Punjab Housing Development Boa vs Mohinder Pal

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RSA-738-2000 (O&M) --2--
Board, with the averments that the defendant, Mohinder Pal, was appointed
as Sectional Officer (Civil), later designated as Junior Engineer (Civil), with
the plaintiff vide letter No. PHB-Admn.EA-II-79/240043-44 dated
03.09.1979 and was incharge of executing five works, namely, Rural Houses
at Harrowal, Bholewal, Harshian, Kotli Surat Malli and Kala Afghana,
District Gurdaspur. It was further averred that the defendant got material
issued for the execution of the said works, from time to time, from the store
as well as by purchase from the market vide various indents/purchase orders
and was duty bound to keep full account of the material received by him and
to hand over the balance material which remained unused.
2.1. It was pleaded that on checking of the material at site against
the accounts kept by the defendant, it transpired that the defendant neither
accounted for the material held by him nor showed its transfer to any other
work, resulting in a loss to the plaintiff-Board assessed at Rs. 1,26,650.30, as
per the annexures attached to the plaint. It was further averred that the
defendant, without accounting for the material, absented himself from duty
and was ultimately removed from service vide order dated 30.04.1985. The
Divisional Engineer(C), Punjab Housing Development Board, Amritsar,
worked out the loss and called upon the defendant, vide letter No.
PHB/ASR/85/6726 dated 07.08.1985, to make good the same, but the
defendant failed to do so. This led to the filing of the present suit.
3. Upon notice, the defendant appeared and filed a written
statement, taking the preliminary objection that the Housing Commissioner
was not competent to file the suit. On merits, it was admitted that the
defendant was incharge of the execution of the five works and got material
issued from time to time, but it was denied that any material was ever
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misappropriated by him. It was pleaded that the defendant kept full account
of material used, that the unused material remained lying at site, that the
details of the alleged loss had not been furnished in the plaint, that the
defendant was proceeded on leave and his services were terminated during
that leave and that running bills showing consumption of material had been
regularly submitted and passed without objection. It was further pleaded that
the defendant did not abstain from his duties, but had proceeded on medical
leave and that the order of removal was passed illegally and wrongfully,
without holding any enquiry and without giving the defendant any
opportunity. It was also denied that the defendant caused any loss to the
plaintiff, and it was the contractor, rather than the defendant, that was liable
for the loss. Thus the prayer for dismissal of the suit was made.
4. On the pleadings of the parties, the following issues were framed:-
“1. Whether plaintiff is entitled to recover the suit amount
from the defendant as alleged in the plaint? OPP
2. Whether the suit is within limitation? OPP
3. Relief.”
5. The learned Trial Court, vide judgment and decree dated
25.01.1995 held that the defendant, while working as Junior Engineer, did
not account for the material issued to him and decreed the suit for
Rs. 1,26,650.30 with costs and future interest at 6% per annum from the date
of decree till realization. On limitation, the learned Trial Court held that the
relationship between the plaintiff and the defendant was one of Principal and
Agent, that Article 3 of the Limitation Act, 1963 (hereinafter referred to as
“the 1963 Act” ) applied and that the cause of action arose from 07.08.1985,
holding the suit within limitation.
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6. Aggrieved thereof, the defendant preferred the first appeal. The
learned First Appellate Court, vide judgment and decree dated 20.08.1999,
held that the relationship between the parties was that of employer and
employee and not that of Principal and Agent and examining each of the five
works item wise, held that the shortage in respect of all five works came to
the knowledge of the plaintiff Board between 25.02.1983 and 12.12.1984
and that the suit, filed thereafter, was barred by limitation qua all five works.
The judgment and decree of the learned Trial Court were accordingly set
aside and the appeal was allowed. Hence the present Regular Second
Appeal.
CONTENTIONS
ON BEHALF OF THE APPELLANT-PLAINTIFF
7. Impugning the judgment and decree of the learned First
Appellate Court, learned counsel for the appellant-plaintiff submits that the
learned First Appellate Court erred in allowing the appeal solely on the
ground that the suit was barred by limitation. It is submitted that the cause of
action for recovery of an ascertained departmental loss from an employee
arises only when the claim is demanded and refused and not upon a mere
internal detection or verification of shortage by departmental officers. It is
further submitted that the various dates relied upon by the First Appellate
Court, between 25.02.1983 and 12.12.1984, represent only internal stages of
checking, re-verification and assessment of the alleged shortage work wise
and did not, by themselves, constitute a clear and unequivocal denial of the
plaintiff's right so as to set the limitation running.
7.1. It is further submitted that even if the relationship between the
parties is not treated as that of Principal and Agent, it was only on the
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defendant's refusal to hand over the material found short with him and his
failure to respond to the demand raised vide letter dated 07.08.1985, that the
cause of action for recovery became complete. The present suit, having been
filed on 03.05.1988, is within three years of 07.08.1985 and is not barred by
limitation on that count. Learned counsel accordingly prays that the
judgment and decree by the learned First Appellate Court be set aside and
that of the learned Trial Court be restored.
ON BEHALF OF THE RESPONDENT-DEFENDANT
8. Per contra , learned counsel for the respondent-defendant
submits that the judgment and decree passed by the learned First Appellate
Court is based on a proper appreciation of the pleadings and the material on
record and does not warrant any interference. It is submitted that the learned
First Appellate Court rightly rejected the characterisation of the relationship
between the parties as one of Principal and Agent, the defendant being
merely an employee of the Board. It is further submitted that once the
alleged shortage stood detected and was brought to the notice of the
defendant, work wise, between 1983 and 1984, the cause of action for its
recovery stood complete and the plaintiff Board could not indefinitely
postpone the running of limitation by choosing to terminate the defendant's
service or issue a formal demand years later. It is accordingly prayed that the
appeal be dismissed.
DISCUSSION AND REASONING
9. I have heard learned counsel for the parties and gone through
the paper-book.
10. The short question before this Court for consideration is one of
limitation. In the present case, it is not in dispute that the
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respondent-defendant was working as Sectional Officer (Civil) with the
appellant-plaintiff and that vide letter dated 03.09.1979, he was made
incharge to ensure the execution of the following works:-
“1. Rural Houses, Harrowal, District Gurdaspur.
2. Rural House, Bholewal, District Gurdaspur.
3. Rural Houses Harshian, District Gurdaspur.
4. Rural House, Kotli Surat Malli, District Gurdaspur.
5. Rural Houses, Kala Afghana, Distt: Gurdaspur,”
10.1. Later, proceedings were initiated against the respondent-
defendant alleging that certain material handed over to him was never
accounted for, nor shown to have remained unused. A report regarding
verification/shortage of material was forwarded by the office of the Assistant
Engineer(C) to the office of the Divisional Engineer, Punjab Housing
Development Board, Amritsar, on 25.02.1983 (Ex.P-16). He was removed
from service vide order dated 30.04.1985.
11. At the outset, it may be noted that Article 3 of the 1963 Act,
being confined to a suit by a principal against his agent for movable property
received and not accounted for, has no application to a suit of this nature
between an employer and its employee; it is, therefore, Article 113 of the
1963 Act, the residuary provision, that governs the present suit, under which
the period of limitation is three years from the date the right to sue accrues.
Judged against this standard, the appellant-plaintiff, having already assessed
the loss and removed the respondent-defendant from service on 30.04.1985,
filed the present suit for recovery of that very loss only on 03.05.1988,
which is clearly beyond three years from the date on which the cause of
action first accrued in its favour, that is, 25.02.1983, when the Assistant
Engineer prepared and forwarded the assessment report regarding the loss
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caused by the respondent-defendant to the office of the Divisional Engineer,
Punjab Housing Development Board, Amritsar.
11.1. Moreover, it was sought to be argued on behalf of the appellant-
plaintiff that limitation should instead begin from 07.08.1985, being the date
on which the respondent-defendant was formally called upon, vide letter No.
PHB/ASR/85/6726, to make good the loss. This argument cannot be
accepted. In Indian Evangelical Lutheran Church Trust Association v. Sri
Bala & Co. 2025 INSC 42 , the Hon’ble Apex Court observed that:
“9.4 Further, if a suit is not covered by any of the specific articles
prescribing a period of limitation, it must fall within the residuary
article. The purpose of the residuary article is to provide for cases
which could not be covered by any other provision in the Limitation
Act. The residuary article is applicable to every variety of suits not
otherwise provided for under the Limitation Act. It prescribes a
period of three years from the date when the "right to sue" accrues.
Under Article 120 of the erstwhile Limitation Act, 1908, it was six
years, which has been reduced to three years under Article 113 of the
present Act. According to the third column in Article 113, time
commences to run when the right to sue accrues. The words "right to
sue" ordinarily mean the right to seek relief by means of legal
proceedings. Generally, the right to sue accrues only when the cause
of action arises, that is, the right to prosecute to obtain relief by
legal means. The suit must be instituted when the right asserted in
the suit is infringed or when there is a clear and unequivocal threat
to infringe that right by the defendant against whom the suit is
instituted [ State of Punjab v. Gurdev Singh, (1991) 4 SCC 1 ].”
11.2. In the light of principles discussed above, the right to sue
accrues when there is a clear and unequivocal violation of, or threat to the
right asserted by the plaintiff. On the facts of the present case, that violation
stood complete on 25.02.1983 itself, when the shortage of material entrusted
to the respondent-defendant was assessed and reported by the Assistant
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RSA-738-2000 (O&M) --8--
Engineer. The subsequent correspondence, including the letter dated
07.08.1985 was addressed only after the respondent-defendant's removal
from service on 30.04.1985 and did no more than reiterate a claim that had
already arisen more than two years earlier. It is well settled that mere
correspondence or a subsequent demand cannot be relied upon to enlarge or
postpone a period of limitation that has already commenced to run. To hold
otherwise would allow a plaintiff to keep a stale claim alive indefinitely by
choosing, at its own convenience, the date on which to issue a formal
demand, which the law of limitation does not permit.
12. In such circumstances, the appellant-plaintiff having slept over
its rights for long, resulting in accrual of a substantial right in favour of the
respondent-defendant, there is no reason to interfere with the decision
rendered by the learned First Appellate Court.
RELIEF
13. Resultantly, in view of the discussion made hereinabove,
finding no illegality or perversity in the decision rendered by the learned
First Appellate Court, there being no misreading or misinterpretation of the
pleadings and evidence, the present appeal being devoid of merits, is hereby
dismissed.
14. Pending application, if any, also stands disposed of.
01.09.2026 (HARKESH MANUJA)
sonika
JUDGE
Whether speaking/reasoned: Yes/No
Whether reportable: Yes/ No
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