Norman Macleod, Kt., C.J.@mdashOn the 1st February 1911, the plaintiffs bought for a sum of Rs. 5,000 two lands under a registered sale-
deed passed to them by one Amolak as manager of a joint family. The plaintiffs were put in possession. One of the lands, Survey No. 192, was
leased to one Bhavani under a rent-note. When the period of the rent-note had expired Bhavani refused to vacate and the plaintiffs had to sue for
possession. In a possessory suit they got a decree for possession and filed Darkhast No. 440 of 1912 for possession. Bhavani retaliated by filing
Suit No. 31 of 1913 claiming the property as his own and got a decree in September 1919, and thereafter he remained in possession of Survey
No. 192 as owner. An appeal was filed by the plaintiffs against the decree in Suit No. 31 of 1913 in the District Court which confirmed the decree
of the lower Court on the 15th March 1915. The plaintiffs then filed a Second Appeal to the High Court, and that appeal was dismissed on the
28th November 1916.
2. The plaintiffs in this suit seek to recover from the brother and two sons of Amolak the amount they paid on the sale-deed on the 1st February
1911, together with the amount spent by them in improving the land by building a well, with interest and damages and costs incurred by the
plaintiffs in conducting Suit No. 31 of 1913 making a total of Rs. 7,525.
3. All the issues have been found in favour of the plaintiffs, but the plaintiffs'' suit has been dismissed as barred by limitation. Two questions arise:
(1) what Article of the Indian Limitation Act is applicable; and (2) when did time begin to run. The defendants say that Article 97 applies and time
began to run from the date of the failure of consideration, that is to say, when a decree was passed in favour of Bhavani in September 1913. The
plaintiffs contend that if Article 97 applies, the date of the failure of consideration must be taken as the date of the High Court decree when it was
finally decided that Bhavani was entitled to possession of the property. That point arose recently in Martand v. Dhondo(1920) 23 Bom. L.R. 69.
In that appeal we followed the decision in Hukumchand v. Pirthichand (1918) 21 Bom. L.R. 632., where it was held that failure of consideration
occurs at the date of the decree of the first Court, and not at the date of the appellate decree confirming it. It appears from the evidence that
Amolak, was fighting the suit filed by Bhavani, no doubt in his own interest, but he must have been aware that if Bhavani succeeded the plaintiffs
would make a claim against him for the return of the purchase money. Although he was a respondent in the plaintiffs'' appeal, he was a respondent
in the interest of the appellant, and was endeavouring to get the decree reversed, for he incurred expenses in instructing pleaders and counsel to
support the appellant. It might be said, therefore, in a case where two parties now in opposition have previously combined in order to resist the
attempts of a third party to get possession of property, the subject-matter of the transaction between them, either that there was an agreement
between the opposing parties that it should not be considered that there was no failure of consideration until the final decree in the suit was passed,
or that one party induced the other not to take proceedings by filing a suit for money paid on an existing consideration which afterward failed, until
the question as to who was entitled to the property was finally decided, I think myself that it would be perfectly open to the parties to come to an
agreement that the decision of the lower Court should not be treated as a failure of consideration. I do not think, speaking for myself, that that
could be taken as a contract contrary to the provisions of the Indian Limitation Act. I also think that the combination of the plaintiffs and the
defendants in this case against Bhavani might be considered as preventing time from running. That certainly was the finding of the appellate Court in
the case which I have referred to in the argument which is not reported, where an auction purchaser at a mortgagee''s sale filed a suit against the
mortgagee because either he was unable to get possession or had been ousted by the mortgagor, but all the time the parties were combining in
order to get possession of the property from the mortgagor, and the appellate Court expressed the opinion that the auction purchaser''s suit against
the mortgagee to recover what he had paid was premature. However that may be, those are very interesting questions which need not be decided
in this case, because I think there is another answer to the defendants'' argument that the suit was barred by limitation.
4. By the sale-deed of February 1911 the sellers under the provisions of Section 55(2) of the Transfer of Property Act must be deemed to have
contracted with the plaintiffs that the interest which they professed to transfer to the plaintiffs subsisted and that they had power to transfer the
same; and there can be no doubt that at the time of the transfer all the parties considered that the defendants had a good title and possession was
given. If possession had not been given, then a different state of circumstances would have arisen and the case would have assumed an entirely
different aspect.
5. What are the remedies of a purchaser who is dispossessed are discussed in Subbaroya v. Rajagopala ILR (1914) Mad. 887. That was a suit by
purchasers to recover the amount paid by them to the defendants or their predecessors for a certain property on the ground that the consideration
for the sale failed when the plaintiffs were deprived of possession. The learned Judge said (p. 889):
In the present case, the conveyance was prima facie unimpeachable, and I do uot think the construction to which the release of Gnanammal lent
itself in the eye of law, can be said to amount to a knowledge of the defect of title. On the second question as to when the cause of action for
damage arose, a very large number of cases were quoted before mo. These cases can roughly speaking be classified under three heads : (a) where
from the inception the vendor had no title to convey and the vendee had not been put in possession of the property; (b) where the sale is only
voidable on the objection of third parties and possession is taken under the voidable sale; and (c) where though I the title is known to be imperfect,
the contract is in part carried out by $ giving possession of the properties.
6. This case now under consideration clearly falls under class (6). The learned Judge proceeds:
In the second class of cases the cause of action can arise only when it is found that there is no good title. The party is in possession and that is what
at the outset under a contract of sale a purchaser is entitled to, and so long as his possession is not disturbed, he is not damnified.
7. That judgment was confirmed, on an appeal under the Letters Patent, It was argued by the defendants that where a seller has covenanted that
he has a good title, and it eventually transpires that he has no title then the covenant of title was broken immediately upon the execution of the
assurance which contains them; and that is so stated in Dart on Vendors and Purchasers Vol II, p. 788. The authority for that proposition is Turner
v. Moon (1901) 2 Ch. 825. In that case there was no question of limitation, although the case of Spoor v. Green (1874) L.R. 99 was referred to
by Sir Lawrence Jenkins in Tulairam v. Murlidhar ILR (1902) Bom. 750, : 4 Bom. L.R. 571. But at the end of the judgment the learned Chief
Justice said:
We allude to these facts because we desire to guard ourselves against being taken to decide that where the Transfer of Property Act applies, there
may not be remedies to which a different period of limitation would be applicable. No point of this kind has been made in the argument before us,
or could be made, for the sale-deed here is dated the 22nd November, 1880.
8. The appellant relies upon Article 116 of the Indian Limitation Act which prescribes a period of six years for compensation for the breach of a
contract in writing registered from the time when the period of limitation would begin to run against a suit brought on a similar contract not
registered, If we take it, then, that there has been a breach of the contract the cause of action for a suit for damages arose, under the authority of
Subbaroya v. Rajagopala ILR (1914) Mad. 887, when it was found that there was no good title to the property, the sale being only voidable at the
instance of third parties. It would follow then that the cause of action arose on the 3rd September 1913, and the period of limitation would have
been three years if the contract had not been registered. As the contract has been registered, than the period of limitation under Article lie is six
years, and, therefore, the suit is within time. It must specially be noted that it is not the case that the seller had no title at all so that it could be said
that he was selling nothing, and that therefore, the transaction was void ab initio, nor is it a case where the purchaser got no possession. Here
undoubtedly at the time the sale-deed was passed it was considered that the defendants had a good title to convey the freehold, and it was only in
1913 when Bhavani filed his suit that it was discovered that there was a claimant who asked to be allowed to redeem, and his claim eventually
proved successful, and it was only under the special provisions of the Dekkhan Agriculturists'' Relief Act that Bhavani was allowed to redeem on
the footing that the mortgage money had already been paid off. It appears to me, therefore, that this case can be distinguished from those cases in
which it was discovered that the seller had no title whatever, and it certainly would be a very extraordinary consequence, if, in the case of a sale by
A to B, both parties being under the impression that A had a good title to convey to B, B remained in possession for a period of over six years and
was eventually turned out by some one who had a better title than A, that he should be debarred from any remedy against his vendor, assuming of
course that he has been in possession all the time under his conveyance. In my opinion, therefore, Article 116 of the Indian Limitation Act applies.
The cause of action arose in September 1913 when Bhavani obtained his decree. The result must be that the appeal must be allowed. We remand
the case because the lower Court dismissed it on the plea of limitation, and has not considered finally what relief the plaintiff was entitled to. The
Court will now continue the case as if it had decided itself that the plaintiffs'' suit is not barred. Whatever costs the plaintiffs have incurred on
taxation with regard to this appeal must be paid by the respondents. Costs of the appeal to be calculated on the final decree. No fresh evidence to
be allowed in the lower Court on remand.
Fawcett, J.
9. The lower Court has held plaintiffs'' suit barred under Article 97 of the Indian Limitation Act on the ground that it was filed more than three
years after the 31st October 1913, on which date the Court refused to put them into possession in execution of a possessory decree that they had
obtained. It was first of all contended that assuming that Article 97 was the proper Article to apply, yet there was conduct on the defendants'' part
which amounted to an estoppel, so that time really did not begin to run against the plaintiffs until the date of the High Court''s decree upon the
litigation instituted by Bhavani, namely, 28th November 1916. The lower Court held that no such estoppel by conduct arose, and I cannot say that
I am satisfied upon the evidence that the defendants are proved to have made a representation amounting to an estoppel u/s 115 of the Indian
Evidence Act. I also feel very considerable doubts whether in any case there could be an estoppel, which would operate to let limitation run from a
different time to that laid down in the Indian Limitation Act, contrary to the mandatory provisions of Section 3 of the Act.
10. However, it is not necessary to decide the point in this particular case, because I think the appellants are entitled to succeed on another
ground. The second question that arises is whether the Article of the Limitation Act to be applied is 116 or 97. On this point both the Allahabad
and Madras High Courts are agreed that in cases where there is an implied covenant of title under the provision of Section 55, Sub-section (2), of
the Transfer of Property Act, and there is a registered conveyance, a suit of the present kind falls under Article 116; and in Tulsiram v. Murlidhar
ILR (1902) Bom. 750 : 4 Bom. L.R. 571 the point was expressly left open in the judgment of Sir Lawrence Jenkins. I think that the terms of
Article 116 are certainly wide enough to cover a case of the present kind, and that the words ""express or implied"" contained in Article 115 are also
intended to be read into Article 116. To my mind considerable support is given to the contention that Article 116 should be considered to cover a
case like the present by the decision of the Privy Council in regard to the question I (upon which there was a difference of opinion) whether, when
1 a lease was registered, a suit for arrears of rent should be held to 1 fall under Article 110, which is a specific Article for arrears of | rent, or under
Article 116. The Allahabad High Court held that, in spite of there being a registered lease, the case should be held to fall under Article 110, while
the Bombay and other High Courts considered that Article lid was the proper Article,; The question came up for decision by the Privy Council in;
Tricomdas Cooverji Bhoja v. Gopinath Jiu Thakur ILR (1916) Cal. 759and the Privy Council accepted the view of the High Court of Bombay
and the other High Courts that agreed with it. The different considerations that arise were stated as follows :
On the one hand it has been contended that the provision as to rent is plain and unambiguous, and ought, to be applied, and that, in any case
compensataion for the breach of a contract '' points rather to a claim for unliquidation damages than to a claim for payment of a sum certain. On
the other it has been pointed out that '' compensation'' is used in the Indian Contract Act in a very wide sense, and that the omission from Article
116 of the words, which occur in Article 115. ''and not herein specially provided for'', is critical. Article 116 is such a special provision, and is not
limited, and therefore, especially in view of the distinction long established by these Acts in favour of registered instruments, it must prevail.
11. Then after pointing out that the decisions had been almost universal in favour of applying Article 116 the Privy Council said they accepted that
interpretation of the law. This means that Article 116 should be liberally construed, having regard to the favour evidently intended to be given to a
registered contract. I think, therefore, that we are fully justified in following the view which has been taken by the Allahabad and Madras High
Courts in the matter before us : see Arunachala v. Ramaaami ILR (1914) Mad. 1171 and Mul Kunwar v. Chattar Singh ILR (1908) All. 402.
12. The third question that arises is from what point of time limitation runs under Article 116 in the present case. The respondents have contended
that it should be held to run from the date of the sale-deed, namely, 1st of February 1911, when the implied covenant of title was made; and
reliance was placed on the English law on the subject which is referred to in Tulsiram v. Murlidhar ILR (1902) Bom. 750 : 4 Bom. L.R. 571. I
agree, however, that a distinction should be made between cases where from the inception the vendor had no title to convey -and the vendee has
not been put in possession of the property, and other cases, such as the present one where the sale is only voidable on the objection of third
parties and 1 possession is taken under the sale. 1 think it is only in the first class of cases that the starting point of limitation will be the date of sale,
and the distinction on this point made in Subbaroya v. Rajagopala is supported by the decisions of the Privy Council in Hanuman Kamat v.
Hanuman Mandur ILR (1891) Cal. 123, P.C. and Basau Kuar v. Dhum Singh ILR (1888) All. 47. Under Article 116 time runs from the period of
limitation from which time would begin to run against a suit brought on a similar contract not registered. Assuming that the sale-deed had not been
registered, then I think the Article applicable to the ""suit would be Article 97. That Article is one which in many cases has been held to apply to
such suits and it is one which specially provides for the case within the meaning of Article 115, so that the latter Article does not apply : of Johuri
Mahton v. Thakoor Nath Lukee ILR (1880) Cal. 830. That being so, we have only to consider when the failure of consideration arose, and I think
there is ample authority for holding that, in a case like the present, limitation runs only from the date of the judgment of the first Court declaring that
the plaintiffs'' vendor had not a good title. Accordingly I agree that the appeal on the point of limitation should be allowed.
