P L D 1961 Supreme Court 17 (PLP)

The trial Judge held that the case was governed by Article 62 of the first Schedule to the Limitation Act, and, as it had been brought more than three years after the cause of action bad accrued to the plaintiff, it was barred. The various acknowledgements, pleaded by the plaintiff to enlarge limitation, were held to have been made by unauthorised persons, and, consequently, of no avail to the plaintiff. The contention appears to have been raised, on behalf of the appellant in the High Court, that Article 62 of the First Schedule to the Limitation Act was not the appropriate provision under which the present suit fell. This contention found favour with the learned Judges who were of the opinion that as the defendant had retained the plaintiff's money, not for his use but for the purpose of adjustment towards sums due by the plaintiff to the defendant, Article 62 could not apply. Apparently, this position was also conceded to be correct by the learned counsel for the defendant. The suggestion was then considered in the High Court, whether the case could fall within the purview of Article 64 of the First Schedule. For this purpose, reliance was placed on Exh. P. 10. the statement of accounts, submitted under the signature of the Deputy Excise and Taxation Commissioner in the trial Court, on the 17th of June 1954, and bearing the date, the 5th of June 1954. The learned Judges rejected this suggestion, on the ground that "by no stretch of language this statement of accounts represents `money payable to the plaintiff for money found to be due from the defendant to the plaintiff on accounts stated between the parties', because the sum of Rs. 57,808-4-3 mentioned in the document was not actually outstanding against the defendant or payable to the plaintiff". The learned Judges also observed that it was a one-sided account, representing the money which was due to the plaintiff, without mentioning the amount which the plaintiff had to pay to the defendant. This remark appears to be inapt in the context of the proceedings in the course of which this account was filed. They further found that the Deputy Excise and Taxation Commissioner was not an agent of the respondent, duly authorised in this behalf, for stating an account or for making an admission. The learned Judges also rejected the contention that section 10 of the Limitation Act (which declares that suits for recovery of trust property or proceeds thereof, from trustees, or their legal representatives or assigns, not being assigns for valuable consideration, or for an account of such property or proceeds, shall not be barred by any length of time) might cover the case. The moneys claimed, in the view of the learned Judges, were never retained to trust by the Government. Finally, the High Court held that the residuary Article 120 could be invoked in the case, which prescribes a period of six years' limitation in cases where no specific period of limitation is provided in the First Schedule, from the date when the right to sue accrues. In respect of the item of Rs. 21,609-11-3, claimed on account of excess payment of licence fees, the learned Judges pointed out that the payment, having been completed before the 1st October 1948, the suit instituted on the 8th of August 1955, more than six years later, must be held to be barred by time. With regard to the item of Rs. 66,837-12-0 also, the opinion of the learned Judges was that more than six years had elapsed prior to the Institution of the suit, from the time when the stock was actually delivered or sold, though the precise dates of the transaction were not available. The learned Judges then considered the five acknowledgements of liability, pressed into service by the learned counsel for the plaintiff, and rejected them all, either on the ground that they were unauthorised or that more than six years had expired from the time of the alleged acknowledgements before the suit was lodged. From a perusal of the written statement, submitted on behalf of the Government in the instant case, the impression is clearly gained that the case was being fought out in what can only be described as a sprit of sheer litigiousness. All sorts of defences to the suit were raised and even on facts which clearly came out in the evidence subsequently, the written statement contained absolute denials. The averments in the plaint, concerning excess payment of licence fees, taking over of unsold stock of the appellant and receipt of Rs. 66,837-12-0 as proceeds thereof from Messrs D. P. Edulji & Co. were absolutely denied. The defendant might have been expected to show a greater awareness of the fact that the dispute was between them as Government and a subject and that it was inconsistent with their public responsibilities to fight shy of admitting even patent facts. We can only conclude that proper advice was not tendered to Government by the learned counsel who drafted this written statement on its behalf. Recourse to the residuary Article 120 could only be had in this case if no other specific Article of the First Schedule to the Limitation Act was found to be applicable. No argument was presented to us on the applicability of section 10 of the Limitation Act or of Article 64 of the First Schedule thereof and we need not therefore consider them. In the plaint, it was averred that the cause of action arose in favour of the plaintiff on the 26th June 1954, when the case was finally decided, on remand, by the trial Judge, after enquiry under the principle embodied in section 65 of the Contract Act. Mr. Mushtaq Hussain, Additional Advocate-General, who appeared for the respondent, argued on the contrary, that the right to sue, for the sums claimed, had accrued to the plaintiff at the same time as he had instituted the first suit for a declaration that the licence fees claimed from him were not recoverable. The learned Additional Advocate-General pointed out that there was nothing to prevent the plaintiff from suing simultaneously for these sums of money at that time. According to him, this was the starting point of the Limitation for a suit, whether it fell under Article 62 or Article 120 of the First Schedule. He also submitted that the findings of the High Court, with regard to the alleged acknowledgements on which reliance was placed for extension of limitation, were correct. These findings were contested on behalf of the appellant. The first question that calls for consideration is whether the suit could be said to be governed by Article 62 of the First Schedule to the Limitation Act. This provision requires that money should be "payable by the defendant to the plaintiff for money received by the defendant for the plaintiff's use" and the period of limitation prescribed is three years, the teminus a quo being the date of receipt of the money. The essence of a cause of action for a suit of this type is that money which, in justice and equity, belongs to the plaintiff, is received by the defendant, under circumstances which render the receipt by him a receipt for the use of the plaintiff. There is an analogy between such a suit and the action under the English Law for money had and received by the defendant for the plaintiff's use, though the technicalities of English procedure, governing such action need not be imported into our system of law. The criterion for finding, whether money is received by the defendant for the use of the plaintiff is whether, having regard to the circumstances, the law would impute such an intention to the defendant. In a case, going up from Ceylon to the Privy Council, and reported as John v. Dodwell & Co. (A I R 1918 P C 241), their Lordships made the following pertinent observations:- " * * * under principles which have always obtained in Ceylon, law and equity have been administered by the same Court as aspects of a single system, and it could never have been difficult to treat an action analogous to that for money had and received, as maintainable in all cases `where the defendant has received money which ex acquo et bono (in equity and good conscience) he out to refund'." The position does not appear to be in any way different in this country. Such a suit need not be based on a contract, express or implied, as seems to be the requirement of English Law. Judging by this criterion, it is difficult to see why the money received by the defendant from Messrs D. P. Edulji & Co., on account of the proceeds of the sale of the plaintiff's stock, and the excess payment, made by him to the defendant on account of licence fees, should not be held to fall within the ambit of Article

62. Clearly, the moneys in question were received by the defendant and the circumstances make it plain that this receipt could only have been for the plaintiff's use. The mere fact that it was intended to adjust these items, towards sums alleged to be due from the plaintiff to the defendant, would not deprive there receipt, of the character envisaged by Article

62. This consideration becomes reinforced when it is remember that as a matter of fact, no licence fees were payable to the defendant at all in view of the final decision of the High Court, apart from whatever might have been payable on the principle of quantum meruit. The next question, calling for determination is of the date or dates, on which the sums claimed were received by the defendant, It appears that the parties were agreed that the relevant date, in respect of the excess payment of licence fees, may be regarded as the lst of October 1948. The record is not helpful in determining the precise date on which the sum of Rs. 66,837-12-0 was deposited into the Treasury by Messrs D. P. Edulji & Co. The High Court's finding is that this was done before the 9th of May 1950, as an order of that date, recorded by Mr. J. W. Hearn, Financial Commissioner Development, in hearing a revision petition of the plaintiff in this very case, mentions that the liquor stock of the plaintiff had been sold and that the plaintiff was making a claim on that account. The stock in question had been handed over to Messrs D. P. Edulji & Co., on the 10th of October 1948-vide Paragraph 9 of Exh. P. 2 read with the corresponding paragraph of Exh. P. 1 which are the written statement and the plaint respectively, appertaining to the previous suit. The receipt must therefore, have taken place at some time between these to dates. Mr. Bhandara, Managing Director of Messrs D. P. Edulji & Co. was examined as P. W. 6 in the present case and deposed that the proceeds of sale of the stock in question used to be sent to the Treasury either weekly or monthly and that the entire stock had been disposed of in about two months' time. This would seem to point to the 10th of December 1948, as the date by which the payment was fully received by the defendant. The suit was brought on the 8th of August 1955, which was more than six years from the 1st October 1948, as well as from the 10th of December 1948, and unless, therefore, the appellant could rely on a subsequent acknowledgement of liability, extending limitation, the plaintiff would be out of Court. In the High Court judgment, five such acknowledgments have been noticed. They are as follows:- (1) Paragraph 9 of the written statement of the defendant in the first suit (Exh. P. 1) ; (2) The order of Mr. J. W. Hearn, Financial Commissioner, dated the 9th May 1950, (Exh. P. 14); (3) Statement of accounts (Exh. P./5 and Exh. P./5-A) produced in the earlier suit ; (4) Statement of account (Exh. P./10), dated the 5th June 1954, and filed in the previous suit on the 17th June 1954; and (5) Statement of Mr. Ziauddin, Advocate, counsel for the defendant (Exh. P. 11), made in the trial Court in the previous suit. No addition to this list has been suggested in this Court. If Article 62 governs the case, acknowledgements 1, 2, 3 and 5 cannot advance the case for the plaintiff to any material extent. The first acknowledgement was made on 7-7-49. The second so called acknowledgement was really no acknowledgement within the meaning of section 19 of the Limitation Act as it merely amounted to a recital of facts in a judicial order passed by the Financial Commissioner, bearing the date, the 9th May 1950. The section requires an acknowledgement in writing signed by the party concerned or its agent duly authorised in this behalf. The third acknowledgement is undated but as the account in question way filed in the course of the earlier suit, it may be taken to have been submitted in Court on a date subsequent to the date of suit, vie., the 4th of May 1949. The statement made by Mr. Ziauddin as counsel for the defendant (the fifth acknowledgement) is also dated the 17th November 1949. Assuming that these were good acknowledgements satisfying the requirements of section 19 of the Limitation Act, in other respects, they afford little assistance to the plaintiff to save the bar of limitation for the suit filed on the 8th of August 1955. The three years' period prescribed by Article 62 had long since elapsed and even if the plaintiff be given the benefit of deduction of a two months' period, in respect of the statutory notice under section 80, Civil Procedure Code, given to the defendant before suit, under subsection (2) of section 15 of the Limitation Act, the bar of limitation would still be effective against the suit. Some one of these acknowledgements however could be pressed into service to establish that by virtue of a subsequent acknowledgement of liability made within a fresh period of limitation starting from the date of the earlier acknowledgement, the suit was instituted within the time allowed by law. This brings me to the acknowledgement of liability contained in the account (Exh. P. 10), submitted on behalf of the defendant in the course of the first suit, in the original Court, on the 17th June 1954, in connection with the enquiry on the question of quantum meruit. The authority of the Deputy Excise and Taxation Commissioner who signed this statement on behalf of the defendant, to make an acknowledgement of liability is not admitted on behalf of the respondent, albeit on somewhat specious grounds. But even if that objection is overruled, the liability expressly admitted in this document is confined to Rs. 21,609-11-3 on account of excess fees paid and Rs. 36,198-9-0 in respect of the stock taken over from the plaintiff at the time when Prohibition was enforced in the Province. The latter figure represents the distillery price of the stock as contrasted with the sum of Rs. 66,837-12-0 which is also mentioned in the document as actually received from Messrs. D. P. Edulji & Co. by way of proceeds of that stock. The .plaintiff, however, is confronted with a serious hurdle in respect of this acknowledgement in so far as it was made beyond the period of 3 years, whichever earlier acknowledgement may be adopted as the starting point for a fresh period of limitation. In terms, section 19 of the Limitation Act, would not cover such an acknowledgement and the plaintiff's suit must fail, if Article 62 is to provide the rule of decision. ??????????? It was, however, urged that Article 97 of the First Schedule to the Limitation Act may be found applicable to the facts of this case. That Article prescribes a limitation of three years for a suit for money, "paid upon an existing consideration, which afterwards fails", from the date of the failure. If these words are construed to import the existence of a contract between the parties, whether express or implied, it may be difficult to spell out such a contract from the relationship between the parties. In the Privy Council ruling Busu Kuar and others v. Dhum Singh (1888 I L R 11 All. 47), which is cited by learned counsel for the appellant, there appears to have existed a contract inter partes, the consideration for which failed later. The arrangement, on the contrary by which the appellant was enabled to sell excisable liquor under a licence, cannot be described a3 a contract. A licence is in the nature of C a privilege conferred to do that which it would not have been permissible for the licensee to do, otherwise. The word "contract" is however not expressly mentioned in the Article and the contention may perhaps be raised that one promise may, generally speaking, constitute consideration for another, even if no enforceable contract, stricto sensu, results from the mutual undertakings of the parties. Whatever may have been the position in law of the understanding between the parties at the time that the Excise and Taxation Commissioner granted licences to the appellant for the sale of liquor, at a subsequent stage, it appears that a "consideration" came into being for the appellant's consent to defendant retaining the proceeds of sale of his stock and adjusting it in the former's account. In the written statement filed on behalf of the defendant in answer to the plaint in the previous suit, (Exh. P. 1), the 9th paragraph reads as follows :- "

9. Para (ix) is correct to the extent that on the termination of the licences, the plaintiff surrendered unsold liquor under the Excise Rules and its disposal has been arranged as required by the said rules. The sale proceeds would be setoff against the arrears as requested by the plaintiff in writing." This written statement was signed by the Excise and Taxation Officer, Lahore, and Mr. N. A. Siddiqi, Government Pleader, Lahore, who was examined as P. W. 1 in the present case and who testified that this document was drawn up under the instructions given by the Lagal Remembrancer to the Government of West Punjab and the Excise and Taxation Officer, Lahore, and after consultation with the then Excise and Taxation Commissioner. It may be noted that in the present case too the written statement printed at pages 8 to 10 of the paper book, bears the signature of Mr. Muhammad Afzal, Excise and Taxation Commissioner, who designates himself as "Defendant" although the formal defendant to the suit was the Government of West Pakistan. All along in this litigation, therefore, the defendant has been represented by the Officers of the Excise and Taxation Department and it would be idle to contend that the above quotation from Exh. P. 1 was not authorised by the defendant-respondent. Mr. Siddiqi stated on oath in the trial Court that he must have seen the written request of the appellant to which reference is made in the above extract. That the defendant had to deduct the price of the goods in question to the tune of Rs. 66,000 odd, from the amounts shown as due from appellant on account of licence fees, was also admitted by Mr. M. Ziauddin, Advocate, who appeared in Court on the 17th November 1949, on behalf of the defendant in the earlier suit, on that date. This statement (Exh. P. 11) was duly proved by calling Mr. Ziauddin as a witness for the plaintiff. The position that emerges therefore is that on the express request of the appellant, the defendant agreed to set off the sale, proceeds of his stock against such arrears of licence-fees as may be due from him, This cold hove only happened on or about the 10th of October 1948, when due to the enforcement of Prohibition, the liquor licence of the appellant was terminated and his unsold stock taken over. At that time both parties were under the impression that the licence-fees were legally payable. It was only by the judgment of the Letters Patent Bench of the High Court, dated the 4th December 1953, that it was finally decided that the licences issued to the appellant were ultra vires of the Excise and Taxation Commissioner and that no fees were legally recoverable from him. There was then nothing left towards which these proceeds of sale could have been adjusted and it could justly be said that the "consideration" for the plaintiff's consent to defendant's retention of his money, failed at that time. For the sum of Rs. 66,837-12-0 claimed on account of the price of the plaintiff's goods therefore, the starting point for limitation under Article 97 would seem to be the 4th of December 1953, at the earliest and plaintiff's suit lodged on the 8th of August 1955, would be clearly within time in respect of this item. In respect of the item of Rs. 21,609-11-3 claimed by way of refund of excess licence fees paid, I have not been able to discover any evidence of an "agreement" between the parties or of any "consideration" relevant to the retention thereof, by the defendant. There was of course the prospect that if the original arrangement had continued, he would have been granted a further licence to absorb the amount paid. As observed above, it seems doubtful if such an arrangement involves any "agreement" or "consideration" such as could enable the plaintiff-Appellant to call in aid the provisions of Article 97 of the First Schedule to the Limitation Act. An implied understanding that a licence would be issued in lieu of the deposited fees, to enable plaintiff to purchase excisable liquor for sale, could not be described as an "existing consideration" to which the incident of a subsequent failure might be attached. I am, therefore, inclined to the view that the claim with regard to this item is governed by. Article 62 alone and for the reasons discussed above it cannot succeed in the face of the bar of limitation raised in defence of the suit. - To this extent the judgment of the High Court ought to be affirmed. The question may well arise whether the appellant is entitled to receive the whole sum of Rs. 66,837-12-0, which represents the sale price of his stock of liquor admittedly received by the defendant or only the amount which plaintiff-appellant paid to the Brewery for this stock viz.. Rs. 36,198-9-0. The excess of the former sum over the latter, is really the profit on the sales which plaintiff himself might have made if his licence had enured for the purpose. But in that case he would have had to pay the licence fees in respect of these sales. He has clearly avoided payment of the relevant fees because of the decision that the fees are not recoverable. On the principle of quantum meruit, it could be argued that he should not be allowed to retain the benefit of the profits which would have accrued to him on obtaining a proper licence. But against this consideration must be set the fact that the plaintiff's money has been withheld by the defendant for nearly twelve years now, from the 10th of December 1948. The plaintiff is a businessman who could have invested his money, if he had access to it, to get an adequate return on his capital. Of this opportunity he has been deprived by the defendant's conduct. At 6%. per annum, interest on Rs. 36,196-9-0 up to date would have exceeded Rs. 25,000 and it cannot be postulated with certainty that he could not have obtained a higher return on his capital. Moreover, the plaintiff has not asked for the return of all fees paid to the defendant but only fees paid in excess of those due in respect of actual sale by him. On a consideration of the equities of the case, therefore, it would seem just that he should receive the full amount of Rs. 66,837-12-0. I would, therefore, allow the appeal, set aside the order and decree of the High Court and substitute therefor, a decree for Rs. 66,837-12-0 in favour of the plaintiff appellant and against the defendant, with proportionate costs of this Court and the Courts below. A. H.??? Order accordingly.