Sanchayita Lahkar

The High Court of Kerala, Division Bench of Justice Sathish Ninan and Justice P. Krishna Kumar held that under Section 55 of the Limitation Act, when a contract is breached and the breach is of a continuing nature, the limitation period commences from the date the breach ceases. Delivering judgment in an appeal against the trial court’s dismissal of a timber merchant’s suit for damages arising from a failed agreement to cut and remove trees from the respondents’ property, the Court affirmed that the claim was time-barred, finding that the contractual breach did not extend beyond the stipulated period of the agreement.

The case originated from an agreement dated August 6, 1998, entered into between the appellant, a timber merchant, and the respondents for the cutting and removal of trees standing on property belonging to the respondents. The total consideration fixed was Rs. 25 lakhs. Under the agreement, it was the responsibility of the defendants to obtain passes from the Forest Department to enable the removal of the trees. They were also to settle the claims of the labourers employed on the estate.

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The plaintiff asserted that he had constructed a 25-kilometre motorable road through the property, apart from incurring expenses for building stacking sheds and hiring labourers. The agreement was initially valid for one year, commencing on September 1, 1998. The plaintiff claimed that due to the defendants’ failure to obtain the required forest passes, the agreement was extended until April 3, 2001. Despite these efforts, the plaintiff alleged that he could not remove all the trees and consequently suffered financial losses.

The defendants admitted the existence of the agreement but contended that it had been fully performed. They further stated that, upon completion of the first contract, a new agreement (Exhibit B4) was executed on October 1, 2000, for cutting trees in another property. They alleged suppression of this fact by the plaintiff and sought dismissal of the suit. The trial court held that the contract had been performed and that the plaintiff’s claim was time-barred.

The Division Bench examined whether the plaintiff’s claim was barred by limitation and whether there had been a breach of the agreement by the defendants. The Court observed that the period fixed for performance under the agreement dated August 6, 1998, was one year, which expired on September 1, 1999. The plaintiff’s claim of extension until April 3, 2001, was noted but not accepted as altering the limitation period. The Bench stated that “even taking it to be that there had been such an extension, it was only for a specified period, i.e., up to 03.04.2001.”

The Bench referred to Section 22 of the Limitation Act concerning continuing breaches, observing that “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.”

The Court further observed that “when the term of the agreement obliging the defendants to obtain passes from the Forest Department is breached by them, there occurs a breach of the contract. That breach continues during the period fixed in the contract. On expiry of the period of the contract, the breach ceases.” The Bench concluded that the alleged continuing breach did not extend beyond the contractual period and that the suit should have been filed within three years from the expiry date.

The Bench stated that “the breach was a continuing one, but during the currency of the contract. The breach cannot be said to continue thereafter since the period fixed by the parties has expired.” It further recorded that once the period of the agreement had expired, the plaintiff was required to institute the suit within three years from that date to seek damages.

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The Court stated, “A suit could be maintained within three years from the date of expiry, claiming the total damages consequent on the breach committed by the defendants. Having failed to do so, the present suit is barred by limitation.” It affirmed that since the limitation period had elapsed, the trial court’s dismissal of the suit was legally justified. The Bench further noted that “having found that the suit is barred by limitation, the other questions do not arise for consideration.”

“Resultantly, the appeal fails and is dismissed.”

Advocates Representing the Parties:
For the Appellant: Shri M.R. Anandakuttan, Sri Mahesh Anandakuttan, Sri T. Saproo, and Smt. M.A. Zohra.
For the Respondents: Smt. M.C. Siny, Sri R. Anas Muhammed Shamnad, Shri Mohan Pulikkal, Shri T.S. Rajasenan, and Shri R. Sudheer.

Case Title: V. Chandran v. Aliamma George & Others
Neutral Citation: 2025: KER:79909
Case Number: R.F.A. No. 79 of 2013
Bench: Justice Sathish Ninan and Justice P. Krishna Kumar