ASMY TRADING COMPANY Versus SHAHDARA PIONEER CO-OPERATIVE MULTI-PURPOSE MILL SOCIETY LTD.

This is a suit for recovery of the balance of a sum of money deposited by the plaintiff as security for fulfilment of a contract relating to the export of rice.

2. The plaintiff firm entered into an agreement dated 25‑5‑1962, with the defendant, a Co‑operative Society, for export of 5000 tons of rice, out of a quantity of 17000 tons allocated by the Government of Pakistan to the defendant under an agreement dated 8‑5‑1962. The dispute in suit relates to the refund of Rs. 18,500 being the balance of the security deposit of Rs. 50,000 which the plaintiff had deposited with the defendant under the agreement. Under clause 5 of the agreement it was stipulated that the said amount shall be refunded to the plaintiff after completion of the agreement, otherwise it was to be forfeited in proportion to the default in shipment. There was some delay on the part of the plaintiff in shipment and only 4960 tons of rice were shipped, as a result of which the Government of Pakistan cancelled its contract with the defendant and forfeited the defendant's security deposit of Rs. 7 lacs. The defendant in turn blamed the plaintiff for the delay in the shipment and forfeited the deposit of Rs. 50,000 and also claimed proportionate damages. The plaintiff disputed the defendant's claim and repeatedly demanded refund of its deposit of Rs. 50,000 and some correspondence was exchanged between the parties. Ultimately, by letter dated 19‑5‑1964 (Exh. 9), the defendant sent a cheque to the plaintiff for Rs. 30,500 towards refund of the security deposit (to quote) "after withholding a sum of Rs. 18,500 pending the decision of the High Court Karachi in respect of the award of the sole arbitrator in favour of the society filed for the recovery of Rs. 50,750 withheld by the Ministry of Food". The letter further stated that the sum of Rs. 1,000 had been deducted from the security deposit as margin money for the unshipped quantity of 40 tons of rice under the agreement.

3. The defendant having failed to pay the sum of Rs. 18,500 despite several reminders, the plaintiff filed a suit on 22‑4‑1967 in the Court of the Ist Civil Judge, Karachi being Suit No. 936/67 for the recovery of the said sum claiming interest at 6 %. Thereupon the defendant moved an application on 24‑1‑1968 under Order, VII, rule 11 (d), C. P. C. for rejection of the plaint on the ground that the required notice under section 70 of the Sind Co‑operative Societies Act, 1925 was not served on the Registrar of Co‑operative Societies.

This objection succeeded and the plaint was rejected by the learned Civil Judge on 31‑8‑1968. Thereafter the plaintiff gave the required statutory notice to the Registrar on 8‑10‑1968 and, after expiry of two months, filed the present suit in this Court on 19‑12‑1968 claiming the sum of Rs. 18,5(;0 and interest at 10 %, amounting to Rs. 25,900. In the plaint the plaintiff pleaded that the cause of action for the suit arose on 19‑5‑1964 when part payment of the security deposit was made, and again on 7‑12‑1968 when the notice under section 70 addressed to the Registrar of the Cooperative Societies expired. In the alternative, the plaintiff pleaded that the period spent in prosecuting the Suit No. 936/67 be excluded in computing the period of limitation. That further in the alternative, the plaintiff pleaded that the cause of action arose sometime in the year 1967 when the decision of the High Court on the award was given. Accordingly, it pleaded that the suit was within time.

4. The defendant submitted a written statement raising a preliminary objection that the suit was barred by limitation and denied _ that the plaintiff was entitled to exclude the period spent in prosecuting the suit in the lower Court in computing the period of limitation. It also denied that the cause of action arose to the plaintiff on 19‑5‑1964, but assuming without conceding that it arose on 19‑5‑1964, even then, the plaintiff's suit was barred by time ; that no cause of action arose to the plaintiff on 7‑12‑1968 as alleged nor when the decision of the High Court was pronounced on the award, which matter it pleaded was decided in June 1965. The refund of the amount of Rs. 30,500 was admitted, but denied that the defendant promised to pay the balance after the decision of the High Court in the award matter. which is submitted, had no bearing on the plaintiff's suit. The plaintiff's claim for interest was also denied. Accordingly, it prayed that the suit be dismissed.

5. On these pleadings the following issues were accepted by the Court but, when the case came up for trial before me, counsel agreed to drop issues Nos. 2 and 3 :

(1) Whether the plaintiff's suit is liable to be dismissed being time barred ?

(2) When was the Award matter between the defendant and the Ministry of Food decided by the High Court ? What bearing, if any, has the said matter on the present suit ?

(3) Whether the plaintiffs gave notice under section 70 of the Cooperative Societies Act ?

(4) Whether or not the plaintiffs are entitled to exclude the period spent in the proceedings in Suit No. 936 of 1967 while computing the period of limitation ?

(5) Whether the plaintiffs are entitled to claim interest, and if so, at what rate ?

(6) To what relief, if any, are the plaintiffs entitled ?

6. The plaintiff's partner, Mohammad Yousuf Khan, alone was examined on behalf of the plaintiff firm. The defendant led no oral evidence. Having considered the evidence and the submissions of the counsel for the parties, my findings on the issues are as follows

7. Issues Nos. I & 4.‑These issues may conveniently be considered together as they raise a connected question whether the plaintiff's suit is barred by limitation. In support of the plea of limitation Mr. Ahmed Saeed Kureshi, learned counsel for the defendant, relied on Article 113 and, in the alternative, Article 62 of the First Schedule to the Limitation Act, 1908. Article 113 prescribes the period for a suit for specific performance of a contract. In my opinion, Article 113 cannot apply because the suit is not for specific performance of the contract claiming any specific relief of the kind mentioned in section 5 of the Specific Relief Act, 18.'7. On the contrary, the plaintiff is suing for a simple money decree in the sum of Rs. 25,900. Article 62 also, in my opinion, does not apply. That Article prescribes a period of three years for a suit to recover money "payable by the defendant to the plaintiff for money received by the defendant for the plaintiff's use", and the time from which the period begins to run is when the money is "received". As rightly pointed out by Mr. Mohsin Tayabally, learned counsel for the plaintiff, this Article applies only when at the time the money is received by the defendant, it becomes forthwith payable to the plaintiff and does not apply to a case in which the money originally received by the defendant on his own account becomes, by subsequent events, money received for the plaintiff's use. It is not disputed that at the time when the plaintiff deposited the money with the defendant under the Agreement, it was not received by the defendant for the plaintiff's use but it was received by the defendant on his own account. Mr. Mohsin Tayabally referred to the following cases which have laid down this interpretation of Article 62 : Gulab Rai and another v. Tulsi Ram (A I R 1929 All. 437), District Board of Ramnad v. D. K. Mahomed Ibrahim Sahib and another (A I R 1933 Mad. 524). Reference may also be made to Madhavdas Parmanand v. Jan Mahomed Ghulam Hyder (A I R 1942 Sind 37), a decision of the former Sind Chief Court. in Ahich Weston, J. observed "As held in a Bombay case, Abasbhal v. Bhimji (33 Bom. L R 1563) a test for . the applicability of Article 62 is whether, when the money was paid, it was recoverable immediately by the plaintiff .. " There are observations, however, to the contrary in some reported cases and one of them was cited by Mr. Ahmed Saeed, learned counsel of the defendant, Johuri Mahtcn v. Thakoor Nath Lukee (1 L R 5 Cal. 830) to which reference was made in Labh Singh v. Court of Wards Estate of S. Buta Singh through Manager and another (A I R 1945 Lah. 210). In the Calcutta case cited by Mr. Ahmed Saeed, the plaintiff bad deposited Rs. 395 with the defendant pending negotiations for the renewal of a lease upon the understanding that if the lease was renewed the sum should remain in the hands of the defendant as part of the security to be given by the plaintiff for the due performance by him of the conditions of the new lease, otherwise the sum was to be returned to the plaintiff. The negotiations failed and no new lease was granted to the plaintiff who instituted the suit to recover the deposit more than 3 years after the date of the deposit and also more than 3 years after the time when the negotiations for the new lease terminated. It was observed that although the money was originally received by the defendant for his own use, it only became money received by him for the plaintiff's use when negotiations fell through and that limitation under Article 62 would only begin to run from that date. However, the application of Article 115 was also considered, it being treated by the lower Courts as a suit for compensation for breach of a contract not in writing registered and since the period of limitation fixed by both the Articles were the same, the question as to which Article was most applicable became of no practical importance. In the Lahore case, Beckett, J. observed that the prevalent view to the contrary had the effect of putting a somewhat artificial construction upon the word "received" and observed that "it is quite possible that the view that Art. 62 applies with effect from the date when the nature of the money in the defendant's hands changes is the correct view." The difficulty would seem to arise because of importing into Art. 62 the concept of the English common law action for "money had and received", which is based on a contract implied by fiction of law. It would seem that Article 62 is much wider in terms and ought not to be restricted by considerations of the English law, but ought to be construed according to the language used in that Article.

In my view, the appropriate Article which is applicable in the present case, is Article 115. That Article prescribes a period of 3 years for a suit "for compensation for the breach of any contract, express or implied, not writing registered and not herein specially provided for", and the period is t run from the time when the contract is broken. The money was deposited wit the defendant as security under the Agreement and it was stipulated there' that it would be refundable to the plaintiff after completion of the Agreement. The plaintiff's case is that upon completion of the agreement, the plaintiff demanded return of the security deposit of Rs. 50,000 but the defendant in breach of the agreement refunded only a sum of Rs. 30,500 and withheld the balance pending decision by the High Court on the award. But the plaintiff made it quite clear by its letter dated 13‑5‑1964 (Exh. 7) that it accepted the part payment without prejudice to its right "to the refund of the full sum of Rs. 50,000". Clearly, therefore, the plaintiff's suit is for the breach of the contract. In fact, Mr. Mohsin Tayabally, contended that on 19‑5‑649 when the part payment was offered by the defendant and accepted by the plaintiff, a new arrangement or agreement came into existence under which the plaintiff agreed to forbear to sue the defendant and to grant him time. Therefore, on the plaintiff's own admission, the suit is based on a breach of the agreement, whether it be the original agreement or the new agreement.

The term "compensation" used in Article 115 is not necessarily restricted to a claim in unliquidated damages but includes also a claim for a sum certain. D The point was finally decided in the year 1916 by the Privy Council in Tricomdas Cooverji Bhoja v. Sri Gopinath Jiu Thakur (AIR1916PC182) and has since been accepted without question by the various High Courts. The plaintiff has also claimed interest and, there can he no doubt, that interest in the circumstances, is a claim for compensation for delay in payment of plaintiff's money. In this view of the matter, the limitation would run from 9‑10‑1962 when the last shipment was effected, less 40 tons. However, in view of the part payment of Rs. 30,500 made on 19‑5‑1964, the plaintiff is entitled to a fresh period of limitation under section 20 of the Limitation Act. It is doubtful whether the letter (Exh. 9) dated 19‑5‑1964 amounts to an unequivocal acknowledgment of liability under section 19 of the Limitation Act. I would rather interpret it as an acknowledgment of liability only to the extent of Rs. 30,500 (which sum was paid), while as to the balance, the expression, "pending the decision of the High Court" would seem to be ambiguous. It may be construed as a promise to pay only if the award ‑6f the sole arbitrator in favour of the defendant, is upheld by the High Court. That would make it a conditional acknowledgment, and therefore not the acknowledgment contemplated under section 19 of the Limitation Act, I would, therefore, prefer to hold that this was a case of part payment under section 20 of the Limitation Act‑although the question is of no practical importance, as the period of limitation is the same under both the Articles. So a fresh period of limitation of three years commenced on 19‑5‑1964. In this view of the matter, time expired on 18‑5‑1967,

Therefore, the suit fled in the lower Court on 22‑4‑67 was in time. But it was dismissed on 31‑8‑68 as the plaintiff had failed to give the statutory notice under section 70 of the Sind Co‑operative Societies Act, 1925, and the submission of Mr. Mohsin Tayabally is that the plaintiff is entitled to exclude the period from 22‑4‑1967 to 31‑8‑1968, namely, one year four months and nine days in computing the period of Limitation under sec tion 14(1) of the Limitation Act. It was contended by Mr. Mohsin Tayabally that the dismissal of the suit in the lower Court was only on account of ,failure to give the statutory notice to the Registrar, and that this was a "cause of a like nature" as defect in jurisdiction, for which the Court was "unable to entertain" the suit, within the meaning of section 14(1), Limitation Act. I find no force in this submission. In the first place, the plaintiff's failure to give notice is not a cause of defect of jurisdiction in the Court because the Court has jurisdiction to dismiss a suit for want of notice. In the second place, the phrase "cause of a like nature" has been construed by Anwarul Haq, J. (as he then was) in Kilachand Devechand & Co. (Private) Ltd. v. Messrs Sh. Mian Mohammad Allahbux (P L D 1962 Kar. 510) as meaning any cause unconnected with want of diligence or good faith on the part of the plaintiff. I am not satisfied that the plaintiff was prosecuting the suit in the lower Court with due diligence and in good faith as defined in section 2(7) of the said Act, viz., with due care and attention. That notice to the Registrar was required in this case, was an elementary point and the omission to give such notice is a clear case of lack of diligence. Moreover, ‑the plaintiff did not promptly act when his attention was drawn to the procedural defect in the suit. No explanation has been given by the plaintiff for his delay. Therefore, in my view, the plaintiff is not entitled to the benefit of the exclusion of time. The suit became barred on 18‑5‑19671 and the notice to the Registrar which was given more than a year later on 8‑10‑1968 after the suit had become hopelessly time‑barred, can be of no avail.

Mr. Mohsin Tayabally next contended that exchange of letters between the parties ending with the defendant's letter (Exh. 9) dated 19‑5‑1964, showed that a new agreement was concluded between them, under which the plaintiff agreed to forbear to sue under the decision of the award .matter by the High Court. That decision was made by the High Court in June 1965, as admitted in paragraph 2 of the defendant's written statement. Therefore, it was contended that the period of limitation for the suit expired in June 1968. But there is no positive proof that the defendant requested the plaintiff to forbear from suing and that the plaintiff abstained on that account. However, conceding that a new agreement was concluded, even then, there is a delay of 189 days, as the present suit was filed on 9‑12‑1968 and even if the 60 days' notice period is allowed to the plaintiff under sec tion 15 (3) of the Limitation Act, the suit is not saved unless the period spent on prosecuting the suit in the lower Court can be excluded under section 14(1) of the Limitation Act, which I have held does not apply.

Finally, Mr. Mohsin Tayabally contended that Article 120 governed the case, which prescribes a period of six years for a suit for which no period of Limitation is provided elsewhere in the Schedule. But as I have held that a specific Article 115 applies, the residuary general article can have no :application in the circumstances. The submission, therefore, cannot be accepted.

8. Issue .No. S.‑The plaintiff has made out no case for the grant of interest. There is no agreement to pay interest. Aside from the fact that the plaintiff claimed interest at 6 % in the lower Court as against 10 % in the present suit, the plaintiff is not entitled to interest by way of damages for delay in payment of its dues under illustration (n) of section 73 of the Contract Act, 1872. This issue is decided against the plaintiff.

9. In the result, the technical objection of limitation succeeds. The suit is accordingly dismissed. The parties will bear their own costs.

S. A. H. Suit dismissed.