[Cites 7, Cited by 0]
Rajasthan High Court - Jodhpur
Rajasthan State Road Development And ... vs M/S Praman Construction Pvt. Ltd on 19 December, 2025
Author: Pushpendra Singh Bhati
Bench: Pushpendra Singh Bhati
[2025:RJ-JD:54387-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Civil Misc. Appeal No. 2338/2024
1. Rajasthan State Road Development And Construction,
Corportation Ltd. Through Its Managing Director, Setu
Bhawan, Opp. Jhalana Doongri, Agra Bypass, Jaipur
2. Rajasthan State Road Development And Construction
Corporation Ltd., Unit Udaipur, 80 Ashok Nagar, Road No.
3, Udaipur
----Appellants
Versus
M/s Praman Construction Pvt. Ltd., (A Company Registered
Under The Companies Act, 1956) Regd. Office - 9 Five Star
Compex, Near Kumbhanagar, Hiranmagri Sector 04, Udaipur
----Respondent
For Appellant(s) : Mr. Sunil Bhandari
For Respondent(s) : Mr. Harshit Bhurani
HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI
HON'BLE MR. JUSTICE ANUROOP SINGHI
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
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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.
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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 measurement of the work was carried out on 06.10.2010, in
which the respondent admittedly participated, and therefore, the
cause of action, if any, stood crystallized in the year 2010 itself.
3.2. Learned counsel further submitted that under Articles 18 and
113 of the Limitation Act, 1963, the limitation period of three
years expired, at the latest, in October, 2013, whereas the suit
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was filed much thereafter, and the learned Commercial Court
committed a jurisdictional error in entertaining and decreeing a
time-barred suit.
3.3. It was further contended that invocation of Clause 23 of the
contract by the respondent after expiry of limitation could not
revive a stale or time-barred claim, and the learned Commercial
Court erred in treating the same as a fresh cause of action.
3.4. Learned counsel for the appellants submitted that the learned
Commercial Court failed to appreciate that a duly constituted
expert committee conducted final measurement of the work on
06.10.2010 and, based on such measurement, only an amount of
Rs.61,363/- was found payable to the respondent, as reflected in
the Measurement Book and Final Bill.
3.5. It was submitted that despite participating in the final
measurement, the respondent neither signed the measurement
nor challenged the same in any forum, and therefore, the learned
Commercial Court erred in discarding the final measurement and
substituting its own assessment.
3.6. Learned counsel further submitted that the respondent had
abandoned the work on 29.06.2010 and failed to resume the
same even after extension of time was granted up to 15.11.2010,
and therefore, rescission of contract vide order dated 23.09.2010
was strictly in accordance with the contractual terms.
3.7. It was contended that as per Clauses 2 and 3 of the contract,
the appellant-Corporation was fully empowered to levy
compensation for unexecuted work and to forfeit the security
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deposit, and the learned Commercial Court exceeded its
jurisdiction in quashing the penalty order and directing refund of
the security deposit.
3.8. Learned counsel submitted that the learned Commercial Court
misread the oral and documentary evidence on record, ignored the
contractual stipulations, and granted a decree which is internally
inconsistent, particularly after rejecting the claims relating to
idling charges and extra work.
3.9. It was lastly submitted that the award of interest at the rate
of 9% per annum is excessive and unsupported either by the
contract or by any statutory provision.
4. Per contra, learned counsel appearing on behalf of the
respondent submitted that the impugned judgment and decree
dated 05.06.2024 passed by the learned Commercial Court,
Udaipur are just, legal and proper, and do not warrant any
interference by this Court in appellate jurisdiction.
4.1. Learned counsel for the respondent submitted that the
objection raised by the appellants regarding limitation is wholly
misconceived. It was contended that the respondent had
submitted its final bill on 01.10.2010, and upon non-release of
payment, made repeated representations, including a written
request dated 14.01.2011.
4.2. It was further submitted that on 21.03.2011, higher officials
of the appellant-Corporation directed the concerned officers to
process the payment of the respondent's bill; however, despite
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such directions, the payment was not released, thereby giving rise
to a continuing grievance.
4.3. Learned counsel submitted that the respondent thereafter
invoked Clause 23 of the contract on 07.10.2013 by depositing the
prescribed fee and requested the appellants to refer the dispute to
the Empowered Standing Committee. It was contended that a
detailed claim was also submitted on 25.11.2013 in terms of the
directions issued by the appellants.
4.4. It was contended that despite invocation of the contractual
dispute resolution mechanism, the appellants failed to refer the
dispute to the Empowered Standing Committee within the
stipulated period, and therefore, the cause of action to institute
the suit arose on account of such non-referral.
4.5. Learned counsel for the respondent further submitted that the
suit is also within limitation in view of Article 55 of the Limitation
Act, 1963, which provides a limitation period of three years for a
suit for compensation for breach of contract, to be computed from
the date when the contract is broken, or, in cases of successive or
continuing breaches, when the breach ceases.
4.6. It was contended that in the present case, the breach on the
part of the appellants was a continuing breach, inasmuch as the
respondent's legitimate dues were continuously withheld despite
submission of the final bill, repeated representations, and
invocation of the contractual mechanism, and therefore, limitation
did not commence or conclude in the year 2010, as alleged by the
appellants.
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4.7. Learned counsel submitted that the evidence on record
clearly establishes that complete and approved drawings were not
provided to the respondent at the inception of the work, and that
the work was stopped on several occasions due to objections
raised by the Forest Department, which fact stood admitted during
the cross-examination of the appellants' witnesses.
4.8. It was further submitted that the respondent was at all times
ready and willing to perform its contractual obligations, and that
the delay in execution of work was attributable to non-availability
of approved designs and lack of coordination between the
departments of the appellants.
4.9. Learned counsel for the respondent submitted that the
learned Commercial Court, after detailed appreciation of oral and
documentary evidence, recorded a categorical finding that the
appellants had taken contradictory stands with regard to supply of
drawings and stoppage of work, and such findings are findings of
fact which do not call for interference in appeal.
4.10. It was contended that the learned Commercial Court rightly
held that the respondent had executed work beyond the original
scope of the contract, and that the appellants could not unjustly
enrich themselves by withholding payment for the work executed
by the respondent.
4.11. Learned counsel submitted that the rescission of the
contract and imposition of penalty vide order dated 23.09.2010
were arbitrary and unjustified, and the learned Commercial Court
was correct in quashing the said order.
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4.12. Learned counsel for the respondent placed reliance on the
following judgments in support of the submissions advanced on
behalf of the respondent:
1. J.C. Budhraja vs. Chairman, Orissa Mining Corporation
Ltd. And Another (Civil Appeal No's. 1971-1973 of 2000
decided on 18.01.2008)
2. Khan Bahadur Shapoor Freedom Mazda vs. Durga
Prasad Chamaria and ors. (Civil Appeal No. 77 of 1957
decided on 01.03.1961)
5. Heard learned counsel for the parties and perused the
material available on record as well as the judgments cited at the
Bar.
6. This Court observes that since the present appeal is being
pressed and argued primarily on the issue of limitation, it is
appropriate to first examine whether the suit instituted by the
respondent on 10.12.2015 was within the prescribed period of
limitation.
6.1. This Court notes that it is an admitted position on record that
the contract between the parties was rescinded by the appellant-
Corporation vide order dated 23.09.2010, and the respondent was
called upon to participate in the final measurement of the work.
6.2. This Court further notes that the final measurement was
carried out on 06.10.2010 by a duly constituted committee. Thus,
by the said date, the contractual relationship between the parties
stood conclusively terminated and the final quantification of work
executed had taken place.
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6.3. This Court finds that once the contract was rescinded and
final measurement was conducted, the cause of action, if any, in
favour of the respondent stood crystallized, at the latest, on
06.10.2010.
6.4. This Court observes that the respondent's reliance on
invocation of Clause 23 of the contract on 07.10.2013 for
reference of the dispute to the Empowered Standing Committee
cannot extend or revive the period of limitation, as a contractual
dispute resolution mechanism cannot override the statutory
mandate of the Limitation Act, 1963.
6.5. This Court further observes that even the invocation of Clause
23 by the respondent was itself beyond the period of limitation.
The cause of action having accrued on 06.10.2010, the statutory
period of limitation expired in 05.10.2013 , and the request for
reference to the Standing Committee was made after expiry of the
prescribed limitation period.
6.6. This Court finds that a reference sought to the Standing
Committee beyond the period of limitation cannot create a fresh
or independent cause of action, nor can it revive or validate a
claim which had already become time-barred under the Limitation
Act, 1963.
6.7. This Court further finds that mere representations,
correspondence, or internal departmental directions for processing
of payment do not give rise to a fresh cause of action, nor do they
arrest the running of limitation once the right to sue has accrued.
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6.8. This Court observes that the plea of the respondent based on
Article 55 of the Limitation Act, 1963 on the ground of an alleged
"continuing breach" is misconceived in the facts of the present
case. Once the contract was rescinded and final measurement
undertaken, no continuing contractual obligation subsisted
between the parties.
6.9. This Court further observes that withholding of payment after
termination of the contract and final determination of dues does
not constitute a continuing breach within the meaning of Article
55, but at best gives rise to a single and complete cause of action,
which accrued in the year 2010.
6.10. This Court finds that under Articles 18 and 113 of the
Limitation Act, 1963, the limitation period for instituting a suit for
recovery of money is three years from the date when the right to
sue accrues, which, in the present case, expired in October, 2013.
6.11. This Court holds that the suit having been instituted only on
10.12.2015, was clearly barred by limitation, and the learned
Commercial Court committed a jurisdictional error in entertaining
and decreeing a time-barred suit.
6.12. This Court further observes that since limitation goes to the
very root of the matter, once the suit is held to be barred by
limitation, no adjudication on the merits of the rival claims is
warranted.
7. In view of the aforesaid discussion, this Court holds that the
suit instituted by the respondent was barred by limitation, and
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consequently, the impugned judgment and decree dated
05.06.2024 cannot be sustained in law.
8. Accordingly, the present D.B. Civil Misc. Appeal No.
2338/2024 is allowed. The judgment and decree dated
05.06.2024 passed by the learned Commercial Court, Udaipur in
Commercial Case No. 167/2018 (E.D.) is hereby quashed and set
aside.
9. All pending applications, if any, stand disposed of.
(ANUROOP SINGHI),J (DR. PUSHPENDRA SINGH BHATI),J
SKant/-
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