TaxTMI 
TaxTMI 
2015 (10) TMI 2806
X X X X Extracts X X X X
X X X X Extracts X X X X
....p, 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 the Respondent's request, 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 the Respondent's cross objection, granting interest thereon from 5.3.1982. 4. The Appellant State has contended that the High Court ignored its myriad objections/submissions in connection with the various different heads; that the bills paid from time to time by the Respondent including the Final Bill were accepted without any remonstration or reservation being raised, thereby inexorably leading to the conclusion that the suit was clearly an afterthought; and that the suit was barred by limitation as the claims were raised after a lapse of more than three years from the arising of the causes of action. It is only the last contention to which we shall advert our attention. 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 di....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d are rejected. We shall now proceed to consider whether the suit was in fact barred by limitation. 7. The period of limitation would be computed under either Article 55 or Article 113, both of which are laid out below of the facility of reference: 8. It would be pertinent, at this point, to recall the decision of this Court in Gannon Dunkerley and Co. Ltd. v. Union of India (1969) 3 SCC 607, though that matter dealt with the provisions of the Indian Limitation Act, 1908. The Appellants/Plaintiff therein filed a suit seeking an enhanced rate of compensation in light of the deviation in the nature of the work being rendered more complex, the increase in costs due to undue prolongation of the period of work, the increase in the quantity of work, and the grant of contracts to other competing parties at substantially higher rates. This Court held that 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 rates because of change of circumstances, and in respect of work not covered by the contract." The claim for enhanced rates was found to arise outside the contract and for this reason was not i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....breach for failure to deliver in a particular month arises at the end of that month and not at the end of the period of the contract. The situation before us is similar in that the cause of action had arisen on each occasion when the Appellant State failed to hand over the site at the contractually stipulated time. Specifically, the limitation periods arose on 15.11.1976, 15.11.1977, 15.11.1978 and 15.11.1979, i.e. on the first day of each season, when the Respondent State committed a breach by failing to hand over the site. Thus the period of limitation did not commence at the termination of the contract period or the date of final payment. The High Court's conclusion that the last date of breach and last date of payment were relevant, not each cause of action, was thus patently erroneous. For each breach, a corresponding amount of damages for additional costs could have been sought. The suit, however, was filed on 25.1.1985, well after the limitation period of three years for even the final breach, as the various causes of action became time barred on 15.11.1979, 15.11.1980, 15.11.1981 and 15.11.1982 respectively. 10. There is another perspective on the method or manner in....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 12. The Respondent has sought to place reliance on Section 19 of the Limitation Act. It would be apposite to reproduce this Section: 19. Effect of payment on account of debt or of interest on legacy.--Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made. This Section would not come to the aid of the Respondent, as the suit before us is not for payment on account of a debt or of interest on legacy, but is a suit for damages for additional costs incurred as a result of the extension of the contract period. This Court in Union of India v. Raman Iron Foundry 1974 (2) SCC 231, after placing reliance on Jones v. Thompson [1858] 27 L.J.Q.B. 234, has opined that a claim for damages does not give rise to a debt until the liability is adjudicated and damages have been assessed by a decree or any order of a Court or any other adjudicatory authority or forum. Furthermore, in J.C. Budharaja v. Chairman, Orissa Mining Corporation Ltd. and An....