(1) The short but important question which this enquiry posses is, whether Article 56 of the Limitation Act applies to the facts of the case or is it Article 115 which is applicable.
(2) The necessary facts in order to appreciate the contentions raised before me are that the plaintiff who is the appellant before me instituted the suit for recovery of an amount of Rs. 2,717-82 nP. due on the execution of contract work of the first defendant Panchayat at Gundugolanu. It was alleged inter alia in the plaint that tenders were called for by the first defendant for some earth work for deepening the Vindyavasi tank in Gundugolanu village and for providing barbed wire fencing. In response to that call the plaintiff submitted his tender. His tender was finally approved and an agreement was executed by the plaintiff in favour of the first defendant. He completed the work as well as certain other items which were not included in the contract. As the defendant refused to pay the amount, the suit was laid.
(3) The principal defence raised by the first defendant was that the contractor did not carry out certain works entrusted to him. He carried out certain works which were not entrusted to him and some work was not satisfactorily carried out. The first defendant, therefore, refused to pay any amount more than what was certified by the technical officer.
(4) The trial court after framing proper issues and recording evidence of the parties, reached the conclusion that the plaintiff has done the work for which he has not been paid by the first defendant and that the amount sued for is the correct amount due to the plaintiff. It was found by the trial Court that the suit is not barred by limitation. The suit was therefore decreed.
(5) The first defendant carried the matter in appeal. The lower appellate Court found that some excess work was done by the plaintiff and that the first defendant is liable for the same, it however dismissed the suit on the ground that Art. 56 of the Limitation Act applies to the facts of the case and as the work was completed more than three years before the suit. the suit is barred by the statute of limitation. It is this view of the Court below, that is assailed in this second appeal.
(6) The main contention of Mr. Ramachandra Rao, the learned counsel for the appellant is that Art. 56 is not applicable and it is Art. 115 which must apply.
(7) In order to appreciate this contention, it is necessary to mention a few more facts before those articles are read.
(8) The plaintiff issued the first notice on 8-11-1955 to which the first defendant gave a reply Ex. A-13. It mentions among other things, the defects in the work executed by the plaintiff. It clearly mentions several items which were in excess of the estimate sanctioned by the first defendant and also refers to some of the work which, was not satisfactorily carried out by the plaintiff. Relying upon the certificate issued by the Assistant engineer authorising the Panchayat to pay the plaintiff an amount of Rs. 4,581 after deducting the items of work which were unsatisfactory as well as directing the Panchayat to withhold the payment in regard to the work excessively done by the plaintiff for which no estimate was sanctioned by the first defendant, the panchayat mentioned in the said reply that in accordance with the certificate issued by the Assistant Engineer, the Panchayat was willing to pay Rs. 4,581 and refused to pay the balance claimed by the plaintiff. It is pertinent to note in this connection that the plaintiff had claimed in the notice the amount of Rs. 6,411-14-0 but the first defendant agreed to pay on the strength of the certificate issued by the Engineer only Rs. 4,581/- and refused categorically the liability to pay the balance claimed by the plaintiff.
It is true that subsequently the Panchayat Supervisor seems to have informed the contractor-plaintiff through his letter dated the 29th October 1957 that he has prepared the revised estimate for the repairs to the Vindyavasi Tank, that the same has been approved by the Divisional Engineer and that the same has been forwarded to the Panchayat for taking necessary action. The Panchayat however seems to have stuck to their view through resolution, Ex. B-22, which they took on 25-10-57, It was resolved that as the Engineer has not informed the Panchayat about the work done over the estimate and as the Panchayat resolved by resolution 190 dated the 10th January 1956 that it would not take responsibility for the work done above the estimation, the sanction of the revised estimate was refused. It is thus clear that the first defendant Panchayat stuck to the stand which they had taken in their first reply which they gave on 8-12-1955 and in which they had refused to pay the plaintiff the excess amount which was claimed. On the basis of these facts let me therefore see which Article of Limitation applies.
(9) The lower appellate Court has applied Art. 56 to the facts. Article 56 mentions that for the price of work done by the plaintiff for the defendant at his request where no time has been fixed for payment. the starting point for such a suit is when the work is done.
(10) What is argued before me by the counsel for the appellant is that in this case, the contractor has executed the work on the strength of a contract entered into between the parties and therefore it cannot be said that the plaintiff has claimed the price of work done at the request of the defendant. He attempted to make a distinction between the request which is made by the defendant and the contract entered into between the parties. No direct authority however is cited in support of this contention. What is therefore to be seen first is whether the suit amount to the work done by the plaintiff for which the claim is put and relates to the contract entered into between the parties or is it in relation to the excess of the work which the plaintiff has executed as is claimed by the defendant continuously in their stand. It could not be shown to me either from the plaint or from the judgments of the Courts below that what are the items for which the suit is laid that fall within the ambit of the contract and what is the amount claimed for the excess work done.
As stated earlier, as far as the defendant is concerned, it has been clearly urged at the very first occasion that the amount refused by the first defendant related only to the work done over and above the sanction by the first defendant. It, of course, included some items of work which was not satisfactory and which was rejected by the Assistant Engineer. It is disputed that for the work which is done in excess, no regular sanction of the estimate by the first defendant is there. As far as that work is concerned, it is not seriously disputed that the work was done at the request of the first defendant and to that extent it must follow that the claim is not based upon the contract. As that portion of the claim is for the price of work done by the plaintiff at the request of the defendant, there can be no hesitation in concurring with the conclusion of the lower of the lower court. To that extent Art 56 applies. Admittedly the work was completed on 15-4-55 i.e., the date from which the limitation starts. Calculated thus, it cannot be denied that to that extent the suit is clearly time barred.
Now in regard to the items which were included in the contract but for which the Assistant Engineer had issued a certificate that the contractor is not entitled to any amount and which was refused by the first defendant, it is clear that even in regard to such items, the first defendant had denied the liability to pay on 8-12-1955 in the reply to the notice. In that case also, therefore, the suit ought to have been filed within three years from the date of the denial. I should not however be understood to have laid down that Art. 56 does not apply to the items of work done by the plaintiff under the contract. I do not see any material difference between the words used in Art. 56 i.e., 'at the request of the defendant' and work done under the contract entered into between the parties. Merely because the parties have entered into an agreement or a contract it can hardly be disputed that the work in such cases would not be deemed to have been carried out by the plaintiff at the request of the defendant. After all, when the tenders are called for it is an offer which the defendant had made an a counter offer was made in the form of submission of tenders by the contractor. Once that tender is accepted, it is a contract which was entered into between parties. But merely because the contract is reduced to writing or the work is executed on the basis of such contract, it cannot be said that Art. 56 does not apply.
There is no other article which was brought to my notice and which says that for the work done under the contract, some other article is applicable. In the either fall under Art. 56 and if it does not fall under the article. It is only the residuary article of 115 that can be attracted. I am however of the clear opinion that it is Art. 56 which is applicable to such cases. I am fortified in my conclusion by the following decisions :
Mathura Prasad v. Chairman District Board, Sitapur, AIR 1928 Oudh 297 at p. 298, Raunak Ali v. Municipal Board, Unao, AIR 1948 Oudh 49 and Sundaram v. Sankara, ILR 9 Mad 334 at p. 342.
(11) The first two cases relate to suits by the contractor either against the District Board or the Municipality for the price of the work done viz., to make certain constructions. In all these cases it was Art. 56 which was applied and not Art. 115. I have already said that the learned counsel for the appellant has not cited any direct ruling refusing to apply Art. 56 to such cases. He has however relied on certain decisions which have applied Art. 115 to cases where contracts were executed by the contractor relating to certain local bodies. I will deal with them at the appropriate stage.
(12) Now coming to Art. 115, it is clear from a reading of that Article that it applies to suits which are instituted for compensation for the breach of any contract, express or implied not in writing, registered and not therein specifically provided for. The time starts from the date when the contract is broken. Admittedly, the suit is not for compensation for the breach of any contract express or implied but it is a suit, even according to the plaint, for the price of the work done. What is argued now is, that as far as the plaintiff is concerned, he fulfilled his part of the obligation arising under the contract but in so far as payment is concerned, when the defendant had refused to discharge his obligation, when the defendant had refused to discharge his obligation, it must be presumed that the defendant has broken the contract. Assuming that it is so, even then, I do not think it advances that case of the plaintiff any further. The contract was certainly broken on the date when the defendant refused to pay the amount claimed by the plaintiff and that was on 8-12-1955. That refusal was unequivocal and it is only to that refusal that the defendant stuck on. The contract therefore was clearly broken on 8-12-1955 was clearly barred by the statute of limitation in arriving at the conclusion that this is not a suit for compensation of a breach of contract.
The expression 'compensation' used in Art. 115 must be read in the light of Sec. 73 of the Contract Act which uses that term. A reading of that section would reveal that compensation is pair when contracts are broken. The term 'compensation' may bear a different meaning than the word 'damages' but in my view the term 'compensation' does not carry the same meaning as the price for the work done. There is a clear distinction between the two. What is claimed in the suit by the plaintiff is not compensation alleging breach of contract but clearly claiming the price for the work which he had done for the defendant. On this ground also, I do not think Art. 115 can apply to such cases.
(13) It is beyond doubt that any breach of contract on the part of a party gives rise to an option on the part of the other party. He can either elect to keep the contract alive and seek its enforcement or rescind it and claim compensation. It is to such suits of compensation that Art. 115 applies and not to the former class of cases where contract has not been rescinded without which compensation cannot be claimed. In order to apply Art. 115, therefore, there must be a contract, a breach thereof and the suit must be for compensation. The facts found in the case leave me in no doubt that in regard to excess work there was no contract between the parties, hence no question of breach of contract arises which can give rise to suit for compensation. In regard to the defective work, it is plain that it not being in consonance with the contract, defendant rejected it. If the plaintiff succeeds in proving that it was it was in accord with the contract, what he will get is the price of the work done and not the compensation for any breach of contract. Article 115 in such a case cannot apply.
(14) The learned counsel for the appellant relied upon the following three cases :
Secretary of State v. Gajjan Singh, AIR 1935 Lah 775 at p. 777, M. L Dalmia and Co. v. Union of India, : AIR1963Cal277 and District Board, Allahabad v. Baijnath Prasad, AIR 1934 All 458 (2).
(15) The Lahore case does not discuss Art. 115 at all and it was not necessary to so discuss and decide because the learned Judge had found on the facts that the amount became payable according to the terms of the contract only after the final bill is prepared and a certificate of completion is issued. In view of that finding it was unnecessary for that court to decide whether Art. 115 applied to not. It is true that the senior Subordinate Judge had applied Art. 115 to the facts of the case. Nevertheless, it was found even by the senior Subordinate Judge that 'all those claims which would have been included or decided by the measurements in the final bills are within time, because though the final bills were drawn up in December 1921, they were not signed by the Engineer-in-charge till 20th March 1927.'
(16) I do not know this conclusion was reached and how Art. 115 would apply under such a conclusion. In that case the claim within the period of limitation because the starting point was from the date when the bill was sanctioned. There was therefore no occasion for a breach of contract and no question of applying Art 115 consequently would arise.
(17) The Calcutta case does not render assistance to the appellant be on the facts of that case the learned Judge found that the Government was guilty of breach of contract. If this finding was clearly given, there can be little doubt that Art. 115 applied. It must however be pointed out that there is no reference to Art. 56 or any decision thereupon in that case.
(18) In the Allahabad case it was found that in view of the terms of the contract the time started from the date of accrual of cause of action.
(19) No doubt it was a case where a suit was instituted against the District Board for recovery of money due to the contractor for repairs effected. The judgment negatived the contention that Sec. 92(3) of the District Board Act applies. Negativing that contention and without discussing either Art. 56 or 115, it was found that the contractor could have no cause of action until after the scrutiny of the bill by the District Board servants and the amount was found due. The cause of action therefore arose in that case on the date when the bill was accepted. That case therefore does not help appellant.
(20) For the reasons which I have given, I do not find any reason to interfere with the conclusion of the Court below that the suit is time barred.
(21) The second appeal therefore is dismissed. In view of the circumstances of the case, the parties will bear their own costs throughout.
(22) Appeal dismissed.