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2023 Supreme(Online)(KER) 14566
HIGH COURT OF KERALA
A. Muhamed Mustaque, Shoba Annamma Eapen, JJ
PATHANAPURAM BLOCK PANCHAYATH – Appellant
Versus
K.RAMACHANDRAN, – Respondent
RFA 221 2019
ANSU VARGHESE, SRI.MANU RAMACHANDRAN, SRI.NAVEEN THOMAS, T.KRISHNANUNNI (SR.), SUBHASH CYRIAC, SMT.PRINCY ZAVIER, S.SREEJITH (S-3453), T.SETHUMADHAVAN (SR.)
Unilateral loss determination by a party to a contract is invalid without a counterclaim; limitation period in contractual disputes starts from contract termination.
Headnote:
Limitation - Contractual Dispute - Limitation Act (Article 113) - The court interpreted the limitation period under Article 113, confirming that the period for the suit commenced from the contract termination date, ruling the plaintiff's claim timely and valid while addressing consequential declaratory relief in revenue recovery.
Fact of the Case:
The plaintiff, a contractor, entered a contract with the defendant Panchayath for road work but faced challenges in completion and payment due to additional work and subsequent claim disputes, leading to a suit for recovery and challenging revenue recovery initiated by the Panchayath.
Finding of the Court:
The court examined the claims of limitation and the nature of declaratory relief sought against revenue recovery, determining that the plaintiff's suit was timely and that the Panchayath's unilateral claim of loss required a counterclaim to be valid.
Issues: Whether the suit is barred by limitation, whether the declaratory prayer against revenue recovery proceedings is maintainable, and the quantification of the recovery amount owed to the plaintiff.
Ratio Decidendi: Limitation runs from the date of contract termination, and unilateral loss calculation by the Panchayath requires a counterclaim to be valid; a court may grant declaratory relief if the primary claim is upheld.
Final Decision: The appeal is partly allowed; the plaintiff is entitled to Rs.16,07,906/- with 6% interest.
JUDGMENT
A.Muhamed Mustaque, J.
This appeal was filed by the first defendant in O.S.No.78/2016 on the file of the Subordinate Judge, Punalur. The appellant is the Pathanapuram Block Panchayath. The first respondent in this appeal is the plaintiff. He is also a contractor.
2. We shall refer to the parties with reference to their status in the trial court. The plaintiff entered into an agreement on 26.6.2003 with the first defendant. This agreement was for undertaking work related to the improvements, metalling and black topping of a road Panayam– Puthuvel Kodiyattu Kuzhy Erappakuzhy Myladumpara in Pattazhi Grama Panchayath. The total cost of the work was fixed at Rs.88.10 lakhs. Though the plaintiff commenced the work, he could not complete the work within the stipulated time period. The plaintiff submitted part bill for the works done and received an amount of Rs.32,25,652/- on 27.4.2004. It appears that certain additional works needed to be carried out but the revised estimate was not approved. That appears to be the bone of the dispute between the parties. The value of the unpaid work is the subject matter of the plaint claim. The first defendant admitted that additional work would have to be done for the completion of the original work and the revised estimate was forwarded to the sanctioning authority. But the Government declined the sanction for the revised estimate. According to the first defendant, the plaintiff did not carry out the original work and the contract was terminated at the risk and cost of the plaintiff. The first defendant also claims that they sustained a loss to the tune of Rs.26,76,658/- due to the non-completion of the work by the plaintiff. The first defendant is initiating revenue recovery.
3. The plaintiff, apart from seeking recovery of the amount, also sought prayers to declare that the revenue recovery proceedings initiated were illegal and void.
4. The trial court overruled the objections of maintainability of the suit and noted that no counterclaim has been laid, decreed the suit allowing recovery of the unpaid value of the work.
5. The learned senior counsel appearing for the appellant Panchayath assailed the impugned judgment mainly on three grounds:
I. Related to limitation.
II. Related to the declaratory prayer against revenue recovery proceedings.
III. Quantification of the amount.
6. On the point of limitation: The agreement was executed on 26.6.2003. As seen from Ext.A9, the time was extended for completing the work upto 31.03.2007. The suit was filed only on 18.02.2012. The learned senior counsel argued that there was no pleading to exclude any grounds of exemption from limitation law as referrable under Order VII Rule 6 of the Civil Procedure Code(CPC). It is further submitted that the challenge made by the plaintiff before this Court against the revenue recovery proceedings cannot revive the time which was barred by limitation. The main cause of action itself has been shown with reference to the judgment of this Court dated 09.12.2011. The learned senior counsel appearing for the plaintiff referred to Exts.A9 and A9(a). Ext.A9 shows that the contract was terminated only on 24.01.2011. It is submitted that the limitation has to be reckoned with reference to the date on which the contract was terminated and the first defendant refused to pay the amount.
7. As seen from the pleadings and the documents, the original period was extended upto 31.3.2007. It is further seen from Ext.A9(a), the Panchayath also requested, as per its letter dated 29.12.2010, the plaintiff-contractor to complete the work. The contract was terminated only on 24.01.2011. Further, the revenue recovery proceedings were initiated only on 25.10.2011. The right to sue accrues in a contractual matter, if no period for stipulation of payment is made, the period would run from the date of refusal. In such cases, Article 113 of the Limitation Act would apply. No period for payment was fixed. In this case, the suit was filed on 18
