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HIGH COURT OF CALCUTTA
Mallick
INDIA TRADES CORPORATION - Appellant
Versus
UNION OF INDIA - Respondent
Special Case 4 Of 1954
Decided On : MAY 03, 1956
LIMITATION ACT - CONTRACT - BREACH - STARTING POINT OF LIMITATION - CONTRACT REQUIRING COMPLIANCE WITH FORMALITIES UNDER SECTION 175(3), GOVERNMENT OF INDIA ACT - TIME BEGINS TO RUN FROM DATE CONTRACT SIGNED AS REQUIRED BY ACT, NOT FROM DATE OF PROVISIONAL CONTRACT OR BREACH.
Fact of the Case:
A dispute arose between a contractor and the Government over a claim for damages for breach of contract. The contractor entered into three contracts with the Government for the manufacture and supply of bricks. The first contract was signed on 31-1-1943, and the second and third contracts were signed on 12-12-1947. The contractor alleged that the Government breached the contracts, particularly by failing to supply coal as required. The contractor submitted a claim for damages on 5-7-1944, but the Government contended that the claim was barred by limitation.
Finding of the Court:
The court held that the claim under the first contract was barred by limitation because the breaches occurred before the formal contract was signed and more than three years had passed since the date of breach. However, the court held that the claim under the second and third contracts was not time-barred because the starting point of limitation for those contracts was the date the formal contracts were signed, not the date of the provisional contracts or the date of the breaches.
Issues: 1. Whether the claim under the first contract was barred by limitation. 2. Whether the claim under the second and third contracts was barred by limitation.
Ratio Decidendi: 1. The court applied Article 115 of the Limitation Act, which provides a three-year limitation period for suits for breach of contract. The court held that the starting point of limitation for the first contract was the date of the breach, which occurred before the formal contract was signed. Since more than three years had passed since the date of breach, the court held that the claim was barred by limitation. 2. The court held that the starting point of limitation for the second and third contracts was the date the formal contracts were signed, not the date of the provisional contracts or the date of the breaches. The court reasoned that the provisional contracts were not enforceable against the Government until the formal contracts were signed in compliance with Section 175(3) of the Government of India Act. Therefore, the court held that the claim under the second and third contracts was not barred by limitation.
Final Decision: The court held that the claim under the first contract was barred by limitation, but the claim under the second and third contracts was not barred by limitation.
( 1 ) THIS is a special case stated by the arbitrator under Section 13, Arbitration Act, for the opinion o this Court on a question of law involved in the proceedings now pending before the arbitrator. The question of law involved is whether the claim in dispute is barred by limitation.
( 2 ) THE case originally stated by the arbitrator came for consideration before Bachawat J. Bachawat J. felt that the case stated did not contain sufficient facts to enable the Court to give its opinion on the point of law raised and directed the arbitrator to restate the case. Pursuant to such direction the arbitrator has restated the present case on which this Court is called upon to give its opinion.
( 3 ) MR, Roy appearing for the claimant made a grievance that the arbitrator stated the present case without giving his client any opportunity to make his submission as to the correctness of the facts stated. It is not for me in the present proceeding to adjudicate on the correctness of the facts stated by the arbitrator. I am to give my opinion on the basis of facts stated by the arbitrator. If the facts are not correct or if the arbitrator is guilty of misconduct in not giving an opportunity to Mr. Roy's ' client to make his submission on the correctness of facts stated the right of Mr. Roy's client to challenge the award that may be passed hereafter remains unaffected.
( 4 ) THE arbitration proceeding relates to a claim for damages for breach of contract. Messrs. India Trades Corporation (for convenience "referred to as a contractor) entered into three several contracts with the Government for the manufacture and supply of bricks. As is usual in case of Government contracts there was in each case what may be characterised as a provisional agreement of an informal character entered into by one of the officer of the Government which was subsequently embodied in a formal document in compliance with the formalities provided by Section 175 (3), Government of India Act. The first of such provisional agreement was entered into on 12-11-1942 and the formal document evidencing the contract was executed on 31-1-1943. The second provisional agreement was enter ed into on 25-2-1943. This was finally embodied in two formal documents executed on 12-12-1947 in compliance with the formalities provided by Section 175 (3), Government of India Act. It is said that under the second and third contracts the Government was under an obligation to supply coal in order to enable the contractor to manufacture and supply bricks. It is stated that the Government supplied coal in terms of the agreement during January, February and March 1944 but did not supply any coal thereafter. On 5-7-1944 the contractor submitted a claim to the Superintending Engineer, Eastern Aviation Circle of compensation for the loss alleged to have been suffered by the contractor. The case does not state on what basis this claim has been made by the contractor. Learned counsel of both sides stated, however, that the claim was by way of compensation for breaches of contract alleged to have been committed by Government mostly for not supplying coal in terms of the contract, though the Government is alleged to have committed other breaches as well.
( 5 ) BE that as it may, all the breaches alleged to have been committed by the Government and on the basis of which the contractor preferred its claim for damages took place prior to 5-7-1944. Certain payments were made by the Government on account of the price of bricks sold and delivered but not on account of damages. Mr. Roy appearing for the contractor stated that his client does not contend'that limitation is saved by reason of these payments. Nor does Mr. Roy contend that limitation is saved by reason of any acknowledgment of liability made on behalf of the Government.
( 6 ) ON 6-8-1949 the contractor asked the Government to refer the dispute arising out of the claim submitted on 5-7-1944. Pursuant thereto the present arbitratio
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