STATE OF GUJARAT versus M/S KOTHARI AND ASSOCIATES

Citation: [2015] 10 S.C.R. 133 · Decided: 16-10-2015 · Supreme Court of India · Bench: VIKRAMAJIT SEN · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2015) 10 S.C.R. 133 
STATE OF GUJARAT 
v. 
M/S KOTHARI AND ASSOCIATES 
(Civil Appeal No. 1770 of 2005) 
OCTOBER 16, 2015 
[VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ.) 
A 
B 
Limitation Act, 1963 - Art. 55 - Work contracts -
Successive breaches - Extension· of contract - Claim for C 
damages- Delay by appellant-State in handing over the site 
to respondent resulting in non-completion of work within the 
stipulated period by respondent - Extension of period from 
time to time, though compensation sought by respondent 
denied by the appellant - Final Bill signed under protest by o 
respondent- Issuance of notice u/s. 80 CPC by respondent 
to appellant claiming damages-After period of three years, 
respondent filing of suit for damages for additional costs -
Grant of compensation with 12% interest from the date of 
statutory notice by trial court- In appeal, High Court granted E 
interest for an extended period and held that since there were 
successive breaches by appellant, and the date of the last 
breach was relevant, the suit was within limitation- On appeal, 
held: The suit claims are damages incurred due to the 
extension of the contract period and the resultant damages F 
are incurred by respondent, thus, suit would fall under Article 
55 and not Article 113, which is a residuary provision - There 
were successive or multiple breaches, rather than continuous 
breach - Each breach was distinct and complete in itself and 
gave rise to a separate cause of action for which respondent G 
could have rescinded the contract- Suit was required to be 
filed within three years of the happening of each breach -
Period of limitation did not commence at the termination of 
the contract period or the date of final payment - Suit was 
H 
133 
134 
SUPREME COURT REPORTS 
[2015] 10 S.C.R. 
A 
filed after the limitation period of three years for even the 
final breach - Respondent made claim for compensation 
on every occasion - Appellant granted the extensions but 
rejected the claims, thus, the cause of action for making the 
claim for damages undoubtedly arose on each of those 
B occasions - Fresh contract would be deemed to have been 
entered into between the parties on the grant of each of the 
extensions - Respondent should have initiated legal action 
on each of these occasions - Having not done so, it 
abandoned the claim - The suit is for damages for additional 
C costs incurred, not on account of a debt or of interest on 
legacy, and thus s. 19 would not per se extend the period of 
limitation - There could be no extension uls. 18 on account 
of the acknowledgement in writing as each claim was 
0 
specifically refuted by the Appellant- Notice perforce should 
have been issued before the suit became time barred, and 
only if so done would the period have been extended for a 
further two months under s. 80 CPC - Thus, respondent failed 
to file the suit for damages within the period prescribedand 
the suit is dismissed. 
E· 
F 
G 
Union of India vs. British India Corporation Ltd 
(2003) 9 SCC 505; Lachhmi Sewak Sahu vs. Ram 
Rup Sahu AIR 1944 Privy Council 24; Gannon 
Dunkerley and Co. Ltd. vs. Union of India (1969) 
3 SCC 607:1970 (3) SCR 47; Rohtas Industries 
Ltd vs. Maharaja of Kasimbazar China Clay Mines 
ILR (1951) 1 Cal 420; Union oflndia vs. Raman 
Iron Foundry 1974 (2) SCC 231:1974 (3) SCR 
556; J.C. Budharaja vs Chairman, Orissa Mining 
Corporation Ltd. andAnr(2008) 2 SCC 444: 2008 
(1) SCR 821; Mis Disha Constructions vs. State 
of Goa (2012) 1sec690: 2011 (13) SCR 496-
referred to. 
H 
Jones v. Thompson [1858) 27 L.J.Q.B. 234 -
referred to. 
STATE OF GUJARAT v. M/S KOTHARI AND 
135 
ASSOCIATES 
Case Law Reference 
A 
c2003) 9 sec 505 
referred to. 
Para 6 
AIR 1944 Privy Council 24 
referred to. 
Para 6 
1970 (3) SCR 47 
referred to. 
Para 8 
B 
ILR (1951) 1 Cal 420 
referred to. 
Para 9 
1974 (3) SCR 556 
referred to. 
Para 12 
. 2008 (1) SCR 821 
referred to . 
Para 12 
2011 (13) SCR 496 
referred to. 
Para 13 
c 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 
1770 of 2005 
Fram the Judgment and Order dated 30. 07 .2003 of the 0 
High Court of Gujarat atAhmedabad in First Appeal No. 34 of 
1992. 
Pritesh Kapur, Kabir Hathi, Jesal Wahi, Hemantika Wahi 
for the Appellant. 
· 
Meenakshi Arora, Shirish D. Patel, Bina Gupta, Ranjit 
B. Raut for the Respondent. 
The Judgment of the Court was delivered by 
VIKRAMAJIT SEN, J. 1. This Appeal lays siege to the 
E 
F 
decision of the Division Bench of the High Court of

Excerpt shown. Read the full judgment & AI analysis in Lexace.