Madras High Court
P.Janakiraman vs The Commissioner on 8 August, 2023
C.S.No. 642 of 2018
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 08.08.2023
CORAM
THE HONOURABLE Ms. JUSTICE P.T. ASHA
C.S.No. 642 of 2018
P.Janakiraman ... plaintiff
Vs.
1.The Commissioner,
Corporation of Chennai,
Ripon Buildings, Chennai – 600 003.
2.The Superintending Engineer,
Bus Route Road Department,
Corporation of Chennai, Ripon Buildings,
Chennai – 600 003. ... defendants
Prayer: Plaint filed under Order IV Rule (1) of OS Rules High Court
Madras, 1956 read with Order VII Rule (1) of CPC, 1908, for
(a)Directing the defendants to pay a sum of Rs.6,18,00,341/-
and pay interest @ 12% from the date of plaint till the date of
realisation on Rs.2,60,76,222/-.
1/26
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C.S.No. 642 of 2018
(b)Grant such other relief or reliefs as the Hon'ble Court may
deem fit and proper in the circumstances of the case.
For Plaintiff : Mr. V.Srikanth
For Defendants : Mr. Bharath Gowtham
for Ms.Aswini Devi
JUDGEMENT
The above suit is filed for recovery of a sum of Rs.6,18,00,341/-
together with interest at 12% per annum from the date of the plaint till
the date of realisation of sum of Rs.2,60,76,222/-.
Plaintiff's case:
2. It is the case of the plaintiff that the defendants had floated
tender for laying of cement concrete road for the stretch from
(i)Ennore Road to Joint Canal Bridge, (ii)Tiruvottiyur High road to
Vaidhyanathan Bridge and (iii)Muthamizh Nagar, 5th Main Road
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C.S.No. 642 of 2018
(from north Avenue to South Avenue).
3. The plaintiff had participated in the tender on 23.07.2004.
However, it was only on 27.04.2005 that the 2nd defendant had issued
a letter of acceptance and the site was handed over to the plaintiff on
04.07.2005. The period of contract was fixed at 6 months. The
defendants had taken a year for entrusting the work from the date of
tender, as a result the prices of raw material had increased
substantially.
4. By letter dated 04.10.2005, the plaintiff informed the 2nd
defendant that sufficient site was available only at Muthamizh Nagar,
5th main road and not at Vaidyanathan road and Manali road and
stated that this was only on account of the delay on the part of the
corporation of Chennai. The plaintiff therefore requested the 2nd
defendant to arrange for the sufficient site so that the work in the
other two roads also be completed within the time frame of the
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C.S.No. 642 of 2018
contract. The 2nd defendant had responded by calling upon the
plaintiff to submit PERT/CPM chart by letter dated 25.11.2005. By
letter dated 17.12.2005, the plaintiff had submitted PERT chart for the
said three roads individually.
5. The plaintiff would further submit that in May 2006, on
account of assembly election, the plaintiff was not in a position to
continue the work and therefore by letter dated 17.05.2006, the
plaintiff had requested the 2nd defendant to grant an extension of time
by further period of 4 months from 04.04.2006. By letter dated
25.07.2006, the 1st defendant had granted the extension for a period of
6 months on condition that from 04.04.2006 a fine of Rs.5,000/- per
day would be levied and action would be initiated to debar the
plaintiff, in case the work is not completed before 31.08.2006.
6. The plaintiff would submit that on account of efflux of time,
the prices of the raw materials also increased and therefore, the
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C.S.No. 642 of 2018
plaintiff once again vide letter dated 06.09.2006 had sought for
extension upto 30.11.2006. The 2nd defendant by letter dated
28.09.2006 granted the extension, after imposing the penalty of
Rs.5,000/- per day upto 30.11.2006. Although the plaintiff by letter
dated 04.10.2006 had requested the 2nd defendant to obtain orders
from the competent authority for escalation of prices since prices of
raw materials and labour had gone up, the 1st defendant by letter dated
14.11.2006 had turned down the request and levied the penalty of
Rs.5,000/- per day upto 30.11.2006.
7. The 2nd defendant had declined the request for escalation of
prices vide their letter dated 24.01.2007, however, granted extension
upto 28.02.2007 to complete all the minor works. The plaintiff
thereafter vide letters dated 31.01.2007 and 01.02.2007 had requested
the defendants to waive fine of Rs.5,000/- per day and once again
requested them to re-consider the plaintiff's request for price
escalation. This request was once again reiterated vide letter dated
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C.S.No. 642 of 2018
12.02.2007 and 30.08.2007, none of which was responded to.
8. By letter dated 23.05.2008, the plaintiff had set out the
reasons for the delay and reasons for requesting an escalation of price.
It was their contention that they were unable to take up work in
Manali road from Ennore road to Joint Canal Bridge, since there were
several underground cables running on this road and it was not
possible to shift / remove the cables and proceed with the laying of
the road. In the light of these hurdles, hindrances and difficulties, the
defendants themselves had pre-closed contract with reference to this
stretch of the road and the final bill was disbursed to the plaintiff on
13.03.2007.
9. This would clearly go to prove that the defendants had not
made available the road for which the plaintiff had tendered. The
plaintiff therefore submitted a claim as detailed herein below:
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C.S.No. 642 of 2018
Claim No.1 Request payment for the difference
in cost between the agreement rate
and the escalated rate during the
extended period of contract
Rs.22,63,751/-
Claim No.2 Request to refund the fine imposed
and recovered against the terms and
conditions of contract
Rs.4,15,271/-
Claim No.3 Request payment for the prevention
of profit earning due to foreclosure
of contract at Rs.32,43,323/-
Claim No.4 Request payment for the loss of
profit and over heads due to
prolongation of contract
Rs.2,01,54,377/-.
10. By letter dated 30.11.2010, the plaintiff had called upon the
2nd defendant to give his decision with reference to each of these
claims, for which there was no response. The plaintiff had addressed
several letters in this regard, to which the defendants had not sent any
reply and ultimately by letter dated 04.05.2011 the request was
rejected as one without basis since the delay according to the
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C.S.No. 642 of 2018
defendants was only on account of the plaintiff's lethargic and casual
attitude.
11. Therefore, the plaintiff had preferred an appeal vide their
communication dated 28.05.2011 and requested the defendants to give
decision and stating that in case the authorities are not re-considering
their decision, the plaintiff would be initiating arbitration proceedings
as contemplated under Clause 7.8. Since there was no reply from the
2nd defendant, the plaintiff by letter dated 21.06.2011 had requested
the dispute to be referred to an arbitrator. The 2nd defendant had
replied that there was no provision to consider escalation of price and
therefore the request for appointing arbitrator would not arise. The
plaintiff therefore was constrained to file O.P.No.700 of 2012 under
Section 11 of the Arbitration and Conciliation Act, 1996, seeking
appointment of an arbitrator.
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12. The defendants had contested the same to the effect that the
resolution through arbitration was available only in cases of claims
below Rs.50,000/- and in all other cases, it was only the Civil Court
that had jurisdiction to deal with the matter. This statement was
recorded by order dated 30.10.2017 and the plaintiff was given liberty
to move the Civil Court. Therefore, the present suit.
13. The 1st defendant had filed a written statement inter alia
denying the very claim of the plaintiff. The defendants had submitted
that the suit was barred by limitation. It is the case of the defendants
that the plaintiff alone was a bidder and the plaintiff had quoted cost
which was 40.12% higher than the office estimate. After negotiation,
the plaintiff had reduced the quote to a sum of Rs.4,22,59,177.40/-
which is 8.11 % higher than the office estimate. Since there were no
bidder and considering the extensive damage to the roads, the
defendants were compelled to award tender to the plaintiff taking into
account the public welfare.
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C.S.No. 642 of 2018
14. The defendants would submit that the site was handed over
to the plaintiff on 04.07.2005. As per tender condition no.1-16, the
tender period for competing the work on the three roads was 6 months
from the date of handing over of the site and therefore the work
should have been completed on or before 04.02.2006. However, on
the request of the plaintiff, the contract was extended for a further
period of 6 months from 04.01.2006 for completing the works at the
three sites. Despite the extension, the plaintiff had not taken steps to
expedite the work and the defendants were constrained to send letters
dated 20.04.2006, 28.04.2006 and 17.05.2006, requesting the plaintiff
to expedite the work at Muthamizh Nagar and Vaidyanathan Salai and
to commence the work at Manali road. The defendants had also
intimated the plaintiff that if no action was taken by the plaintiff then
they would have to invoke the tender condition.
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C.S.No. 642 of 2018
15. On 17.05.2006, the plaintiff had requested the extension of
time for a further period of 4 months from 04.06.2006. However,
during this extended period the work at Vaidyanathan salai remained
only at the sand and gravel mix level and at Muthamizh Nagar had
progressed to the laying of about 30% of the total length and beyond
this the plaintiff had not shown any progress. The plaintiff appeared
to be working at his convenience and had not given importance to the
public need. Therefore, the defendant had decided to impose penalty
for the delay and non-completion of work by way of penalty of
Rs.5,000/- per day.
16. Though the plaintiff had been entrusted with the work at
three sites, he had only completed the work at 2 sites and the work at
Manali road was dropped since the plaintiff had not even commenced
the work and thereafter the work was finished by another contractor.
The defendant had set out the amounts that had been paid to the
plaintiff with reference to both Muthamizh Nagar and Vaidyanathan
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C.S.No. 642 of 2018
salai and had also stated that a sum of Rs.34,81,037/- had been
retained. The defendants had submitted that the claim was highly
exorbitant and without jurisdiction. Therefore, they sought to have
the suit dismissed.
17. This Court by order dated 13.07.2021 had framed the
following issues:
“(i) Whether the suit is within the limitation in view
of the order passed in O.P.No.700 of 2012 dated
30.10.2017?
(ii) Whether the plaintiff is entitled for the suit claim
of Rs.6,18,00,341/- with interest as prayed?
(iii) Whether the request of the plaintiff seeking
extension of time to execute the contract and waiver of
fine imposed will dis-entitled the plaintiff seeking
payment of differences in cost between the agreed rate
and accelerate rate, refund the fine imposed and recover,
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C.S.No. 642 of 2018
payment for the prevention of profit arising due to
foreclosure and payment of loss of profit and over its due
to prolongation of contract and
(iv) what other relief, the plaintiff is entitled?
18. The plaintiff had examined P.W.1 and marked Ex.P.1 to
Ex.P.29. On the side of the defendants D.W.1 was examined and
Ex.D.1 to Ex.D.11 were marked on their side.
19. The defendants had raised the preliminary issue of
limitation. Therefore, this Court proceeded to hear the arguments
with reference to limitation on account of the fact that if the issue is
answered in favour of the defendants it would bring the suit to an end.
20. Mr. V.Srikanth, learned counsel for the plaintiff would
submit that though the final bill was settled on 17.08.2007, however,
the rejection of the claim by the defendants was only on 04.05.2011
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C.S.No. 642 of 2018
and therefore the time for filing the suit would commence from
14.08.2011 and therefore there is no limitation. The learned counsel
would further submit that as soon as the claim was rejected, the
plaintiff had taken steps to request the defendants to appoint an
arbitrator as per the terms of the contract and ultimately the petition
under Section 11 of the Arbitration and Conciliation Act was ordered
only on 30.10.2017 and therefore the suit is well within time.
21. The learned counsel would rely upon the Judgement of this
Court reported in 2022 SCC Online Mad 3618 – P.P.Thomas Vs.
State of Tamil Nadu, wherein, the learned Judge on examining the
rival contention in the said suit had held that it was only Article 113
that would be applicable for a consolidated suit claim and limitation
period would run from the date when the right to sue first accrues.
22. Per contra, Mr. Bharath Gowtham appearing on behalf of
the defendants would submit that the plaintiff had received the final
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C.S.No. 642 of 2018
bill on 17.08.2007 without demur and in fact the same was not even
received under protest. He would rely upon the legal notice issued by
the plaintiff on 23.05.2008, Ex.P.17, where the plaintiff had only
sought for recovery of a sum of Rs.2,01,54,377/- towards loss of
profits and overheads. Therefore, he would submit that the suit which
is filed in the year 2018 in respect of the claim which has been settled
finally in the year 2007 is clearly barred by limitation.
23. The learned counsel would rely upon the Judgement of the
Hon'ble Supreme Court reported in 2016 (14) SCC 761 – State of
Gujarat Vs. Kothari and Associates.
Discussion:
24. As already observed, if the issue of limitation goes in favour
of the defendants then the suit has to be dismissed. However, if the
Court comes to a decision that the suit is not barred by limitation, it is
only then the other issues have to be considered.
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C.S.No. 642 of 2018
25. Admittedly, the plaintiff has received the final payment on
17.08.2007 and when he had received the payment, he has not
objected to the same or contended that he is receiving the same
without prejudice to his claim. On the contrary, the plaintiff has
received the amount towards full and final settlement of his dues
under the contract. The subsequent communication of the plaintiff
calling upon the defendants to appoint an arbitrator appears to be an
after thought particularly on considering the notice, Ex.P.17, which
was issued within 10 months of the plaintiff receiving full and final
settlement, in the said notice for the first time the plaintiff has made a
claim with reference to the delay, escalation of prices etc., and had
called upon the defendants to pay a sum of Rs.32,43,323/- towards
compensation for loss of profit for work not done and
Rs.2,01,54,377/- towards loss of profit due to prolongation of
contract, though the full payment was received by the plaintiff on
17.08.2007 there was no response. Further, the plaintiff has not taken
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C.S.No. 642 of 2018
any steps whatsoever to institute the suit.
26. The Hon'ble Supreme Court in the Judgement reported in
2016 (14) SCC 761 – State of Gujarat Vs. Kothari and Associates,
was considering the similar case, where the respondent who had
participated in the tender floated by the State of Gujarat in that case,
for every extension that was granted to the contractor had sought for
compensation for the monetary loss due to the extended time limit and
on every occasion the State had denied the compensation. The
contractor had also received the full payment under protest on
01.01.1982 and the security deposit was also refunded. On
07.08.1983, the contractor had issued a statutory notice under Section
80 CPC to the State claiming damages. Ultimately, the suit was filed
on 25.01.1985. The Trial Court held in favour of the contractor
against which the State had preferred an appeal before the High Court
and the contractor had also filed a counter claim. The High Court had
dismissed the appeal and the said dismissal order was taken up to the
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Hon'ble Supreme Court.
27. While dismissing the appeal filed by the State, the High
Court had opined that limitation need not mandatorily be computed on
the basis of each cause of action. It held that date of return of security
deposit could be taken for calculating the period of limitation.
28. The Hon'ble Supreme Court after considering the arguments
and the facts in the said case has held as follows:
“11.....The High Court’s conclusion that the last
date of breach and last date of payment were relevant,
not each cause of action, was thus patently erroneous.
For each breach, a corresponding amount of damages
for additional costs could have been sought. The suit,
however, was filed on 25.1.1985, well after the limitation
period of three years for even the final breach, as the
various causes of action became time barred on
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C.S.No. 642 of 2018
15.11.1979, 15.11.1980, 15.11.1981 and 15.11.1982
respectively.”
“13.In a works contract, more often than not,
delays occur, and that is why it is assumed that time is
not of the essence. Where extensions are asked for and
granted, there must be a clear and discernable stand on
behalf of either of the parties that the extension is
granted and/or accepted without prejudice to the claim of
damages. It has become commonplace that neither party
lodges a claim for damages, but waits for the end of the
contract to raise these disputes, taking advantage of the
nebulous and equivocal nature of the transactions
between them. This, however, is not the position that
obtains before us since the Appellant State had
categorically posited that the claim for damages for the
alleged delay on its part would not be entertained.”
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C.S.No. 642 of 2018
29. Ultimately, the Hon'ble Supreme Court held as follows:
“It is thus clear that the Respondent failed to file
the suit for damages within the period prescribed in
the Limitation Act. The suit is required to be dismissed on
this ground alone. The impugned Order is, therefore, set
aside, and the Appeal is allowed, but with no order as to
costs.”
This Judgement will apply on all fours to the case on hand.
30. Therefore, the primary issue of limitation is held against the
plaintiff and the suit is dismissed however without costs.
08.08.2023
Internet : Yes/No
Index :Yes/No
Speaking / Non-Speaking
kan
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C.S.No. 642 of 2018
List of witness on the side of the Plaintiff:
P.W.1 - Mr. P.Janakiraman
List of Exhibits marked on the plaintiff's side:
Ex.P.1 - is the photocopy of letter of acceptance from
Defendant to plaintiff dated 27.04.2005.
E.P.2 - is the photocopy of Agreement executed
between the Plaintiff and Defendants dated July,2005.
Ex.P.3 - is the photocopy of Plaintiffs letter to 2nd
Defendant requesting free site for execution dated 04.10.2005.
Ex.P.4 - is the photocopy of 2nd Defendant instructed
the Plaintiff to submit PERT/CPM Chart dated 25.11.2005.
Ex.P.5 - Ex.P5 is the photocopy of Plaintiff submitted
the PERT CHART to the 2nd Defendant dated 17.12.2005.
Ex.P.6 - is the photocopy of a letter from Plaintiff to
the 2nd Defendant seeking extension of time for 4 months from
04.06.2006 dated 17.05.2006.
Ex.P.7 - is the photocopy of a notice from the 1st
Defendant to the Plaintiff duly imposing fine of Rs.5000/- per day
from 04.07.2006 and granted EOT up to 31.08.2006 dated
25.07.2006.
Ex.P.8 - is the photocopy of a letter from Plaintiff to
st
the 1 Defendant seeking EOT upto 30.11.2006 narrating the price
hike of materials dated 06.09.2006.
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Ex.P9 - is the a letter from Plaintiff to the 2nd
Defendant granting EOT upto 30.11.2006 and imposed penalty at
Rs.5000/- per day upto 30.11.2006 dated 28.09.2006.
Ex.P.10 - is the photocopy of a letter to the Plaintiff to
nd
the 2 Defendant to obtain orders for price escalation citing Andhra
Pradesh G.O dated 04.10.2006.
Ex.P.11 - is the photocopy of a letter from 1st Defendant
to the Plaintiff rejecting the plea of the Plaintiff for price escalation
and return of fine amount dated 14.11.2006.
Ex.P.12 - is the photocopy of a letter from Plaintiff to
nd
the 2 Defendant duly enclosing a judgment and sought for price
escalation and EOT upto dated 28.02.2007 dated 24.12.2006.
Ex.P.13 - is photocopy of a letter from Plaintiff to the
nd
2 Defendant requesting to waive the fine imposed dated 31.01.2007.
Ex.P.14 - is the photocopy of a letter from Plaintiff to
nd
the 2 Defendant requesting to waive the fine imposed dated
01.02.2007.
Ex.P.15 - is the photocopy of a letter from Plaintiff to
nd
the 2 Defendant requesting to Reconsider price escalation dated
12.02.2007.
Ex.P.16 - is the photocopy of a letter from the Plaintiff
nd
to the 2 Defendant requesting to withdraw the fine imposed and pay
price escalation dated 30.08.2007.
Ex.P.17 - is the photocopy of a letter from the Plaintiff
to the 2nd Defendant duly submitting claims for redressal dated
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23.05.2008.
Ex.P.18 - is the photocopy of a letter from the Plaintiff
nd
to the 2 Defendant requesting to give decision on each claims dated
30.11.2010.
Ex.P.19 - is the photocopy of a letter from the Plaintiff
nd
to the 2 Defendant once again requesting to give decision on each
claims dated 18.04.2011.
Ex.P.20 - is the photocopy of the letter from the 2nd
Defendant to the Plaintiff duly rejecting the claims of the Plaintiff
dated 04.05.2011.
Ex.P.21 - is the photocopy of a letter from the Plaintiff
nd
to the 2 Defendant duly prefer an appeal to consider his claims,
otherwise Arbitration will arise dated 28.05.2011.
Ex.P.22 - is the photocopy of a letter from 2nd Defendant
to the Plaintiff duly rejecting the claims of the Plaintiff and rejected
the Arbitration as time barred dated 09.06.2011.
Ex.P.23 - is the photocopy of a letter from the Plaintiff
nd
to the 2 Defendant requested to appoint an Arbitrator as per clause
7.8 of Agreement dated 21.06.2011.
Ex.P.24 - is the photocopy of a letter from 2nd Defendant
to the Plaintiff stating that the appointment of Arbitrator dose not
arise dated 20.07.2011.
Ex.P.25 - is the photocopy of a letter from the Plaintiff
nd
to the 2 Defendant duly enclosing a copy judgment stating that the
claims are within the stipulated period for consideration by
Arbitration dated 26.08.2011.
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Ex.P.26 - is the photocopy of a letter from 2nd Defendant
to the plaintiff denying appointing an Arbitrator as it is time barred
dated 23.11.2011.
Ex.P.27 - is the photocopy of Resolution passed by
corporation of Chennai foreclosing the major portion of work allotted
to Plaintiff dated 11.05.2012.
Ex.P.28 - is the office copy of the petition in O.P
No.700/2012 High Court, Madras dated August, 2012.
Ex.P.29 - is the certified copy of order in
O.P.No.700/2012 dated 30.10.2017
List of witness on the side of the Defendants:
D.W.1 - Mr. P.Arivazhagan
List of Exhibits marked on the defendants' side:
Ex.D.1 - Letter from Superintending Engineer to
plaintiff dated 16.05.2005
Ex.D.2 - Site Handing over letter dated 04.07.2005.
Ex.D.3 - Bill dated 06.07.2005.
Ex.D.4 - Letter from Superintending Engineer to
plaintiff dated 20.04.2006.
Ex.D.5 - Letter from Superintending Engineer to
plaintiff dated 28.04.2006
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Ex.D.6 - Letter from Superintending Engineer to
plaintiff dated 17.05.2006.
Ex.D.7 - Letter from Superintending Engineer to
plaintiff dated 27.03.2006
Ex.D.8 - Bill dated 08.03.2007.
Ex.D.9 - Bill dated 13.08.2007.
Ex.D.10 - Bill dated 13.08.2007.
Ex.D.11 - Authorisation letter dated 09.12.2021.
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P.T. ASHA. J,
kan
C.S.No. 642 of 2018
08.08.2023
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