2015 (10) TMI 2806 - SC - Indian Laws

Claim of interest for an extended period - repeated and consecutive delays in handing over the site due to which the Respondent could not complete the work within the stipulated time - price escalation clause - the claim of the Respondent stood barred by the principles of prescription as contained in the Limitation Act, 1963 - HELD THAT - The payment of the Final Bill and Security Deposit could not be construed to accept or acknowledge the damages raised by the Respondent and therefore Section 19 would not per se extend the period of limitation. Furthermore, there could be no extension Under Section 18 on account of the acknowledgement in writing, as at each point that the Respondent raised a claim for damages, it was specifically refuted by the Appellant State, and the amounts that were accepted by the Appellant State were limited to the liabilities within the contract, not fresh liabilities for damages. The Respondent has also argued that since notice Under Section 80 of the Code of Civil Procedure 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 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. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Entitlement to claim interest for an extended period.
2. Delay in handing over the site and materials.
3. Compensation for monetary loss due to extended time limits.
4. Bar of limitation under the Limitation Act, 1963.

Detailed Analysis:

1. Entitlement to Claim Interest for an Extended Period:
The High Court of Gujarat allowed the Plaintiff/Respondent to claim interest for an extended period, dismissing the appeal of the Appellant State. However, the Supreme Court set aside these findings, primarily on the ground that the Respondent's claim was barred by the principles of prescription under the Limitation Act, 1963.

2. Delay in Handing Over the Site and Materials:
The Appellant State invited tenders for canal lining, which the Respondent, a registered partnership, accepted. The Respondent faced repeated delays in site handover and material issuance by the Appellant State, which hindered timely completion of the project. Despite these delays, the Respondent managed to complete the work within the allocated working days. The Respondent signed the Final Bill under protest and later claimed damages for additional costs incurred due to these delays.

3. Compensation for Monetary Loss Due to Extended Time Limits:
The Trial Court found that the delay was caused by the Appellant State and awarded compensation to the Respondent under twelve of the thirteen heads of claims, including price escalation in labor, fuel, and overheads. The High Court upheld this decision and granted interest from an earlier date than the Trial Court had specified.

4. Bar of Limitation Under the Limitation Act, 1963:
The Supreme Court focused on the limitation aspect, which was not initially pleaded but discussed in the High Court's order. The High Court had ruled that the suit was based on successive breaches, making the date of the last breach relevant for limitation purposes. However, the Supreme Court emphasized that under Section 3 of the Limitation Act, the court must dismiss any suit filed after the prescribed period, regardless of whether limitation was raised as a defense. The Supreme Court held that the suit was barred by limitation, as the claims should have been filed within three years of each breach, which did not happen.

Conclusion:
The Supreme Court concluded that the Respondent's suit was barred by limitation and should be dismissed. The High Court's judgment was set aside, and the appeal by the Appellant State was allowed, with no order as to costs.