P L D 1968 Karachi 196 (PLP)

FARUQUI, J.‑This is a first appeal by the Province of West Pakistan and the Superintending Engineer, Mechanical Circle, Hyderabad, against whom the 11 Additional District Judge, Hyderabad, decreed the plaintiffs' claim for Rs. 1,17,300 and costs by his judgment dated 29th January 1964, in Suit No. 12/62. The respondents are Messrs Asghar Ali Muhammad Ali & Co.

2. The Executive Engineer, Workshop Division P. W. D. Jamshoro, Hyderabad issued a public notice in the press on 18‑5‑57 for the disposal by public auction of a stock of iron and steel scrap to be held on 5‑6‑57 at Hyderabad. At this auction the appellant No. 2, namely the Superintending Engineer, on behalf of the Department started the auction with a minimum, bid of Rs. 1,000 per ton, which seems to have been fixed as the reserve price. The respondents who were plaintiffs in the trial Court gave a bid of Rs. 1,010 per ton and this having been accepted, the whole quantity of the goods, which weighed 200 tons, was sold to the plaintiffs who paid Rs. 2,02,000 at the aforesaid rate and took delivery. The Iron & Steel (Control of Production, Distribution & Imports) Order, 1948, which came into force on 1st April 1948 included pig iron as one of the commodities to which the Order applied. This was the first time of the Schedule to the said Order. Section 12 of this Order empowered the Controller to fix the maximum price of this commodity. However, the entry No. 1 in the Schedule of the Order was amended by a Notification which was published on 22‑4‑53 and by this Amendment the first entry now read as pig iron and iron steel scrap including cast iron scrap. It is common ground that the scrap which was sold at the public auction to the plaintiffs was covered by this description. The maximum price of such scrap was fixed by the Controller at Rs: 500 per ton. Op 21st January 1959, the plaintiffs addressed a letter to the Minister of Industries, Government of Pakistan, Karachi (Exh. 31) informing him of the fact that they had purchased this scrap at Rs. 1,010 per ton against the reserve price of Rs. 1,000 per ton upon the representation by the Superintending Engineer that there was no control on' scrap in West Pakistan. However, they learnt from the representative who bad visited Karachi that the said scrap bad been under control since 1953, and that being so it should not have been sold at the price at which it was auctioned. The plaintiffs added that they were now finding themselves in a fix as the maximum price fixed by the Controller was Rs. 500 per ton and the Minister was then requested to permit the disposal a of the said iron scrap at the rate at which it had been purchased by the plaintiffs with a marginal profit of 10 per cent. It was added that in the alternative the P. W. D. may be directed to j refund the amount representing the difference between the rate at which it was purchased and the control price. Lastly, an offer was made to place the entire scrap at the disposal of the Government for distribution by the Controller at suitable rate to dealers. Copies of this letter were sent amongst others to the Controller of Iron & Steel, the Director of Industries, West Pakistan, the Additional Chief Engineer, Hyderabad, the Executive Engineer, Workshop Division, Hyderabad and the Superintending Engineer, Mechanical Circle, Hyderabad. The Central Govern ment took action on this letter of the plaintiffs and appear to have corresponded with the competent authorities in the Provincial Government, but the only letter that we have on record is one dated 16th April 1960, Exh. 30, which was addressed by the Iron & Steel Controller Mr: Habibur Rehman to the Secretary Irrigation and Works Department, West Pakistan, Lahore. In this letter which was in ‑reply to the letter of the Chief Engineer, Irrigation, West Pakistan dated 10th February 1960, the argument of the Chief Engineer, upon which the stand was taken by the Provincial Government that there was no justification for the refund of the price over and above the control price, was repelled by the Controller and it was pointed out that even though the sale was at an open auction by the Superintending Engineer it would still be an offence under the Iron & Steel Order of, 1948. The Secretary was then advised to refund the difference to the plaintiffs as had been advised in the previous letter of the Controller dated 2‑10.59. However, neither the Provincial Government nor the Superintending Engineer were willing to make any refund or take the iron scrap which the plaintiffs bad offered to place at the disposal of the Controller and so the plaintiffs served a notice, under section 80, C. P. C. and followed it up by this suit in which a decree was passed against the two appellants as stated above. The plaintiffs had also impleaded Pakistan as the first defendant but the decree was only against the second and the third defendants, namely the Province of West Pakistan and the Superintending Engineer. The sum of Rs. 1,17,300 consisted of two sums. Firstly, there was the amount of Rs. 1,02,000 which was the difference on 200 tons at the rate of Rs. 510 per ton. Secondly, Rs. 15,300 were claimed by way of interest.

3. Mr. Haleem has attacked the judgment of the trial Court before us on three grounds: Firstly, that the plaintiffs were not entitled to the refund of the price or the difference because the case was not covered by section 65 of the Contract Act as found by the Court below. Secondly, that the plaintiffs were a firm and the suit having been instituted without the firm being registered was not maintainable in law. Thirdly, that the suit was barred by limitation. We shall now, proceed to deal with these contentions.

4. With regard to the first point, it was urged that in so far as the sale to the plaintiffs of the goods was at a price forbidden by law, the contract was hit by section 23 of the Contract Act and was void ab initio and that section 65 of the Contract Act was not attracted in this case. Reliance was mainly placed on a judgment of the Dacca High Court in the case of P. K. Basak & Co. Ltd. v. Gossen & Co. Ltd. (P L D 1957 Dacca 233). Another case relied upon was a judgment of a single Judge of the Calcutta High Court in the case of Jagadish Prosad Pannalal v. Produce Exchange Corporation Ltd. (A I R 1946 Cal. 245). We will return to these two cases presently. Section 65 of the Contract Act is in the following terms:

"

65. When ad agreement is discovered to be void or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it." It will be noticed that this section provides for restoration of advantage in two situations: Firstly, where an agreement is discovered to be void and secondly, when a contract becomes void. The argument that when a contract is void ab initio section 65 is not attracted loses sight of the first part of the section which deals with cases in which an agreement is discovered to be void. These two terms, viz., agreement and contract, have clearly been used in the sense in which they have been defined by the Contract Act. Section 2 (g) provides that an agreement not enforceable by law is said to be void and clause (h) provide that an agreement enforceable by law is a contract. Having regard to the meaning of these two terms in the definition the intention of the Legislature seems to be clear. The term 'agreement' has not been used as being synonymous with the term `contract' in this section. An agreement, which by it very nature was void from its inception, would still attract the consequences which this section provides if after the agreement is made it is discovered to be void. On the other hand, contract which was an enforceable agreement at the time when it was entered into may become void latter on because of the happening of certain event. In either case the section provides for the restoration of advantage by the person who may have received it or to make compensation for it to the person from whom advantage was received. It was held by the Privy Council as far back as the year 1922 in the case of Thakurain Harnath Kaur v. Thakur Indar Bahadur Shah (AIR 1922 P C 403) that "the section deals with (a) agreements and (b) contracts. The distinction between them is apparent from section

2. By clause (e) every promise and every set of promises forming the consideration for each other is an agreement, and by clause (h) an agreement enforceable by law is a contract. Section 65, therefore, deals with (a) agreements enforceable by law and (b) with agreements not so enforceable. By clause (g) an agreement not enforceable by law is said to be void. An agreement, therefore, discovered to be void is one discovered to be not enforceable by law, and on the language of the section, would include an agreement that was void in that sense from its inception as distinct from a contract that becomes void."

5. In the Dacca case, upon which reliance was placed, the learned Judges were dealing with a situation in which the parties had entered into a secret agreement which was found to have been against public policy and therefore void under section 23 of the Contract Act. The passage which was relied upon by the A. A. G. reads:‑

"We must point out that section 65 of the Contract Act does not apply to contracts void under the provisions of sections 23 and 24 of the said Act, for the latter are void ab initio and cannot be said to have become void or to have been discovered to be void." We must point out with great respect that an agreement which is hit by section 23 of the Contract Act is one which is no enforceable by law and is, therefore, not a contract. Therefore, if in this case the agreement was void ab initio it would not by covered by the second part of section 65 which deals with contracts which become void but by the first part which deals with the agreements which are discovered to be void. We, therefore, with respect are not able to follow the dictum. The Calcutta case, upon which reliance was placed, is not applicable. In that case a valid contract had been entered into in respect of a certain quantity of maize starch at the rate of Rs. 77 per cwt. Before the contract could be performed the Government fixed its price at Rs. 48 per cwt. The purchaser took delivery after such fixation and then claimed the difference between the contract rate and the rate fixed by the Government. It was on these facts that it was held that section 65 did not apply to the case as the seller had received the benefit after the contract ceased to be a contract by becoming void. The learned Judge who decided the case brought out clearly the distinction between an agreement which was void db initio and was so, discovered at a later stage and a valid contract which became void afterwards. In that case, when the Government had fixed a price the contract had become impossible of performance without infringing the law and had thus become void under section 56 of the Contract Act. It was then open to the buyer to rescind the contract but he could not claim the performance of the contract at a lesser price which was subsequently fixed by the Government. We are in respectful agreement with the view taken in this case but, as we have pointed out, it has no application to the facts of the case before us.

6. It was next urged by the A. A.‑G. that in this case the contract has been fully performed and whereas section 65 may be attracted in cases of executory contracts it cannot be pressed into action where the contract has been performed. We do not agree. Section 65 does not lay down any such restriction. Indeed, when it provides for making of compensation is respect of the advantage which may have been, received it must follow that cases would frequently arise where an agreement or a contract may have been performed and yet it may become necessary to order restoration in the form of compensation. This compensation may have to be determined with regard to its value and quantity. The Privy Council in the case of Govindrarn Seksaria v. Edward Radbone (PLD1947PC213) quoted with approval the comments of Stone, C. J. which were in these terms :‑-- "Under section 65 alternatives are to restore any advantage or to make compensation for it to the person from whom he received it. This must mean valuing or quantifying in money the advantage retained, if retained it be." In the present case, the advantage which the defendant No. 2 retained was a sum of Rs. 510 per ton which was the amount in excess of the price which could have been charged. Of course, it was open for tile Provincial Government or the Superintending Engineer to refund the entire auction price and demand the return of the scrap iron. This would have restored the parties to the position in which they would have been if the agreement had not been acted upon. But this they did not do. We have referred to the correspondence in which the Controller had rejected the plea of the Provincial Government that they were entitled to retain the whole price. The plaintiffs had written to the Minister that they were prepared to place the entire quantity for the purpose of distribution or such other purpose as the Government might decide upon. If the plaintiffs had not done so they may have been on weaker grounds but in this case they did make an offer but the Provincial Government was not prepared either to take the iron back or to pay the difference of the auction price and the control price. The Central Government, viz. the defendant No. 1, examined Habibur Rehman who had signed Exh. 30 and was at that time the Assistant Controller of Iron & Steel and in employment with the Central Government. He stated that he had dealt with the representation made by the plaintiffs and the Provincial Government had been advised to refund the excess amount to the plaintiffs. This, however, as we have seen, they did not do.

7. The Court below found that this agreement was discovered to be void on 21st January 1959 when the plaintiffs wrote to the Minister having learnt from their representative that the iron scrap was under control since 1953. The finding that the agreement was discovered to be void was not seriously challenged and for good reason. Asghar Ali himself went into the witness box and stated that the Superintending Engineer had assured that the iron scrap which was being sold was not hit by the control. Another person who had gone to bid at the auction, namely Pir Bux, also deposed about this assurance though in some‑what different terms and no body appeared on behalf of the Provincial Government or the Superintending Engineer to deny the assertions which had been made on this point on behalf of the plaintiffs. We are inclined to hold that nether the plaintiffs nor the engineers who were selling the scrap were aware of the control which had been extended to iron scrap. It may be recalled that as the Control Order originally stood this commodity had not been included. It was only by a subsequent notification in the year 1953 that control was extended. to scrap iron. We have no doubt that if the plaintiffs had known that the scrap which they were buying at Rs. 1,010 per ton could not have been validly sold by them at a price more than Rs. 500 per ton they would not have bought it. We, therefore, accept the finding of the Court below that the agreement in question was subsequently discovered to be void.

8. The question next arises as to whether the plaintiffs could recover the difference on the whole quantity of 200 tons as held by the trial Court. Asghar Ali admitted in his evidence that when he made the application to the Minister, Exh. 31, he had consumed 50 tons for manufacturing ploughs. The remaining 150 tons, according to him, he sold at the rate of Rs. 300 to 400 per ton in the year 1961 when the defendants had declined to take it back and refund the price. It would, therefore, follow that when the plaintiffs offered to place the whole quantity at the disposal of the Government they were only in a position to restore 150 tons out of 200 tons which they' had bought. They cannot, therefore, be permitted to claim the difference of price on the whole of 200 tons. Their claim for restoration either of the whole price or the difference between the control price and the auction price depended on their capacity to restore the advantage which they bad received under the agreement, that is by returning the entire quantity of the iron scrap if the Provincial Government had agreed to take it back. In so far as they had already utilised 50 tons of this scrap we are ‑of the opinion that they were entitled to the difference only on the remaining 150 tons which the Provincial Government in spite of the plaintiffs' offer did not agree to take back. The plaintiffs' claim, therefore, would be reduced from Rs. 1,02,000 to Rs. 76,500.

9. The next question relates to 'the objection based on section 69 of the Partnerships Act: Admittedly Asghar Ali Muhammad Ali & Co. was a firm which had come into existence on 4th June 1957, and this firm was registered; on 25‑7‑

63. The auction had taken place on 5‑6‑57 and the suit was instituted on 17‑3‑

62. Section 69 of the Partnership Act in so far as it is material may be reproduced:

"69. (1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any Court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm. (2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm." The contention of the learned A. A.‑G. was that in so far as the firm was not registered on the date on which the suit had been instituted the suit was liable to be thrown out on that ground alone. The reply of Mr. Sharaf Faridi was three‑fold. Firstly, that the agreement in this case was not by the firm but by Asghar Ali Muhammad Ali personally; secondly, that in any case, the subsequent registration of the firm on 25‑7‑63 during the pendency of the suit removed the defect and validated the suit and, thirdly, that, having regard to ,the facts of this case, section 69 was not attracted even if the suit was by the firm. In respect of the first plea our attention was drawn to the title of the plaint and its body. The title 'of the plaint is Messrs Asghar Ali Muhammad Ali &. Co. through Asghar Ali Muhammad Ali. In para. 1 of the plaint it is stated that‑the plaintiff is a trader who carries on business in the name and style as above. Then throughout the plaint in the subsequent paragraphs the plaintiff has been used in singular. The plaint has been signed by Asghar Ali Muhammad Ali only and not Asghar Ali Muhammad Ali for Asghar Ali Muhammad Ali & Co. II has also been verified by Asghar Ali son of Muhammad Ali. The argument was that there was nothing to show that the agreement was for the benefit of the partnership or that the plaintiff had brought the suit for its benefit. If was urged that unless either of these two facts had been established the barring provision of section (9 of the Partnership Act would not be attracted. Reliance was placed upon a judgment of this Court, to which one of us was a party, in the case of Jaffar Khan v. Muhammad Achar (P L D 1961 Kar. 335). The legal proposition as stated is affright, but the question is whether on the facts of this case it can be said that the two requirements as aforesaid or either of them had not been fulfilled. The answer must be in the negative. Asghar Ali admitted in the course of his evidence that a partnership had been entered into by him and others on 4‑6‑57, that is a day before the auction of the iron scrap took place. The name of this firm was Asghar Ali Muhammad Ali & Co. This firm was registered on 25‑7‑63 during the pendency of the suit. The letter, Exh. 31, was written on behalf of Asghar Ali Muhammad Ali & Co. In the face of these admissions the manner in which the body of the plaint was drafted did not alter the position. A clear issue had been framed by the trial Court with regard to the bar under section 69 of the Partnership Act. When it was admitted that there was such a firm bearing the name in which the agreement had been made and this firm had come into being a day, before the auction' took place, the burden would be very heavy on Asghar Ali to establish that he had entered into the agreement in his personal capacity. He made no 'attempt whatever to discharge this burden. He did not even suggest in his evidence that he had entered into the contract not for the benefit of the firm but in his own name for his own benefit. Section 69 of the Partnership Act stands as a bar to a suit in the circumstances stated in that section. Therefore when a suit is in the name of the firm it was for the plaintiffs to establish that the bar did not operate. The first contention of Mr. Faridi, therefore, must be repelled.

10. With regard to the next argument that the subsequent registration validated the suit, reliance was placed on three judgments, (i) by the Madras High Court, in the case of T. Vardadarajulu Naidu v. R. Rajamanika Mudalar and others (A I R 1937 Mad. 767) ; (ii) a judgment of the Calcutta High Court and reported in Racha Charan Saha and others v. Matilal Saha and others (41 C W N 534) and (iii) a, judgment of the Lahore High Court on which the trial Judge has also relied. This was in the case of Nazir Ahmad and others v. Peoples Bank of Northern India Ltd. (A I R 1942 Lah. 289). With regard to the first two cases it is enough to say that the Madras decision was overruled by that very Court in a subsequent judgment reported in l0overdhandoss Takersey v. M. Abdul Rahman and another (A I R 1942 Mad. 634) and, the Calcutta decision was also overruled in Hari Narayan Das and others v. The State (A I R 1953 Cal. 497). With regard to the third case, which was a Full Bench case, the question before their Lordships was whether a suit instituted against a company in liquidation without leave under section 171 should not be dismissed on that ground alone though such a leave was subsequently granted by the Court. It was in this context that one of the three learned Judges happened to advert .to section 69 of the Partnership Act and took the view that a subsequent registration of a firm before th8 passing of the decree validates the proceedings. With respect we do not agree. The prohibition in section 69 of the Partnership Act is to the institution of the suit itself unless the firm is registered. The prohibition is express and mandatory. Ii prevents a Court from taking cognizance of a suit brought by an unregistered firm. There is mass of case‑law in support of this view which is now well established. We do not, therefore, see how we can accept the contention that the subsequent registration of the firm during the pendency of the suit can validate the suit. That brings us to the third point whether section 69 is at alt attracted in the present case. We have quoted the two subsections of this section which are material for present purposes. The first subsection says that no suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any Court etc. The second subsection says that no suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered etc. It is the second subsection which was invoked by the learned A. A.‑G. But are the conditions requisite for the application of this subsection present in this case? As has been earlier it is common ground that the agreement of purchase and sale in this case was void ab initio as having been forbidden by law. So when the plaintiffs came to Court seeking restoration of advantage upon the ground that the agreement had been discovered to be void it cannot be held that this suit was to enforce a right arising from a contract. In the first place, the term `contract' must be read in the sense of its definition under the Contract Act. Section 2(e) of the Partnership Act provides that expressions used but not defined in this Act, and defined in the Contract Act, shall have the meanings assigned to them in that Act. The expression 'contract' has not been defined in the Partnership Act and, therefore, by virtue of section 2(e) of the Act the meaning of it must be assigned according to section 2(g) and (h) of the Contract Act. However, we are of the opinion that even if this expression was not so understood the result would still be the same. Under section 65 it is not the right arising from a contract which has become void or an agreement which is discovered to be void which is enforced by a suit. The principles of restoration as contained in section 65 is an equitable principle which is applied notwithstanding the agreement or the contract and in fact in spite of it. The agreement in the present case was that the buyers pay for the goods at the rate of Rs. 1,010 per ton and the sellers deliver it to them for this price. But the present suit is not for the purposes of enforcement of either of these terms. The obligation under section 65 to restore the advantage or to pay compensation received under a void agreement or a contract which has become void, is completely different from that under the agreement or the contract itself. That obligation is like a phoenix that can be raised again by one of the parties from the dead ashes of its former self. Before the new right to claim compensation can come into being the other right under the contract must die. The two causes of action are entirely different. We are, therefore, of the opinion that the present suit is not hit by section 69 of the Partnership Act because it' does not seek to enforce a right arising from a contract. Mr. Haleem, who argued the case with great tenacity, was, however, not to be daunted and he attempted to contend that though this suit was not to enforce a right arising from the main agreement yet when that agreement was discovered to be void, the right to claim restoration of advantage must be related to an implied agreement which must attach to such an agreement which is found to be void. We are unable to accept this argument. The obligation does not arise from any implied contract but because of a statutory provision which embodies in it an equitable principle. We accordingly hold that the suit is not barred by section'69 of the Partnership Act.

11. The third objection is based on the ground of limitation. The learned Additional District Judge did not indicate as to which Article of the First Schedule of the Limitation Act applied in this case but held that limitation in such a case commenced only when the agreement was discovered to be void. In this case he held that this discovery was made by the plaintiff on 21‑1‑59 and giving allowance for the period of 2 months required for the statutory notice under section 80, C. P. C. the suit was within the period of limitation having been instituted on 17‑3‑

62. He further field that in the circumstances of the case limitation would commence from 23‑10‑59 when the Provincial Government refused to refund the excess amount and in either case the suit was within time. Mr. Haleem, on the other hand, contended that the Article applicable to this case was Article 62 of the first Schedule. This Article relates to suits "for money‑payable by the defendant to the plaintiff for money received by the defendant for the plaintiff's use".' The period of limitation provided is three years commencing front the time when the money is received. In this case, the auction price having been paid on 5‑6‑57, the suit would be barred by time if this Article was applicable. I shall presently examine the argument in support of this contention. It was next pointed out that even if Article 96 applied the suit would still be barred by time. This Article relates to a suit for relief on the ground of mistake. The period of limitation provided is three years commencing from the time when the mistake becomes known to the plaintiff: It was pointed out that in Exh. 31, which was the letter addressed to the Central Government by the plaintiffs on 21st January 1959, it was stated that when their representative happened to be in Karachi he was given to understand that the iron scrap had been under control since 1953. It was, therefore, urged that in the absence of any evidence that the said representative had brought this information on or after 17‑1‑59 and the suit having been instituted on 17‑3‑62 it must be held that the plaintiffs had not proved that the suit was instituted within time even when two months time for notice under section 80, C. P. C. is allowed.

12. The contention of Mr. Faridi on the other hand was that in so far as no specific Article existed in the First Schedule to the Limitation Act in respect of' a suit under section 65 of the Contract Act, Article 120, which is the residuary Article, would apply. In the alternative, it was urged that Article 97 would apply and it was added that even if Article 96 applied the suit would still be within time: Article 120 provides for 6 years' limitation and is attracted only in a suit for which no period of limitation is provided elsewhere in the Schedule. Article 97 relates, to a suit for money paid upon an existing consideration which afterwards fails. Tire period of limitation provided is three years commencing from the date of the failure.

13. Now to revert to Article 62 which, according to the learned A. A.‑G.; was applicable to the present case, the requirement is that the money should have been received by the defendant for the plaintiff's use. Now, can it be said that in the present case the Superintending Engineer or the Provincial Government received the auction price of the goods sold for the plaintiffs' use. Such a suit would be in the nature of an action under the English Law for money had and received by the defendant for the plaintiffs' use. It was held by the Supreme Court in the case of Muhammad Akbar Khan v. Province of West Pakistan (P L D 1961 S C 17) that the essence of a cause of action for a suit contemplated under Article 62 is that money which, in justice and equity, belongs to the plaintiffs is received by the defendant under circumstances which rendered the receipt by him a receipt for the use of the plaintiffs. The criterion, it was observed, 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 this case, the appellant Akbar Khan had been granted a licence for the sale of country liquor but prohibition having been enforced in the Province of West Punjab with effect from 1st October 1948, which debarred the Muslims from selling liquor, the stocks of country liquor in the possession of the appellant still lying unsold were taken over by the Excise & Taxation Commissioner and handed over to a non‑Muslim firm for disposal. This firm sold the liquor in due course and deposited the sale‑proceeds in the Government Treasury after deducting its own commission. Upon a demand and threat of coercive process by the Government against the said Akbar Khan for payment of unpaid licence fee the latter instituted a suit in which, amongst other thing, it was claimed that the demand could not be enforced against him without accounting for the price of liquor stocks taken from his possession and handed over to the non‑Muslim firm. It was in these circumstances that it was held that the said moneys had been received by the Province of West Punjab were for plaintiff's' use in the circumstances of the case. It is plain to us that the facts of this case were clearly different from the one with which we are dealing. Can it, in the circumstances of the case, be said that the law should impute an intention on the part of the defendants 2 and 3 that the money received as auction price should be held as to‑have been received for plaintiffs' use? The answer, in our opinion, must be in the negative. Here was a case in which a certain commodity had been sold on behalf of the Province of West Pakistan and the plaintiff bought it and paid its agreed price which the former received. The Province of West Pakistan received this money as the price of the goods which they bad sold and of which possession had been given to the plaintiffs. The transaction was over and the liability of the defendant could not arise‑until it was declared that the agreement of sale was void in consequence of which the money would have to be refunded to the buyer. But even in this case the liability to refund the money which was the advantage received under the contract would only arise if the buyer also restored the advantage which he had received under the agreement. At no time, the defendants 2 and 3 received or retained the money for the benefit of the plaintiffs nor did they have any liability to account for it. Article 62 is, therefore, clearly inapplicable to the present case.

14. With regard to Article 96, the text of which has been reproduced earlier would show that it is attracted when relief is claimed on the ground of mistake. But that is not the case here. The relief in the present suit has been claimed on the ground that the agreement was forbidden by law and thus void and the defendant must, therefore, restore the advantage or pay compensation. This article, therefore, does not govern the case. We then come to Article 97 which, in our opinion, is applicable. This Article, as has been noted, applies to a suit for money paid upon an existing consideration which afterwards fails. In the present case, upon the agreement having been found to bye void, the consideration for that agreement failed and the parties became liable to restore the advantage which had been received under the agreement. The case, would, therefore, fall under Article 97. . The question then is as to when did the time begin to run? The judicial pronouncements on this point refer to two starting points of limitation. In the first set of cases where a sale was found to be void limitation was held to commence when such a declaration was made by a Court. In the second set of cases, which related to sale of immovable property which having been discovered to be void, it has been held that time does not begin to run until the plaintiff has been dispossessed of the property. I may refer to two judgments of the Judicial Committee in this respect. The first of these is the case of Mst. Basso Kaur and others v. Lala Dhum Singh (15 I A 211). In this case, the respondent being indebted to the appellant had agreed to convey certain properties to him setting off the debt against part of the price. No money having been paid the respondent unsuccessfully sued to inforce the agreement. It was held that the starting point of limitation was the date of the decree whereby the respondent's suit had been dismissed. That, it was held, imposed under section 65 of the Indian Contract Act, a fresh obligation on the respondent to pay his debt; in the alternative it imported, within the meaning of Article 97 of the Limitation Act, a failure of consideration. The second case was from Burma: M. A. H. N.

1. T. v. Fatima Bibi (5 Rang. 283). In this case, money was advanced by the appellant to a woman who had purported to be acting as guardian of her nephew. In consideration of having received this money the latter executed a mortgage of certain property professedly belonging to the minor. Later‑on, a mortgage decree was obtained by the appellant, but this decree was set aside subsequently upon a suit by the minor on the ground that the respondent, who had acted as his guardian, had no authority. The appellant then brought a, suit for the recovery of the money on the ground that as the minor could not be sued, the purported guardian, namely the first respondent, was liable. It was held by the Privy Council that Article 97 applied to the suit and that the period of three years did not began to run until the date of the decree setting aside the mortgage and consequently the suit was not barred by time.

15. The cases in which it had been held that where the sale was void ab initio and under which possession had been delivered to the vendee who was subsequently ejected by the true owner, the vendee's suit against the vendor for the recovery of the purchase money fell within Article 97 and not 62 and the limitation began to run only when the vendee was dispossessed. These cases are collected in the Commentary by Rustamji on Limitation Act at page 557 of its 1958 edition. We will refer only to one judgment of a Division Bench of the Lahore High Court in the case of Punjab Government v. Laid Baijnath (A I R 1945 Lah. 164). This was a suit by the respondents against the Punjab Government for the recovery of a sum of Rs. 2,100 upon the ground that he had been deprived of the possession of the property which his predecessor had purchased at an auction sale conducted under the Punjab Land Revenue Act. It was held that where possession of the property sold is delivered to the purchaser and subsequently the sale is found to be void and the purchaser is dispossessed, a suit by the purchaser to recover the purchase price is governed by Article 97 and not by Article 96 or Article 62 and the terminus a quo for limitation is the date of dispossession of the purchaser from the property sold.

16. Now, in the case before us, the plaintiffs had been delivered possession of the scrap iron which possession the enjoyed and it was on the discovery that the agreement was void that they claimed compensation or restoration of advantage under section 65 of the Contract Act. Article 97 was, therefore, clearly applicable; The starting point of limitation in this case, according to the authorities cited, would be either when it was declared that the agreement was void or when the plaintiffs wet dispossessed of what they had bought under the said agreement. In the present case, they wrote to the Central Government on 21st January 1959, informing them that they had learnt that this Article had been under control. It was not, however, until 16th April 1.960, that the Central Government accepted this position and wrote to the Provincial Government by Exh.30 advising them to refund the difference between the auction price and the control price to the plaintiffs. The plaintiffs were never dispossessed of the goods which they had bought and, therefore, in the present case, the time against the plaintiffs would not began to run until the 16th of April 1960, on which date the Central Government declared that the sale at the price at which it had taken place was prohibited by law and advised the Provincial Government to refund the excess. When this day is to be taken as the starting point of limitation the suit was clearly within time: Our conclusion, therefore, is that the suit was not barred by limitation.

17. The next question is as to what amount are the plaintiffs entitled in the suit. We have already held in para. 8 above that the plaintiffs' claim for compensation would have to be reduced from Rs. 1,02,000 to Rs. 76,

500. But they had also claimed interest in the sum of Rs. 15,300, which claim has been allowed by the Court below. Neither in the plaint, nor in evidence was any basis disclosed upon which such a claim was made, nor has the Court below given any reason for the grant. of such interest antecedent to the suit. Such an interest can only be granted when there is a stipulation for it or where there is no stipulation where mercantile usage is pleaded or where interest is payable under any statute, such as section 80 of the Negotiable Instruments Act or the Interests Act of 1839. None of this can be claimed by the plaintiffs. Reliance was placed 'on the latter part of section 1 of the Interests Act of 1839. But in order that this could be attracted a demand for payment bad to be made in writing so as to give notice to the debtor that interest will be claimed from the date of such demand. It was urged that in any case this section provides for payment of interest in all cases in which it is payable by law. In the Present case, we are unable to discover any law under which this interest was payable. We, therefore, reject the plaintiffs' claim for interest antecedent to the date of the suit.

18. In the result we decree the plaintiffs' claim for the sum of Rs. 76,500 with interest at 6%. from the date of the suit until the date of the decree. Such an interest can be allowed under section 34 of the Civil Procedure Code. The decree of the Court below is modified accordingly. The plaintiffs shall also get costs of the suit on the aforesaid sum of Rs. 76,

500. The rest of the claim is dismissed with no order as to costs. The decree shall be satisfied within one month. S. A. H. Appeal partly allowed.