1926 (4) TMI 4 - HC - Indian Laws

Summary

Issues Involved:
1. Entitlement to compensation for delayed payment.
2. Interpretation of the sale-deed covenant.
3. Applicability of the Limitation Act.
4. Nature of the contract (indemnity vs. covenant to pay).

Detailed Analysis:

1. Entitlement to Compensation for Delayed Payment:
The core issue is whether the plaintiff is entitled to compensation for the loss occasioned by the defendant's delay in paying Rs. 5,000 to the prior mortgagee, Bohra Khetpal. The plaintiff executed a mortgage bond on August 22, 1908, and later sold the village Araila to the defendant on June 7, 1913, leaving the entire consideration with him for payment to the prior mortgagee. The defendant did not pay this amount until September 22, 1916. The plaintiff claims compensation for the extra interest paid due to this delay. The trial court awarded Rs. 987-8-0 as compensation, but the lower court held the claim barred by limitation.

2. Interpretation of the Sale-Deed Covenant:
The sale-deed included a covenant that if the vendee failed to pay the money left with him for the prior mortgage, causing a suit, he would be responsible for costs and interest. The interpretation of this covenant is crucial. The court noted that the contingencies of failure to pay and a suit need not be cumulative and can be read distributively. Thus, the plaintiff's right to sue arises from any event causing him to be damnified. The plaintiff paid a larger amount to Bohra Khetpal due to the delay, entitling him to claim the amount from the vendee.

3. Applicability of the Limitation Act:
The court examined whether the suit was barred by limitation. Under Article 83 of the Indian Limitation Act, a suit for damages resulting from delay is within time if filed within three years from the date of actual injury. The damages accrued when the plaintiff had to sell another property and pay the balance of the mortgage money due to the delay. The suit was filed within three years from that date, making it within the limitation period.

4. Nature of the Contract (Indemnity vs. Covenant to Pay):
The court discussed whether the contract was one of indemnity or a covenant to pay. The sale-deed contained a provision that if the defendant did not pay the Rs. 5,000 and litigation ensued, he would be liable for costs and interest. This was seen as a particular clause constituting a contract of indemnity in a certain event. The court held that the indemnity did not come into operation as the mortgagee did not sue the plaintiff, nor was the plaintiff involved in a suit due to non-payment. However, the breach of contract and the resulting injury gave the plaintiff a cause of action. The court highlighted that under Indian law, a suit for compensation can only be brought for injury or loss already caused, not for prospective loss, aligning with Section 73 of the Contract Act.

Conclusion:
The appeal was allowed, setting aside the lower appellate court's decree and restoring the trial court's decree with costs. The court concluded that the plaintiff was entitled to compensation for the delayed payment, the suit was within the limitation period, and the nature of the contract allowed for the claim of damages due to the breach and resulting injury.