2002 PLP 754 (CLD)

4. The suit was resisted by the appellant/ defendant on various grounds. It was contended that the suit was barred by time: The execution of the two agreements was not denied. However, it was asserted that it was the plaintiff, who had defaulted in the performance of the agreements and had unilaterally rescinded the same thereby causing loss to the appellant/ defendant.

5. On the basis of the pleadings, the learned trial Court framed the following issues:‑‑ (1) Whether the suit is barred by time? OPD (2)Whether the suit is mala fide? OPD (3)Whether the plaintiff is entitled to recover Rs.2,82,085 from the defendant? OPP. (4)Relief.

6. We first of all propose to examine Issue No.

1. Learned counsel for the appellant/ defendant argued that the appellant had been able to establish on record that the suit was time barred. We have heard learned counsel for the appellant as well as the respondent/ plaintiff, who argued his own case. The two agreements in question were executed in 1984. It was stated before us by the plaintiff that from the very beginning the appellant did not supply the requisite raw material to him as per agreed terms and as such committed breach of the two contracts. The plaintiff also produced on record Exh.P.10, which is dated 20‑7‑1985, and purports to be a final notice addressed to the appellant/ defendant by him. The first paragraph of this notice is relevant for deciding Issue No.

1. It is stated therein that by means of a preliminary notice dated 30‑6‑1985, the plaintiff rescinded the abovementioned contracts on the ground that the appellant/ defendant had failed to perform the said contracts in spite of efforts made by the plaintiff. It was also stated in the said notice that the last breach of the said contracts took place on 15‑6‑1985. At this point it may be noted 'that the suit of the plaintiff was filed on 27‑6‑1988.

7. With the assistance of the plaintiff we went through the contents of the agreements also. The plaintiff argued that the appellant, from the very inception, violated the terms of clause (iii) of the agreement by failing to provide the agreed raw material against requisition slips issued by the plaintiff. The plaintiff was quite clear that the breaches of contracts started immediately after the execution of the two contracts resulting ultimately in rescission of the contracts by him. The said breach of contract as admitted in Exh.P.10 noted above, took place on 15‑6‑1985 and thereafter the contracts were rescinded by means of the preliminary notice, dated 30‑6‑1985 referred to in Exh.P.10.

8. Article 114 of the Schedule to the Limitation Act provides the period of limitation for a suit based on rescission of a contract. The period of limitation commences from the date when the facts entitling the plaintiff to have the contract rescinded first become known to him. In the present proceedings, it is the plaintiffs own case that there were consistent breaches of contact, which according to him entitled him to rescind the contracts.

9. If Article 114 is considered' in the light of the evidence on record, it will become apparent that the suit is time‑barred. The two contracts were rescinded by the plaintiff by means of the preliminary notice, dated 30‑6‑1985 referred to above. The circumstances entitling the plaintiff to rescind the contracts occurred on dates much prior to the. issuance of the said , preliminary notice. This fact is evident from the contents of the A final notice (Exh.P.10) and from the circumstances discussed below. It is, therefore, clear that the facts entitling the plaintiff to rescind the two contracts were known to him prior to the alleged last breach in June, 1985. The suit; therefore, which was filed on 27‑6‑1988 was barred by limitation.

10. We next consider, Article 115 of the Limitation Act which entitles a plaintiff to file a suit for breach of contract within three years from the date 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 breach is continuing) when it ceases.

11. The plaintiff, who argued his own case, contended that the breach of contract committed by the appellant/ defendant was a continuing breach and the plaintiff, therefore, became entitled to file a suit within three years from the date on which the last breach of contract took place.

12. The submissions made by the plaintiff as noted above are self‑contradictory. If clause (iii) of the agreements is adverted to in the context of such submissions, it becomes clear that by the plaintiffs own reckoning, breach of the agreements started immediately after the execution of the said contracts. From the submissions we understand that a series of breaches of contracts occurred each month due to the appellant's failure to supply raw material as required by monthly requisition slips issued by him under clause (iii) of the two agreements. He, however, was under the impression that the term `continuing breach' used in Article 115 was applicable in the case and gave him a right to sue within three years from the last breach before the contracts were rescinded. This impression is legally untenable because, as explained by the plaintiff himself, there was a monthly breach of contract resulting from the failure of the appellant to honour the requisition slips issued by the plaintiff each month. We, therefore, are of the opinion that the suit, which as noted above, was filed on 27‑6‑1988, was clearly time‑barred.

13. The learned trial Court while discussing Issue No. 1 also appears to have reached the conclusion that the plaintiff's suit was out of time, but decided the said issues against the appellant/ defendant on the basis of the letter, dated 12‑6‑1988 (Exh.P.14) addressed to the plaintiff by the appellant/ defendant. The trial Court, without giving any reason or lawful justification, held that the said letter (Exh.P.14) was the final denial of 'liability by the appellant/ defendant, which was relevant for the purpose of determining the question of limitation. Since the said letter (Exh.P.14) is the sole basis on which the learned trial Court has treated the plaintiff's suit to be within time, it is important to reproduce the same. It reads as under:‑‑ "We are‑in receipt of your letter, dated 6th June, 1988. We strenuously refute your charges that any compensation whatsoever is payable by us to you. Please note that if you are ill‑advised to initiate any legal action against us, the same will depend at your risk and costs."

14. It was argued by learned counsel for the appellant that the said letter (Exh.P.14) could not, by any stretch of reasoning, be construed as extending the period available to the plaintiff for instituting his suit. Learned counsel cited a number of precedents to support his argument including the cases titled Yaqoob Habib Kaliya v. A. Sattar (PLD 1958 Karachi 534) and Harchandrai v. Popular Metal Works (PLD 1971 Karachi 925). We have considered the contents of Exh.P.14 in the light of section 19 of the Limitation Act and of the precedents cited by learned counsel for the appellant and have come to the inescapable conclusion that the letter (Exh.P.14) does not constitute an acknowledgement of liability sufficient to give a fresh period of limitation to the plaintiff.

15. In view of the above discussion, we reverse the finding of the learned trial Court on issue No. 1 and hold that the suit of the plaintiff was time‑barred. In this view of the matter, it is not necessary for us to decide the remaining issues.

16. For the foregoing reasons, this appeal is allowed and the impugned judgment and decree, as a consequence, is set aside. Q.M.H./M.A.K./D‑344Appeal allowed.