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1958 DIGILAW 82 (ORI)

KRISHNA PATRO v. BERHAMPUR MUNICIPALITY

1958-08-07

DAS

body1958
JUDGMENT : Das, J. - This is an appeal by the unsuccessful Defendant against the judgment of the learned Additional District Judge of Berhampur decreeing the Plaintiff's suit. 2. The Plaintiff commenced a suit for recovery of a sum of Rs. 3,131-15-8 being the arrear Kist dues in respect of a lease taken by the Defendant-Appellant for collection of fees from cart-stands within the Berhampur Municipality. On the 7th February 1947 the Municipality auctioned the disputed cart-stands for the financial year 1947-1948 and the Defendant was the highest bidder having offered Rs. 15,725 at the auction sale. The lease was formally confirmed by the Municipal Council on the 14th February, 1947. The Defendant deposited a sum of Rs. 200/- as earnest money before the sale and on the date of sale he paid another sum of Rs. 3,731-4-0 thus making up the i of the sale money which he was required to pay under the sale notification. The Defendant further promised to execute the necessary document in due course and signed the bidsheet Ext. 2-a, undertaking to abide by the conditions of the sale notification and to collect the fees within a specified area pending execution of the surety-bond and the agreement is completed. The Defendant was put into possession of the lands to be used as cart-stand and was allowed to collect the fees therefor with effect from the 1st. April 1947. He, however, did not execute the document as agreed upon though admittedly he continued to collect the fees and made certain payments towards the suit-contract between the 2nd June and 2nd December 1947, that is for the period from 1st May to 31st December 1947. According to the terms of the contract the Defendant after the deposit of the of the bid-money was required to pay the balance in nine equal monthly installments beginning from the 1st May 1947; the amount depositors being agreed to be credited towards the first 3 installments, that is, for January, February and March 1948. The Defendant having delayed the payment of the kists the Plaintiff served a notice on the Defendant on the 17th December, 1947, informing him that unless he pays all the kist dues the lease-hold, according to the terms of the contract, will be re-sold on the 29th December 1947, for the unexpired period of three months. The Defendant having delayed the payment of the kists the Plaintiff served a notice on the Defendant on the 17th December, 1947, informing him that unless he pays all the kist dues the lease-hold, according to the terms of the contract, will be re-sold on the 29th December 1947, for the unexpired period of three months. In fact, the cart-stand was re-auctioned and was knocked down in favour of one Raghunath Naik for an amount of Rs. 5,535/- on the 30th December 1947. Thus, according to the Plaintiff, the Defendant made actual collection of the cart-stand fees and derived benefits therefrom from the 1st April to 31st December 1947, and also a sum of Rs. 2,338-8-6 was due from him as per the auction-sale for the nine months after giving due credit to the amounts paid by him including the deposit. It was further alleged that under the contract the Defendant was liable to pay interest at the rate of 12 per cent per annum and accordingly, the Plaintiff filed the suit for recovery of a sum of Rs, 3,131-15-8. 3. In the written statement, the Defendant admitted the auction-sale and his bid threat and the acceptance of the same by the Plaintiff-Municipality. His defence, however, was that he was not put in effective possession of the lease-hold property and that the Plaintiff's employees colluded with one Sibram Rout and his men as a result of which he could not fully realise the cart-stand fees and in consequence was put to heavy loss. He further averred that there was never a completed contract between him and the Plaintiff and he never agreed to pay the lease-amount in nine monthly equal installments and to abide by the other terms in the sale notification. According to him there was no valid lease as it was not stamped and registered. The Defendant admitted the payments made by him. But he pleaded that there was failure of consideration of the contract as he was not put in effective possession by holding the fresh auction-sale and consequently he was dispossessed. 4. The additional Subordinate Judge, who heard the suit at the first instance, came to the conclusion that there was a completed and valid contract between the parties in as much as the Defendant accepted the offer by the Plaintiff who offered the highest bid which was confirmed by the Municipality Council. 4. The additional Subordinate Judge, who heard the suit at the first instance, came to the conclusion that there was a completed and valid contract between the parties in as much as the Defendant accepted the offer by the Plaintiff who offered the highest bid which was confirmed by the Municipality Council. He, 'however dismissed the Plaintiff's suit on the ground that there was a waiver of enforcing the right to re-sell on default of payment of the kist money and there was no express cancellation of the contract and the Plaintiff was not entitled to claim any compensation on account of its right to re-sell which was done without clear thirty days notice. He further held that the Plaintiff was not entitled to the interest claimed and that in any event if the question of waiver is found in favour of the Plaintiff, the Plaintiff would not be entitled to more than Rs. 734-12-8 which is the difference between the original auction-amount of Rs. 15,725/- and the total of all the payments made by the Defendant and the bid-money obtained on resale. In the result, he dismissed the Plaintiff's suit. 5. On appeal, the learned Additional District Judge reversed the findings of the trial Court and held that there was a valid and completed contract between the parties and that the contract was properly terminated. In this view of the matter there was no question of any waiver, and accordingly he decreed the suit. The concurrent findings of both the Courts, therefore, were that there was a valid and completed contract and that registration of the lease deed was not necessary and possession was delivered by the Plaintiff-Municipality to the Defendant before the 1st April, 1947, and that the Defendant was in possession until the re-sale took place. Mr. P.V.B. Rao, learned Counsel for the Appellant, did not challenge the above concurrent findings of fact. 6. His argument, however, was that since the Plaintiff had determined the contract, it cannot be a suit for the arrear of lease money on the basis of that very contract. The Plaintiff can only claim damages and that to the tune of the actual loss suffered. His second branch of argument was that since there was waiver, the lease has not been properly terminated, and that the Defendant was entitled to thirty days notice before any legal termination could be effected. 7. Mr. The Plaintiff can only claim damages and that to the tune of the actual loss suffered. His second branch of argument was that since there was waiver, the lease has not been properly terminated, and that the Defendant was entitled to thirty days notice before any legal termination could be effected. 7. Mr. Rao, in support of his first contention, relied upon a decision of the Madras High Court reported in Narasimham. Mudali v. Potti Narayan Swami Chetti 92 I.C. 333. What was held in that case was that if one party to a contract repudiates it the other party may treat the repudiation as inoperative and at the end of the period of the contract treat the other party as responsible for all the consequences and non performances, thereby keeping the contract alive or on the other hand, he may treat the repudiation as a wrongful putting an end to the contract and may atone bring an action as a breach of it. A promisee cannot, however, both sue upon the breach and also keep the contract open. It was further held that where one party to a contract evidences an intention no longer to be bound by it, the other party will be justified in regarding himself as having been emancipated. A party cannot repudiate a contract for a long time and then suddenly insist upon its performance. Long delay coupled with repudiation will amount to a conduct giving rise to an implication of abandonment of contract. The above view of law, if I may say so with great respect, is quite correct having regard to the facts of that particular case. The principle is that one cannot repudiate a contract and bring the contract to termination and still keep it alive for purposes of realising the entire contract amount. Once the contract is repudiated, it ceases to have any legal effect from the date of repudiation, but there is no reason why the Plaintiff cannot bring a suit for a period prior to the termination of the contract. 8. In the case of (Manathanath Kolongara Veetil Adambat) Gopalan Nair Vs. Dist. Board of Malabar the Defendant-Appellant was a toll-gate contractor under the Plaintiff District Board. He committed default in payment, and the Board exercised its option of resale. As there were no bidders the sale was postponed to some other date without the consent of the Defendant. 8. In the case of (Manathanath Kolongara Veetil Adambat) Gopalan Nair Vs. Dist. Board of Malabar the Defendant-Appellant was a toll-gate contractor under the Plaintiff District Board. He committed default in payment, and the Board exercised its option of resale. As there were no bidders the sale was postponed to some other date without the consent of the Defendant. On a subsequent date, the resale was held and the Board sued the Defendant for the loss occasioned by such sale. Walsh. J. in these circumstances, held that the Board had treated the contract as broken by ordering re-sale and that Section 63 or Section 107 of the Contract Act had no application to the case, but Section 39 applies and the limitation ran from the date of re-sale and not from the subsequent date of actual sale. Thus, in that case the question was involved was from which date the period of limitation will begin to run, whether from the date of the sale or from the subsequent adjourned date on which the sale actually took place. Hence, this case does not support the contentions of Mr. Rao at all. Again in the case of Kumarswami Chettiar v. Karuppuswami Mooppanar AIR 1953 Mad 380 it was held that the principle underlying Section 39 of the Contract Act that it is open to one party to keep the contract alive can have application only when the contract is executory or where there is still something to be performed under the contract. It can have no application where time for performance has arrive and there has been a breach. When a contract has been broken, it is dead and there is nothing which could thereafter be kept alive. Even if the parties subsequently come to an agreement in respect of the same subject matter, it is in law a new contract. Thus, there is a fundamental difference between a refusal to perform a contract before performance has become due and a failure to perform it after it has become due. The facts in the instant case were that the Defendant undertook to pay the balance of the lease money in nine equal monthly instillments. The last instalment paid by him was on the 2nd December, 1947, for a portion of the dues for August 1947. The monthly installment comes to Rs. 1,310-6-8 whereas by the last instalment a sum of Rs. The last instalment paid by him was on the 2nd December, 1947, for a portion of the dues for August 1947. The monthly installment comes to Rs. 1,310-6-8 whereas by the last instalment a sum of Rs. 282-4-8 only was paid. It may be remembered that the Plaintiff-Municipality had not brought a suit for the realisation of any dues after December 1947 when the contract was put to an end. The Plaintiff merely filed the suit for the kist dues during the month prior to the termination of the contract. Accordingly, the above contention of Mr. Rao is bound to fail. The Plaintiff could only have been entitled to claim damages and that to the tune of actual loss suffered by it u/s 73 of the Indian Contract Act, if the Plaintiff-Municipality, after repudiation, had sued the Defendant for the entire period of the lease, that is from the 1st April, 1947 to 31st March 1948, that not being the case, this contention of Mr. Rao also does not hold good. 9. Coming to the question of interest, according to Clause 8 of the contract if any instalment is not paid in proper time, interest at the rate of 1 per cent per month will be charged from the date the instalment fell due up to the date of its payment. Further, according to Clause 9 if any instalment is not paid within thirty days from the due date, the Executive Authority will take up departmental collection and the lessee is liable for the cancellation of his contract and forfeiture of his deposit. The right of collection will then be put to auction or otherwise disposed of as the Council thinks fair and all losses resulting therefrom will be recovered from him, but he will not be entitled to claim any excess that may be realised on such resale or disposal. In view of the above terms in the contract itself, the Plaintiff is clearly entitled to interest and the Defendant is not entitled to claim the benefit of the excess, if any, realised on resale. 10. The last payment, as I have mentioned earlier was on the 2nd December 1947, and the default was a continuous one. The acceptance of a portion of the lease-money would not, in any event, amount to waiver in law. 10. The last payment, as I have mentioned earlier was on the 2nd December 1947, and the default was a continuous one. The acceptance of a portion of the lease-money would not, in any event, amount to waiver in law. Thus, there is no question of waiver or the consequent insufficiency of notice involved in this case. It is well settled that a mere waiver of past breaches does not preclude the lessor from enforcing a forfeiture when the same or another condition is subsequently breached vide Raj Mohan De v. Matilal Saha Poddar 22 C.L.T. 556. When the breach is of a continuing nature, the same rule 'applies, and continuation of the breach after the waiver will certainly justify a forfeiture. In the present case the mere fact that the Plaintiff did not enforce the terms of forfeiture as provided in the contract, when the Defendant made default in delaying payment of the installments, does not preclude the Plaintiff from enforcing its right under the contract when the Defendant failed to comply even after issue of notice to him calling upon him for due performance. Thus, once the Courts below came to the conclusion that there was a valid and completed contract between the parties the terms thereof are enforceable in law despite the fact that the Plaintiff did not take action immediately after the default was occasioned. Thus, there is no doubt that the Plaintiff-Municipality acted rightly while cancelling the contract of the Defendant and putting the lease-hold interest to sale. Accordingly all the contentions raised by Mr. Rao having failed, I find no merit in this appeal and the same is dismissed with costs. Appeal dismissed. Final Result : Dismissed