The statutory remedy invoked by the plaintiff extended the limitation period, allowing a timely lawsuit despite the initial termination.

J U D G M E N T

A.Muhamed Mustaque, J.

This appeal was preferred by the Corporation of Kochi represented by their officials, challenging a decree in a suit for declaration and realisation of money. The appellants are defendants 1 and 2 in the suit. The plaintiff was a contractor engaged by the appellant. We shall refer to the parties with reference to their status in the trial court.

2. The plaintiff was engaged for the construction of a new office complex of the Cochin Corporation at Marine Drive. On 4/4/2006, an agreement was executed. The plaintiff could not complete the entire work. The defendants, by a resolution passed by the Council of the Cochin Corporation, on 18/5/2009, decided to terminate the contract. The plaintiff challenged the decision of the Corporation before the Government invoking Section 57 of the Kerala Municipality Act , 1994. Under , the Government has the power to rescind or cancel the resolution. The Government by order dated 3/8/2012, declined to interfere in the matter. The Government also declined the recommendation of the first defendant to entrust the balance works at an enhanced rate to the plaintiff. The suit was filed on 15/1/2013. The plaintiff prayed for a declaratory relief in the suit to the effect that the termination was illegal and, consequently, sought for realisation of money towards the unpaid cost of the work. The total claim made by the plaintiff was for recovery of Rs.6,78,26,101/-. The trial court awarded Rs.6,18,86,937/- under various heads.

3. The learned Senior Counsel appearing for defendants 1 and 2 submitted that the suit was barred by limitation. According to the learned Senior Counsel, the agreement was terminated on 18/5/2009 and the suit was filed only on 15/1/2013. It was argued that the time taken before the Government, in challenging the decision of termination will not save the period of limitation. According to the learned Senior Counsel, the period of limitation has to be reckoned with when payment was denied by termination. It was further argued that the plaintiff cannot claim any amount other than in accordance with the terms of the agreement.

4. The learned counsel for the plaintiff submitted that the right to sue would accrue only after the preparation of the final bill and the appellant-Corporation issued a communication on 8/10/2012 fixing 9/10/2012 for joint measurement. It was also submitted that the right to the claim for payment would arise only after the finalisation of the bill and not before that. The counsel further argued that the declaratory relief is perfectly maintainable as the plaintiff invoked alternate remedy challenging termination, before the Government, invoking Section 57 of the Kerala Municipality Act , 1994.

5. Though the trial court had not framed the issue regarding limitation, as seen from the impugned judgment, the trial court in para.13 onwards considered the said issue. The trial court is of the view that since the plaintiff invoked statutory remedy before the Government, the period covered by the statutory remedy can be excluded for the purpose of limitation.

6. There are two aspects involved in regard to the question relating to limitation. The first one is in relation to challenging limitation through a declaratory relief. This is decisive in the nature of certain claims made by the plaintiff based on cost escalation. The second is in relation to the money claimed.

7. Admittedly, the termination was based on the resolution of the Council of the Cochin Corporation. The Government has the necessary power to cancel or amend the resolution passed by the Council invoking Section 57 of the Municipality Act. But the plaintiff moved the Government on 27/6/2009. The Government considered the request pursuant to the judgment of this Court in W.P.(C). No.4319/2010, dated 10/2/2010. The request before the Government to interfere with the decision of termination and give an enhanced rate of 109% above the 2004 PWD Schedule of Rates (SoR),