The subject suit has thereafter been filed by the respondent/plaintiff claiming basically the service bond amount i.e a claim under Section 74 of the Indian Contract Act, 1872 (hereinafter referred to as 'the Act'). This suit no. 357/2013 was filed on 5.6.2013. The issue is that whether a suit filed on 5.6.2013 is within limitation, and whether cause of action can be said to have been arisen on 19.6.2009 to the respondent/plaintiff when it sent its letter accepting the resignation but subject to the petitioner no.1/defendant no.1 paying the bond amount.
8. Article 55 of the Limitation Act, 1963 reads as under:-
Description of suits Period of limitation Time from which period begins to run
55. For compensation Three years When the contract is broken or for the breach of any (where there are successive contract, express or breaches) when the breach in implied not herein respect of which the suit is specially provided for instituted occurs or (where the breach is continuing) when it ceases.
9. The subject suit is a suit for recovery of amount on a breach of contract, the amount being liquidated damages being the amount as stated in the bond. The subject suit has its genesis in Section 74 of the Act. In a suit alleging breach of contract and claiming damages on account of breach of contract either Section 73 or Section 74 of the Act is applicable. When damages are not liquidated damages the suit is filed under Section 73 of the Act. When the damages are liquidated damages, if the conditions of Section 74 are satisfied, the suit will be under Section 74 of the Act.
10. In the present case, since the breach on behalf of the petitioner no.1/defendant no.1 becomes clear when the respondent/plaintiff wrote its letter dated 19.6.2009 accepting the resignation while simultaneously refusing to waive the bond amount, the breach on the part of the petitioner no.1/defendant no.1 with respect to the service bond thus specifically arose on 19.6.2009. The cause of action once it arose on 19.6.2009, suit had to be filed within three years i.e on or before 19.6.2012. The suit however, as stated above, was only filed on 5.6.2013 i.e beyond three years limitation period and the suit is therefore clearly barred by limitation.
11. Counsel for the respondent/plaintiff argues that actually there are successful breaches and the petitioner/defendant actually has received increments after the service of the letter dated 19.6.2009, however, it is not disputed on behalf of the respondent/plaintiff that there is finality to the letter dated 19.6.2009 in refusing to waive the bond amount. Therefore, the cause of action with respect to the bond amount under Section 74 of the Act arose on 19.6.2009 when this letter dated 19.6.2009 was served upon the petitioner no.1/defendant no.1 by the respondent/plaintiff. This is not a case of successive breaches because qua a breach of contract, breach arises when the breach of contract is first committed unless such breach is waived. In the facts of the present case, breach of contract achieves clarity and finality on the respondent/plaintiff serving the letter dated 19.6.2009 upon the petitioner/defendant.
In view of the above, the suit of the respondent/plaintiff was barred by limitation
Delhi High Court
Sh. Rohit Sharma And Anr. vs Ntpc Ltd. on 5 September, 2014
4. This petition under Article 227 of the Constitution of India impugns the order of the trial court dated 23.10.2013 by which the trial court rejected the application of the petitioners/defendants under Order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC) by refusing to accept the contention of the petitioners/defendants that the suit for recovery of Rs.2,63,248/- was barred by time under Section 55 of the Limitation Act, 1963.
5. The facts of the case are that the respondent/plaintiff was the employer. Petitioner no.1/defendant no.1 joined services of the respondent/plaintiff by submitting the service bond for working for a particular number of years. Petitioner no.1/defendant no.1 however before the expiry of the bond period sent his resignation letter and asked for waiver of the service bond agreement vide his letter dated 15.5.2009 which reads as under:-
"To, The General Manager NCPS, Dadri 15 May 2009 Dear Sir, Subject: Resignation letter of Rohit Sharma My Name is Rohit Sharma (Emp. No.-100030). I am currently an Engineer (E2A) in the Operation Department (Group 1).
It is with regret that I inform you of my decision to resign from this organization. I wash to pursue postgraduate studies in management and have decided to go ahead with it. I request you sir, to relieve me of my duties effective 15 June, 2009 in accordance with the notice period rules.
I would also request you sir to consider a waiver of the service bond agreement as I am resigning for the purpose of higher studies and not to join any other organization.
It has been a pleasure working at NTPC Ltd., I hope you will make the parting process equally so.
My dues are to be credited to my bank account. Thanking You, Yours faithfully Rohit Sharma (emp no.: 100030) Operations-Gr.I"
6. Respondent/plaintiff by its letter dated 19.6.2009 accepted the resignation but made it conditioned upon the payment by the petitioners of the service bond amount and this letter reads as under:-
"NTPC LIMITED NATIONAL CAPITAL POWER STATION-DADRI P.C. VIDYUT NAGAR, DISTT. GAUTAM BUDH NAGAR-201008 HR-EMPLOYEE BENEFITS DEPARTMENT REF. NO. : 08/HR/EB/100030 DATE: 19.06.2009 OFFICE ORDER NO. : MS-68/2009 The resignation submitted by Mr. Rohit Sharma, Emp. No. 100030 Engineer (Opn-Th), O&M-Th has been accepted by the competent authority with release from the services of the company w.e.f. 15.06.2009 (AN). It is subject to fulfilment of the following conditions:
1. Submission/Receipt of No. Dues Certificates from all concerned.
2. Settlement of all Outstanding Dues.
3. Payment of Service Bound Amount.
4. Payment of Lumpsum Adjustable Advance against CHRC NO. 624/2007 & 639/2008
5. Settlement of Outstanding Advances / Other Dues as per F&A Records. It is pursuance of Inter Officer Memo No. 01: NCR-HQ/HR-EB/2009 Dated 15.06.2009 issued by NCR-HQ, NOIDA.
This issue with the approval of competent authority.
(ANIL KUMAR) DY. MANAGER (HR-EB) DISTRIBUTION:
1. MR. ROHIT SHARMA EMP. NO. 100030 ENGINEER (Opn_Th) O & M-Th HOUSE NO. 442, VARUN APARTMENTS C-58/28, SECTOR-62, NOIDA (U.P.)
2. C.M.O.
3. AGM (O&M-Th)
4. A.G.M. (HR)
5. D.G.M. (OPN-Th)
6. D.G.M. (FIN-ESTT)
7. SR. MANAGER (VIG.)
8. DY. MANAGER (TA-ESTATE)
9. DY. MANAGER (HR-IE)
10. E.S. TO G.M. (NCPS)
11. PERSONAL FILE COPY TO:
1. A.G.M. (HR), NCR-HQ, NOIDA
2. D.G.M. (HR-EB),CC
3. D.G.M.(HR-IE),CC
4. E.S.TO RED (NC)
5. SECRETARY (EMPLOYEES PF/GF/PENSION TRUST), CC"
7. The subject suit has thereafter been filed by the respondent/plaintiff claiming basically the service bond amount i.e a claim under Section 74 of the Indian Contract Act, 1872 (hereinafter referred to as 'the Act'). This suit no. 357/2013 was filed on 5.6.2013. The issue is that whether a suit filed on 5.6.2013 is within limitation, and whether cause of action can be said to have been arisen on 19.6.2009 to the respondent/plaintiff when it sent its letter accepting the resignation but subject to the petitioner no.1/defendant no.1 paying the bond amount.
8. Article 55 of the Limitation Act, 1963 reads as under:-
Description of suits Period of limitation Time from which period begins to run
55. For compensation Three years When the contract is broken or for the breach of any (where there are successive contract, express or breaches) when the breach in implied not herein respect of which the suit is specially provided for instituted occurs or (where the breach is continuing) when it ceases.
9. The subject suit is a suit for recovery of amount on a breach of contract, the amount being liquidated damages being the amount as stated in the bond. The subject suit has its genesis in Section 74 of the Act. In a suit alleging breach of contract and claiming damages on account of breach of contract either Section 73 or Section 74 of the Act is applicable. When damages are not liquidated damages the suit is filed under Section 73 of the Act. When the damages are liquidated damages, if the conditions of Section 74 are satisfied, the suit will be under Section 74 of the Act.
10. In the present case, since the breach on behalf of the petitioner no.1/defendant no.1 becomes clear when the respondent/plaintiff wrote its letter dated 19.6.2009 accepting the resignation while simultaneously refusing to waive the bond amount, the breach on the part of the petitioner no.1/defendant no.1 with respect to the service bond thus specifically arose on 19.6.2009. The cause of action once it arose on 19.6.2009, suit had to be filed within three years i.e on or before 19.6.2012. The suit however, as stated above, was only filed on 5.6.2013 i.e beyond three years limitation period and the suit is therefore clearly barred by limitation.
11. Counsel for the respondent/plaintiff argues that actually there are successful breaches and the petitioner/defendant actually has received increments after the service of the letter dated 19.6.2009, however, it is not disputed on behalf of the respondent/plaintiff that there is finality to the letter dated 19.6.2009 in refusing to waive the bond amount. Therefore, the cause of action with respect to the bond amount under Section 74 of the Act arose on 19.6.2009 when this letter dated 19.6.2009 was served upon the petitioner no.1/defendant no.1 by the respondent/plaintiff. This is not a case of successive breaches because qua a breach of contract, breach arises when the breach of contract is first committed unless such breach is waived. In the facts of the present case, breach of contract achieves clarity and finality on the respondent/plaintiff serving the letter dated 19.6.2009 upon the petitioner/defendant.
12 (i). In view of the above, the suit of the respondent/plaintiff was barred by limitation and the impugned order is illegal in holding that the suit is within limitation.
(ii). At this stage, counsel for the petitioners/defendants states that the petitioners/defendants did not press the counter claim which was filed in response to the suit inasmuch as the suit itself is being dismissed as barred by limitation.
13. I may for the sake of completion of narration note that by the impugned order the trial court had decreed the suit under Order VIII Rule 10 CPC on account of the non-filing of the written statement by the petitioners/defendants, but, before decreeing the suit under Order VIII Rule 10 CPC, trial court had held that the suit is within limitation. Since that part of the order pertaining to limitation is set aside by the present judgment, the consequential order under Order VIII Rule 10 CPC will also fall, and consequently the appeal which is filed by the petitioners/defendants before the Senior Civil Judge under Section 96 CPC need no longer be pursued.
14. In view of the above, the petition is allowed and disposed of in terms of the abovesaid observations, leaving the parties to bear their own costs.
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