Case Note & Summary
This second appeal arose from a civil suit filed by a registered partnership firm, M/s. D. V. Save, through its partner, against the State of Maharashtra through the Collector, Parbhani. The dispute related to an earth-work and lining contract for Mile Nos. 26 and 27 under the Purna Project, awarded by the Executive Engineer, Irrigation and Power Department. The contractor sought declaration and recovery of Rs.33,650/- on account of forfeited security deposit, penalties, and work done under the final bill. The State defended on merits and also raised limitation, contending the cause of action arose in 1967. The trial court decreed the suit, but the first appellate court reversed and dismissed it as time-barred. The present second appeal was filed against that appellate decree. The contract was allotted pursuant to a work order dated 16.12.1964. Mile No.26 work was to be completed within one year and Mile No.27 within twenty-four months from that date. During execution in 1966-67, the State imposed penalties and took action under Clause 3(a) of the contract, forfeiting security deposit and withdrawing work. The final measurement was called on 12.04.1967 and closed on 26.04.1967; security deposit was forfeited on 27.04.1967. On 28.07.1967, the Executive Engineer informed the contractor that the final bill had been received and asked attendance by 31.07.1967, followed by another communication dated 09.09.1967. Although the contractor claimed he could not attend due to typhoid, his own evidence indicated he saw the final bill on 01.09.1967 but did not sign it because measurement books and other papers were not provided. The contractor did not raise any grievance or take proceedings until he served a legal notice on 17.06.1975 and then filed the suit on 29.08.1975. The core legal issue, argued by both sides and decided by the High Court, was whether the suit was barred by limitation under Article 113 of the Limitation Act, 1963. The appellant also sought to rely on the distinction between Articles 58 and 113 to argue that the right to sue accrued only after an unequivocal threat; the State argued mere correspondence could not extend limitation. The question of non-registration of the partnership under Section 69 of the Partnership Act formed part of the order admitting the appeal, but counsel restricted arguments to limitation only, so that issue was not decided. The appellant submitted that the contractor was never served with the final bill along with measurement books and other relevant papers; he had reason to believe bills were still in process. Cause of action arose only when the legal notice dated 17.06.1975 was not responded. Reliance was placed on Shakti Bhog Food Industries Ltd. v. Central Bank of India, Union of India v. West Coast Paper Mills Ltd., and Shyamkumar Lalaramji Jaiswal v. Dattatraya. Counsel emphasized the difference in language between Articles 58 and 113, arguing that under Article 113 the right to sue accrues only on clear or unequivocal threat to infringe the right. The respondent State contended that starting point of limitation remains unaffected by conduct or correspondence, and that mere letters to authorities do not extend limitation; the cause of action accrued in 1966-67 and could not be revived by a 1975 legal notice. The High Court considered Article 113, which provides three years from when the right to sue accrues. It noted that the contractor was aware of penalty and forfeiture in 1966-67, saw the final bill on 01.09.1967, and had been called to the office earlier. The court held that cause of action comes into existence when a right is infringed or threatened, and here the plaintiff knew of deductions and the final bill. There was no correspondence or grievance from 1967 until 1975. The court acknowledged the difference between Articles 58 and 113 but held that even a liberal construction showed the right to sue accrued on seeing the final bill or even earlier when penalty and forfeiture were communicated. It concluded the appellate court rightly held the suit barred. The second appeal was dismissed. The judgment and decree dated 24.04.1995 of the Additional District Judge, Parbhani, in Regular Civil Appeal No.10/1985 were affirmed. No costs were mentioned.
Headnote
A) Limitation - Computation of Limitation - Article 113 of the Limitation Act, 1963 - Right to sue accrues - In a suit for recovery of security deposit, penalty and work dues arising from a government contract, limitation begins when the contractor has knowledge of the final bill and of penalty and forfeiture; the plaintiff saw the final bill on 01.09.1967 and was aware of deductions, but filed suit only on 29.08.1975 beyond three years - Held that subsequent legal notice in 1975 could not revive the cause of action and the suit was barred by limitation (Paras 13-16).
Issue of Consideration
Whether the lower Appellate Court was justified in applying Article 113 of the Indian Limitation Act, 1963 and holding that the plaintiff's suit for recovery of Rs.33,650/- was barred by limitation, particularly when the plaintiff claimed that limitation commenced only upon issuance of a legal notice dated 17.06.1975.
Final Decision
Second Appeal No.482 of 1995 dismissed. The judgment and decree dated 24.04.1995 passed by Additional District Judge, Parbhani in Regular Civil Appeal No.10/1985, dismissing the plaintiff's suit as barred by limitation, was affirmed. No costs were awarded.
Law Points
- Period of limitation under Article 113 of the Limitation Act
- 1963 begins when the right to sue accrues
- cause of action arises when a right is infringed or threatened to be infringed
- mere issue of legal notice after limitation has begun does not extend or revive limitation
- distinction between Article 58 and Article 113 does not assist a plaintiff who had knowledge of final bill and deductions
- where contractor was aware of penalty
- forfeiture of security deposit
- and final bill by 1967
- suit filed in 1975 is barred by three-year limitation
