Gujarat High Court
Executive Engineer vs A Patel & Company on 9 July, 2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 4617 of 1998
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK
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Approved for Reporting Yes No
No
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EXECUTIVE ENGINEER
Versus
A PATEL & COMPANY & ANR.
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Appearance:
PRAPTI BHATT FOR AADITYA D BHATT(8580) for the Appellant
CHANDNI S JOSHI(9490) for the Appellant
MR KG SUKHWANI(871) for the Respondents
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CORAM:HONOURABLE MR. JUSTICE HEMANT M.
PRACHCHHAK
Date : 09/07/2025
ORAL JUDGMENT
1. Present appeal is filed by the appellant under Section 96 of
the Civil Procedure Code against the judgment and order dated
02.05.1998 passed by the learned 6 th Joint Civil Judge (S.D.),
Mehsana (hereinafter be referred to as "the trial Court") in
Special Civil Suit No. 11 of 1998 whereby the trial Court
dismissed the suit.
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2. Facts giving rise to the present appeal are that appellant -
original plaintiff had tendered for metalling work of 2 nd layer of
the road for the Sami Dudhka Nani Chandur M.D.R. Road. The
respondent had filled the tender and it was accepted by the
appellant. The tender was accepted for Rs.3,85,407/- and it was
51.25% excess amount than the tender amount and, therefore,
considering the said excess 51.25% amount of Rs.1,97,522/- the
tender was accepted for the sum of Rs.5,92,929/- and the
contract was executed between the plaintiff and defendant No.1.
On assigning contract, respondent No.1 has commenced the
work upon receipt of the work order issued by the appellant on
23.12.1976. The work was supposed to start from 24.12.1976
and was to be completed before 24.12.1977 i.e. within one year.
It is the case of the appellant that the respondents have not
completed the work within stipulated time agreed in terms and
conditions of the contract. Therefore, appellant had issued notice
on various dates mentioned in the memo of plaint, but the
respondents did not pay any amount and not completed the
work and only executed the work of Rs.3,63,447/- and, therefore,
the Public Works Committee of the District Panchayat has passed
a resolution dated 21.10.1980 and again issued the work in
favour of one another agency to complete work and while doing
so, it has incurred extra monetary loss. It is further the case of
the appellant that even the respondents had not returned the
empty drums and, therefore also, the appellant has incurred
damage to the tune of Rs.6440/- in all the appellant has incurred
loss of Rs.5,16,024/-. It is the case of the appellant that due to
the loss, the appellant filed the suit before the trial Court for
recovery of the damages along with 18% interest from the date
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of suit till its realization.
2.1 The respondent No.2 filed written statement at Exhibit 14
and respondent No.1 also accepted the contents of the written
statement at Exhibit 14 vide pursis at Exhibit 12, except the
facts which is accepted by the respondent. The agreement was
in two parts i.e. Schedule - A and Schedule - B. Schedule - A
relates to supply of all the materials by the appellant to the
respondents and Schedule - B relates to the items and
specification contract to be executed. It was also under dispute
that since the respondents have not provided the materials in
time, therefore, respondents unable to complete the work of
contract. It is the contention on the part of the respondents that
even the appellant who was not proper party since the work
contract was allocated by the Public Works Committee by
resolution dated 21.10.1980.
2.2 The trial Court has, after considering the averments made
in the plaint and the written statement, has framed the issues at
Exhibit 21 as under:-
[1] Whether the plaintiff proves that the defendant No.1 is
partnership firm and the defendant No.2 is its partner?
[2] Whether the plaintiff proves that the defendant was
issued the work of Sami - Dudhka - Nanichandur M.D.R.
metalling road 2nd layer by tender and the agreement was
executed for the same?
[3] Whether the plaintiff proves that the defendants have not
completed the disputed work within time?
[4] Whether the plaintiff proves that they are entitled for the
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amount of damages ? If yes, what amount ?
[5] Whether the defendant proves that the plaintiff was failed
to perform their part of duty as per the agreement?
[6] Whether the defendant proves that the plaintiff has
terminated the contract illegally?
[7] Whether this suit is barred for want of necessary parties?
[8] Whether this suit is barred by limitation?
[9] Whether the plaintiff is entitled for any relief? If yes, what
reliefs?
[10] What order and decree?
2.3 Relying upon the issue more particularly issue No.8 where
the Court has framed the issue whether the suit is barred by
limitation, which came to be answered by the trial Court in the
affirmative after considering the facts of the case, relevant
documents and the provision of Article 55 of the Limitation Act,
1963, which reads thus:-
For compensation for the When the contract is broken
breach of any contract or [where there are
express or implied not Three successive breaches] when
herein specifically provided Years the breach in respect of
for. which the suit is instituted
occurs or [where the breach
is continuing] when it
ceases.
2.4 The trial Court, after hearing the learned counsel appearing
for the respective parties and considering the material on record
and evaluating the evidence, has dismissed the suit.
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3. Being aggrieved and dissatisfied with the impugned
judgment and order, the appellant has preferred the present
appeal.
4. Heard Ms.Prapti Bhatt, learned counsel for the appellant
and Mr.Paras Sukhwani, learned counsel for the respondents at
length and perused the material on record.
5. Ms.Bhatt, learned counsel for the appellant has submitted
the same facts which are narrated in the memo of appeal and
has submitted that the impugned judgment and order passed by
the trial Court is against the evidence on record. She has
submitted that the respondent has not completed the work
within the time stipulated as per the agreement and there is a
breach of contract after 21.10.1990. She has submitted that as
far as the limitation is concerned, the trial Court has wrongly
applied Article 55 of the Limitation Act and failed to appreciate
the fact that it is not the law that in every case of breach of
contract, the limitation would commenced to run from the date
of the breach, but only from the date when the party aggrieved
is in a position to fix the damages. She has submitted that the
occasion for ascertainment of the degree of damages or the
precise amount which would represent the injury suffered by the
breach is to be distinguished from the date when the cause of
action arose and from which the limitation begins to run. She has
submitted that when the third party has completed the work and
when the final bill was processed then the actual loss caused to
the appellant is determined and on the basis that the suit filed
for recovery of the damages and compensation. She has
submitted that the appeal deserves to be allowed and the
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impugned judgment and order deserves to be quashed and set
aside.
6. Mr.Sukhwani, learned counsel for the respondents has
submitted that the trial Court has not committed any error of
facts and law in passing the impugned judgment and order. He
has submitted that the respondent has executed the work as per
the terms and conditions of the agreement, however, the
appellant had not provided relevant material in time and hence
the progress of the work was not done as per the contract. He
has submitted that the respondent had demanded the material
in the year 1977, but the same was supplied only in the year
1978 and before that such material was not provided. He has
submitted that the trial Court has, after considering the evidence
and the decisions, has passed the impugned judgment and order
and no interference is required to be called for. He has submitted
that the appeal being meritless deserves to be dismissed.
7. Mr.Sukhwani, learned counsel has drawn attention to this
Court that so far as the limitation to the present appeal is
concerned, it is well settled that the breach of contract fall under
the provision of Article 55 of the Limitation Act r/w. Sections 73
and 74 Indian Contract Act. It was clear from the provision of
Article 55 of the Limitation Act that when the first breach was not
noticed, the second contract dated 21.10.1980 was given to the
third party is not proper and, thereafter, on completion of the
contract work, the actual loss was assessed by the appellant and
on the basis cause of action arose it is continuous loss caused to
the appellant and, therefore, the provision of Article 55 of the
Limitation Act r/w. Sections 73 and 74 of the Indian Contract Act
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is not attracted in the present case.
8. When the respondent has abandoned the work and at that
moment only, the cause of action arose and not from the date on
which the appellant reckoned the loss or damages. Because prior
to the date of issuance of the contract in favour of the third party
the breach was already committed by the respondent and it was
to their notice and hence, the appellant has connived and
decided again to issue tender and, thereafter, given the contract
to the third party on 21.10.1980 and, therefore, the contention
raised on behalf of the appellant relating to the cause of action,
only damage was assessed by the appellant which fact is
completely erroneous, illegal and unjust. It is now well settled
that the cause of action is abandonedly on fact and on perusal of
the same, it is clear that prior to the date i.e. 21.10.1980, the
work was abandoned by the respondent and considering that
date, it appears that the cause of action arisen with regard to
damage against the respondents. However, the said suit was
instituted in the year 1990 and, therefore, the trial Court has
rightly decided such issue in favour of the respondents and, thus,
the appeal is devoid of merits.
9. This Court has considered the submissions advanced by
the learned counsel appearing for the respective parties and the
record and proceedings of the case and perused the impugned
judgment and order and examined the document at exhibit 61. It
appears that there was reciprocal promises given by the
appellant to the respondents and on perusing the conditions
stipulated in Schedule B, it is necessary to consider the provision
of Section 51 to 54 of the Indian Contract Act, which reads thus:-
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"51. Promiser not bound to perform, unless reciprocal
promisee ready and willing to perform.--When a contract
consists of reciprocal promises to be simultaneously
performed, no promiser need perform his promise unless
the promisee is ready and willing to perform his reciprocal
promise.
Illustration
(a) A and B contract that A shall deliver goods to B to be
paid for by B on delivery.
A need not deliver the goods, unless B is ready and willing
to pay for the goods on delivery.
B need not pay for the goods, unless A is ready and willing
to deliver them on payment.
(b) A and B contract that A shall deliver goods to B at a
price to be paid by installments, the first installment to be
paid on delivery.
A need not deliver, unless B is ready and willing to pay the
first installment on delivery.
B need not pay the first installment, unless A is ready and
willing to deliver the goods on payment of the first
installment.
52.Order of performance of reciprocal promises.--Where
the order in which reciprocal promises are to be performed
is expressly fixed by the contract, they shall be performed
in that order; and where the order is not expressly fixed by
the contract, they shall be performed in that order which
the nature of the transaction requires.
Illustrations
(a) A and B contract that A shall build a house for B at a
fixed price. A's promise to build the house must be
performed before B's promise to pay for it.
(b) A and B contract that A shall make over his stock-in-
trade to B at a fixed price, and B promises to give security
for the payment of the money. A's promise need not be
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performed until the security is given, for the nature of the
transaction requires that A should have security before he
delivers up his stock.
53. Liability of party preventing event on which the
contract is to take effect.--When a contract contains
reciprocal promises, and one party to the contract prevents
the other from performing his promise, the contract
becomes voidable at the option of the party so prevented;
and he is entitled to compensation from the other party for
any loss which he may sustain in consequence of the
nonperformance of the contract.
Illustration
A and B contract that B shall execute certain work for A for
a thousand rupees. B is ready and willing to execute the
work accordingly, but A prevents him from doing so. The
contract is voidable at the option of B; and, if he elects to
rescind it, he is entitled to recover from A compensation for
any loss which he has incurred by its non-performance.
54. Effect of default as to that promise which should be
first performed, in contract consisting of reciprocal
promises.--When a contract consists of reciprocal
promises, such that one of them cannot be performed, or
that its performance cannot be claimed till the other has
been performed, and the promiser of the promise last
mentioned fails to perform it, such promiser cannot claim
the performance of the reciprocal promise, and must make
compensation to the other party to the contract for any
loss which such other party may sustain by the non-
performance of the contract.
Illustrations
(a) A hires B's ship to take in and convey, from Calcutta
to the Mauritius, a cargo to be provided by A, B receiving a
certain freight for its conveyance. A does not provide any
cargo for the ship. A cannot claim the performance of B's
promise, and must make compensation to B for the loss
which B sustains by the non-performance of the contract.
(b) A contracts with B to execute certain builder's work
for a fixed price, B supplying the scaffolding and timber
necessary for the work. B refuses to furnish any scaffolding
or timber, and the work cannot be executed. A need not
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execute the work, and B is bound to make compensation to
A for any loss caused to him by the non-performance of the
contract.
(c) A contracts with B to deliver to him, at a specified
price, certain merchandise on board a ship which cannot
arrive for a month, and B engages to pay for the
merchandise within a week from the date of the contract. B
does not pay within the week. A's promise to deliver need
not be performed, and B must make compensation.
(d) A promises B to sell him one hundred bales of
merchandise, to be delivered next day, and B promises A
to pay for them within a month. A does not deliver
according to his promise. B's promise to pay need not be
performed, and A must make compensation"
10. On perusal of the above referred provision and vis-a-vis
condition stipulated in Schedule B, now if this Court considers
that the work was not completed within stipulated time, it finds
that the appellant had terminated the contract on 21.10.1980
and the respondents have accepted the same and since, the
respondents have accepted the said condition as per the tender
agreement at Exhibit 78 dated 05.05.1984, the work was
allocated to third agency and the respondents have not taken
any objections to the said work contract issued to third party
and, therefore, the claim of the appellant was commenced from
that date and the date can be reckoning for the purpose of cause
of arose, however, the suit was filed after about seven years i.e.
of the same year i.e. in the year 1990 and, therefore, the trial
Court has, after considering the relevant documents and
provisions of the Indian Contract Act, discussed the said aspects
in para - 51 of the impugned judgment and order. The trial Court
has elaborately discussed the provision of Article 55 of the
Limitation Act and after considering the relevant dates, the trial
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Court has observed in para - 53 which reads as under:-
"53. In this case, it is very clear that the defendants had
made breach of the contract and, therefore, the plaintiff
had rescinded the contract on dated 21-10-1980 as per
Exh. 76 and the plaintiff had decided to complete the
remaining work through another agency. Therefore, the
breach of the contract was done by the defendant before
dated 21-10-1980, after dated 21-10-1980 the defendant
had not executed any work and there was no
correspondence between the parties and, therefore, there
was no continuing breaches of the contract after dated 21-
10-1980. So, as per the provisions of Article - 55 of the
Limitation Act the period of limitation shall be counted from
dated 21-10-1980 and the period of limitation is expired on
dated 21-10-1983. This suit is filed on dated 5-1-1990 and,
therefore, this suit is clearly time barred."
11. The suit is being one for damages for breach of contract, it
is governed by Article 55 of the Limitation Act and therefore, the
suit should have been filed within three years from the date of
the breach. Here, the breach has been committed on
23.12.1976. In pursuance of clause 4 of the agreement, the suit
ought to have filed within three years from the date of
abandonment by the present respondents within three years
from the breach of the agreement. The contract was determined.
Thus, the trial Court has rightly held that the suit was barred by
the provision of Article 55 of the Limitation Act. It is worthwhile
to refer to the decisions of the Hon'ble Supreme Court in the
case of Sundaram Finance Limited Vs. Noorjahan Beevi
reported in 2016 (0) AIR(SC) 3183 : 2016 (13) SCC 1, in the
case of State Of Gujarat Vs. Kothari And Associates
reported in 2016 (14) SCC 761 and in the case of Rajagopala
Naidu Vs. Aiyyaswamy Chettiar reported in 1965 AIR
Madras 532 wherein the Hon'ble Court has held that a suit was
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filed for damages sustained upon a breach and consequent upon
a resale, time would commence to run not from the date of the
breach but only after the resale when the exact amount of
damages could be ascertained by the plaintiff. This argument
was not accepted and it was held that time would commence to
run under Art. 115 from the date of the breach. The Court has
further observed that this claim is definitely out of time. It ought
to have been instituted within 3 years of the date of the breach
of the contract and it is no defence to this objection to argue that
it was only the occasion of resale which enabled the defendant
firm to ascertain exactly the degree of damages, or precise
amount which would represent the injury suffered by them. The
occasion for ascertainment will have to be distinguished from the
date upon which the cause of action arose and from which
limitation began to run. It is also to be referred to the decision of
the Hon'ble Supreme Court in the case of Food Corporation Of
India Vs. Babulal Agrawal with Babulal Agrawal Vs. Food
Corporation of India reported in (2004) 2 SCC 712.
12. Thus, this Court is of the opinion that in view of the
aforesaid observation and the decisions of the Hon'ble Supreme
Court, the suit was time barred and it was decided on the
aforesaid basis and after considering the oral as well as
documentary evidence and the relevant provisions of law, the
trial Court has rightly dismissed the suit filed by the appellant on
the ground of limitation as observed after relying upon the
various decisions of the Hon'ble Supreme Court, this Court as
well as other High Courts.
13. In above view of the matter, I am of the opinion that the
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trial Court has not committed any error of facts and law in
passing the impugned judgment and order and I do not find any
illegality and/or infirmity in the impugned judgment and order.
The trial Court has discussed the relevant documentary evidence
which goes to the route of the matter and suggests that the
cause of action is already commenced from 1980 since the
appellant has allocated the work to the third party, however, the
suit was filed in the year 1990 and, therefore, the same is
grossly time barred. There is no substance in the present appeal
to interfere with by this Court and the appeal being meritless
deserves to be dismissed.
14. In view of the above, the present appeal is dismissed.
Record and proceedings be transmitted back to the concerned
Court forthwith. Pending civil application stands disposed of
accordingly.
(HEMANT M. PRACHCHHAK,J)
V.R. PANCHAL
