Limitation Period Begins To Run On The Date 'Continuous Breach' Of Contract Ceases: Kerala High Court

The Kerala High Court has said that under Section 55 of the Limitation Act where a contract is breached and if the breach is continuous, the limitation period begins to run from the date the breach ceases. A division bench comprising Justice Sathish Ninan and Justice P Krishna Kumar, delivered the judgment in an appeal filed against a trial court order dismissing suit for damages for breach of contract.The case arose when the appellant, a timber merchant, had entered into an agreement with the respondents in 1998 for a period of one year for cutting and removing trees from their property. Under the agreement, the respondents were obliged to obtain necessary forest passes to facilitate removal, and since the respondents failed to procure passes, the agreement was further extended till 03.04.2001. When the respondents allegedly failed to procure the passes, the appellant claimed losses for the unremoved timber and associated expenses. The trial court dismissed the suit as time-barred, leading to the appeal.The counsel for the appellant contended that the respondents failed to obtain passes from the Forest Department for the removal of the trees, which resulted in a continuous breach, and hence the suit cannot be said to be time barred. The Bench observed that Article 55 of the Limitation Act, 1963, contemplates three situations of breaches which includes; (i) when the contract is breached; (ii) when there are successive breaches; (iii) when the breach is continuing one. Referring to Section 22 of the Limitation Act, the Court explained, “In the case of a continuing breach, every moment the breach continues, a fresh period of limitation commences. Article 55 provides that in the case of breach of a contract, when the breach is continuous, limitation begins to run from the date of cessation of the breach.”The Court further clarified that this applies only during the currency of the contract. “On expiry of the period of the contract, the breach ceases. 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 have expired,” the bench added. The Court observed that even if the alleged extension of the agreement until April 3, 2001 was accepted, the appellant ought to have filed the suit within three years from that date. Filing the suit in January 2005 rendered it time-barred.The Court thus upheld the trial court's decision and dismissed the appeal. Case Title: V Chandran v Aliamma GeorgeCase No: RFA 79/ 2013Citation: 2025 LiveLaw (Ker) 691Counsel for Appellant/ Plaintiff: M R Anandakuttan, Mahesh Anandhakuttan, T Saproo, M A ZohraCounsel for Respondents/ Defendants: M C Siny, R Anas Muhammed Shamnad, Mohan Pulikkal, T S Rajasenan, R SudheerClick Here To Read/ Download Judgment

Limitation Period Begins To Run On The Date 'Continuous Breach' Of Contract Ceases: Kerala High Court

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