Case: State Of Gujarat Vs. M/S. Kothari &amp; Associates

2. The Appellant State invited tenders for providing lining to the main canal line. The Respondent, a registered partnership, submitted a tender that was accepted by the Appellant State. Thereafter a regular agreement was entered into according to which the Respondent would have from 15th November to 14th June as its working period. Under the Work-Order dated 24.9.1976, the Respondent was required to complete the work within 18 months, i.e. on or before 23.3.1978. The case of the Respondent, which we have no cause to disbelieve, is that there were repeated and consecutive delays in handing over the site due to which the Respondent could not complete the work within the stipulated time. The first season was to extend from 15.11.1976 to 14.7.1977, but the canal was only made available on 15.1.1977 and even then the cement was not issued to the Respondent by the Appellant State till 31.1.1977. The second season was to extend from 15.11.1977 to 23.3.1978, but the canal was handed over on 15.3.1978. At therequest, the contract period was extended to 14.6.1978, but the Appellant State specifically stated that no compensation would be payable for the extension. Pursuant to a written request by the Respondent, a third season from 15.11.1978 to 14.6.1979 was granted, but yet again the site was handed over as late as on 15.3.1979. The Respondent sought further time to complete the project, and was consequently granted a fourth season which was to extend from 15.11.1979 to 29.6.1980. The site was once again made available with delay only on 15.3.1980. The work was finally completed on 20.6.1980. It is noteworthy that in each request for an extension, the Respondent sought compensation for monetary loss due to the extended time limit, but while allowing each extension the Appellant State denied the claim for compensation each time. Thecase was that as per the contract period, 342 days should have been made available to it to conduct the stipulated work, but as a result of the delay in handing over the site and the materials, the Respondent had to seek extensions, and nevertheless managed to complete the project in 288 working days, thus indicating that there was no laxity on its part. The Respondent signed the Final Bill under protest on 1.1.1982; and the Security Deposit was refunded on 27.1.1982. Thereupon, the Respondent addressed a statutory notice under Section 80 of the C.P.C. dated 7.8.1983 to the Appellant State, claiming damages as a result of the additional costs incurred due to the abovementioned delays. The Respondent eventually filed a suit on 25.1.1985 seeking damages under thirteen different heads, including price escalation in labour due to the prolongation of the work, price escalation in fuel lubricants etc., overstay of capital and machinery, and overheads such as staff, kitchen, office etc.3. The Trial Court found that the delay was caused by the Appellant State; that work was completed by the Respondent well within the number of days contractually allocated to complete it. Noting that under Section 73 of the Indian Contract Act compensation is payable for any loss or damage for breach of a contract, the Trial Court granted compensation under twelve of the thirteen heads of claims itemised by the Respondent. In terms of its Judgment dated 4.5.1991 the Trial Court observed that the factual matrix pertaining to these amounts claimed have remained uncontroverted, and accordingly decreed the suit. The Respondent was granted Rs.13,61,571/- with interest at 12 per cent per annum with effect from 7.8.1983 viz. the date of the statutory notice. The Appellant State appealed against the decree and the Respondent filed a counter-claim seeking interest from the date of written demand of the suit claim instead of from the date of statutory notice. The High Court, vide its judgment dated 30.7.2003, dismissed the appeal filed by the Appellant State and allowed thecross objection, granting interest thereon from 5.3.1982.

Court's reasoning:
5. It would be pertinent to note that the issue of limitation was not pleaded as a ground before the Trial Court or the High Court. It was pressed for the first time in the course of oral arguments before the High Court. Nonetheless, it has been discussed in the impugned Order. The High Court, noting the contention raised by the Respondent that the point of limitation was a mixed question of fact and law and could therefore not be adjudicated at this point, held that even if it could be adjudicated, the suit would not be barred by principles of prescription as it was based on a series of successive breaches committed by the Appellant State, and in such circumstances the date of the last breach was relevant. The High Court was of the opinion that limitation need not mandatorily be computed on the basis of each cause of action. It held the date of return of the Security Deposit as the last date of payment for the work done, and concluded that the suit had been filed within three years from this date. The suit was therefore found to be within the prescribed period of limitation.The Respondent has also argued that since notice under Section 80 of the C.P.C. was served to the Appellant State claiming damages on 7.8.1983, a period of two months from the date of the notice would have to be excluded when calculating the period of limitation, as per Section 15(2) of the Limitation Act. It has relied on M/s Disha Constructions vs. State of Goa (2012) 1 SCC 690  to this end. However, since the limitation period for the last breach alleged by the Respondent itself ended on 15.11.1982 and the notice under Section 80 C.P.C. is dated 7.8.1983, this provision is irrelevant. The notice perforce should have been issued before the suit became time barred, and only if so done would the period have been extended for a further two months.14. It is thus clear that the Respondent failed to file the suit for damages within the period prescribed in the Limitation Act. The suit is required to be dismissed on this ground alone.