948 (sic) Within six years from 8-12-1942 would be time. But as I have said above, I am up-to decide the question of limitation finally ''Qie material before me. It will be for the Court to apply these principles stated above facts it may find and determine the question(sic).

The view I have taken of the question of (sic)tation in the present case is supported by the (sic) Council decision in - ''Amma Bibee v. Udit (sic) Misra'' 31 All 68 (A). In that case the Defendants against whom a decree for foreclosure was outstanding agreed to sell within one month certain immovable property to the Plaintiff and the Plaintiff paid into Court as part of the consideration ''the amount due by the Defendants under the foreclosure decree. The Defendants, however, failed to sell the property to the Plaintiff. Thereupon the Plaintiff instituted a suit against the Defendants for a refund of the money paid by him, alleging that the Defendants had failed to sell the property within one month. The Allahabad High Court agreeing with the decision of the trial Court held on the evidence that the period of one month fixed by the parties for the completion of the sale was not of the essence of the contract, and that, therefore, the Plaintiff, could not rescind the contract and recover the money he had paid.

Subsequently the Plaintiff filed a suit against the Defendants claiming specific performance of the agreement to sell, or in the alternative for a. refund of the money paid by him as part of the consideration for the sale. The first Court gave to the Plaintiff a decree for specific performance. On appeal the Allahabad High Court took the view that the agreement to sell was unenforceable and the Plaintiff''s alternative claim for a refund on failure of consideration was not barred by time, as limitation of the claim began to run from the date of the High Court''s decree declaring the agreement unenforceable & not from the expiry of cue month from the date of agreement. The matter then went up to the Privy Council, where it was contended on behalf of the Defendants that the Plaintiff''s right to a refund of the money paid was barred, as the cause of action arose on the expiry of the one month''s period fixed by the parties for the completion of the sale. This contention did not find favour with their Lordships of the Privy Council, who in a brief judgment expressed their agreement with the decision of the High Court.

Mr. Shivdayal learned Counsel for the Respondent said that the Privy Council decision was distinguishable. According to him the distinguishing feature was that whereas in that case the vendor and the purchaser both, had the right to sue for specific performance of the contract to sell the property even after the expiry of one month fixed, in the agreement, in the present (Law the purchaser alone had the right to claim specific performance of the contract even after the expiry of four months'' period and further the purchaser here was also given an option to recover the consideration amount from the vendor. I am unable to understand how the circumstances pointed out by the learned Counsel for the Respondent render the Privy Council decision inapplicable here.

The suit we are considering is by the intended purchaser. We are concerned with the purchaser''s rights under the agreement and not with the vendor''s rights. Under the agreement before me, the cause of action for the Plaintiff''s suit for the recovery of the consideration money does not depend on the question whether the vendors got under the agreement a right to sue for specific performance of the contract to sell the property even after the expiry of the four months period. Under the agreement on the expiry of the four months the Plaintiff was no doubt given an option to realise the consideration money or to sue for specific performance of the contract. But it must be remembered that the-option was to regard the contract as existing and. to sue for its specific performance or to end'' the contract by abandoning it and realise the consideration money. The Plaintiff clearly could not have treated the contract as existing and yet sued for the recovery of the consideration money. Likewise he could not have sued for the specific performance of the contract after having ended it by abandoning it. The real question, therefore, deserving attention is not whether the Plaintiff has been given an option to realise the consideration money or to sue for specific performance of the contract on the expiry of four months. But it is, when did the cause of action for the optional right asserted in the suit accrued.

To say that the cause of action accrued on the expiry of four months from the date of the contract is in effect to say that the four months'' time was of the essence of the contract; that the contract came to an end on the expiry of that period & thus to negative the option given by the contract to the Plaintiff of suing for specific performance even after that period. It was no doubt open to the Plaintiff to put an end to the contract by abandoning it immediately after the expiry of the four months period. But the fact remains that he did not do so. There is nothing in the agreement or in any law to prevent the Plaintiff from putting an end to the contract at some later time and bring into existence a cause of action for a claim for the recovery of the consideration amount. As observed by Rankin C.J., in - J.C. Galstaun Vs. Sahebzadi Mamoodi Begum,

the object of the Limitation Act is to make people to bring their'' suit promptly when their cause of action has arisen. It is not to make people bring their cause of action into existence before they want to do so.

Mr. Shivdayal referred me to decisions of the Privy Council in-Isac Brickles v. Snell'' AIR 1910 PC 152 (C) and in-''Steedman v. Drinkle'' 1916 1 AC 275 (O) to support the contention that the four months'' time stated in the agreement was "of the essence of the contract". These decisions do not seem to me to be in point. In those cases it was held that where, in a contract for the sale of property, time is expressly made "of the essence of the contract in all respects", specific performance cannot be decreed in favour of the party in default, and the default, though -trivial, will entitle the other party to stand on the letter of the agreement. These cases are not authorities for the proposition that whenever a time is fixed for completion of sale in a contract for the sale of property, the period so fixed is of the essence of the contract. After all the question whether the stipulation as to time is of the essence of the contract or not depends on the terms of the contract and the intention of the parties. The terms of the contract before me point in unmistakable language to the conclusion that the four months'' time specified therein was not of the essence of the contract.

For the foregoing reasons I set aside the judgment and decree of the learned Civil Judge dismissing the Plaintiff''s suit and direct him to decide the question of limitation in the light of the above observations and dispose of the Plaintiff''s suit according to law. A certificate be issued to the Plaintiff-Appellant for the refund of Court-fees paid in this appeal and in the appeal before the District Judge. Costs of the parties in this Court and in the lower appellate Court shall follow the result of the suit in the trial Court.