Article 18 of the schedule of the Limitation Act, prescribing the limitation of three years from the date when the work is done, would come into play when no specific date for payment is fixed.

In a recent judgment, the Hon’ble High Court of Delhi observed that in the case when no specific date for payment is fixed, the cause of action accrues on the date when the work is completed.

The said ratio was delivered by the High Court of Delhi in the case titled M/s Collage Estates Private Limited versus Blue Star Limited FAO(OS) (COMM) 186/2018 on 27.08.2018.

Challenge

The only limited issue before this appellate court was whether the claim filed by the respondent was barred by limitation, in view of the assertion by the respondent that they have completed the work of installing the four chillers on or before 9.11.2010, and the arbitration was invoked vide notice dated 17.03.2015.

In the present case, the respondent completed its work of installing the imported chillers as per the agreement on 23.04.2010, whereas the dispute with respect to the same arose only on 09.11.2010.

It was an admitted fact that due to the disputes which arose between the parties, certain emails of correspondence were exchanged. The last email was sent by the respondent on 01.06.2012 to the appellant replying to the default and payment due requests of the appellant.

Held

The Hon’ble High Court of Delhi after relying upon the decision of Municipal Corporation of Delhi Vs. M/s Gurbachan Singh and Sons, 208 (2014) DLT 177 dismissed the appeal and upheld the arbitral award. The court observed that Article 18 comes into play when no specific date for payment is fixed, which was not the present case as clause 20 of the agreement laid the detail payment schedule.

It was further held that although article 18 states that the limitation commences and the cause of action accrues for the purpose of limitation on the completion of work, however where a final bill as per the agreement is submitted and liability under the same, even if, in part, is admitted or some payment is made then such actions extend limitation in terms of Section 18 of the Limitation Act.  In the present case, limitation was to be seen from the date when the respondent replied to dispute the allegations on 01.06.2012.