Method Of Computation Of Limitation Period U/s.12 Of Limitation Act Can’t Be Extended To Contractual Field: Orissa High Court

The High Court was dealing with a second round of litigation assailing the action of the authorities in terminating the contract on the ground that the petitioners failed to improve the performance of their services for which the contract was awarded to them.

The Division Bench of Chief Justice Harish Tandon and Justice M.S. Raman held, “The method of computation of the period for the purpose of limitation enshrined in Section 12 of the Limitation Act, 1963 cannot be extended and/or applied in contractual field. The said provision is applicable in relation to an institution of the proceedings before the Court of law and, therefore, extending such provision in the contractual field does not appear to us appropriate. The thirty days’ period has to be counted on the basis of an ordinary course adopted in calculation thereof and not on the basis of the methods adopted for institution of the proceedings in the Court of law.”

Advocate Susanta Kumar Mishra represented the Petitioner while Addl. Government Advocate Sanjay Rath represented the State.

Factual Background

The contract was terminated after giving a notice, which was assailed by the petitioner on the ground that Clause 4.8 of the Request for Proposal (RFP) had not been strictly adhered to. The said Clause provided the modalities for termination of a contract, which included thirty days’notice in writing to be served upon the service provider, who was correspondingly given an opportunity to remedy such deficiencies in performance of an obligation within fifteen days from the date of receipt thereof. The Court upheld the contention of the petitioner that once the terms of the contract provide a mechanism for terminating the contract, the authorities cannot violate the same.

After quashing the notice of termination, liberty was granted to the authorities to proceed afresh by following the procedure provided in the said clause. A notice was issued to the petitioner by the Competent Authority, highlighting the poor performance of the sanitary workers, discrepancies in the supply of the equipment/non-performance of the staff and other irregularities. The defence taken by the petitioner was that the intention to terminate the contract was to facilitate the favoured person to obtain the said contract. After the expiration of thirty days, the order was communicated, terminating the said contract. Simultaneously, the contract was also awarded to the opposite party after the expiration of the period of the contract awarded to the petitioner. The same became a subject matter of challenge in the Petition.

Reasoning

The Bench, at the outset, explained that once the concluded contract is entered into by and between the parties, the terms and conditions included in the said concluded contract are binding on the parties, and the adherence thereof has to be strictly followed. “Any departure from one or more terms and the conditions embodied in the said concluded contract would entail the action of the authorities liable to be interfered. The parties entering into a bilateral contract are bound by the terms and conditions incorporated therein and have to proceed on the peripheral thereof”, it added.

Referring to Clause 4.8 of the RFP, the Bench noted that the said clause did not specify what should be the contents of the said notice, but an unambiguous intention was manifested therefrom that such notice must be a thirty days’ clear notice. “...therefore, any action taken within such mischief period cannot be regarded as an action strictly in conformity thereto”, the order read.

One of the contentions raised before the Bench was that to compute the clear thirty days’ period of notice, the day on which the period is to be counted should be excluded, and if such methodology is adopted, the effect of termination would fall short of clear thirty days, thereby making the notice illegal. Addressing this, the Bench explained that the method of computation of the period for limitation enshrined in Section 12 of the Limitation Act cannot be applied in the contractual field.

“Furthermore, the said thirty days’ clear timeline is in relation to a notice issued in writing, expressing an intention of termination on the grounds so disclosed therein and has no nexus to the contract having terminated to take effect from a particular date”, the Bench stated. Rejecting the petitioner’s contention, the Bench held that whether the termination would take effect from a particular date had no nexus to the period provided for issuance of the notice.

The Bench thus held, “Admittedly, the notice dated 9 th September, 2025 was issued upon the petitioner and the order terminating the contract was passed on 27th October, 2025 much after thirty days from the date of the issuance of the said notice. Therefore, once the compliance to the said Clause is readily inferred, we do not find any other grounds warranting interference into the decision of the said authorities.”

Finding the order of termination to be not infirm or in contravention to Clause 4.8 of the RFP, the Bench declined to interfere with the same and dismissed the writ petition.

Cause Title: M/s. Group No.5 Security Service v. State of Odisha (Case No.: W.P.(C) No. 32707 of 2025)

Appearance

Petitioner: Advocate Susanta Kumar Mishra

State: Addl. Government Advocate Sanjay Rath

Opp. Party No.5: Advocate Satya Smruti Mohanty

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