A contractual dispute resolution mechanism cannot override the statutory mandate of the Limitation Act; once a contract is rescinded and final measurements are taken, the cause of action crystallizes, and subsequent representations do not revive a time-barred claim.

Judgment

1. Date of conclusion of arguments 20.11.2025

2. Date on which judgment was reserved 20.11.2025

3. Whether the full judgment or only the operative part is pronounced: Full judgment

4. Date of pronouncement 19.12.2025

Per Dr. Pushpendra Singh Bhati, J:

1. The present D.B. Civil Misc. Appeal has been preferred under Section 13 of the Commercial Courts Act, 2015 claiming the following relief:

“It is, therefore, most humbly and respectfully prayed that the record of the case may kindly be called for and by an appropriate writ, order or direction:–

1. The present appeal may kindly be allowed and the judgment / decree dated 05.06.2024 passed by the Commercial Court, Udaipur in Case No. 167/2018 (E.D.) (C.I.S. No. 169/2018), holding the appellant jointly and severally liable for payment of Rs.27,66,879/- towards the final bill and Rs.13,56,864/- towards the refund of security deposit along with interest @ 9% p.a. and further quashing the order dated 23.09.2010 imposing penalty of Rs.13,00,000/- on the respondent plaintiff and further restraining the appellant from taking any action against the respondent plaintiff pursuant to order dated 23.09.2010, may kindly be quashed and set aside with costs.

2. Any other appropriate order or direction as may be deemed just and proper in the facts and circumstances of the case may kindly be passed in favour of the appellant.”

2. Brief facts out of which the instant controversy has emanated are that the respondent–company was awarded a contract by the appellant–Corporation for construction of Sajjangarh Biological Park, Udaipur, and a work order dated 01.09.2009 was issued for a contract value of Rs. 2,74,44,746.85/-.

2.1. As per the work order, the work was to commence on 16.09.2009 and was required to be completed within a stipulated period of 11 months, i.e., on or before 15.08.2010. A formal contract governing the execution of the work was entered into between the parties.

2.2. During execution of the contract, disputes arose between the parties with regard to execution of work, availability of drawings, progress of work, and compliance with contractual terms.

2.3. On 23.09.2010, the appellant–Corporation rescinded the contract and imposed a penalty upon the respondent in terms of the contract. The respondent was thereafter called upon to remain present for final measurement of the work done.

2.4. A committee was constituted for taking final measurement of the work, and final measurement was carried out on 06.10.2010, in which the respondent participated.

2.5. Thereafter, the respondent submitted claims in respect of the work executed and raised disputes regarding payment of alleged outstanding dues.

2.6. On 10.12.2015, the respondent instituted a civil suit before the competent court seeking recovery of an amount of Rs. 57,19,993/-, along with declaration and permanent injunction, which came to be transferred to the Commercial Court, Udaipur.

2.7. Upon consideration of the pleadings, evidence and submissions of the parties, the learned Commercial Court, Udaipur, vide judgment and decree dated 05.06.2024, partly decreed the suit, which has given rise to the present appeal.

3. Learned counsel for the appellants, at the outset, submitted that the impugned judgment and decree dated 05.06.2024 passed by the learned Commercial Court, Udaipur suffer from serious errors of law and jurisdiction and are liable to be set aside.

3.1. Learned counsel submitted that the suit instituted by the respondent on 10.12.2015 was ex facie barred by limitation. It was contended that the contract was rescinded on 23.09.2010 and final