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Subba Rao, C.J.—Appeal No. 414 of 1951: This appeal raises a question of limitation.
The Appellant is a merchant carrying on business in ground-nut oil at Eluru and die defen-.diant is a merchant dealing in ground-nut oil at vijayawada. On 29-12-1943, the Plaintiff enteredinte a contract with the Defendant for the purchase of 40Q0 tins of ground-nut oil, each tin containing 11 vis. at Rs. 7-3-0. per maund, the goods being. deliverable at Vijayavada by the end of January 1944. On 8-1-1944, i.e., subsequent to the date of the suit contract and before the date fixed for performance, the Central Government promulgated the Vegetable Oils and Oil Cakes (Forward Contracts-Prohibition) Order 1944 (hereinafter referred to as the Order) and under the said order the performance of forward contracts was prohibited.
By virtue of the Government Notification issued on 13-1-1944, the Defendant became liable to pay the difference between the market rate of groundnut oil at the close of business at Vijayavada on 12-1-44 and the contract rate. The market rate on 12-1-44 was Rs. 8-4-0 per maund and the contract rate being Rs. 7-3-0 permaund, the Plaintiff filed the suit to recover from the Defendant thev4ifference in price at Re. 1-1-0 per maund for the oil agreed'' to be sold to him. On that basis, the suit was filed for recovery of a sum of Rs. 5843-12-0. The plaint was filed on 9-1-1950.
The Defendant pleaded that the suit not having been filed within three years after the breach was barred by limitation.
The learned Subordinate Judge held that Article 115 of the Limitation Act applied, that time-should be reckoned from the date of the breach of contract i.e., 8-1-1944: and that the fact that the breach was caused by the operation of a statute-would not affect the'' starting point of limitation.. In that view, the suit was dismissed with costs;. The Plaintiff preferred the above -appeal.
Learned Advocates-General contends that Ant, H5 of the Limitation Act does not apply to the suit as the suit is not one for damages for breach of contract but one for enforcing a right created by the Order and as no specific article of limitation is (Provided by that Order or by the Limitation Act, the residuary Article 120 of the Limitation Act is attracted and under that Article the suit is not barred by limitation as it is filed within six years from the date of the right to sue accrued. Learned "Counsel for the Respondent argues that the Plaintiff''s claim is only for damages for breach of the contract and the provisions of the Order do not affect the character of the liability but only substitutes a measure for fixing the quantum if damages.
The answer to the question raised depends upon the interpretation of the provisions of the Order.
Clause 3 provides that no person shall, alter a specified date, cuter into any forward contract in certain articles. One of the articles is "Vegetable oils''''.
Clause 4 runs thus:
Notwithstanding any custom, usage or practice of the trade or terms of any contract or any regulation of an Association relating to any contract.
(i) every forward contract in any article to which tins Order applies outstanding at the close of business on the specified date shall be deemed to ''be closed out at such rate as the Central Government may by notification in the Official Gazette fix in this behalf and the different rates may be fixed for different classes of contracts.
(ii) All differences arising out of any contract so deemed to be closed out shall be payable on the basis of the rate fixed as aforesaid and the seller shall not be bound to give and the buyer shall not ''be bound to take delivery.
Under the contract of purchase, A agrees to buy goods from B at a particular rate deliverable on a specified date. If there be. a breach of the contract, the person Committing the breach may be made liable to the other for damages representing the difference between the market rate; and the -contract rate. The aggrieved party recovers damages on the basis of the terms of the contract.
The State on public grounds steps in and the order issued by the Central Government says that a forward contract shall be deemed to be closed out at such rate as the Central Government may by notification in the official Gazette fix in this behalf. "Sub-clauses (i) and (ii) of Clause. 4 enable him to "file a suit for recovery of the amount on the basis of the rate fixed in the notification i.e.,in the present case, 12-1-1944. Sub-clause (ii) in express terms exonerates parties to a contract from giving or taking delivery. As the contract is closed out and the parties are no longer bound by the obligations there under, their rights thereafter are governed, only by the statute.
The right to sue conferred by that clause has no relation to the breach of a contract. While a party to a contract can recover damages only from the other party committing broach of a contract, under the Order the right can be enforced though the other party has not committed breach of the contract. The date fixed is not the date of performance agreed between the parties. The difference between the rate prevailing on the date of the closing out of the contract and the contract rate cannot represent damages for breach of the contract.
He cannot thereafter file a suit for enforcing the contract, or, for recovering, damages for its breach as die contract is itself closed out or discharged. Therefore, die argument of the learned Counsel for the Respondent that die liability under Sub-clauses (i) and (ii) of Clause 4 of the Order is only a liability under the contract cannot be accepted for die contract is put an end to and the Order in its place confers a statutory right to safeguard the interests of the parties affected by the statutory discharge.
To put it shortly a party to a contract, after the passing of the Order, is not suing for recovery of damages for breach of contract but only for enforcing the right conferred under the said Order. A similar question was considered by Viswanadha Sas-tri J. in the unreported decision in C. R. P. No. 1102 of 1948 (Mad) (A) wherein the learned Judge observed:
There is no breach in the present case. By promulgating the Order the Government dispensed with the performance of the contract by the parties and substituted instead the right to compensation at the choice of either of them.
We respectfully agree with, the aforesaid construction of clause of the Order.
Bala Krishna Ayyar J., dealing with a similar situation created by the Order observed in C. R. P. No. 703 of 1949 (Mad) (B):
What happened was that the Government intervened and promulgated an order which made die performance of die contract illegal. It Is, therefore, a case not where a contract has been broken but where it has become impossible of performance.
Though it may also be said that the contract has become impossible of performance within the meaning of Section 50 of the Contract Act by reason of the statutory closing out, it would be more appropriate to treat the contract as statutorily discharged giving rise to new rights.
The view expressed by us also gets some support from tile provisions of Section 37 of the Contract Act on which reliance is placed by the learned Counsel for the Respondent. u/s 37, the parties to a contract must either perform or offer to perform their respective promises unless such performance is dispensed with or excused under the provisions of the Act or any other law. Because of die provisions of the Order, the performance of the contract is dispensed with under its provisions and thereafter die parties will not be entitled to any damages under the terms of die contract. Thereafter, they can only rely upon the rights conferred under the Order.
The decision of the House of Lords in Pratt v. Cook Son and Co. 1940 1 All ER 410 (C) though not on all fours throws some light on the question raised. There, the Plaintiff was employed as a packer by a firm of wholesale drapers at a weekly wage of 53 shillings and it was agreed that dinner and tea supplied by the firm were worth an additional 10 shillings per week. The Plaintiff''s action was under die Truck Act, 1831, S. 4, to recover from the Defendants his former employers, arrears of wages at the rate of 10 shillings per week not actually paid to him in current coin.
The Truck Act confers upon persons situated in the position of the Plaintiff a right ft recover the wages in cash. The. plea was that the claim was barred by limitation. It would be in time if the debt was a specialty debt for recovery whereof the statute of limitation prescribed 20 years. Lord Atkin, in the context of the contention of Limitation raised in the case, made the following observations at p. 413:
There is a new cause of action created by Section 4 which goes only to a limited part of the remuneration. No such cause of action exists apart from the statute and it follows that the period of limitation must be as decided.
The law-lords held that (lie debt was a speciality debt due under a statute and, therefore, the suit was in time. Just as in the aforesaid ease in the instant case also there is no cause of action apart from Clause 4 of the Order us the contract was discharged and a new right was conferred under the Order.
If that be the true nature of die right, what is the article of limitation for a suit to recover the compensation under Sub-clause (ii) of Clause (4) of the Order? Article 115 of the Limitation Act on which reliance is placed by the learned Counsel reads:
For compensation Three years for the breach of any contract express or implied not In writing registered and not herein specifically provided for.
When the contract is broken or where there are successive breaches when the breach in respect of which the suit is instituted occurs or where the bread) is continuing when it ceases.
The suit as framed is not for compensation for any breach of any contract for the simple reason that there is no breach at all and the contract itself is discharged. If Article 115 does not interms apply, the only article that can be invoked is the residuary Article 120 of the Limitation Act which reads:
Suit for which no Six years. When the right to period of limitation sue accrues. is provided else- where in the Sched ule. 15. The Limitation Act does not provide any specific article for a suit to recover compensation under statute. If so, the suit can be filed within six years from the date of the right to sue accrues under Article 120 of the Limitation Act. The right to sue accrued in this ease when the Order discharged the contract and the noliliealion fixed the rule for working out the quantum of compensation. The suit was filed within six years from the date the contract was statutorily discharged and also from the date fixing the rate of compensation.
In this view, we hold that the suit was not barred by limitation. As the learned Subordinate Judge dismissed the suit on the question of limitation he did not give his findings on the other issues raised in the case. The decree of the lower Court asset aside and the appeal is remanded to the lower Court for disposal on all the other issues. Costs will abide the result. The Court fee paid by the Appellant will be refunded to him.
C.R.P. No. 2147 of 1950:
For the same reasons, this revision petition is allowed and the matter is remanded to tire lower Court for disposal on the other issues. No costs.
C. R. P. No. 2027 of 1950:
It is represented to us that the matter has been settled out of Court. Dismissed. No costs.