Gujarat High Court
Arjunbhai Visrambhai Mistry vs District Panchayat on 25 September, 2023
Author: Ilesh J. Vora
Bench: Ilesh J. Vora
NEUTRAL CITATION
C/SA/126/2009 JUDGMENT DATED: 25/09/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SECOND APPEAL NO. 126 of 2009
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE ILESH J. VORA
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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ARJUNBHAI VISRAMBHAI MISTRY
Versus
DISTRICT PANCHAYAT
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Appearance:
MR PARAS SUKHWANI WITH MR KG SUKHWANI(871) for the Appellant(s)
No. 1,1.1,1.2,1.3
MR MANISH J PATEL(2131) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE ILESH J. VORA
Date : 25/09/2023
ORAL JUDGMENT
1. This Second Appeal under Section 100 of the Code of Civil Procedure, is at the instance of original defendant, directed against the judgment and decree dated 29.11.2008, passed by the First Page 1 of 11 Downloaded on : Sat Sep 30 20:33:27 IST 2023 NEUTRAL CITATION C/SA/126/2009 JUDGMENT DATED: 25/09/2023 undefined Appellate Court at Himmatnagar, in Regular Civil Appeal No. 76 of 2005, arising from the judgment and decree passed in RCS No. 13 of 1993, by the learned Principal Senior Civil Judge, Himmatnagar, decreed the suit filed by the respondent plaintiff - District Panchayat, Himmatnagar.
2. Brief facts of the case which emerged from the records are that, the respondent plaintiff had filed a suit for recovery of damages against the appellants defendants. The plaintiff - respondent is District Panchayat i.e. local authority, who had invited the tenders for the construction of M.I. Tank at Bamanbore, Taluka: Bhiloda for the estimated cost of the work valued at Rs.6,98,064=31 ps. In a bid, the appellants accepted the offer and had executed an agreement and accordingly, work order dated 02.05.1980 issued in his favour. The stipulated time was fixed for a period of 18 months. According to case of the respondent - plaintiff, the appellants failed to complete the said work in a stipulated time, as a result of which, the District Panchayat vide its resolution dated 10.07.1984 resolved to invite the tender at the risk and cost of the appellants - defendants. In these background facts, the District Panchayat filed a suit to recover the damages of Rs.4,84,388=65ps, inter-alia, stating that, the appellants were negligent and careless in execution of the contractual work and in violation of the terms and condition of the contract, they did not complete the work, which has caused the financial loss to the District Panchayat. The suit was contested by the appellants raising various issues, including the issue of limitation, inter-alia, stating that, the suit is filed after 7 years from Page 2 of 11 Downloaded on : Sat Sep 30 20:33:27 IST 2023 NEUTRAL CITATION C/SA/126/2009 JUDGMENT DATED: 25/09/2023 undefined the date of alleged breach of terms and condition of the contract and therefore, as per Article 55 of the Limitation Act, within 3 years, the suit was not filed and it is time barred.
3. The trial Court framed the appropriate issues including issue of limitation and after appreciating the evidence on record, came to the conclusion that, the defendants - appellants contractor did not complete the work in a stipulated time and after giving sufficient opportunity, they failed to complete the work, which has caused the financial loss to the Panchayat local authority. The learned trial Court on the issue of limitation, found that the suit governed by Article 112 of the Limitation Act, 1963, as the Panchayat being an instrumentality of the State Government, can be said to be a State Government and limitation as prescribed is 30 years. The learned trial Court did not accept the contention about the applicability of Article 55 of the Limitation Act and accordingly, the suit was decreed as prayed. The appellants were directed to pay the amount of damages with interest at the rate of 16% p.a. The appellants being aggrieved with the said judgment and decree dated 31.08.1999, preferred an Civil Appeal before the District Court at Himmatnagar being RCA No. 76 of 2005. The first Appellate Court, after hearing the parties, vide its judgment and decree dated 20.11.2008 dismissed the Appeal. The first Appellate Court while confirming the decree passed by the Civil Court, held that the suit is filed within the period of limitation.
4. Being aggrieved with the aforesaid judgment and order of the first Appellate Court, the appellants - original defendants have Page 3 of 11 Downloaded on : Sat Sep 30 20:33:27 IST 2023 NEUTRAL CITATION C/SA/126/2009 JUDGMENT DATED: 25/09/2023 undefined preferred the present Second Appeal under Section 100 of the CPC.
5. On 03.08.2016, the Second Appeal was admitted on the following substantial questions of law :
"(a) Whether the first appellate Court was justified in upholding the suit for damages being within the period of limitation as per Article 55 of the Limitation Act, 1963.
(b) Whether the first appellate Court was justified in upholding the suit where the suit contract was terminated by construction committee who had no power to terminate the contract.
(c) Whether the first appellate Court was justified in upholding the termination of the suit contract without making time as essence of the contract as required by Article 55 of the Limitation Act.
(d) Whether the first appellate Court was justified in upholding the decree for damages without the evidence.
(e) Whether the first appellate Court was justified in upholding that the respondent is Government institution working under the State Government, therefore, 30 years limitation was available as per Article 112 of Limitation Act.
(f) Whether the first appellate Court was justified in not following the law laid down by the Hon'ble Supreme Court in AIR 1979 SC 720, AIR 1989 SC 952 and AIR 2004 SC Page 4 of 11 Downloaded on : Sat Sep 30 20:33:27 IST 2023 NEUTRAL CITATION C/SA/126/2009 JUDGMENT DATED: 25/09/2023 undefined 2926."
6. It is settled position of law that, the Second Appeal would lie in cases which involve substantial question of law. In other words, as a matter of law, the Second Appeal is entertainable by the High Court only upon its satisfaction that substantial question of law is involved in the matter and its formulation thereof.
7. This Court has heard learned counsel Mr. Paras Sukhwani for Mr. K.G. Sukhwani, learned counsel appearing for and on behalf of the appellants and Mr. Manish Patel, learned counsel appearing for the District Panchayat Himmatnagar.
8. Mr. Sukhwani, learned advocate has submitted that, the learned first Appellate Court committed a serious error of law in dismissing the First Appeal without considering the issue of limitation in its true prospective. He submitted that, the suit itself is barred by the provisions of Law of Limitation and is governed by the Article 55 of the Limitation Act. The first Appellate Court as well as the trial Court was not justified in holding that, the respondent Panchayat is State Government and therefore, 30 years limitation would available as per Article 112 of the Limitation Act. It is in this context, learned counsel Mr. Sukhwani, has submitted that period of limitation for recovery of dues and/or damages by the District Panchayat - Local authority shall be only 3 years as per Limitation Act under Article 55. He further submitted that, Article 112 of the Limitation Act is not applicable in the facts of present case as the action was not taken by the State Government and Page 5 of 11 Downloaded on : Sat Sep 30 20:33:27 IST 2023 NEUTRAL CITATION C/SA/126/2009 JUDGMENT DATED: 25/09/2023 undefined benefit of Article 112 cannot be extended to the local authority - Panchayat, as the Panchayat for the purpose of filing the suit, would not fall under the definition of 'State Government'.
9. Mr. Sukhwani, learned counsel relying on the case of Mathuradas Mohanlal Vs. S.D. Munshaw, reported in AIR 1981 SC 53, contended that, the local authority i.e. District Panchayat is 'State' within the meaning of Article 12 of the Constitution of India, but, all the instrumentality of the 'State' as defined under Article 12 of the Constitution are not State Government, as being independent body, cannot claim the benefit of Article 112 of the Limitation Act.
10. In such circumstances, Mr. Sukhwani, learned counsel has submitted that the first Appellate Court as well as trial Court lost sight in interpreting the status of the local authorities and mis- interpretated Article 112 of the Limitation Act, which is not at all applicable to the facts of present case and therefore, it is evident that the suit is filed after 7 years from the date of alleged breach of the contract and therefore, as per Article 55 of the Limitation Act, suit was not filed within 3 years from the date of cause of action and the suit is time barred and the first Appellate Court ought not to have upheld the findings on the issue of limitation recorded by the trial Court.
11. On the other hand, countering the submissions, Mr. Manish Patel, learned counsel appearing for the District Panchayat - original plaintiff has submitted that, the Panchayat is the 'State' within the meaning of Article 12 of the Constitution of India and therefore, Page 6 of 11 Downloaded on : Sat Sep 30 20:33:27 IST 2023 NEUTRAL CITATION C/SA/126/2009 JUDGMENT DATED: 25/09/2023 undefined the trial Court as well as the first Appellate Court have rightly held that the limitation for filing the suit is of 30 years as per the Article 112 of the Limitation Act.
12. In the aforesaid contention, Mr. Patel has submitted that, no substantial question of law involved in the present appeal and accordingly present Second Appeal deserves to be dismissed.
13. Having heard the learned counsel for the respective parties, the only question that falls for my consideration is whether the first Appellate Court was justified in holding that the respondent - District Panchayat is State Government and therefore, 30 years limitation was available as per Article 112 of the Limitation Act?
14. It is not in dispute that, the work order for construction of MI Tank was awarded to Mr. Arjun Mistry - original defendant and during the pendency of present appeal, he died and his legal heirs - the appellants have been joined. The work order was issued on 02.05.1980 and parties have agreed to complete the said work within stipulated time of 18 months, which had expired on 04.11.1981. According to case of the District Panchayat, till 30.03.1983, the contractor - appellants had not completed the said work and after so many reminders, they remained negligent and careless, as a result, in May, 1984, the District Panchayat passed a resolution to assign the said work to another contractor by way of fresh tender at the risk of the appellants and thereafter, the suit was filed in the year 1993.
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15. The main contention raised is that, though the District Panchayat local authority is a State Instrumentality as per Article 12 of the Constitution of India, but for filing the suit, the local authority - District Panchayat cannot be regarded as suit 'by or on behalf of the State Government under Article 112 and benefits of 30 years limitation, as provided under Article 112 cannot be extended to the Panchayat.
16. The first Appellate Court as well as the trial Court held that, the suit filed by the District Panchayat would be governed by the Article 112 of the Limitation Act, 1963. This Second Appeal confined to the issue of substantial question of law, whether the first Appellate Court was justified in holding that the District Panchayat is Government institution working under the State therefore, 30 years limitation was available as per Article 112 of the Limitation Act?
17. Having considered the contentions advanced by the learned counsel for the respective parties and on perusal of the relevant Articles of Limitation Act, 1963, this Court is of view that, the first Appellate Court as well as the trial Court fell into error in holding that, the District Panchayat is State Government and therefore, Article 112 of the Limitation Act would apply. The findings recorded for the application of Article 112 are erroneous for the following reasons :
Page 8 of 11 Downloaded on : Sat Sep 30 20:33:27 IST 2023NEUTRAL CITATION C/SA/126/2009 JUDGMENT DATED: 25/09/2023 undefined 17.1 In the facts of the present case, after passing the resolution by the Panchayat to assign the said work to another contractor by way of fresh tender at the risk of the appellants, the suit was filed after 9 years from the date of resolution. The work tender was issued by the Panchayat respondent. The agreement for execution of work was entered by the Panchayat with the appellants. The amount of the work contract was released by the Panchayat itself. In such circumstances, it cannot be said that, the suit was filed by the State Government. It is settled position of law that, the Panchayat is a State within the meaning of Article 12 of the Constitution of India.
However, the Panchayat being a separate legal entity, when initiated legal proceedings to recover the amount of damages, it cannot be said that suit has been filed for and on behalf of the State Government. Thus, therefore, the words use "any suit by or on behalf of the Central Government or any State Government" would not include the local authority and/or body and, any instrumentality of the State.
17.2 In the facts of present case, the suit for damages for the breach of contract was being filed by the District Panchayat and with specific averments in the suit that, it was the appellants - defendant who had committed the breach of the contract and that therefore, the Panchayat entitled to compensation for such breach. In such circumstances, when the local body and/or Panchayat for the purpose of filing the suit of damages, would not fall under the term 'State Government', the Article 55 of the Limitation Act would apply for the purpose of deciding the issue of limitation. Article 55 Page 9 of 11 Downloaded on : Sat Sep 30 20:33:27 IST 2023 NEUTRAL CITATION C/SA/126/2009 JUDGMENT DATED: 25/09/2023 undefined contemplates a suit for compensation for the breach of any contact and the limitation prescribed is 3 years. As against this, the limitation of 30 years would be available if, Article 112 is applicable, when the suit is filed by the Central Government or State Government.
17.3 In view of the statutory provision and the facts of the present case, when the suit is not filed by the State Government, then, Article 112 of the Limitation Act would not be applicable and benefit for filing suit within 30 years from the date of cause of action cannot be extended to the District Panchayat.
17.4 The Apex Court in the case of Bharat Sanchar Nigam Limited Vs. Pavankumar Gupta, 2016 (1) SCC 363, in an identical issue of law held that, suit filed by Bharat Sanchar Nigam Limited, (BSNL) being an agency or instrumentality of the Central Government, is separate entity and therefore, the suit filed by the BSNL for recovery of debt due from subscribers cannot be regarded as suit 'by on or behalf of the Central Government' and thus, the expression 'Central Government or the State Government' used in Article 112 of the 1963 Act, cannot supply casus aomissus, and finally it was held that the benefit of limitation period of 30 years cannot be extended to the Company fully financed by and under the absolute control of the Central Government.
17.5 In light of the proposition of law, as propounded by the Apex Court, the respondent District Panchayat, though 'State' within the meaning of Article 12 of the Constitution of India, does not lead to conclusion Page 10 of 11 Downloaded on : Sat Sep 30 20:33:27 IST 2023 NEUTRAL CITATION C/SA/126/2009 JUDGMENT DATED: 25/09/2023 undefined that, the Panchayat authority can claim benefits of Article 112 of the Limitation Act, as the word uses 'State' would mean that, suit was filed on or before of 'State', means the suit by the State Government and the local authority cannot be construed as 'State' within the meaning of Article 112 of the Limitation Act.
18. In view of the afore-stated reasons, the findings recorded by the Courts below that the District Panchayat, respondent plaintiff being a State, the limitation for filing the suit is available for a period of 30 years as provided under Article 112 of the Limitation Act are erroneous and against the law and same are not sustainable in law. Consequently, the suit filed by the respondent is barred by the limitation and as per the Article 55 of the Limitation Act, within 3 years from the cause of action, the suit was not filed and therefore, the suit filed by the respondent on the issue of limitation stands dismiss. Accordingly, the impugned judgment and decree dated 29.11.2008 and 31.08.1999 passed by the Courts below are set aside.
19. In the result, the Second Appeal is allowed in aforesaid terms. No order as to costs. Any amount is deposited by the appellants herein be refunded with accrued interest, if any.
(ILESH J. VORA,J) P.S. JOSHI Page 11 of 11 Downloaded on : Sat Sep 30 20:33:27 IST 2023