The court clarified that the limitation period for a breach of contract begins after the contract's expiration, not during its duration.

JUDGMENT :

Sathish Ninan, J.

1. The suit for damages for breach of a contract was dismissed by the trial court. The plaintiff is in appeal.

2. The plaintiff is a timber merchant. On 06.08.1998, he entered into Ext.A1 agreement with the defendants to cut and remove trees standing in the plaint schedule property belonging to the defendants. The total consideration fixed was ₹ 25 lakhs. It was a term of Ext.A1 that the defendants were to obtain passes from the Forest Department to enable the removal of the trees. The claim of the labourers of the estate were also to be settled by the defendants. The plaintiff constructed a motorable road through the property for a length of 25 kilometres and expended huge amounts for the same. This was in addition to the amount expended for construction of stacking shed, arranging labourers etc. The period of the agreement was for one year from 01.09.1998. According to the plaintiff, since the defendant failed to procure the necessary passes, the agreement was further extended till 03.04.2001. The plaintiff alleges that on the failure of the defendants to obtain passes, the plaintiff was unable to remove the trees in its entirety. The plaintiff has thus suffered damages under various heads. Thus suit was filed for realisation of the same.

3. The defendants, while admitting Ext.A1 agreement, contended that Ext.A1 agreement had been performed in its entirety and that on such completion, on 01.10.2000, yet another agreement was entered into between the parties as Ext.B4 for removal of the trees in yet another property belonging to the defendants. They alleged suppression of such fact by the plaintiff. They prayed for dismissal of the suit.

4. The trial court found that Ext.A1 agreement has been performed. It was also found that the suit is barred by limitation.

5. We have heard Smt.Hemalatha, the learned counsel on behalf of the appellant and Sri. R. Sudhir, the learned counsel for the respondents.

6. The points that arise for determination are :-

(i) Is the plaint claim barred by limitation?

(ii) Has there been breach of Ext.A1 agreement by the defendants ?

7. Ext.A1 agreement is dated 06.08.1998. Under Ext.A1, the period fixed for performance was one year from 01.09.1998. The said period expired on 01.09.1999. The plaintiff claims that on 03.10.2000 the agreement was extended for a further period of six months ie. up to 03.04.2001. Alleging breach on the part of the defendants, the suit has been filed. The suit is filed only on18.01.2005.

8. The learned counsel for the appellant-plaintiff would contend that, the defendants failed to obtain passes from the Forest Department, that the breach is a continuous one, and hence the suit cannot be said to be time barred. We are unable to agree with the contention. Article 55 of the Limitation Act , 1963 reads thus:

Article 55 contemplates three situations; one, when the contract is breached; second, when there are successive breaches; and the third, when the breach is a continuing one. When the breach is a continuing one, limitation begins to run from the date on which the breach ceases.

9. Section 22 of the Limitation Act deals with “continuing breaches”. It reads thus,

“S.22. Continuing breaches and torts-

In the case of a continuing breach of contract or in the case of a continuing tort, a fresh period of limitation begins to run at every moment of the time during which the breach or the tort, as the case may be, continues.”

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