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Report No. 89

Chapter 32

Articles 6 to 55: Suits Relating to Contracts

32.1. Article 6.- Article 6 prescribes a limitation period of 3 years for a suit for a seaman's wages. The starting point is the end of the voyage during which the wages are earn.-thus differing from the starting point under the general article relating to wages (Article 7), where limitation starts running as soon as the wages accrue due.

The article needs no change.

32.2. Article 7.- Article 7 reads as unde.-

"For wages in the case of any other person.

Three years.

When the wages accrue due"

The subject was covered in the Act of 1908 by two articles.

There was no parallel provision in the Acts of 1871 and 1877. The two articles on the subject occurring in the 1908 Act have been combined, on the recommendation of the Law Commission in its Report on the Act of 1908.

32.3. Salary.- Some questions need to be discussed in connection with the article. The first.-Does the expression 'wages' include 'salary'? Arguments have been addressed before the Courts time and again that the salary of a Government servant cannot be called "wages". In a case before the Supreme Court, where the appellant was a clerk in the Accounts Department of the Railways, the Supreme Court observed.-

"a good deal can be said of the contention that a claim for arrears of salary is distinguishable from a claim for wages. But, our difficulty is that the question appears to us to be no longer open for consideration afresh by us, or, at any rate, it is not advisable to review the authorities of this Court, after such a lapse of time when, despite the view taken by this Court that Article 102 of the Limitation Act of 1908 was applicable to such cases, the Limitation Act of 1963 had been passed repeating the law, contained in Articles 102 and 120 of the Limitation Act of 1908, in identical terms without any modification.

The Legislature must be presumed to be cognizant of the view of this Court that a claim of the nature before us, for arrears of salary falls within the purview of Article 102 of the Limitation Act of 1908."

In a later case,2 the Supreme Court, relying on a judgment of the Federal Court3, held that the term "wages" appearing in Article 102 of the 1908 Act includes salary and a suit for the recovery of pay is covered by this article. It has also been held to include pension.4

It is proper that the judicial interpretation should be codified by amending the article.5 The clarification can apply to Article 6 as well.

1. S.D.S. Srivastava v. Union of India, AIR 1974 SC 338 (341): (1974) 2 SCR 485.

2. Maimoona Khatun v. State of Uttar Pradesh, (1980) 3 SCC 578.

3. Punjab Province v. Tarachand, AIR 1947 FC 23, para. 28, 33: 1947 FC 89.

4. Anand Swarup v. Punjab, AIR 1972 SC 2638.

5. See para. 32.8, infra.

32.4. Suits for arrears of salary on reinstatement in service.- The second question in connection with Article 7 relates to the situation where the dismissal of a Government servant is set aside and, on re-instatement, he sues for arrears of salary. The Supreme Court has dealt with the matter thus:1

"When the order of dismissal or removal is set aside by the Court on the ground of failure to afford the constitutional protection, the order is declared invalid ab initio, i.e., as if it, in law, never existed, and the public servant concerned was unlawfully prevented from rendering service. If that be the correct view, salary due to the public servant concerned must be deemed to have accrued month after month because he had been wrongfully prevented from rendering service. The period of limitation under Article 102 to run when the wages accrue due', and wages accrue due when in law the servant becomes entitled to wages."

1. Jai Chand Sawhney v. Union of India, (1970) 2 SCJ 288 (289).

32.5. These observations gave rise to a view that a period of three years for filing the suit for arrears of salary would be computed from month to month, irrespective of the date when the dismissal is held to be invalid.

However, considering the fact that courts may take a longer time than three years to pronounce upon the validity or otherwise of the dismissal of a Government servant, some High Courts have been referring to the service conditions to enable such a Government servant to compute the period of limitation from the date when his dismissal was set aside by the court. The Bombay1 High Court referred to the effect of Fundamental rules 52 and 53 upon the Government servant's salary, which ceases upon his suspension when he becomes entitled only to get subsistence allowance, and ceases altogether upon his dismissal.

As a result of the Fundamental Rules, the Government servant cannot even ostensibly put a claim to salary so long as the orders of suspension and dismissal stand. On this basis, the Bombay High Court held that the right of a suspended or dismissed Government servant to claim arrears of salary can arise only when the order of suspension or dismissal is quashed and set aside, either by the department or by the order of a civil court. On this reasoning, the Court held the date of quashing of the order to be the starting point of limitation for a suit by such a Government servant for salary.

The Gujarat High Cour.-like the Bombay High Cou.-has made the statutory rules as the plank upon which to base its judgment in this regard.

1. State of Bombay v. Sarjoo Prasad Gumasta, ILR 1968 Born 1024.

2. Laxmiben v. State of Gujarat, (1970) 11 Guj LR 51.

32.6. The Cuttack High Court1, on the facts of a case before it, held that the Government servant was illegally prevented from performing his duties, although he was ready and willing to perform those duties, and hence the cause of action arose only on the day when the court quashed the impugned order of transfer.

The Madras High Court2 had, before it, a case of an employee who was informed that the period during which he was off from service would be treated as if he was on duty. The Court observed:

"In the light of our observations as above, the third column in Article 7, 'when the wages accrue due', in a case like the one with which we are faced, has to be interpreted, as we said, liberally and equitably. When an employee whose services have been illegally terminated has been reinstated and when he is informed that the period during which he was off from service would be treated as if he was on duty, then a fresh cause of action would arise on the date when he was reinstated and on the date when a communication to that effect was issued to him."

The Calcutta High Court3 also held that a claim for arrears of salary of a public servant who had been wrongfully prevented from attending to his duties followed from the declaration that the relevant order was void and a nullity.

1. Baikunthanath Pratihari v. State of Orissa, 1974 Cuttack Law Times 532.

2. Union of India v. Venkataraina Naidu, (1975) 1 MLJ 345 (350).

3. Umasankar Das v. State of West Bengal, (1972-73) 77 CWN 899.

32.7. Later judgment of the Supreme Court.- It is now no longer necessary to cull out niceties from the facts peculiar to each case, because the Supreme Court has itself, in a recent judgment1, distinguished its earlier case2. The Supreme Court has observed:

"We are clearly of the opinion that in cases where an employee is dismissed or removed from service and is reinstated either by the appointing authority or by virtue of the order of dismissal or removal being set aside by a civil court, the starting point of limitation would be not the date of the order of dismissal or removal, but the date when the right actually accrues, that is to say, the date of the reinstatement, by the appointing authority where no suit is filed or the date of the decree where a suit is filed and decree."

The earlier case3 having not been overruled, the observations made therein that even if the dismissal or removal is declared ab initio invalid, the salary due to the public servant must be deemed to have accrued month after month, may be construed as still holding the field. The result is, that except in cases where the Government servant has been suspended and thereafter reinstated, the ratio of the earlier case may disentitle a Government servant from claiming arrears of salary for a period three years prior to the institution of the suit for such arrears.

1. Maimoona Khatun v. State of Uttar Pradesh, (1980) 3 SCC 578 (586).

2. Jaichand Sawhney's case, (1970) 3 SCR 222: (1969) 3 SCC 642: (1970) 2 SCI 288; see para. 32.4, supra.

3. Jaichand Sawhney v. Union of India, (1970) 3 SCR 222: (1970) 2 SCJ 288; see para. 32.4, supra.

32.8. Recommendation as to Article 7.- In this position, we think that the matter should be put beyond doubt by amending the third column of Article 7 as follow.-

"When the wages accrue due or, where the suit is for relief consequential on the setting aside of an order of dismissal or removal, when the order of dismissal or removal is aside."

Further, as already recommended1, an Explanation should be inserted below Article 7, as under:

"Explanatio.-In this article and in Article 6, the expression "wages" includes salary and pension."

1. Para. 32.3, supra.

32.9. Article 8.- We now proceed to Article 8. It reads as unde.-

"For the price of food or drink sold by the keeper of a hotel, tavern or lodging-house.

Three years.

When the food or drink is delivered."

It corresponds to Article 8 of the Act of 1908, quoted belo.-

"For the price of food or drink sold by the keeper of a hotel, tavern or lodging-house.

One year.

When the food or drink is delivered."

This was identical with Article 8 in the Acts of 1877 and 1871.

The Law Commission recommended in its Report on the Act of 1908 that the period of limitation should be increased from one year to three years1. This has been implemented in the Act of 1963. No further change is needed in the article.

1. Law Commission of India, 3rd Report (Limitation Act, 1908), para. 71.

32.10. Article 9.- Article 9 reads as unde.-

"For the price of lodging.

Three years.

When the price becomes payable."

Article 9 in the Act of 1908 was as unde.-

"For the price of lodging.

One year.

When the price becomes payable."

This was identical with Article 9 of the Acts of 1877 and 1871.

In the Act of 1963 (the present Act) the period of limitation has been raised from one year to three years, as recommended by the Law Commission in its Report on the Act of 1908.1

No further change is needed in the article.

1. Law Commission of India, 3rd Report (Limitation Act, 1908), para. 71.



The Limitation Act, 1963 Back




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