CFA/1111/2026 of M/S ROYAL ENTERPRISES Vs SUPERINTENDENT SAMUHIK CHIKTSALAYA SANGH on 3 August 2026

1. Superintendent Samuhik Chiktsalaya Sangh, Jawahar Lal Nehru Hospital, Jaipur.

2. Deputy Accountant General (Administration), The Indian Audit And Accounts Department, Office Of Chief Accountant General (General And Social Sector) Rajasthan, Janpath, Jaipur. ----Respondents For Appellant(s) : Dr. Ganesh Parihar, Adv. Mr. Santosh Kumar Sharma, Adv. For Respondent(s) : HON'BLE MR. JUSTICE ARUN MONGA HON'BLE MR. JUSTICE ASHUTOSH KUMAR Order(Oral) 03/08/2026 Per: Arun Monga, J.

1. The present appeal seeks quashing of the impugned Judgment and Decree dated 26.05.2026 passed by the learned Commercial Court, Ajmer, whereby the appellant–plaintiff's suit for recovery of Rs. 5,26,016/- against the respondents was dismissed as barred by limitation.

2. Briefly stated, the facts giving rise to the present appeal are as follows. Pursuant to a Notice Inviting Tender for internal cleaning work at Jawahar Lal Nehru Hospital, Ajmer, a Work Order dated 19.11.2013 was issued in favour of the appellant. In terms thereof, the appellant

(2 of 9) [CFA-1111/2026] deposited security amounts aggregating to Rs. 1,84,800/- by way of two Fixed Deposit Receipts of Rs. 1,52,400/- and Rs. 32,400/- respectively. 2.1 According to the appellant, it satisfactorily completed the contractual work upon expiry of the contract on 28.02.2015. Thereafter, the respondents declined to refund the security deposit on the strength of audit objections alleging non-deposit of EPF, ESI and Service Tax. The appellant asserted that the said statutory enactments were inapplicable to the contract, which was job-based and not covered under the relevant labour laws, and claimed to have furnished the applicable legal provisions and replies to the respondents. It was further pleaded that similar audit objections raised in respect of an earlier contract had been dropped and the security deposit thereunder released. 2.2 Despite repeated representations and legal notices, the respondents neither refunded the security deposit nor paid any compensation. The appellant thereupon served a statutory notice dated 27.12.2017 under Section 80(1) CPC (Exhibit 44), calling upon respondent No. 1 to return both FDRs and to pay Rs. 50,000/- by way of damages within two months of receipt thereof. Admittedly, no payment was made within the said period. 2.3 The appellant further pleaded that, through proceedings under the Right to Information Act and communications received from the concerned authorities, including the EPF authorities, it came to be informed that EPF, ESI and Service Tax were not applicable to the contract and that the audit objections had been dropped. The defendant No. 2, under the RTI Act, informed the appellant on 29.09.2018 that the audit objection had been dropped, and vide RTI reply dated 22.03.2019, it was further informed that both the objections stood decided. The

(3 of 9) [CFA-1111/2026] Expert also opined on 26.09.2018 that no Service Tax was leviable on cleaning services and that PF and ESI were applicable; however, no consequential step was taken by the respondents. The First Appellate Authority under the RTI Act also passed an order dated 07.01.2020 (Exhibit 33), but despite the same, the respondents did not take any step towards refund of the security amount. Notwithstanding the same, the respondents continued to withhold the security deposit, communicated its forfeiture and the appellant's blacklisting, and insisted upon deposit of the alleged statutory dues. After issuance of a further notice dated 10.12.2021 under Section 80 CPC, the suit came to be instituted on 23.11.2022 seeking recovery of Rs. 5,26,016/-, comprising the principal security amount together with interest, damages and litigation expenses.

3. The respondents–defendants contested the suit by filing a written statement. While traversing the plaint on merits, they principally set up the plea that the suit was hopelessly barred by limitation, inasmuch as, on the plaintiff's own showing, the cause of action had arisen upon expiry of two months from the statutory notice dated 27.12.2017, whereas the suit was instituted only on 23.11.2022. The plaintiff filed a rejoinder reiterating the plaint and denying the written statement.

4. On the pleadings, the learned Commercial Court framed six issues, including the issue of limitation. The plaintiff examined PW-1 Bhanwar Singh Choudhary i.e. the proprietor and produced Exhibits 1 to 46; the defendants examined DW-1 Dr. Amit Lodha.

5. Upon appreciation of the pleadings and the oral and documentary evidence, the learned Commercial Court, by the impugned Judgment and Decree dated 26.05.2026, dismissed the suit, principally on the finding that it was barred by limitation.

(4 of 9) [CFA-1111/2026] 5.1 The learned Court held, in substance, that:

(i) the plaintiff itself had issued the statutory notice under Section 80 CPC dated 27.12.2017 (Exhibit 44), and on the plaintiff's own pleadings, coupled with the admissions of PW-1 in cross-examination, the cause of action arose upon expiry of the two-month period stipulated therein;

(ii) the plaintiff failed to produce any document demonstrating that the audit objections had in fact been dropped, and the RTI communications by themselves could not establish such fact; and

(iii) no legal provision permits extension or fresh commencement of limitation merely on account of information furnished under the Right to Information Act, and the plea that limitation ought to run from 06.05.2021, being the date of receipt of the RTI appellate order (Exhibit 33), was untenable.

6. Hence the instant appeal by the plaintiff.

7. We have heard learned counsel for the parties and perused the record. Learned counsel for the appellant reiterated the plea that the cause of action was a continuing one and, in any event, crystallised only on 06.05.2021 when the RTI appellate order (Exhibit 33) was received, whereafter the suit instituted on 23.11.2022 was well within time. Learned counsel for the respondents supported the impugned judgment.

8. The decisive question in this appeal is whether the suit was within limitation.

9. At the outset, it is apposite to notice the a suit of the present nature, for recovery of a security deposit withheld after completion of the contract, together with damages, is governed, at the highest, by the residuary Article 113 of the Schedule to the Limitation Act, prescribing a

(5 of 9) [CFA-1111/2026] period of three years from the date when the right to sue accrues. Even if the matter is viewed as one arising from breach of contract under Article 55, the period remains three years from the date of breach.

10. The learned Commercial Court has rightly answered the question of limitation against the plaintiff and in our opinion also rightly so. Let us see how. (A). Even taking the plaint as gospel, the suit is ex facie barred

11. It is trite that, for the purpose of examining the bar of limitation, the averments in the plaint must be read as a whole and taken to be correct. Applying that very standard, i.e., even if every fact pleaded by the appellant–plaintiff and every piece of evidence adduced by it is taken as gospel truth, the suit is, ex facie, barred by limitation.

12. On the plaintiff's own pleaded case is as below :

(a) the contract expired on 28.02.2015 and the work stood completed; (b) the security deposit thereupon became refundable, and the respondents declined to refund it citing audit objections;

(c) aggrieved thereby, the plaintiff itself served the statutory notice dated 27.12.2017 under Section 80(1) CPC (Exhibit 44), demanding refund of both FDRs and damages of Rs. 50,000/- within two months; and

(d) the respondents did not comply. PW-1 candidly admitted in cross-examination that Exhibit 44 was sent on his behalf by his advocate on 27.12.2017 and that no payment was made within the two-month notice period.

13. The very act of serving a notice under Section 80(1) CPC demanding refund proceeds on the premise that the cause of action for the suit had already accrued; the notice is a statutory condition precedent to the institution of a suit against the Government upon an

(6 of 9) [CFA-1111/2026] existing cause of action, and not an instrument for creating or deferring one. Thus, on the plaintiff's own showing, the right to sue had accrued, at the very latest, upon expiry of the two-month period of Exhibit 44, i.e., on or about 27.02.2018. Computed therefrom, the period of three years expired on or about 27.02.2021. The suit, however, was instituted only on 23.11.2022, more than four years and eight months after the accrual of the cause of action, and long after expiry of the prescribed period. The bar of limitation is thus writ large on the face of the plaint itself, without the Court having to travel beyond the plaintiff's own pleadings and admissions. (B) The RTI communications cannot furnish a fresh cause of action or extend limitation

14. The sheet-anchor of the appellant's case, that limitation ought to be computed from 06.05.2021, the date of receipt of the RTI appellate order (Exhibit 33), is wholly misconceived. Information obtained under the Right to Information Act is merely a disclosure of existing facts; it neither creates a right, nor adjudicates one, nor furnishes a fresh cause of action. The right to sue accrues when the wrongful withholding of the amount occurs and is asserted. Not when the plaintiff subsequently gathers material which, in its perception, fortifies its claim. Once time has begun to run, no subsequent event, much less the receipt of information under the RTI Act, can arrest or restart it.

15. Equally, the learned Commercial Court has rightly recorded that the plaintiff produced no document establishing that the audit objections had in fact been dropped, and that the RTI communications by themselves could not prove such fact. But even assuming, arguendo, that the audit objections stood dropped as claimed, that circumstance would, at best, bear upon the merits of the claim; it can have no

(7 of 9) [CFA-1111/2026] bearing whatsoever upon the computation of limitation, which had already commenced and expired. (C) No acknowledgment, no fresh promise, no continuing cause of action

16. It is not the plaintiff's case, nor is there any material on record, that the respondents at any time prior to the expiry of limitation acknowledged their liability in writing within the meaning of Section 18 of the Limitation Act, or made any part-payment attracting Section 19, so as to furnish a fresh starting point. On the contrary, the pleaded case is that the respondents consistently withheld the deposit, communicated its forfeiture and the plaintiff's blacklisting, and insisted upon deposit of the alleged statutory dues, conduct which is the very antithesis of an acknowledgment of liability.

17. Nor, even otherwise, can the plea of a "continuing cause of action" be availed by the appellant in the case in hand. The non-refund of a security deposit is a completed wrong giving rise to the cause of action when refund is declined. It is not a recurring or continuing wrong within the meaning of Section 22 of the Limitation Act. Repeated representations, reminders and successive legal notices do not keep the cause of action alive, nor does the issuance of a second notice under Section 80 CPC on 10.12.2021 revive a claim that had already become time-barred. A party cannot, by its own act of serving successive notices, confer upon itself a fresh period of limitation.

18. The findings of the learned Commercial Court, with which, as already noted, we concur, are contained in paragraphs 20 and 21 of the impugned judgment, the translation thereof is reproduced hereinbelow: "20. This issue relates to limitation, the burden of proving which lies upon the plaintiff. In relation to limitation, Exhibit 44 is a notice issued by the plaintiff under Section 80 CPC dated 27.12.2017, granting two months'

(8 of 9) [CFA-1111/2026] notice, and only after expiry of the said period of two months did the cause of action to institute the suit arise in favour of the plaintiff. In this regard, the plaintiff has pleaded in the plaint that the plaintiff had sent a pre-suit notice dated 27.12.2017 to defendant No. 1 under Section 80(1) CPC, apprising it of all the facts and the factual position described above, and requested that within two months of receipt of the notice, both the FDRs pertaining to the deposited security amounts of Rs.1,52,400/- and Rs.32,400/- be returned to the plaintiff and that a sum of Rs.50,000/- also be paid by way of damages. However, even after receipt of the said notice, no action was taken by defendant No. 1. PW-1, in his cross-examination, admitted that Exhibit 44 had been sent on his behalf by his advocate on 27.12.2017, informing the defendants to make payment of the amount mentioned in the notice within two months. He further admitted that the defendant-department did not make payment to him within the two-month notice period. The contention of the plaintiff's counsel is that the final information received under the RTI Act was Exhibit 33, which was received on 06.05.2021. Therefore, the period of limitation is liable to be computed from that date itself.

21. Since the plaintiff had served the first notice, Exhibit 44, upon the defendants, according to the said notice, the cause of action for the suit arose after expiry of the two-month period stipulated therein. Thereafter, no acknowledgment on the part of the defendants that they were ready to pay the amount has been stated by the plaintiff. According to the documents placed on record, no document has been produced by the plaintiff to show that the audit para has been dropped till date. Merely on the basis of the information received under the RTI Act, it cannot be determined that the audit objections have been dropped. Exhibit 33 is an appellate order passed under the Right to Information Act, and there is no legal provision to the effect that, on the basis of an order passed under the Right to Information Act, the period of limitation for filing the suit stands extended after issuance of Notice Exhibit 44 to the plaintiff. This is because once a legal notice under Section 80(1) CPC has been served prior to institution of the suit, the cause of action for filing the suit arises only after expiry of two months therefrom, and the suit is required to be instituted within the prescribed period of limitation. The present suit was instituted before this Court on 23.11.2022. Therefore, the suit is barred by limitation."

19. To conclude, having perused the impugned judgment and the case file, we are of the view that the finding of the learned Commercial Court that the suit was barred by limitation rests on a correct appreciation of the pleadings and the evidence, and on a correct application of the law.

20. Indeed, even if the facts pleaded by the appellant–plaintiff and the evidence adduced by it are taken as gospel, the suit is, on the face of the plaint itself, hopelessly barred by limitation, having been instituted more than four and a half years after the accrual of the cause of action as discussed in the preceding part. The impugned judgment, therefore, warrants no interference by this Court.

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21. Resultantly, the appeal fails and is hereby dismissed. No order as to costs. Pending applications, if any, also stand disposed of. (ASHUTOSH KUMAR),J (ARUN MONGA),J 19/Ashwani-Tanisha