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1953 DIGILAW 40 (MAD)

Messrs. Kothari v. V. Krishna Rao

1953-02-03

SATYANARAYANA RAO

body1953
Judgment.- The defendants, a firm of stock brokers and commission agents Madras, are the appellants in this second appeal. They were sued by the respondent to recover a sum of Rs. 1,064-14-0 for damages caused by their negligence in effecting a sale of 40 shares of the Travancore National and Quilon Bank Ltd hereinafter called the Bank. The shares were of the paid up value of Rs.25 each, the face value of which was Rs. 50. The plaintiff, with a view to have the shares sold, requisitioned the services of the defendants and on 9th May 1938, by Ex. P-1 the shares were handed over to the defendants. The bank went into liquidation in 1938 and on 10th March, 1939, a demand was made on the plaintiff by the liquidators of the bank for payment of the unpaid call money. He thereupon came to know from the defendants by their letter of 20th April, 1939, that the shares were in fact sold to the bank. The plaintiff made an unsuccessful attempt in the High Court by an application to have the share register rectified by excluding his name from the list of contributaries. The application was dismissed on 19th December, 1941. The plaintiff was thereafter obliged to pay from time to time the balance calls amounting in all to Rs. 1,000 and odd. The first payment was made on 13th March, 1944, and the last was on the 20th April, 1045. On 1st October, 1945, the present suit was instituted by the plaintiff to recover the sum as damages on the ground that the defendants, by their negligence brought about an invalid sale as they should have known that the bank could not buy its own shares by reason of the prohibition contained in section 55 of the Indian Companies Act.. The suit was instituted in the District Munsiff’s Court, Vellore. The suit was resisted by the defendants on three principal grounds: firstly that it was barred by limitation under Article 90 of the Limitation Act; secondly that the Court had no territorial jurisdiction to try the suit as the cause of action did not arises within its jurisdiction; and lastly that there was no negligence on their part. Both the Courts below disallowed the objections of the defendants and granted a decree in favour of the plaintiff. Hence this second appeal. The same grounds have been repeated before me. Both the Courts below disallowed the objections of the defendants and granted a decree in favour of the plaintiff. Hence this second appeal. The same grounds have been repeated before me. Grounds Nos. 2 and 3 may be disposed of easily. Regarding want of jurisdiction in the Court which tried the suit, the defendants were not able to establish any prejudice which affected the merits of the case to entitle a reversal of the decree on the ground of want of jurisdiction assuming that the Court had no jurisdiction. The question of negligence is one of fact and the Courts below arrived at a concurrent finding that the plaintiff was able to establish negligence on the part of defendants as they did not take the simple precaution of not selling the shares to the bank itself. There is no ground to interfere with the finding of fact. There remains the question of limitation. Under Art. 90 of the Indian Limitation Act for “other suits by principals against agents for neglect or misconduct” a period of three years is provided for and time begins to run from “when the neglect or misconduct becomes known to the plaintiff.” It was argued on behalf of the appellant that on the facts as stated above, the plaintiff had definite knowledge that the shares were sold to the bank at least on the 20th April, 1939 and as the suit was filed more than three years from the date it was barred by limitation. But it must be mentioned that by that date no damage in fact had accrued to the plaintiff. The plaintiff was later called upon to pay the calls and it was not until 20th April, 1945, that the last of the payments was made, the first of such payments having been made on the 13th March, 1944. If the period of limitation is to be counted from those dates, undoubtedly the suit is in time. But unfortunately, that is not the language of the third column of Art. 90 of the Limitation Act. If the period of limitation is to be counted from those dates, undoubtedly the suit is in time. But unfortunately, that is not the language of the third column of Art. 90 of the Limitation Act. In answer to the contention of the learned counsel for the appellant, the respondent’s learned counsel relied upon section 24 of the Limitation Act, which provided that: “in the case of a suit for compensation for an act which does not give rise to a cause of action unless some specific injury actually results therefrom, the period of limitation shall be computed from the time when the injury results.” I at first thought that this section would have application only to suits based on a cause of action in which the claim for damage is an essential part as in the case of actions for slander. But such a doubt is dispelled by the illustration to the section and also by the decisions which have applied that section to different articles of the Limitation Act. Govind Narayana v. Rangnath Gopal1, is a case of misfeasance summons against directors for loss occasioned by their negligence. It was held that the application was governed by Art. 120 of the Limitation Act, and the cause of action to make the application arose, within the meaning of section 24 of the Indian Limitation Act, when the actual damages had resulted. It is an instance, therefore, where the time from which period begins to run under the third column of the Limitation Act was extended by invoking the provisions of section 24 of the Limitation Act. Similarly in Kedarnath v. Hargovind2, section 24 of the Limitation Act was invoked to a case to which Art. 116 applied. In Jagannath Marwari v. Kalidas3, the suit was for damages for malfeasance based on an implied covenant that the surface owner had an inherent right of support from the owner of underground mines. It was held that such a suit was governed by Article 115 of the Limitation Act and under section 24 of the Limitation Act the cause of action arose from the date when the injury had resulted to the plaintiff and not from the date of malfeasance or misfeasance provided for in the Article. It was held that such a suit was governed by Article 115 of the Limitation Act and under section 24 of the Limitation Act the cause of action arose from the date when the injury had resulted to the plaintiff and not from the date of malfeasance or misfeasance provided for in the Article. In the light of these decisions, in my opinion, the third column in Article 90 must be read with the modification contained in section 24 of the Limitation Act, as the present is an action in which no cause of action could have been complete to the plaintiff unless and until the specific injury had actually resulted. Under the section, the period of limitation should be computed from the date when the injury resulted. So, reading the Article and the section together, the present suit which was instituted within three years from the date when the injury actually resulted to the plaintiff, i.e., the date when he made the payments is clearly within time. The appellant’s advocate drew my attention to a decision of a single Judge of this Court in Rangaswami Iyengar v. Srinivasa Iyengar1, in which Article 90 was applied and the suit was held to be barred by limitation but section 24 was not considered by the learned Judge. With great respect, I am unable to follow the decision in that case. The other decisions relied on by the learned advocate for the appellant, Annamalai Chettiar v. Cowasji2, Janki Koer v. Mahabir Prasad3, and Saw Hla Pru v. S.S. Halkar4, do not at all throw any light upon the question which arises for consideration in the present case where the date of knowledge is different from the date when the damage actually accrued or resulted. In cases where the two dates coincide, there is no difficulty in applying Article 90 as in that event the period of limitation begins to run from the date of knowledge, which is also the date when the damage has resulted. These decisions did not consider and perhaps there was no necessity for considering the applicability of section 24 of the Indian Limitation Act. I am therefore of opinion that the view taken by the Courts below that the suit was not barred by limitation is correct and the second appeal is dismissed with costs. No leave. R.M. ----- Appeal dismissed.