Case: Gannon Dunkerley &amp; Co. Ltd Vs. Union Of India

the site, were referred to arbitration, but not the claims for revision of rates due to complex nature of the work and increase in the quantity of work. The arbitrator rejected the claims of the Company in respect of the matters which were referred.5. Thereafter the appellant Company filed a suit on August 9, 1956, against the Union of India, for a decree for Rs. 3,62,674/9/6 being the amount claimed at the rate of 421/2 per cent above the contract rate, in the alternative, a decree for Rs. 2,44,000 being the amount claimed at the rate of 28.1 per cent above the contract rate as recommended by the Executive Engineer, and in the further alternative, a decree for Rs. 1,36,222 at the rate of 18.17 per cent above the contract rate as certified by the Superintending Engineer. The Union of India contended, inter alia, that the claim was barred by the law of limitation.6. The Trial Court held that the claim was not barred by the law of limitation and decreed the claim for Rs. 1,36,222 as certified by the Superintending Engineer. Against the decree passed by the Trial Court the appellant Company as well as the Union of India appealed to the High Court.7. Before the High Court in support of the appeal only the plea of limitation was pressed on behalf of the Union of India. In the view of the High Court the claim was governed either by Art. 56 or by Art. 115 of the First Schedule to the Limitation Act, 1908, and the suit not having been filed within three years of the date on which the work was done and in any event of the date on which the claim was rejected was barred. The appellant Company has appealed to this Court with certificate.8. The appellant Company had undertaken under the terms of the contract to do specific construction work at basic rates. The Engineer-in-charge was by the terms of cl. 12 of the agreement competent to give instructions for work not covered by the terms of the contract, and it was provided that remuneration shall be paid at the rate fixed by the Engineer-in-charge for such additional work, and in case of dispute the decision of the Superintending Engineer shall be final. It is common ground that the claim made by the appellant Company was not covered by the arbitration agreement and on that account it was not referred to the arbitrator. The claim in suit related to the revision of rates due to the complex nature of the work and due to increase in the quantity of work and also grant of contracts to other competing parties at substantially higher rates and other related matters.9. Article 56 of the First Schedule to the Indian Limitation Act, 1908, prescribes a period of three years for a suit for the price of work done by the plaintiff for the defendant at his request, where no time has been fixed or payment, and the period of limitation commences to run from the date when the work is done.A suit is governed by Art. 56 if it arises out of a contract to pay the price of work done at the request of the defendant. The claim in the present case is for payment at an additional rate over the stipulated rate in view of change in circumstances, and not for price of work done by the appellant Company. It is true that additional work was done at the request of the Engineer-in-charge, but the claim in suit was not for the price of work done but for enhanced rates in view of altered circumstances.10. Article 115 of the First Schedule to the Limitation Act is a residuary article dealing with the claim for compensation for the breach of any contract, express or implied, not in writing registered or implied, not in writing registered and not specially provided for, in the First Schedule.The period of limitation in such cases is three years and it commences to run when the contract is broken, or where there are successive breaches when the breach in respect of which the suit is instituted occurs, or where the breach in continuing when it ceases. The suit filed by the appellant Company is not a suit for compensation for breach of contract express or implied: it is a suit for enhanced rate because of change of circumstances, and in respect of work not covered by the contract. The additional work directed by the Engineer-in-charge when carried out may be deemed to be done under the terms of the contract; but the claim for enhanced rates does not arise out of the contract; it is in any case not a claim for compensation for breach of contract.11. The claim is therefore not covered by any specific article under the First Schedule, and must fall within the terms of Art. 120. The Solicitor-General appearing on behalf of the Union of India contended that even if the claim falls within the terms of Art. 120 of the Limitation Act, it was barred, for the appellant Company had in the suit made a claim for work done more than six years before the institution of the suit. Counsel submitted that under Art. 120 the period of limitation commences to run from the date on which the defendant obtains the benefit of the work done by the plaintiff.But under Art. 120 of the Limitation Act the period of six years for suits for which no period of limitation is provided elsewhere in the Schedule commences to run when the right to sue accures. In our judgment, there is no right to use until there is an accrual of the right asserted in the suit, and its infringement, or at least a clear and unequivocal threat to infringe that right by the defendant against whom the suit is instituted: Bolo V. Koklan , 57 Ind App 325 at p. 331 = (AIR 1930 PC 270 at p. 272).

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]9. Article 56 of the First Schedule to the Indian Limitation Act, 1908, prescribes a period of three years for a suit for the price of work done by the plaintiff for the defendant at his request, where no time has been fixed or payment, and the period of limitation commences to run from the date when the work is done.A suit is governed by Art. 56 if it arises out of a contract to pay the price of work done at the request of the defendant. The claim in the present case is for payment at an additional rate over the stipulated rate in view of change in circumstances, and not for price of work done by the appellant Company. It is true that additional work was done at the request of the Engineer-in-charge, but the claim in suit was not for the price of work done but for enhanced rates in view of altered circumstances.10. Article 115 of the First Schedule to the Limitation Act is a residuary article dealing with the claim for compensation for the breach of any contract, express or implied, not in writing registered or implied, not in writing registered and not specially provided for, in the First Schedule.The period of limitation in such cases is three years and it commences to run when the contract is broken, or where there are successive breaches when the breach in respect of which the suit is instituted occurs, or where the breach in continuing when it ceases. The suit filed by the appellant Company is not a suit for compensation for breach of contract express or implied: it is a suit for enhanced rate because of change of circumstances, and in respect of work not covered by the contract. The additional work directed by the Engineer-in-charge when carried out may be deemed to be done under the terms of the contract; but the claim for enhanced rates does not arise out of the contract; it is in any case not a claim for compensation for breach of contract.11. The claim is therefore not covered by any specific article under the First Schedule, and must fall within the terms of Art.our judgment, there is no right to use until there is an accrual of the right asserted in the suit, and its infringement, or at least a clear and unequivocal threat to infringe that right by the defendant against whom the suit is instituted: Bolo V. Koklan , 57 Ind App 325 at p. 331 = (AIR 1930 PC 270   at p. 272).