Citation Codes

Equivalent Citations

citation codes

Case Number

S.B Civil Regular First Appeal No. 53 of 1956

Attorney(S)

S.S Deedwania, for Appellant

Judges

Mr. Indernath Modi

Acts

Article 62 of the Limitation Act, but Article 97,
Article 621 of the Indian Limitation Act.
Article 97 of the Indian Limitation Act,

See more information ...

Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

This is a civil regular first appeal brought by the defendant, Nathulal, against the judgment of the Sub Judge First Class, Beawar, dated 25 August 1954, in a suit for money among other reliefs. The principal contention on appeal was that the plaintiff's suit was barred by limitation: the defendant-appellant argued that the trial court erred in applying Article 97 of the Indian Limitation Act and that Article 62 should have been applied instead. The trial court's findings (summarised by the appellate judge) included that the plaintiffs had been given possession of the suit house under a defective document, were later deprived of that possession, and that an outstanding debt had been sought to be repaid partly by that (defective) sale.

Legal Issues Presented

Whether the plaintiff's suit for money was barred by limitation.
Whether Article 97 of the Indian Limitation Act or Article 62 of the Indian Limitation Act is the correct provision to govern the limitation period in the circumstances of this case (i.e., where money was paid and a consideration later failed, and where the underlying contract/document was defective or void).
If Article 97 applies, whether the limitation period begins to run from the date of payment or from the date when the consideration failed (specifically, when the plaintiffs were deprived of possession).

Arguments of the Parties

Appellant's Arguments (Defendant Nathulal)

The trial court erred in applying Article 97 of the Indian Limitation Act; instead Article 62 should apply.
Where the contract is void, limitation should start from the date the money was paid (i.e., Article 62 applies), not from the date of subsequent failure of consideration.
There is a divergence of judicial opinion on the correct starting point of limitation in such cases; several authorities were referred to by the defendant's counsel in support of this view (though the appellate judge did not detail or specifically deal with those cited authorities).

The opinion does not contain a detailed, point-by-point summary of the respondent's (plaintiff's) separate oral or written submissions beyond the trial court findings and the court's acceptance that the suit fell within Article 97.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Bassu Kuar v. Dhumsingh, ILR 11 All 47 (PC)	Supports the proposition that payment by adjustment of an earlier debt falls within the phrase "for money paid."	The court relied on this authority to hold that treating an outstanding sum as part consideration for the sale was equivalent to "money paid" under Article 97.
Hanmant Narsinha v. Govind Pandurang, 8 Bom LR 283	Also cited for the proposition that adjustment of debt counts as "money paid."	Used alongside Bassu Kuar to support the conclusion that the adjusted outstanding sum constituted "money paid" within Article 97.
Narsing Shiv Bakas v. Pachu Ram Bakas, ILR 37 Bom 538	Authority for holding that money paid even under a void agreement is payment for "existing consideration."	The court applied this authority to conclude that payment made under a defective/void sale could nonetheless be regarded as made upon "existing consideration."
Dharamchand v. Gorelal Mukandlal, AIR 1918 Nag 264	Cited in support of the view that Article 97 applies where the consideration fails and the limitation should start from the date of failure.	The court referred to this case (among others listed) as supporting its view that Article 97 governs and the running of limitation begins on failure of consideration.
Bapu Shivaji v. Kashiram Hanmantrao, AIR 1929 Bom 861	Listed as supporting authority for applying Article 97 where consideration fails.	The court cited it as part of a group of decisions reinforcing the conclusion that Article 97 is applicable and the limitation period runs from failure.
Kashirao v. Zabu, AIR 1932 Nag 5 (FB)	Listed as an authority supportive of the view that Article 97 governs in such situations.	Included among decisions relied upon to buttress the application of Article 97 and its commencement upon failure of consideration.
Bhagwati Prasad v. Badri Prasad, AIR 1936 Oudh 141	Referenced as supporting the applicability of Article 97 when consideration fails.	Used as one of several precedents to support the court's conclusion on limitation starting point.
Dhani Sahu v. Bishun Prasad Singh, AIR 1942 Pat 247	Referenced in support of the view favouring Article 97's application.	Cited to reinforce the court's position that the limitation period should run from failure of consideration.
Punjab Government v. Baij Nath, AIR 1945 Lah 164	Included among authorities supporting the court's approach to Article 97 and commencement of limitation.	Relied on as additional precedent consistent with the court's conclusion that Article 97 applied.
A. M. A. Murugappa Chettiar v. Arunachala Goundan, AIR 1949 Mad 638	Listed as supporting authority for the court's view on Article 97 and date of commencement of limitation.	Referenced with other cases to show precedent in favour of treating limitation as starting on failure of consideration under Article 97.

Court's Reasoning and Analysis

The court began by identifying the central contested point: whether the plaintiff's suit was barred by limitation and whether Article 97 or Article 62 of the Indian Limitation Act should apply.

The court set out the text and three essential "ingredients" required to attract Article 97:

The suit must be for money which has been paid by the plaintiff to the defendant.
Such money must have been paid upon a consideration which was in existence at the time of payment.
The consideration must have afterwards failed.

The court applied each ingredient to the facts as follows:

On "money paid": the court held that payment by adjustment of an earlier debt counts as "money paid." It relied on authorities (Bassu Kuar and Hanmant Narsinha) and on the parties' own arrangement whereby an outstanding sum (Rs. 6,662/13/-) was treated as part consideration for sale of the suit house.
On "existing consideration": the court accepted precedent (Narsing Shiv Bakas) that money paid even under a void agreement can be regarded as paid on "existing consideration," particularly where possession has been given under the contract. The court noted that, by the defendants' own showing, the plaintiffs had been given possession of the suit house (even if the defendants advanced a different story that the possession was connected to a separate loan, which the trial court did not accept).
On failure of consideration: the court concluded that the consideration had failed when the plaintiffs were deprived of possession of the suit house. The facts showed that possession had been delivered under the defective transfer and later taken back by the defendants; the plaint alleged deprivation of possession about four months prior to suit, and the defendants admitted being in possession at date of suit. Therefore the court found the consideration had fallen through.

Having concluded that all three ingredients of Article 97 were satisfied, the court held that the limitation period should start from the date of failure of the consideration (not from the date of payment) and that the plaintiffs' action, brought within three years of that failure, was within time.

The court addressed the defendant's argument in favour of Article 62 and the notion that where the contract is void the money received by the seller is held for the use of the purchaser. The court rejected this distinction between void and voidable contracts for present purposes, reasoning that where the purchaser is given possession he is in effective enjoyment and the seller received the money for his own account and use. Consequently, the court found Article 62 inappropriate and Article 97 the proper provision.

Finally, the court invoked a general principle of construction in the law of limitation: where two provisions may cover a cause of action and neither is specifically more applicable, the court should prefer the provision that keeps the right of suit alive rather than one that destroys it. From this perspective too, Article 97 was preferred.

Holding and Implications

Holding: The appeal is dismissed; the plaintiffs' suit is within limitation under Article 97 of the Indian Limitation Act.

Implications:

Direct effect on the parties: The defendant-appellant's appeal fails and is dismissed with costs awarded to the plaintiffs-respondents.
On wider law: The court applied established authorities and explained its reasons for preferring Article 97 over Article 62 in the circumstances of the case. The opinion does not announce or claim to create a new precedent beyond applying and aligning with cited authorities and the stated principle of interpreting limitation provisions so as to preserve rights of action.

Show full summary ...

Nathulal v. Sulal

1. This is a civil regular first appeal by the defendant Nathulal against the judgment of the Sub Judge First Class, Beawar, dated the 25th of August, 1954 in a suit for money among other reliefs.

2-4. (His Lordship after stating the facts of the case and summarising the findings of the lower court stated as follows:) The only question, which has been seriously argued before me in this appeal, is that the plaintiff's suit was barred by limitation, and it was contended in this connection that the trial court had fallen into error In applying Article 97 of the Indian Limitation Act, while the correct Article, according to the submission of the learned counsel for the defendant-appellant, was Article 62.

5. Having heard learned counsel at some length, I have no hesitation in coming to the conclusion that the plea of limitation has no force. Article 97 reads as follows:

Description of suit Period of Limitation Time from which period begins to run.

For money paid under an existing consideration which afterwards fails.

3 years The date of the failure.

Now in order to attract the application of this Article, the following ingredients must be established. In the first place the suit must be for money, which has been paid by the plaintiff to the defendant. In the second place, such money must have been paid upon a consideration which was in existence at the time of the payment. In the third place, this consideration should have afterwards failed. If all these ingredients are established, then, in my considered opinion, the application of this Article cannot be resisted and the starting point for limitation should be not the date when the money was paid but when the consideration should have failed.

6. Now let us see whether these ingredients are fulfilled in this case. As to the first ingredient, I should like to point out that payment by adjustment of an earlier debt due by the defendant to the plaintiff would fall within the meaning of the phrase "for money paid", for such an adjustment would be as good as payment of money by the plaintiff to the defendant. See in this connection Bassu Kuar v. Dhumsingh, ILR 11 All 47 (PC) and Hanmant Narsinha v. Govind Pandurang, 8 Bom LR 283. In this view of the matter, I am definitely of opinion that the arrangement agreed to between the parties that the outstanding sum of Rs. 6662/13/ was to be considered as part consideration for the sale of the suit house would be money paid within the meaning of Article 97.

The next element, which requires to be fulfilled, is that such money must have been paid on an existing consideration. There is authority for holding that money paid even under a void agreement is paid for "existing consideration". Thus where A pays money to B and in repayment thereof B sells property to A, and the transfer happens to be void for one reason or another, but A has been given possession of the property by B in pursuance of the contract of sale, the position is that there was "existing consideration" within the meaning of this phrase. See Narsing Shiv Bakas v. Pachu Ram Bakas, ILR 37 Bom 538. I am, therefore, clearly of opinion that the present case amply fulfils this qualification also inasmuch as, on the defendants' own showing, the plaintiffs had been given possession of the suit house by them, although the case of the latter was slightly different, inasmuch as, according to them, the plaintiffs had been given possession thereof in connection with another loan of Rs. 1500/- which had been agreed to be re-paid by recovery of rent from the suit house for a period of 5 years which story has not been believed by the trial court and in my opinion, perfectly rightly.

Then there remains to be seen whether it can be predicated of the present case that the consideration for which the money had been paid had afterwards failed. I have no hesitation in holding in the circumstances of the present case that it has failed. There was an outstanding debt. This debt was sought to be repaid partly by sale of the defendants' house to the plaintiffs by a document which in the eye of law was not effective to pass title, but possession nevertheless had been delivered under it to the plaintiffs. The plaintiffs then were deprived of the possession of this house. The conclusion in these circumstances is inescapable that the consideration for which the money had been paid eventually fell through. Thus it will be seen that all the three requirements of Article 97 are amply fulfilled in the present case, and, that being so, the limitation for the plaintiffs' suit would rightly start from the date of the failure of the consideration and not from the date of the payment of the money.

In these circumstances, I am definitely of opinion that the plaintiffs' suit falls squarely within the four walls of Article 97 of the Indian Limitation Act and this suit would be within time having been brought within three years of the date of failure of the consideration. As already pointed out, the consideration in this case could be said to have failed only when the plaintiffs were deprived of the possession of the property which had been made over to them. There is a clear allegation in the plaint that the plaintiffs were deprived of their possession of the suit property about 4 months previous to the institution of the suit. The defendants in their written statement have clearly admitted that they were in possession of the suit property at the date of the suit and they have not dared to say clearly when they got the possession back but it does appear from the general tenor of the written statement that they must have got it back sometime after five years of the execution of the writing Ex. P. 48 i. e., in 1945. The present suit was brought on 3rd April, 1945. In these circumstances, I am definitely of the opinion that the plea of limitation has no force and must be overruled. In support of the view, which I have felt persuaded to adopt, reference may be made to the following: Dharamchand v. Gorelal Mukandlal, AIR 1918 Nag 264; Bapu Shivaji v. Kashiram Hanmantrao, AIR 1929 Bom 861; Kashirao v. Zabu, AIR 1932 Nag 5 (FB); Bhagwati Prasad v. Badri Prasad, AIR 1936 Oudh 141; Dhani Sahu v. Bishun Prasad Singh, AIR 1942 Pat 247; Punjab Government v. Baij Nath, AIR 1945 Lah 164 and A. M. A. Murugappa Chettiar v. Arunachala Goundan, AIR 1949 Mad 638.

7. Learned counsel for the defendant, however, submits that there is a divergence of judicial opinion on the point as to the starting point of limitation in such cases, and, according to his submission, the limitation where the contract happens to be a void one, as in the present case, should really start from the date when the money is paid and not later, and he referred me in support of this submission to a few cases, but I consider it unnecessary to cite or deal with them in detail. The reason is this. It clearly seems to me that there can be hardly any occasion for the plaintiff in a case like the present to file his suit for money so long as he is in possession of the property which has been sold to him, though the mode of sale is altogether defective; and, in fact, if he brought such a suit, he would in all probability fail on the ground that he cannot approbate and reprobate, and that he can have no grievance so long as he remains in undisturbed possession of his property and his right to bring a suit in a case like the present can properly and legitimately arise Only if and when he stands deprived of possession of such property and not before.

8. In this view of the matter, I am clearly of opinion that the view, which I have felt persuaded to accept, is the better view.

9. It only remains for me to add that Article 62 cannot be appropriately applied to this class of cases. The argument in favour of the applicability of Article 62 in the case of void contracts appears to be based on the consideration that in case of such contracts neither the purchaser becomes the owner of the property nor the seller becomes the owner of the money, and that the money, which is received by the seller, therefore, should be held to have been received by him for the use of the purchaser. This distinction, however, between a void and voidable contract seems to me, with all respect, of doubtful validity, for, at the time of the contract (which turns out to be void later on) when the purchaser pays the price and the seller hands over the property to the purchaser, the purchaser is fully entitled to the use of the property, even though he has no title in it, while the seller receives the money on his own account, and, for his own use, and not for the use of the purchaser who happens to be in actual enjoyment of the property sold.

Where, therefore, even in cases of void contracts, actual possession of the property sold is handed over by the seller to the purchaser, it cannot be rightly postulated that the purchaser is not in effective enjoyment of the property sold, or, that the money, which the seller has had from the purchaser in respect thereof, is held by him not on his own account but for the use of the plaintiff within the meaning of Article 621 of the Indian Limitation Act. In this view of the correct legal position, I am inclined to think that the appropriate Article to apply is, not Article 62 of the Limitation Act, but Article 97, end, if this is the correct conclusion to come to in the circumstances of this case, as I think it is, the present suit is clearly within limitation, and I hold accordingly.

10. Lastly, I should like to invite attention to: that well-settled principle of the Law of Limitation that where two articles of such law may be wide enough to cover a given right of suit and it can be postulated of neither of them that the one applies more specifically than the other, then the Court should lean in favour of the application of the provision which would keep the right of suit alive in preference to that which would destroy it. Judging from this angle also, I feel strongly persuaded to think that the appropriate article, which should be applied in this case, is Article 97 and not 62, and 1 hold accordingly.

11. For the reasons mentioned above, this appeal fails and is hereby dismissed with costs to the plaintiffs-respondents.

Nathulal v. Sulal

Structured Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments (Defendant Nathulal)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Nathulal v. Sulal

Comments

We use cookies to improve your experience