M/S Shyamaraju And Company India Ltd vs The Municipal Commissioner
2026 Latest Caselaw 1519 Kant

Karnataka High Court

M/S Shyamaraju And Company India Ltd vs The Municipal Commissioner on 20 February, 2026

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                                                         CRP No.100020 of 2022




                    IN THE HIGH COURT OF KARNATAKA, AT DHARWAD

                        DATED THIS THE 20TH DAY OF FEBRUARY, 2026

                                           BEFORE

                        THE HON'BLE DR. JUSTICE K.MANMADHA RAO
                                                                             ®
                          CIVIL REVISION PETITION NO.100020 OF 2022


                   BETWEEN:
                   M/S SHYAMARAJU & COMPANY (INDIA) LTD.,
                   A PRIVATE COMPANY INCORPORATED
                   UNDER THE INDIAN COMPANIES ACT, 1955
                   CORPORATE OFFICE AT DHIVYASHREE CHAMBERS,
                   A WING, #11 O' SHAUGENSSY ROAD,
                   BENGALURU-560 025.
                   REPRESENTED BY ITS AUTHORIZED SIGNATORY
                   MR. V.M. MATHEW

                                                                 ...PETITIONER
                   (BY SRI. CHETAN MUNNOLI, ADVOCATE)

Digitally signed   AND:
by
MOHANKUMAR
B SHELAR           1.     THE MUNICIPAL COMMISSIONER,
Location: High
Court of                  CITY MUNCIPAL COUNCIL ILKAL,
Karnataka,
Dharwad Bench             TALUKA HUNGUND
                          BAGALKOT DISTRICT-587125.

                   2.     THE MANAGING DIRECTOR,
                          KARNATAKA URBAN INFRASTRUCTURE
                          DEVELOPMENT AND
                          FINANCE CORPORATION (KUIDFC),
                          NAGARABHIVRUDDHI BHAVAN,
                          #22, 17 F CROSS,
                          BINAMANGAL 2ND STAGE,
                          OLD MADRAS ROAD,
                          INDIRA NAGAR,
                          BENGALURU-560 038.
                              -2-
                                           CRP No.100020 of 2022




3.   THE PROJECT MANAGER,
     KARNATAKA URBAN INFRASTRUCTURE
     DEVELOPMENT AND
     FINANCE CORPORATION,
     NORTH KARNATAKA URBAN SECTOR
     INVESTMENT PROGRAMME
     KUIDFC-NKUSIP,
     DIVISIONAL OFFICE,
     PROJECT IMPLEMENTATION UNIT
     1ST FLOOR, CORPORATION SHOPPING COMPLEX,
     GOAVES, HINDWADI, BELAGAVI-590 011.

                                                 ...RESPONDENTS

(BY SRI. NARAYAN G. RASALKAR, ADVOCATE FOR R1 TO R3)

THIS CIVIL REVISION PETITION IS FILED UNDER SECTION 115 OF CPC., PRAYING TO SET ASIDE THE ORDER DATED 26.10.2021 PASSED ON IA NO.V IN OS NO.95/2016 ON THE FILE OF THE SENIOR CIVIL JUDGE AND JMFC, HUNGUND AND CONSEQUENTLY DISMISS THE SUIT IN THE INTEREST OF JUSTICE AND EQUITY.

     THIS CRP HAVING BEEN HEARD AND RESERVED FOR
ORDERS    ON    04.02.2026         AND    COMING      ON     FOR
PRONOUNCEMENT       THIS     DAY,        ORDER     WAS     MADE
THEREIN AS UNDER:

CORAM: THE HON'BLE DR. JUSTICE K.MANMADHA RAO

CAV ORDER

1. The petitioner has filed this Civil Revision Petition

calling in question the order dated 26.10.2021 passed by the

Senior Civil Judge and JMFC, Hungund, rejecting I.A. No.V filed

under Order VII Rule 11(d) read with Section 151 of Civil

Procedure Code, 1908('the CPC' for short) seeking rejection of

the plaint in O.S.No.95/2016 on the ground of limitation.

2. The facts leading to the filing of the petition are

that:-

The petitioner and the respondents entered into a contract

on 18.10.2010 for execution of sewerage works. The said

contract came to be terminated by the respondents on

26.04.2012. The petitioner challenged the termination before

this Court by filing a writ petition, which came to be dismissed on

11.01.2013. The writ appeal filed thereafter was also dismissed

on 15.02.2013.

3. Thereafter, the petitioner instituted O.S.No.130/2013

before the competent Civil Court seeking declaration and

injunction in respect of the termination order. During the

pendency of the said suit, liberty was granted by this Court to

file a separate suit for damages after disposal of the said suit.

4. After termination of the contract, the respondents

undertook measurement of the work already executed, prepared

estimates for the balance work, obtained approval from the

competent authority and got the balance work executed through

another contractor at the risk and cost of the petitioner. Based

on such exercise, damages were quantified. On 09.11.2016, the

respondents filed O.S.No.95/2016 before the Senior Civil Judge,

Hungund, seeking recovery of damages and cost of balance

work.

5. After appearance in the said suit, the petitioner filed

I.A.No.V under Order VII Rule 11(d) read with Section 151 of the

CPC contending that the suit is barred by limitation, as according

to the petitioner the cause of action arose on 26.04.2012 itself,

the date of termination of contract. The Trial Court, by order

dated 26.10.2021, rejected I.A.No.V holding that the issue of

limitation is a mixed question of law and fact and cannot be

decided at the threshold under Order VII Rule 11(d) of the CPC.

6. Being aggrieved by the said order passed on

I.A.No.V, the petitioner has approached this Court by filing the

present Civil Revision Petition.

7. The learned counsel for the petitioner contends that

Article 55 of the Limitation Act squarely applies to the case. It is

submitted that the breach occurred on 26.04.2012 when the

contract was terminated and limitation commenced from that

date. It is argued that the suit filed on 09.11.2016 is ex facie

barred by limitation. Reliance is placed on the decisions in

Dahiben v. Arvindbhai Kalyanji Bhanusali reported in

(2020) 7 SCC 366, and Raghwendra Sharan Singh v. Ram

Prasanna Singh reported in (2020) 16 SCC 601, to contend

that where the plaint itself discloses that the suit is barred by

limitation, it must be rejected under Order VII Rule 11(d) of the

CPC. Reliance is also placed on judgments holding that unilateral

quantification of damages does not extend the period of

limitation and that clever drafting cannot circumvent the law of

limitation.

8. In support of the contentions, learned counsel

appearing for the petitioner has placed reliance on the following

judgments:-

     •     Shri Mukund Bhavan Trust and others v.
           Shrimant       Chhatrapati          Udayan         Raje
           Pratapdinh     Maharaj      Bhonsle      and   another
           reported in (2024) 15 SCC 675;



     •     M/s.Delta Founation and Constructions, Kochi
           and   others   v.    Kerala   State      Construction,

Corporation Ltd., Ernakulam, reported in AIR 2003 KERALA 201.

9. Per contra, the learned counsel for the respondents

contends that the plaint discloses a continuing cause of action. It

is submitted that under the terms of the contract, the

respondents were required to measure the executed work,

estimate the balance work, obtain approval from the competent

authority and then execute the balance work at the risk and cost

of the contractor. It is argued that damages could be determined

only after completion of these steps.

10. It is submitted that the petitioner has challenged the

order dated 26.10.2021 passed by the learned Senior Civil Judge

and JMFC, Hungund, in O.S.No.95/2016, whereby his application

under Order VII Rule 11(d) read with Section 151 of the CPC

came to be rejected. The respondent No.1, being the Employer--

City Municipal Commissioner, CMC Ilkal along with respondent

No.2, a Government Company and respondent No.3, its

supervisory representative, were vested with supervisory and

financial control over the project funded under the loan

conditions of the Asian Development Bank, Manila, with

participation of the Central and State Governments. The work

under Agreement dated 18.10.2010 for supplying and laying

sewerage network and construction of FAL type STP of 8.0 MLD

capacity at Ilkal, valued at Rs.35,87,07,060/-, was to be

completed within 18 months from the date of handing over of

site, i.e., on or before 17.04.2012.

11. It is contended that the petitioner failed to complete

the work within the stipulated period and committed

fundamental breaches of contract despite repeated opportunities.

Consequently, after following due procedure and in public

interest, Respondent No.1 terminated the contract by

proceedings dated 26.04.2012. The W.P.No.14760/2012 filed by

the petitioner challenging the termination was dismissed on

11.01.2013, and W.A.No.30106/2013 was also dismissed on

15.02.2013 by the Co-ordinate bench of this Court. Thereafter,

the petitioner instituted O.S.No.130/2013 and pursued multiple

interlocutory proceedings and writ petitions, including

W.P.No.81897/2013, which was disposed of on 24.07.2014

granting liberty to file a separate suit for damages after disposal

of the pending suit, and W.P.No.105613/2014, disposed of on

10.02.2015 with directions regarding preliminary issues. Thus,

the litigation initiated by the petitioner continued, and the

consequences arising out of the termination order dated

26.04.2012 remained sub judice.

12. It is further submitted that upon abandonment of the

work by the petitioner at the time of termination, the Employer

was compelled to undertake damage control measures and

subsequently assess the balance work in accordance with

contractual clauses, including GCC Clause 51.1 and PCC Clause

69.1, which permitted completion at the risk and cost of the

defaulting contractor. The assessment of the balance work,

undertaken with technical and financial assistance of respondents

No.2 and 3, and approved at various levels during the period

2012 to 2014, revealed that against the original contract value of

Rs.35,87,07,060/-, and after deducting RA-2 and Final Bill

amounts of Rs.4,07,91,737/-, the balance amount available was

Rs.31,79,15,323/-.

13. However, it is argued that the actual cost incurred for

completion through a fresh contract with M/s UPL Environmental

Engineers Limited, Vadodara, in joint venture with M/s Gharpure

Engineering and Constructions (P) Ltd., Pune, amounted to

Rs.42,71,42,307/-, resulting in an excess expenditure of

Rs.10,92,26,984/- and additional administrative cost at 20%

amounting to Rs.2,18,45,397/-, totaling Rs.13,10,72,381/-. The

process of evaluation, preparation of estimates, sanction and

calling of fresh tenders was necessarily time-consuming and

could not have been finalized on the date of termination itself.

Hence, the cause of action for recovery of risk and cost amount

arose only upon ascertainment and approval of the actual

expenditure, and the question of limitation is a mixed question of

fact and law requiring evidence and trial.

14. It is submitted that pursuant to evaluation of fresh

tenders, the Joint Venture of M/s UPL Environmental Engineers

Limited, Vadodara, Gujarat with M/s Gharpure Engineering and

Constructions (P) Ltd., Pune, Maharashtra, was found to be

competitive and was accordingly recommended by the expert

committee. The respondent No.1 accepted the said bid with

technical support of respondents No.2 and 3, and a fresh

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Agreement dated 24.03.2014 was executed for completion of the

balance work at a tender price of Rs.42,71,42,307/-, preceded

by Letter of Acceptance dated 05.02.2014 and Notice to Proceed

dated 25.03.2014. As per the terms of the original Agreement

dated 18.10.2010 and the termination proceedings dated

26.04.2012, the Employer reserved the right under Clause PCC

69(1)(ii) and (iii) to complete the unexecuted work at the risk

and cost of the defaulting contractor. After assessment of the

balance work and upon finalization of the excess cost, notice

dated 18.03.2015 was issued to the petitioner intimating the

proposed recovery. Thereafter, by Order dated 09.06.2015, the

damages and interest were determined at Rs.14,44,78,730/-,

and the same was communicated by notice served on

13.06.2016, directing payment within 15 days.

15. It is further submitted that upon failure of the

petitioner to comply with the said demand within 15 days of

service, it was specifically pleaded that the cause of action arose

on 28.06.2015 and continued thereafter. The suit in

O.S.No.95/2016 was instituted on 09.11.2016 before the Senior

Civil Judge, Hungund, seeking recovery of Rs.14,44,78,730/-

with interest at 18% per annum, which is well within three years

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from the pleaded date of cause of action. The plaint clearly

discloses the material facts, including the determination of

damages on 09.06.2015, service of notice on 13.06.2016, failure

to pay within 15 days, and the continuing nature of the cause of

action arising out of termination dated 26.04.2012 and

subsequent completion of balance work at enhanced rates.

Therefore, limitation cannot be reckoned from the date of

termination alone, as the right to sue accrued only upon

ascertainment and demand of the quantified amount.

16. It is also submitted that the scope of Order VII Rule

11(d) of the CPC is confined strictly to the averments in the

plaint, and in the present case, the plaint does not disclose that

the suit is barred by any law. Even assuming applicability of

Article 55 of the Limitation Act, 1963, the question as to when

the right to sue accrued whether on the date of termination of

the contract or upon ascertainment and quantification of the

excess expenditure incurred in completing the balance work

depends upon interpretation of the contractual clauses and the

factual matrix pleaded. Such determination cannot be

undertaken without evidence. Therefore, the issue of limitation

constitutes a mixed question of law and fact which cannot be

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adjudicated at the stage of considering an application under

Order VII Rule 11(d) of the CPC. Hence, the order of the Trial

Court rejecting I.A. No.V does not call for interference in exercise

of revisional jurisdiction under Section 115 of the CPC.

17. In support of the contentions, learned counsel for the

respondents has placed reliance on the judgment of the Apex

Court in the case of Mukesh Kumar v. Harbans Warraich

reported in AIR 2000 SC 172; wherein it has been held that the

defendants not refusing either to execute the conveyance or to

perform their part, held that cause of action is continuing.

18. Reliance is also placed on decisions recognizing that

limitation can be a mixed question of law and fact and that

where determination of limitation depends upon factual

adjudication and examination of contractual terms, rejection of

the plaint at the threshold is impermissible under Order VII Rule

11(d) of the CPC.

19. Heard learned counsel appearing on either side and

perused the material on record.

20. Having given anxious consideration to the rival

contentions, it is not in dispute that O.S.No.130/2013,

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O.S.No.16/2015 and O.S.No.95/2016 arise out of the same

contractual transaction and are presently pending before the

Commercial Court for adjudication. However, while considering

an application under Order VII Rule 11(d) of the CPC, the Court

is required to confine its examination strictly to the averments

made in the plaint in the suit sought to be rejected. The

existence or pendency of other proceedings between the parties

cannot, by itself, be a determinative factor for rejecting or

sustaining the plaint. The question that requires consideration is

whether, on a plain reading of the plaint in O.S.No.95/2016

alone, the suit appears to be barred by limitation. Therefore, this

Court proceeds to examine whether from the statements made in

the plaint in O.S.No.95/2016, the bar of limitation is apparent so

as to warrant rejection under Order VII Rule 11(d) of the CPC.

21. Further, the plea of limitation raised by the petitioner

is not one that can be determined solely on a bare reading of the

plaint. The question as to when the right to sue accrued, whether

the breach was complete on the date of termination or continued

until ascertainment of damages, and whether exclusion of time

or other statutory provisions are attracted, are matters which

require factual determination. It is well settled that limitation, in

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such circumstances, constitutes a mixed question of law and

fact. In Sangramappa v. S. Gangamma, reported in 2019 (1)

KLR 81 (DB), it has been held that where adjudication of

limitation depends upon evidence and disputed facts, rejection of

the plaint under Order VII Rule 11 of the CPC is impermissible.

The present case squarely falls within the said principle and

therefore cannot be decided at the threshold stage.

22. This Court has also perused the citations relied upon

by the learned counsel for the parties, wherein it is observed that

the scope of an application under Order VII Rule 11(d) of the

CPC is well settled. The Court is required to look only at the

averments in the plaint. If from the plaint itself it is clear that the

suit is barred by any law, the plaint must be rejected. However,

where determination of limitation depends upon disputed facts or

requires evidence, the plaint cannot be rejected at the threshold.

23. The legal principles laid down in the judgments relied

upon by the learned counsel for the petitioner are not in dispute.

The Apex Court has clearly held that if a suit is ex facie barred by

limitation on the basis of plaint averments alone, rejection of

plaint is mandatory and that clever drafting cannot create an

artificial cause of action.

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24. At the same time, the very same line of authorities

also makes it clear that rejection of plaint is permissible only

when the bar of limitation is apparent on the face of the plaint

and does not require factual adjudication.

25. In the present case, the plaint does not merely rely

upon the date of termination of the contract. It specifically

pleads that the respondents were contractually required to

complete measurement, estimation, approval and execution of

balance work and that damages were quantified only thereafter.

The plaint further pleads that the cause of action arose after

completion of these steps.

26. Whether Article 55 of the Limitation Act governs the

case and whether the right to sue accrued on the date of

termination of the contract or on the date of ascertainment and

quantification of the excess expenditure incurred in completing

the balance work are matters which requires examination of the

contractual terms and factual matrix. Such determination cannot

be undertaken without evidence. At this stage, it cannot be

conclusively held that the suit is barred by limitation on the face

of the plaint.

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