1962 Supreme(AP) 106

Andhra Pradesh High Court
Judges : CHANDRASEKHARA SASTRI, MANOHAR PERSHAD
Mohd.Dalil Khan - Appellant
Versus
State OF A.P. - Respondent
Decided On : 06-29-62

Section 74 of the Indian Contract Act does not apply to a deposit made for the due performance of a contract.

Headnote:

CONTRACT - CONSTRUCTION - DEPOSIT - FORFEITURE - LIMITATION - INDIAN CONTRACT ACT, SECTION 74 - WHETHER SECTION 74 APPLIES TO A DEPOSIT MADE FOR THE DUE PERFORMANCE OF A CONTRACT - WHETHER ON A TRUE CONSTRUCTION OF SECTION 74 A CASE OF A DEPOSIT OR OF ANY AMOUNT PAID AT THE TIME THE CONTRACT IS ENTERED INTO FOR THE DUE PERFORMANCE OF THE CONTRACT COMES WITHIN THE AMBIT OF SECTION 74 AND WHETHER THE RIGHTS OF PARTIES IN RELATION TO THIS DEPOSIT OR SUM CAN BE ADJUDICATED UPON UNDER THE SAID SECTION.

Fact of the Case:

The appellant, a contractor, entered into four contracts with the Government. Disputes arose regarding the payment of certain amounts claimed by the appellant under the contracts. The appellant filed a suit for recovery of the amounts claimed. The Government filed a written statement and cross-objections.

Finding of the Court:

The court held that the appellant was entitled to the amounts claimed under the second contract for metal collection, but disallowed the claim for extra lead, the return of earnest money and security deposit. The court also allowed the appellant's claim for further carting charges, return of further security and return of earnest money in respect of the third contract, but disallowed his claim to the extent of the cost of the metal collected. The court dismissed the appellant's claim in respect of the fourth contract. The Government's cross-objections were partly allowed.

Issues: 1. Whether the appellant was entitled to the amounts claimed under the second contract for metal collection? 2. Whether the appellant was entitled to extra lead, the return of earnest money and security deposit under the second contract? 3. Whether the appellant was entitled to further carting charges, return of further security and return of earnest money in respect of the third contract? 4. Whether the appellant was entitled to the cost of the metal collected under the third contract? 5. Whether the appellant was entitled to the amounts claimed under the fourth contract? 6. Whether the appellant's claim was barred by limitation?

Ratio Decidendi: 1. The court held that the appellant was entitled to the amounts claimed under the second contract for metal collection, as the evidence supported his case and the Government had not agreed to pay non-season rates in the absence of any agreement. 2. The court held that the appellant was not entitled to extra lead, the return of earnest money and security deposit under the second contract, as the contract did not provide for such a contingency and the claim was barred by limitation. 3. The court held that the appellant was entitled to further carting charges, return of further security and return of earnest money in respect of the third contract, as the evidence supported his case and the Government had admitted liability to pay these amounts. 4. The court held that the appellant was not entitled to the cost of the metal collected under the third contract, as the evidence did not support his case. 5. The court held that the appellant was entitled to the amounts claimed under the fourth contract, as the Government had admitted liability to pay these amounts and the claim was not barred by limitation. 6. The court held that the appellant's claim was barred by limitation in respect of the first contract, as the claim was not made within three years of the completion of the contract.

Final Decision: The appeal and the cross-appeal were partly allowed. The appellant's claim to the extent of Rs. 3613-8-0 in respect of the first contract, his claim to the extent of extra lead relating to the second contract, his claim to the refund of the earnest money to the extent of Rs. 299.00 relating to the cost of the metal amounting to Rs. 6757-1-3 relating to the third contract were not accepted and the appellant was held to be disentitled to the same; and his claim relating to the second item of the second contract, item 3 to the extent of the security deposit amounting to Rs. 578-14-0 relating to the above contract, the claim relating to the items 2 to 4 of the third contract and items 1 and 2 of the 4th contract were decreed.