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Report No. 89

23.6. Applicability of section to tort. and contract suits.- There is a controversy on the question whether the section, in terms applies also to suits based on contract, or whether it is confined to suits based on torts.

The Rangoon High Court consistently1 held that section 24 applies only to suits based on torts.

However, the Allahabad High Court2-3 seems to have taken a somewhat wider view and the following observations of Arshworth, J. are worth quoting:

"Where there is no sum named to be paid in case of breach of stipulation by way of penalty, under Indian Law a mere breach of the covenant by omission to pay, as in this case, gives no right to a claim for compensation, and the suit will come within the language of section 24 of the Limitation Act. I may mention that the word 'act' in section 24 of the Limitation Act will include an omission [see section 3(2) of the General Clauses Act, 10 of 1897].

It has been urged that section 24 is only applicable to suits based on tort, but no reason appears for holding this."

1. (a) V. M. Cony v. Loong Ghye, AIR 1936 Rang 510; (b) Annamalai Chetyar v. Cowasjee, AIR 1938 Rang 258.

2. Kedar Nath v. Har Gobinii, AIR 1925 All 605.

3. See also Kahan & Sons v. Krishna Ron, AIR 1953 Mad 726.

23.7. The Bombay High Court1 while dealing with a case in which misfeasance summons had been taken out against the Director of a company under section 235 of the Companies Act, 1913, observed:

"The case of Cavandish Bentink v. Fann, also shows that a misfeasance application, to be successful, must establish that actual loss resulted to the company from the misfeasance. But by section 24, Limitation Act, in the case of a suit for compensation for an act which does not give rise to a right of action unless some specific injury actually arises the reform, the period of limitation is to be computed from the time when the injury results.

In this connection I think that 'injury' in section 24 includes a legal injury; and that the present application is clearly one for 'compensation', which is the expression used in section 235, Companies Act itself. And in so far, if at all, as the case is not covered by section 24, think it comes within section 23".

1. Govind v. Rangnath, AIR 1930 Born 585.

23.8. Meredith, J. of the Patna High Court1 having taken stock of the controversy on this subject, ultimately observed that "the better view is that section 24 is applicable in the case of action ex contracts in proper cases". The case was, however, one in which the breach of contract itself had furnished the cause of action (and the aspect of special damage was not material).

1. Jagat Kishore Prasad v. Parmashwar Singh, AIR 1951 Pat 348: ILR 28 Pat 974.

23.9. The matter came up in some other cases1-4 in an indirect way, but no concluded view was expressed on the above point.

1. Rajagopala Naidu v. Aiyyaszvamy Chattier, AIR 1965 Mad 532.

2. Jagannath Marwari v. Kalidas Rahn, AIR 1929 Pat 245.

3. Eastern Traders (I) Ltd., New Delhi v. Punjab National Bank, AIR 1966 Punj 303.

4. Bhajan Hardit Singh v. Karson Agency (India), AIR 1967 Del 101.

23.10. Meaning of cause of action.- It would appear that in section 23, the use of the word 'injury' in juxtaposition with the expression 'cause of action' indicates that all types of actions, irrespective of their form, are contemplated.' Holloway, J., in a Madras case has gone in detail as to what constitutes a "cause of action", and observed as under:1

"Parke, B in Nicklin v. Williams, 10 Exch 259 and Campbell, C.J. in Bonomi v. Backhouse, EB&E 622, talk of a cause of action not being an injury to a right, but of consequential damages being that cause. It is clear, however, that this language is incorrect; and the only meaning in cases in which the cause of action is said to arise from consequential damages, is that until that damage, there was no injury at all.

In that same case, Coleridge, J. sa.-"The right of action vests in a party whose rights are injuriously affected by the act of another person at the time when the right is so affected. Erie, J. sa.-"A cause of action arises when this right is violated," and again, "as a general principle, it is difficult to conceive a cause of action from damage when no right has been violated, and no right has been violated, and no wrong has been done," and in the Exchequer Chamber, "Willes, J. sa.-"the question in this case depends upon what is the character of the right".

The injury in this case was to a right in rem. This right was not to prevent the defendant from excavating, but to have his land in its natural state. There was no 'juris vinculum' at all until that state was disturbed; there was no disturbance until the damage accrued, and at the accruing of the disturbance arose the injury, the cause of action."

1. Desouza v. Colas, (1866-67) MHC 384 (407).

23.11. Need to extend section 23 to action on contracts.- From the above discussion it transpires that the doubts expressed about the applicability of the section to suits based on contracts have been resolved by the courts mostly in favour of its applicability. However, in order to obviate, further controversy, on the point, it is desirable to extend the section expressly to suits on contracts.

23.12. Section to be extended to all wrongs.- In fact, while making it clear that section 23 is comprehensively and is not confirmed to tort, etc. opportunity can also be taken of clarifying that the section applies to all wrongs (for example breach of statute or breach of trust).1

1. See para. 23.14, infra, for a draft.

23.13. "Specific injur.-an expression needing to be replaced.- Another point on which the section seems to require verbal improvement relates to the words "specific injury" occurring in the section. The word 'injury' is now-a-days used in the context of civil liability for the wrong itself (which is a legal concept), white 'the word "damage" is used to indicate the harmful physical consequence of the injury.

The section has obviously in mind the consequence and from this angle "specific damage" is better than the present wording "specific injury". In fact, the Limitation Act itself (in the articles relating to libel and slander); uses the expression "specific damage". These words were also used in illustration (b) to section 24 of the Limitation Act of 18771. The words "specific injury", therefore, should be replaced by "specific damage".

1. Para. 23.2, supra.

23.14. Recommendation.- In the light of the above discussion, we recommend that section 23 should be revised as under:

Revised section 23

"23. In the case of a suit for compensation for an act which does not "give rise to a cause of action unless some specific damage actually results therefrom, the period of limitation shall be computed from the time when the damage results.

Explanatio.-The provisions of this section apply to a wrong which constitutes a breach of contract, as also to an act which constitutes a wrong independent of contract."

The Limitation Act, 1963 Back

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