Appeal from original Decree No. 89 of 1996(R) --- Against the judgment and decree dated 14.12.1995/21.12.1995 passed by Sub- Judge, V, Ranchi in Money Suit No. 82 of 1987. 1. Food Corporation of India 2. District Manager, Food Corporation of India, Ranchi 3. Senior Regional Manager, Food Corporation of India,Patna ...Appellants Versus Deepak Kumar Singh ... .....Respondent For the Appellant : M/s. Satish Bakshi, Nipun Bakshi & Mrinal Singh, Advs. For the Respondents : M/s. V. K. Prasad & Sahil, Advs. PRESENT HON'BLE MR. JUSTICE APARESH KUMAR SINGH --- By Court: Heard learned counsel for the parties.
2. Appellants were the defendants in Money Suit No. 82 of 1987 instituted by the plaintiff/respondent, who has also preferred crossobjection being aggrieved by the findings rendered in the same impugned judgment. 3. The case of the parties as borne out from the pleadings before learned court, inter alia, are as under: Plaintiff was appointed as Adhoc contractor for the period 197682 by the respondent/appellantF.C.I to undertake handling and transportation of consignment of different commodities received at the Railway Station Ranchi and Hatia which included three operations of unloading of the goods from the railway wagons, loading the same on trucks provided by the plaintiff and its transportation to the point of destination. The job required the contractor to deposit 50% of the total security money with the concerned authority of defendant no. 1 either in cash or through its Bank Demand Draft and remaining 50% to be realized by way of deduction @ 5% from the running account bill of the contractor. On completion of the work of contract, he was required to submit his final bills for payment. Plaintiff claims to have deposited the required security 2. money through different sums in different years ranging from the year 19761985 and the remainder was duly deducted from his running account bills. But, according to him, he had not received a single farthing despite the repeated requests and reminders. He protested through letter dated 23rd December, 1980/8th January, 1981 to the District Manger of Food Corporation of India. He also took the plea that substantial amount of security deposits and outstanding bills for the work done have remained unpaid. He had to pay the minimum wages to the workers @ 60 paise per bag for loading and unloading with variable dearness allowance as per the rates prescribed by the appropriate authorities of the Govt. of Bihar in terms of the clause of agreement whereas only 24 paise per bag for loading and unloading was paid to him, as a result, he suffered a loss of Rs. 5,31,453/, which the defendants are obliged to pay. 4. It is not a matter of dispute and as per the case of the parties also decided in answer to Issue no. 10 by learned trial court, that plaintiff was awarded contract for handling and transporting of goods in a regular manner for the period from 25th June, 1983 till 23rd June, 1985. The nature of work was same i.e., operation of work from Hatia Railway Station to Hatia Food Storage Depot. Plaintiff in similar fashion made certain deposits towards security and certain sums were also deducted from his running bills. Accordingly, he completed the work of handling and transportation for the period from 24th June, 1983 till 8th May, 1985 and requested the Assistant Manager and District Manager of the Corporation for grant of works done certificate to enable him to submit his bills. This was avoided one or the other pretext. In the month of October, 1985, the defendants issued the work done certificates. Thereafter on 3rd November, 1985 the plaintiff submitted his bills for the work done to the tune of Rs. 1,78,717.12/, but the defendants neglected to refund the security deposit. Plaintiff also claimed payment of Rs. 79,845.92 on account of difference between the contract rate and the rate at which payments were made to the plaintiff for transportation work for the period from January, 1983. Plaintiff' also in total claimed a sum of Rs. 8,70,684.60 from the defendants on account of refund 3. of security deposits and payment for value of the works done under different contracts as described in the schedule. Cause of action according to him, arose on different dates and finally on 19th November, 1986 when the defendants failed to make payment to the plaintiff despite issue of legal notice.
5. Defendants through their written statement controverted the claim of the plaintiff and also raised a counter claim. According to them, the plaintiff's cause of action was barred by limitation and the principles of waiver, estoppel and acquiescence. The suit was also barred under the provisions of Arbitration Act embodied in the contract. They also averred that plaintiff's engagement was on Adhoc basis with effect from 23rd January, 1978 for transportation of goods. During this period because of his unworkman like performance defendants suffered a loss of Rs. 5,40,171/, which he was informed through letter dated 23rd December, 1980 to deposit within 30 days, failing which, it would be deducted or adjusted from his outstanding bills and security deposits as per the contract. They also contended that due to breach of the contract, defendants have suffered loss. The claim of the plaintiff to the extent of Rs. 5,31,423.00 on account of revision of minimum wages was denied. Plaintiff had left the work during the subsistence of the regular contract which entailed heavy loss and expenses upon which they are entitled to realize all the cost and damage charges. According to them, plaintiff committed breach of contract between 1983 to 1985 for short transportation of wheat, rice and sugar which entailed a loss of Rs. 1,92,128.12 and was legally recoverable from them. According to the defendants, due to abandonment of work, they had to appoint new contractor to complete the left over work which entailed an extra expenditure of Rs. 38,215.00. Defendants incurred total amount of Rs. 2,97,165.44 on account of violation of contract, out of which a sum of Rs. 1,47,531.93 was adjusted against the bills submitted by the plaintiff and the balance sum of Rs. 1,59,633.51 had remained due. Apart from that, defendants had to pay the demurrage and wharfage charges amounting to Rs. 33,84,733.00 to the Railways on account of inadequate handling and 4. transportation facilities on the part of the plaintiff. After adjustment of the actual amount payable to the plaintiff, defendants were entitled to recover a sum of Rs. 35,34,366.81. Therefore, they sought a decree by way of counter claim to the aforesaid extent. According to them, demand notice dated 17th March, 1986 claiming the aforesaid amount was not replied. Again on 19th November, 1987 they sent reminder, but without any response. The defendants therefore sought dismissal of the suit with compensatory cost and decree in respect of their counter claim. 6. In reply, plaintiffs contended that the entire counter claim was malafide, misconceived and not maintainable being barred by law of limitation and principles of waiver, estoppel and acquiescence; that no cause of action had arisen for raising counter claim. Plaintiff' had to leave work as compelling circumstances were created by the defendants which prevented the plaintiff from discharging his part of the contract. Therefore, there was no breach of contract on the part of the plaintiff. Defendants have arbitrarily adjusted the amount and that demurrage and wharfage charges were not on account of any fault on the part of the plaintiff. They attributed negligence on the part of the Corporation Railway Headincharge as he was never punctual in attending the goods office and never signed on T. 39 Form. 7. On the basis of the pleadings of the parties, learned trial court framed 14 issues, inter alia, as follows: i) Is the suit as framed maintainable? ii) Has the plaintiff a valid cause of action for this suit? iii)Is the suit barred by the law of limitation and principles of waiver estoppel and acquiescence? iv) Whether this suit is barred by the Arbitration Act? v) Whether due to the negligence of the plaintiff the defendants had to pay the demurrage and wharfage charges to the Railway? vi) Whether the plaintiff is entitled to get a decree against the defendants? vii)Whether the plaintiff committed breach of contract leading to the losses and damage to the defendants? viii)Whether the counter claim made by the defendants is legal and maintainable? ix)Whether the counter claim for a decree for Rs. 35,34,366.81 as sought for by the defendants is 5. barred by the law of limitation? x) Whether the plaintiff was appointed as H/T contractor on behalf of the Food Corporation of India by its competent authority w.e.f 23.1.78 and further he was appointed as the regular contractor in the year 1983 for handling and transportation of the goods from Railway siding to the godown of the defendants? xi)Whether the plaintiff left the work of loading and transportation of work during the subsistence of the contract as a result thereof, the defendants had to appoint another contractor to complete the incomplete work? xii)Has this court jurisdiction to entertain this suit in view of the arbitration cause in the contract entered into by and between the plaintiff and the defendant? xiii) Are the defendants entitled to get a decree for counter claim against the plaintiff? Xiv) To what other relief or reliefs if any the plaintiff is entitled for? 8. Plaintiffs examined 8 witnesses, namely, P.W.1 is Suresh Sahani, P.W.2, Laxman Ram, P.W.3 is Rajendra Pandey, P.W.4 is Deepak Singh the plaintiff, P.W.5 is Mahendra Prasad, P.W.6 is Satyanarain Prasad, P.W.7 is Mohan Roy and P.W.8 is Jagdish Arora and also adduced several documentary evidence. 9. Defendants examined 16 witnesses, namely, Durga Charan Kashyap (D.W.1), Rath Nath Bhagat (D.W.2), Vinod Kumar Jaiswal (D.W.3), Arbind Prasad (D.W.4), Premsagar Prasad Singh (D.W.5), Satya Narain Mandal (D.W.7), Sheo Dayal Mishra (D.W.8), Jafirul Haque (D.W.9), B.D.Bishwarkarma (D.W.10), Mahbool Ali (D.W.11), Indradeo Ram (D.W.12), R.K.P.Singh (D.W.13), Utpal Bose (D.W.14) and R.K.Pandey (D.W.16) and exhibited several documents in support of their counter claim as well. 10. Learned trial court first decided more or less an undisputed issue relating to the appointment of plaintiff as a contractor initially w.e.f. 23rd January, 1978 and thereafter as a regular contractor in the year 1982 for handling transportation of goods from Railway Siding to Godown of the defendant in accord with the case of the parties also. Learned trial court thereafter proceeded to render a finding against the plaintiff on the issue relating to limitation and also held the suit as being barred by Arbitration 6. Act. It held that the claim for the period 1976 to 1983 given in the schedule of the plaint was for a period beyond 3 years from the date of filing of the suit and was, therefore, barred by limitation. Plaintiff had completed the work and work done certificates were also issued, to which no objection was raised and he did not either make any claim regarding the amount. Under the arbitration clause in the Adhoc contract, all disputes and differences touching any of the items concerning the agreement were to be adjudicated through the sole Arbitrator appointed by the Managing Director of Food Corporation of India whose award could be final. Plaintiff having failed to refer the dispute to the sole Arbitrator and having remained silent towards any claim relating to the period prior to 1982 was precluded from raising such a claim to the present suit. Apart from that, the evidence of the plaintiff (P.W.4) was also taken into account as he did not whisper a word about the claim even prior to 1982. P.Ws. 2 and 6 being his agents, who had executed the work for the period November, 1982 to May, 1985 also had not stated in relation to the claim relating to the work done prior to 1982. No other witness of the plaintiff had spoken a word regarding the claim prior to 1982. The claim raised through the schedule were, therefore, held to be barred by law of limitation and the provisions of the Arbitration Act. 11. Learned trial court thereafter proceeded to determine the Issue No. 11 in relation to the counter claim raised by the defendants. Upon analysis of the material pleadings and the evidences on record, it rendered a finding that the plaintiff had left the execution of work on 9th May, 1985, though the stipulated date of completion of work was 23rd June, 1985. Plaintiffs had on their part failed to adduce any evidence to the effect that the defendants were themselves responsible for creating circumstances and situations which persuaded him to leave the work before expiry of the period. Learned trial court held that the plaintiff had violated the terms and conditions of the contract causing loss and damage to the defendants with regard to the work left over by him. Defendant had to appoint another contractor. 7.
12. Learned trial court thereafter proceeding to determine the Issue nos. 8 and 9 in relation to the counter claim raised by the defendants. The counter claim of the defendant were based on these items: i) Loss of Rs. 1,92,128.12 on account of breach of contract by the plaintiff between 1983 to 1985; ii) Loss of Rs. 4,330/ towards the price of gunny bags due to the breach of contract by the plaintiff; iii) Incurring of extra expenditure of Rs. 38,215.00 for appointing another contractor to complete the left over work after the plaintiff abandoned the work prior to expiry of period of contract; iv) An amount of Rs. 2,97,165.44 incurred by the defendants on account of breach of contract towards which they adjusted a sum of Rs. 1.47,531.93 against the bills of the plaintiff and the balance of Rs. 1,49,633.51 remained due to them; v) Claim of Rs. 33,84,733.30 towards demurrage and wharfage charges paid to the Railways due to inadequate handling and transportation facilities provided by the plaintiff. 13. Learned trial court held that period of contract was from 24th June, 1983 to 23rd June, 1985. The period of three years of limitation in raising such a counter claim or for filing a suit for recovery of the amount should end on 24th June, 1988. The counter claim was laid on 18th July, 1988 beyond the period of limitation. Therefore, it was not legally maintainable. Though the claim was not admitted by the plaintiff, but the defendant should have taken legal recourse within 3 years from the aforesaid date to recover the amount which they failed to do. The counter claim against the plaintiff was filed on 17th July, 1988, which was beyond the period of 3 years. Accordingly, the counter claim was held to be barred by law of limitation. Learned trial court then proceeded to deliver a finding against the defendant in relation to entitlement to counter claim in answer to Issue no. 13. At the same time, learned court also did not find substance in the claim of the plaintiff for a decree for realization of the amount claimed. 8. Plaintiff, Deep Kumar Singh (P.W.4) had, in his crossexamination, admitted that he had not deposited “No Demand Certificate” required for refund of amount of security deposits. P.W.3, in his crossexamination, had also stated that no register was maintained regarding the payment of wages to the labourers under the Minimum Wages Acts. D.W.9, an Assistant in Food Corporation of India proved the Cheque of the credit note as Ext.8 and stated that demurrage and wharfage charges were paid due to the acts of the plaintiffs to the Railways in mishandling of the transportation work. D.W.10 also deposed against the plaintiff in relation to the mishandling of transportation work in an unworkmanship manner due to negligence which resulted in payment of demurrage and wharfage charges to the Railways. No crossexamination of the aforesaid witnesses were undertaken by the plaintiff. 14. Learned trial court ultimately came to a conclusion that any such amount claimed by the plaintiff were legally adjusted by the defendants from his bills and therefore nothing remained due against the defendants. Accordingly, it held that the plaintiff was not entitled to any decree for realization of the amount claimed. The counter claim of the defendants was also dismissed as barred by law of limitation. 15. Learned counsel for the appellants had made elaborate arguments on the findings of learned trial court in answer to Issue no. 9 where it held the counter claim as barred by limitation. The entire emphasis of his submission is based upon Clauses 10 and 11 of the agreement, whereunder in a case of termination of contract or violation of terms and conditions of the contract, liability of contractor is to be ascertained by a designated officer of the Corporation. Only after ascertainment of the liability and the issuance of demand, which is dated 17th March, 1986 on the plaintiff failure to respond, the cause of action arose. According to him, the terms and conditions of contract contemplated creation of cause of action dependent upon ascertainment of the liability of the contractor in the manner laid therein. Therefore, the counter claim was well within the period of 9. limitation, if it was filed in July, 1998. 16. Learned counsel for the appellants has relied upon judgments rendered by the Apex Court reported in the case of Syndicate bank Vs. Channaveerappa Beleri and others reported in (2006) 11 SCC 506 and in the case of M/s. Aries & Aries Vs. Tamil Nadu Electricity Board reported in 2017 SCC OnLine SC 537 in support of his contention. According to him, if the findings relating to limitation are decided in their favour, the entire claim on merits are bound to be adjudged in their favour. 17. The determination of the instant appeal so far as present appellant is concerned, is primarily dependent on the question whether the counter claim was barred by limitation or not? Whether the findings on Issue no. 9 by learned trial court are proper in the eye of law or on facts or not? 18. Considerable discussion has been undertaken on the point in issue during the course of submission of learned counsel for the appellants and the plaintiff/respondent herein. One may usefully referred to the Articles 18 and 55 of the Indian Limitation Act, which read as under: Description of suit Period of limitation Time from which period begins to run 18. For the price of Three years When the work is done work done by the plaintiff for the defendant at his request, where no time has been fixed for payment 55. For Three years When the contract is compensation for the broken or (where there are breach of any successive breaches) when contract, express or the breach in respect of implied not herein which the suit is instituted specially provided occurs or (where the for. breach is continuing) when it ceases.
19. The claim of the appellants herein obviously does not fit in terms of Article 18. It provides for realization of price of work done within 3 10. years from the date when the work is done when no time has been fixed for payment. Here is a case of breach on the part of contractor i.e., plaintiff which is the basis for the defendants/appellants herein to raise his counter claim. Article 55 quoted above provides specific answer as to the time period from when cause of action arises in case of a breach of contract. The cause of action for compensation for breach of any contract, express or implied arise when the contract is broken or where there are successive breaches, when the breach in respect of which the suit is instituted occurs or where the breach is continuing, when it ceases.
20. In the state of facts of the present case as borne out from the pleadings and evidence on record, plaintiff had left work on 9th May, 1985 i.e. more than 1 month before the stipulated date of completion of contract i.e., 23rd June, 1985. The Food Corporation of Indiadefendant were clearly aggrieved on account of abandonment of the work by the contractor and treated it as a breach of the terms and conditions of the contract. In any case the contract would have come to an end by 23rd June, 1985. Even if, the breach continued successively, it would have ceased by 23rd June 1985 only. There are no pleadings or evidence on record on the part of the appellants shown by the learned counsel for the appellants in support of their case that there was an express or implied termination of the agreement on their part on account of the breach committed by the plaintiff contractor. The appellant undertook a task for ascertaining the outstanding liability against the contractor and waited till March, 1986 to issue of notice of demand. The ascertainment of liability dependent upon whims and vagaries of defendantF.C.I on an uncertain future date would in any case not determine the date of accrual of the cause of action. Cause of action accrued as a result of breach of contract on the part of the plaintiff i.e., on 9th May, 1985 and if period of limitation in terms of Article 55 of Limitation Act is to be reckoned, the suit or counter claim should have been filed within a period of 3 years from that period. Even if the breach continued, it ceased to have effect on the stipulated date of completion of the work i.e., 23rd June, 1985. Learned trial court was therefore not in error in coming to a finding that the 11. counter claim raised by the defendant on 18th July, 1988 was definitely beyond the period of limitation. 21. Learned counsel for the appellants has tried to rely upon the residuary Article 113 under the Limitation Act. Article 113 however contemplates of a limitation period in such circumstances when no period of limitation is provided elsewhere in the schedule. This residuary article would therefore not come in support of the appellants. The judgment rendered by the Apex Court in the case of Syndicate bank (Supra) also does not come to the help of the appellants as it was rendered in the context of a guarantor/sureties liability under Sections 128 and 129 of the Contract Act. The Apex Court had occasion to deal with the special meaning of words 'on demand' or 'payable forthwith without demand' in the facts and circumstances of the case. It was found that sureties liability would be enforceable even if the principle debtor's liability has become time barred. The limitation period would begin to run for sureties liability in such a case from the date of such demand and refusal/noncompliance therewith. It was also held that the extent of liability under a guarantee and question when the liability will arise, would depend on terms of the contract. The facts of the present case are therefore clearly distinguishable as it is not a case of realization of a liability from a surety or guarantor. If there was a clear breach of the contract by the plaintiff the period of limitation would run in terms of Article 55 of the Act for defendant to raise a claim of compensation, which they failed to do within the stipulated period of 3 years. The appellant is also unable to take the help of the judgment rendered by the Apex Court in the case of M/s. Aries & Aries(Supra). As per the facts of the said case, despite the date of final payment i.e., 13 th January, 1981, the parties had exchanged correspondences between them and the plaintiff had reiterated its claim on different counts including execution for extra work done, which the defendant had entertained and also kept the matter pending. Finally, on 6th November, 1981, the said claims were rejected. In those circumstances, the apex court held that it 12. would be reasonable to assume that the cause of action in respect of rejected claim arose on 6th November, 1981 and the suit could have been filed prior to expiry of 3 years from the said date in view of Article 113 of the Limitation Act, 1963. The findings of High Court in holding to the contrary were therefore not justified. 22. In view of the discussions made hereinabove, this Court is of the considered view that the counter claim raised by the defendant/appellant was definitely barred by limitation. 23. Coming to the case of the plaintiff/crossobjector in the present appeal, on consideration of the submission of learned counsel for the cross objector, I find that they have miserably failed to demolish the findings rendered by the learned trial court in respect of claim related to the period 1978 to 1982 both on the point of limitation and being hit by the existence of arbitration clause in the agreement during the period of Adhoc contract. They have also not been able to establish their claim on the merits relating to the period of 1982 to May, 1985. Plaintiff had committed breach of contract and had completely failed to bring on record any evidence to show that the failure to perform their promise was actuated on account of refusal of defendantFCI to perform the reciprocal part of their promise. The performance of the contract on the part of the plaintiff was not rendered impossible on account of any refusal on the part of F.C.I. to comply their reciprocal promise. It also appears from the evidence on record that the plaintiff had failed to adduce any evidence in relation to the payments made under the Minimum Wages Act and also not deposited No Demand Certificate for refund of the amount of security deposits which is a pre condition as per the evidence of P.Ws. 3 and 4 discussed hereinabove as well. Whatever amount had remained legally due in favour of the plaintiff' for the work executed were duly adjusted by the Railways after breach of the contract on their part and engagement of a new contractor by the FCI to get the work executed. 24. In totality of the facts and circumstances, the material evidence on 13. record and for the discussions made above, the respondents/crossobjectors herein have completely failed to dislodge the findings of learned trial court on any of the counts warranting interference in the impugned judgment. Accordingly, both the instant appeal and crossobjection stands dismissed. (Aparesh Kumar Singh,J) Jharkhand High Court, Ranchi Dated 4th January, 2018 Jk/NAFR