Mussamat Basso Kuar v. Lala Dhum Singh
BS649599
PRIVY COUNCIL
Before:-The Earl of Selborne, Lord Hobhouse, Lord Macnaghten, Sir Barnes Peacock and Sir Richard Couch.
0 D/d. 21.6/
07.07.1888
Mussamat Basso Kuar - plaintiffs
Versus
Lala Dhum Singh - Defendants
On Appeal from the High Court at Allahabad.
Solicitors for Appellants :- T.L. Wilson & Co.
Solicitors for Respondent :- Barrow & Rogers.
Limitation - Starting Point - Fresh obligation under Indian Contract Act, 1872 section 65 Failure of Title to retain Money under article 97 of Act XV of 1877.
[Para ]
The Respondent being indebted to the Appellant agreed to convey certain property to him, setting off the debt against part of the price. No. money was paid, and disputes arising as to other terms of the agreement, the Respondent unsuccessfully sued to enforce it; being afterwards sued for his debt he pleaded limitation:-
Held, that the decree dismissing the Respondent's suit was the starting point of limitation. That imposed, under sect. 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.
Appeal from a decree of the High Court (March 12, 1886), reversing a decree of the Subordinate Judge of Saharunpur, which was in favour of the Plaintiff.
The facts are stated in the judgment of their Lordships.
The only question in the suit was whether it was barred by limitation.
The opinion of the Subordinate Judge was as follows:-
"I am of opinion that the amount claimed is of the nature of a debt on account books. The sale-deed which was executed was, in consequence of the fact that it was not executed in accordance with the contract admitted by the two parties, declared to be defective, and the Plaintiff's right of revoking the contract was admitted by the High Court, and the Defendant's claim to have the sale completed and the sale-deed completely executed was dismissed. Hence the disputed amount of debt reverted to its original condition. The Plaintiffs are not right in stating that, according to sects. 64 and 65 of the Contract Act, this part of the consideration of the sale-deed was recoverable by the Plaintiffs. As to the plea of limitation, it may be observed that it is wrong. The Defendant, on the 3rd of August, 1880, instituted a suit for having this amount of debt set off against the consideration of the sale-deed. On the 14th of March, 1884, that claim was dismissed by the high Court on appeal. The Plaintiff's were, under sect. 12 of the Code of Civil Procedure, not competent to seek determination of this debt by means of a separate suit during the pendency of the above-mentioned suit, nor could the Court determine it separately. Therefore, for the period in which the Plaintiff were taking proper steps against the setting off of the amount in question, an allowance should be made to the Plaintiffs in computing the term of the suit, and the benefit of exclusion of time provided ion sect. 15, Act XV. of 1877, should, by reason of bar under sect. 12 (Civil Procedure Code), be given to the Plaintiffs."
The judgment of Petheram, C.J., in appeal, was as follow:-
"The only question which we have to determine is at what time did the debt become due.
"Prior to September, 1879, there had been various transactions between the parties, and these transaction resulted in a debt due by the Defendant to the Plaintiff of Rs. 33,359 3a.6p., that being the identical amount which is claimed in the present suit. In September, 1879, the parties entered into negotiations as to the mode in which this debt should be liquidated. The Defendant apparently was not in a position at that time to pay in money, but he had certain landed property, and negotiations took place for the sale of this property to the Plaintiffs, and the extinguishment of the old debt thereby. These negotiations proceeded so far that the purchase-money was fixed at Rs. 55,000, and it was agreed that the Plaintiff should pay this amount by giving credit to the Defendant to the extent of the debt due by him, and paying the balance in cash. So far the negotiations were completed, except apparently a few minor points. In the end, however, a dispute arose as to what had been settled, as the actual terms of the bargain which were to be reduced into writing. The Defendant brought a suit against the Plaintiff for specific performance of the contract, which he alleged had been settled and executed for the sale to the latter of the property in dispute. That suit was tried by the Subordinate Judge, who decreed the claim. In appeal, the High Court reversed the Subordinate Judge's decree, as it appeared that the parties were never ad idem with reference to the contract set up by then Plaintiff. It is said now that this Court found that the true contract was not the contract set up by the then Plaintiff, but was in fact the contract set up by the then Defendant, who is now Plaintiff. From the judgment of the Court, however, it appears that this is not what was then decided. All that the judgment shews is that the contract set up in that suit was not proved because there was no evidence that the parties had come to any agreement that was to be the contract. That is all that was necessary for the decision of that case. The judgment in effect decided that there had been no contract, and the parties were therefore relegated to their original position. In other words, the negotiations failed, because they resulted in an agreement, and the original debt due by the present Defendant to the present Plaintiff always remained due, and is so still. It is alleged that the contract was completed on the 1st of September, 1879, and that is therefore the latest possible date we can look to in considering when the money came due. The whole amount had in fact become due before that date by reason of prior transactions, but, upon the view most favourable to the Plaintiff, and assuming that an account was stated on that day, giving rise to a new period from which limitation would begin to run, it is impossible to assign the debt to a later date than that. The present suit was brought on the 18th of September, 1884, that is to say, much more than three years from latest possible date upon which the debt can be said to have become due. Under these circumstances the suit is barred by limitation. The Plaintiff's contention is that the contract which he set up was found to have been completed, and under its terms this money having been credited in the present Defendant's books, was to be treated as a payment by the present Plaintiff as a deposit on account of the sale, and the present suit is therefore a suit for money had and received, upon a cause of action which did not arise until the contract had gone off, i.e., when this Court decided that the contract set up by the present Defendant was not, but that set up by the Plaintiff was, binding. I am of opinion that this contention must fail. In the first place, by the terms of the contract itself, which is now set up by the Plaintiff, no deposit was payable, and the price was not be paid till the completion of the contract. Secondly, in the present Plaintiff's letter to the Defendant demanding payment of the money, and dated the 29th of September, 1879, the Plaintiff did not demand the money of the Defendant, or ask him to return it as a deposit, but demanded it simply as the balance of the old demand. Under these circumstances it is impossible to treat the money as anything but the old balance due from the Defendant to the Plaintiff, and as that debt was barred by limitation at the time when this suit was brought, I am of opinion that the Subordinate Judge should have given the Defendant a decree. The appeal must be decreed with costs."
Doyne, for the Appellant, contended that the Respondent on the dismissal of his suit for specific performance of the contract alleged by him became bound to repay the amount of the debt due by him to Barumal, which up to that time he had retained as part of the consideration of the alleged contract: see Act IX of 1872, sect. 65. During the pendency of the suit brought by the Respondent for performance of the alleged contract, Barumal could not have prosecuted a separate suit for the recovery of the debt now claimed. In that suit the Respondent asserted a right to retain that debt. Till the determination of the Respondent's suit, Barumal's cause of action in respect of that debt was suspended. The Appellant was therefore entitled to the exclusion of the time occupied by that suit: see sect. 15, Act XV of 1877. Moreover, the Appellant had a lien on the estate as against the Respondent to the extent of the Respondent's debt, which was regarded as part of the price paid by the Appellant in pursuance of his contract of purchase. Regarded in that light it was sufficient to support a lien: seen Rajah Sahib Perhlad Sein v. Baboo Budhoo Singh, 12 Moore's Ind. Ap. Ca. 275.
[LORD SELBORNE referred to Rose v. Waston, 10 H.L.C. 673.
C.H. Hill, for the Respondent, contended that the decree of the High Court was right.
No payment:- nor anything equivalent thereto-was ever made by Barumal to the Respondent, either by way of deposit on account of the sale, or in respect of the purchase-money of the respondent's villages. Nor, until the present suit was impending, was it pretended by Barumal that the principle sum now claimed was anything other than the debt of Rs. 33,359, due on the 1st of September, 1879. No act has been done, either by Barumal or by the Respondent, which would have the effect of altering the character of that debt, or the right in which it was claimable, or of affording a starting point for the running of the Statue of Limitation with respect to the appellants' claim, which would bring the present suit within the statutable period. If the Appellants allege a completed contract for the sale of the villages, other than that formerly asserted by the Respondent, the same is at variance with the case made in the plaint in the present suit, as well as with the contentions of Barumal in the suit formerly brought by the Respondent. Evidence has not been adduced on the part of the Appellant, to prove the existence or the terms of such other contract, and, as a matter of fact, no such contract existed, while, on the other hand, the High Court refused to allow the existence of the contract, as formerly asserted by the Respondent.
Reference was made to Act XV of 1877, sect. 4, and schedule ii. Article 97, and to Luchmee Buksh Roy v. Runjeet Ram Panday, 13 Beng. L.R. 182.
Doyne replied.
Cases Referred :-
Luchmee Buksh Roy v. Runjeet Ram Panday, 13 Beng. L.R. 182.
Rajah Sahib Perhlad Sein v. Baboo Budhoo Singh, 12 Moore's Ind. Ap. Ca. 275.
Rose v. Waston, 10 H.L.C. 673.
JUDGMENT
The judgment of their Lordships was delivered by
1888 July 7
Lord Hobhouse :- The question in this case is whether a debt which at one time was due from the Respondent to one Barumal, whom the Appellants represent, and which has never been paid, has been extinguished by lapse of time. The High Court, differing from the Subordinate Judge, have decided the point against the Appellants, and have dismissed the suit brought by them for recovery of the debt.
Barumal and Dhum Singh, who were bankers in Saharunpur, had dealings together, and Dhum Singh came to owe Barumal Rs. 33,359. 3a. 6p. It was then agreed between them that Dhum Singh should convey to Barumal or to his wife, Basso Kuar, certain villages for the sum of Rs. 55,000, and that his debt should be set off against the price. On the 1st of September, 1879, he executed and delivered to Barumal a deed by which he acknowledged the receipt of the whole purchase-money, and conveyed the villages to Basso Kuar, and he indorsed on the deed a memorandum showing that the balance only of the price, after allowing for the debt, was paid in cash. No money was actually paid.
On the same day Barumal took away the deed and signed a letter prepared by Dhum Singh, in which he agreed to register the deed and to pay the balance of the price. But very soon afterwards he found, or alleged, that the deed was not in accordance with certain conditions for which be bad stipulated, and, declining to complete the purchase, be demanded what was owing to him. Dhum Singh on his part insisted that the deed was in accordance with the contract, and after an attempt at arbitration had failed, he brought a suit on the 3rd of August, 1880 against Barumal and Basso for specific performance of the contract, praying that the deed might be registered, and that Barumal might be ordered to pay the balance of the Rs. 55,000 with interest after setting off the debt of Rs. 35,359. 3a. 6p.
On the 24th of February, 1881, the Subordinate Judge decided in favour of Dhum Singh's view, and gave him a decree according to his prayer. Barumal appealed to the High Court. After reviewing the evidence their conclusion was that Dhum Singh did not make out to their satisfaction that the sale deed ever became a contract binding on Barumal, and enforceable against him in law. They therefore dismissed his suit. Their decree was made on the 14th of March, 1884.
Upon that event Barumal renewed his demands for the payment of his debt, and not being able to get it, he, in conjunction with his wife Basso, instituted the present suit on the 10th of September, 1884. He is since dead, and his sons have been substituted for him as co-Plaintiffs with the widow. In his plaint he states the deed of the 1st of September, 1879, and alleges that, in the preparation of the deed, Dhum Singh took steps contrary to the engagement, that so disputes arose, that Dhum Singh unjustly brought a claim for enforcement of the contract, but that the claim was dismissed by the High Court, who held the contract to be invalid. He then claims that the amount for which Dhum Singh had given credit to him in the sale-deed ought to be refunded, and claims interest upon it.
Dhum Singh's defence is that Barumal always denied the existence of a contract; that the High Court held there was no contract; that the character of the debt never was altered; and that there was nothing to save it from being barred by limitation.
The High Court hold that this defence is sound in law, and their decree dismisses the suit as being barred by limitation. They do not state under which article of Act XV. of 1877 the case falls; but they consider Barumal's claim to be for nothing but the old balance due from Dhum Singh. Probably they would hold it to fall, as was argued at their Lordships' bar, under Article 64 (in the second schedule); therefore, as none of the statutory provisions by which the time for suing is enlarged can be applied to this case, except that which relates to acknowledgment, and as no written acknowledgment can be found later than the plaint filed by Dhum Singh in the specific performance suit, Barumals right to sue would be barred at latest long before he sued.
Their Lordships find themselves unable to agree with the High Court as to the nature of the claim. They think that it is substantially put upon the right ground in the plaint. It must be remembered that it has throughout been common ground to both disputants, that there was a contract made between them, and that among its terms were the sale of the villages for Rs. 55,000, the retention by Dhum Singh of his debt of Rs. 33,359. 3a. 6p. as part payment, and the payment by Barumal of the balance. Their quarrel was about other matters. Dhum Singh alleged that the terms just mentioned were all the terms of the contract, and he claimed its completion on that footing. Barumal alleged that there were other terms, accused Dhum Singh of dishonesty, and after a time claimed the right of receding from the bargain altogether. But the Subordinate Judge took the view of Dhum Singh, and decreed completion of the contract according to that view. Up to the date of the Subordinate Judge's decree in 1881, Dhum Singh retained the amount of his debt as of right, and in accordance with the contract alleged by him. After the decree of 1881 he still retained it as of right, and with a title which could not be disputed in any Court of Justice, except by the one mode of appeal from the decree of 1881. Barumal might have sued for his debt, but the utmost benefit that could have come to him from such a suit would have been to have it suspended or retained in Court till after the decision of the appeal in the specific performance suit. Dhum Singh's defence would have been that the debt was paid by virtue of the contract, and that defence must have prevailed if the suit were heard while the decree of 1881 still stood unreversed. It would be an inconvenient state of the law if it were found necessary for a man to institute a perfectly vain litigation under peril of losing his property if he does not. And it would be a lamentable state of the law if it were found that a debtor, who for years has been insisting that his creditor shall take payment in a particular mode, can, when it is decided that he cannot enforce that mode, turn round and say that the lapse of time has relieved him from paying at all.
In their Lordships' view the decree of the High Court in 1884 brought about a new state of things, and imposed a new obligation on Dhum Singh. He was now no longer in the position of being able to allege that his debt to Barumal had been wiped out by the contract, and that instead thereof Barumal was entitled to the villages. He became bound to pay that which he had retained in payment for his land. And the matter may be viewed in either of two ways, according to the terms of the Contract Act, IX. of 1870, or according to the terms of the Limitation Act, XV. of 1877.
By the 65th section of the Contract Act, "when an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it." In this case there most certainly was an agreement, which, as written, was in the terms alleged by Dhum Singh. But it was held not to be enforceable by him because there were other unwritten terms which he would not admit; and the other party did not seek to enforce the agreement according to his version of it, but threw it up altogether. The agreement became wholly ineffectual, and was discovered to be so when the High Court decreed it to be so. The advantage received by Dhum Singh under it was the retention of his debt. Therefore by the terms of the statute he became bound to pay his debt on the 14th of March, 1884.
Trying the case by the terms of the Limitation Act, their Lordships think that it falls within Article 97. An action for money paid upon an existing consideration which afterwards fails, is not barred till three years after date of the failure. A debt retained in part payment of the purchase-money is in effect, and as between vendor and purchaser, a payment of that part; and if that were doubtful on the first retention while there was yet undecided dispute, it could no longer be doubtful when a decree of a Court of Justice authorised the retention, and in effect substituted the land for the debt. Dhum Singh retained the money, and Barumal lost the use of it, in consideration of the villages which formed the subject of the sale-deed. That consideration failed when the decree of 1884 was made, and it failed none the less because the failure was owing to Barumal's own reluctance to take it under the conditions insisted on by Dhum, Singh.
The result is that in their Lordships' opinion the High Court ought to have sustained the Subordinate Judge's decree, and to have dismissed the appeal with costs, and they will now humbly advise Her Majesty to reverse the decree of the High Court, and to make an order to that effect. The Respondent must pay the costs of the appeal.
.