State Cannot Evade Responsibility To Pay A Contractor In The Guise Of Limitation Period: Kerala High Court

The Kerala High on Wednesday held that the state cannot avoid its obligation to compensate a contractor for dues owed to him by invoking the ground of limitation.

A single bench of Justice Shaji P Chaly observed that

“Above all, in a welfare State, the State has the duty and obligation to protect the interests of its citizens, rather than finding ways and means to defeat their interests and means of livelihood. The scheme of part III of the Constitution of India dealing with ‘fundamental rights’ speaks eloquently of the responsibilities of the State to safeguard the well-being and prosperity of the citizens without fail. Therefore, when a citizen was engaged by the Government to carry out one of its activities, it had every duty to reward the person as agreed upon in the contract, even without asking for it.”

The Government had engaged the petitioner’s father for constructing a protection wall on the banks of Karamana river. However, the Government tried to pay its dues to a previous contractor by adjusting it against the liabilities against the petitioner’s father. This led to the petitioner's father filing a suit and an appeal. In the appeal, a permanent injunction was granted preventing the state from deducting any money owed to the previous contractor from the amount owed to the petitioners' father for the contract executed between the government and the petitioner’s father.

Adv. T. Rajasekharan Nair appeared for the petitioners and Senior Government Pleader Adv. Deepa Narayanan appeared for the State.

The State while admitting the facts and figures presented by the petitioners, claimed that the recovery of the money is barred by limitation. The court in this regard, observed that the period of limitation for a claim for recovery of money from a private person is three years. However, under Article 112 of the Limitation Act, 1963 , this period extends to thirty years for claims made by the government. The court analysed a catena of judgments by the Supreme Court on this subject and concluded that it was the duty of the State to pay the amount due to the petitioner:

“The principles of law evolved by the Apex Court and this Court would make it clear that the State Government, in the guise of the period of limitation, cannot evade its responsibility to pay the amount due to the petitioners’ father, who undertook the contract work when the previous contractor Sri. K. Muraleedharan failed to carry out the contract. Moreover, when a civil court passed order of prohibitory injunction restraining the State and its officials by permanent prohibitory injunction from adjusting the amount due to the petitioner’s father, there was an onerous responsibility to the State to pay the amount to the petitioners”.

The court held the actions of the State to be illegal and arbitrary. The court cited that under Article 300A of the Constitution no person can be deprived of his/her property save by authority of law. Once the contract work was satisfactorily completed, and the money owed to the petitioners' father became due to them, it cannot be used to settle outstanding dues of a previous contractor for some other work completed, by using the State's power of eminent domain. In view of the above, the court directed the State to pay the amount due to the petitioners.

Case Title: Vishnu and Others V State of Kerala and Others

Citation: 2023 LiveLaw (Ker) 112 

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