Civil Courts have jurisdiction to hear claims under construction contracts barred from arbitration, provided they arise within the limitation period set by specific contract conditions.

JUDGMENT :

A.Y. KOGJE, J.

1. This appeal is filed by the appellants against judgment and order dated 05.05.1999 passed by the Civil Judge (Senior Division), Bharuch in Special Civil Suit No.100 of 1991.

2. The original plaintiff is the contractor, while original defendant No.2 is the principal, defendant No.3 is the Executive Engineer of defendant No.2 and defendant No.1 is the State.

3. The tender was invited for construction of 408 B-type and 258 C-type quarters for Narmada Project at Kevadia Colony. The plaintiff filed suit for recovery of Rs.37,58,657/- and interest at the rate of 18% from the date of suit under several claims and the Civil Court by the impugned judgment and order, partly allowed the claim and decreed the suit for an amount of Rs.15,95,677.44 with simple interest at the rate of 15% from the date of filing of the suit till realisation. Being aggrieved by the impugned judgment and order, initially defendant Nos.2 and 3 preferred the present appeal against original plaintiff and defendant No.1-State. Later on, by order dated 23.06.2025, the State was transposed as appellant No.3.

4. The Court admitted the appeal by order dated 02.09.1999 and in accompanying Civil Application No.5446 of 1999, this Court passed an order granting ad interim relief in terms of para-9(a) on condition of deposit of decreetal amount.

5. Pending the appeal, an amendment was moved to raise a specific legal contention that the Civil Court has no jurisdiction to decide the dispute in view of the provisions of the Gujarat Public Works Contract and Disputes Arbitration Tribunal Act, 1992, which amendment was granted by this Court on 02.09.1999.

6. Though in the appeal memo, several grounds are raised, learned Advocate for the appellant has mainly argued on the issue of limitation, contending inter alia that considering the conclusion of the contract and the final bill having been paid on 17.10.1984, filing of the Civil Suit in the year 1991 is time barred.

7. Learned advocate has argued that the suit itself was not maintainable on the ground of limitation. According to the learned advocate, the limitation will ticking only on the first instance of the breach itself, which according to her, was prior to the final payment made in October, 1984. She has also relied upon the decision in the case of State of Gujarat Vs. Kothari and Associates reported in AIRONLINE 2015 SC 206 and relied upon Paragraph Nos.4 and 11 to make out a case that the breach which was alleged in the plaint itself had taken place pending the contract, and therefore, the limitation would have begun prior to Year-1984, whereas the suit has been filed in Year-1991. However, during the course of arguments or from the pleadings, there is nothing coming on record to indicate that the breach has taken place on any particular date because of which the limitation would have begun.

8. The respondent-original plaintiff has supported the impugned judgment and order. However, there is no cross Objections in connection with the claims which were not allowed. It is submitted that the respondent-plaintiff was able to satisfy the claims under each head and was also able to substantiate it by way of evidence on record. He has referred to the deposition of the plaintiff at Exh.45 and the documentary evidence, particularly the tender document.

9. Learned advocate for the respondent has submitted that at the stage of payment of final bill in October, 1984, had given a cause of action for the appellant to invoke the clause of arbitration. As the matter was not referred to arbitration, the respondent had to file a suit before the Civil Court, wherein, the Ci