Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7315 OF 2008
[Arising out of SLP (Civil) No. 22935 of 2007]
M/s Shakti Tubes Ltd. Tr. Director …Appellant
Versus
State of Bihar & Ors. …Respondents
J U D G M E N T
S.B. SINHA, J :
1. Leave granted.
2. Whether the period spent on pursuing a writ petition should be
excluded for the purpose of computing the period of limitation in filing a
suit in terms of Section 14 of the Limitation Act, 1963 is the question
involved in this appeal which arises out of a judgment and order dated
3.10.2007 passed by the High Court of Judicature at Patna in First Appeal
No. 388 of 1997.
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3. The basic fact of the matter is not in dispute.
Appellant was a contractor of the State. It entered into a contract for
supply of black pipes to the Minor Irrigation Department of the State of
Bihar (for short “the Department”) at the rate of Rs. 174.95 per meter. The
said agreement contained a clause for escalation of price. On the premise
that the price of steel had gone up from Rs. 10804 per MT to Rs. 13031 per
MT, appellant, by its letter dated 18.06.1992, stated that as per the terms and
conditions of the agreement supply would be made only at the escalated rate
for which the additional price was calculated at Rs. 24.09 per meter.
4. Orders for seven lakh meters of supply of black pipes were placed on
16.07.1992. The State worked out the escalation and determined the total
increase at Rs. 24.09 per meter. On or about 4.11.1992, ‘the Department’,
however, fixed the escalated rate of price of steel at Rs. 190.48 instead of
Rs. 199.04.
5. On or about 18.03.1993, orders were placed for further supply of
50000 meters.
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6. It is also not in dispute that 90% of the payment was to be made at the
time of making supply and the rest 10% of the consideration was to be paid
within a month thereafter.
7. Appellant, by its letter dated 4.06.1993, stated:
“We find that the escalation granted to us is not
correct as it does not take into account the full
impact of the price increase. The rates of HR
Coils immediately before the increase on 19.05.92
were Rs. 10804/- and after the increase, these went
upto Rs. 13031/- per MT. Thus there was an
increase of Rs. 2227/- per MT. This, taken
together with taxes on purchase of raw material
and sale of pipes, gives a total impact of Rs.
2408.72 per MT or Rs. 24.09 per meter of pipe.
As against this, we have been given an escalation
of Rs. 15.53 per meter only.
In support of the price of the HR Coils mentioned
by us above, we are enclosing herewith copies of
two invoices issued by SAIL. These clearly show
that rates as have been mentioned by us above.
We invite your attention to our letters dated
09.11.92 and 10.12.92 through which we have
brought this mistake to your notice. We regret that
despite it, you have not taken any action on the
subject. As a result, our funds to the tune of about
Rs. 35 lacs are lying unnecessarily blocked. This
is causing severe financial problems for us. We,
therefore, request you to please settle this matter
quickly now, otherwise, we shall claim interest on
this amount for the period of delay.”
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The said letter was not responded to.
8. Appellant filed a writ petition before the Patna High Court on or
about 10.01.1994 praying inter alia for the following reliefs:
“(i) Issue rule NISI in the nature of mandamus
commanding the respondents to pay the admitted
dues which comes to Rs. 39,04,497.84 to the
petitioner for the supply made by the petitioner in
accordance with the provisions of law and upon
return of the rule and after hearing of the parties
make the rule absolute;
(ii) Issue rule NISI in the nature of mandamus
commanding the respondents to pay interest to the
petitioner on the supply made by the petitioner in
accordance with the provisions of interest on
Delayed Payments to Small Scale and Ancillary
Industrial Undertakings Ordinance, 1992 on
account of delay in making payment of the price of
the goods by the respondents and upon return of
the rule and after hearing of the parties make the
rule absolute;
(iii) Issue rule NISI commanding the
respondents to perform statutory duty and obey
and fulfill the provisions of the Act made by the
Parliament and upon return of the rule and after
hearing the parties make the rule absolute;”
9. A notice was directed to be issued by a learned Judge of the High
Court.
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10. By an order dated 14.09.1995, a learned Single Judge of the said
Court, opined:
“The Petitioner in this application seeks two
directions to the concerned authorities from this
Court (i) for the payment of a sum of Rs. 30 lacs
and odd as the price for certain materials (steel
pipes) supplied by him under a government
contract and (ii) for the payment of interests, the
terms of the Small Scale and Ancillary Industrial
Undertakings Act, 1992 on payments made to him
after some delays.
A counter affidavit has been filed in this
case on behalf of the Respondent Nos. 1 and 2 in
which any liability to make any payment to the
petitioner is totally denied. In that view this Court
aspect give nay relief (sic) to the petitioner in
respect of his first claim and this writ petition is,
accordingly, rejected in so far as the petitioner’s
first claim is concerned. The rejection of this writ
petition, however, will not come in the way of the
petitioner in case he files a suit or a representation
for the realization of his alleged dues. If any suit
or representation is filed by the petitioner that
would be disposed of in accordance with law and
on its merits without being influenced by the fact
that the petitioner failed to get any relief from a
writ court. The respondents also dispute the
petitioner’s claim for interests on delayed
payments on the plea, that the supplies were made
by the petitioner beyond the stipulated dates and
that the petitioner’s claim relates to the period
prior to 03.04.1993, the date on which the Act
came into force. A question thus arises whether
the petitioner can be allowed interests on delayed
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payments by a writ court, in view of these disputed
facts.
However, I am inclined to admit this writ
petition on this limited question as some writ
petitions have been admitted and referred for
hearing before a Division Bench on the question
of payment of interests and delayed payments.”
11. Appellant issued a notice under Section 80 of the Code of Civil
Procedure on or about 7.10.1995. On 25.06.1996, a suit was filed for a
decree for a sum of Rs. 65,97,319.00. The said suit was decreed by a
judgment and order dated 28.06.1997, and thereby rejecting the contention
of the respondents that the suit was barred by limitation. The learned Trial
Judge held that the appellant was entitled to the benefit of the escalation
clause contained in the agreement between the parties.
12. An appeal was preferred thereagainst. A learned Single Judge of the
High Court held:
“Therefore, I am of the view that the same
escalation rate should also be granted in case of
second tender allotted to the plaintiff on
21.03.1992. Admittedly, the lowest rate of supply
of the tender which is the subject matter of the suit
was Rs. 174.95 per meter. This rate was granted
before increase in price of steel. As per the terms
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of the agreement, the plaintiff is entitled to get the
escalation rate in case of increase in price of steel.
Since it is established that increase in price of steel
was to the extent of Rs. 24.08, as such this
increase should be added in the rate fixed by the
defendants for supply of MS black pipe. Thus,
after adding Rs. 24.08 in the lowest rate of supply
of pipe, which was fixed at Rs. 174.95 the total
amount will come to Rs. 199.08 and this will be
the actual escalated rate which the plaintiff will be
entitled to receive towards price of per metre M.S.
black pipe after escalation of price of steel. Thus,
on the basis of the above discussion, I find and
hold that the plaintiff is entitled to get escalated
price at Rs. 199.04 and not at Rs. 190.48 granted
by the State of Bihar.”
13. The learned Single Judge, however, allowed the appeal filed by the
State and dismissed the suit, holding:
“21. It has been argued by the learned Advocate
of the plaintiff – respondent that the period during
which the plaintiff was pursuing writ application
before the High Court should also be excluded for
computing the period of limitation. In this regard
the learned Advocate of the plaintiff has placed
reliance upon the decision reported in AIR (36)
1949 Patna Page 293 (Lal Bihar Lal and another,
plaintiffs Vrs. Bani Madhava Khatri and others,
Defendants). But I am of the view that the said
decision will not apply in this case as the principle
laid down in the decision cited above is applicable
in such cases where the suit is filed in wrong
Court that is a Court having no jurisdiction to
entertain it or where a suit is instituted in the
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wrong court in consequence of a bonafide mistake
of law of defect of procedure and not in cases
where the party has chosen altogether a different
remedy before a different Court having
jurisdiction to grant relief. Under circumstances,
the plaintiff cannot be entitled to exclude the
period during which he was pursuing writ
application before the High Court in computing
the Limitation period. Thus, I find no difficulty in
holding that the plaintiff’s suit is barred by law of
limitation…”
14. Mr. R.F. Nariman, learned senior counsel appearing on behalf of the
appellant, in assailing the judgment would contend that the High Court
committed a serious error insofar as it failed to take into consideration that
in a case of this nature Section 14 of the Limitation Act, 1963 would apply.
15. Dr. Rajeev Dhawan, learned senior counsel appearing on behalf of
the State of Bihar, on the other hand, submitted that the suit filed by the
plaintiff – appellant having nothing to do with the applicability of the
escalation clause, the impugned judgment is unassailable.
It was furthermore contended that as the appellant having accepted
that the cause of action for filing the suit arose on 4.11.1992, the same
should have been filed within a period of three years thereafter.
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16. We will proceed on the premise that the cause of action for filing the
suit arose on 4.11.1992. Indisputably, appellant served a notice upon the
State on or about 7.10.1995 in terms of Section 80 of the Code of Civil
Procedure itself. As in terms of Section 80 of the Code of Civil Procedure,
a statutory notice of sixty days is required to be served, the said period must
be excluded for the purpose of computation of the period of limitation. The
suit should have, therefore, been filed in or about January, 1996 which in
fact was filed on 25.06.1996. It is in this situation, the question as regards
applicability of Section 14 of the Limitation Act has to be determined.
17. It is not in dispute that the writ petition was filed on 10.01.1994 and
the same was disposed of on 14.09.1995. Indisputably, if the period taken
for pursuing the remedy is excluded, the suit must be held to have been filed
within the period prescribed by the Limitation Act, 1963..
18. Dr. Dhawan is not correct in contending that the writ petition filed by
the appellant had nothing to do with the escalation clause.
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19. We are not unmindful of the fact that the plaintiff filed three suits
being Money Suit Nos. 97 of 1996, 153 of 1997 and 131 of 1997, but we are
concerned herein with filing of Money Suit No. 97 of 1996.
20. In the writ petition, the entire contention of the appellant revolved
around the arbitrary refusal on the part of respondent to pay the price of the
steel in terms of the escalation clause. Even the amount claimed in the writ
petition, viz., Rs. 39,04,497.84 was the same for which the suit was filed.
The price of the steel, as contended in the writ petition, is the same in the
suit as would appear from the writ petition and the judgment passed in
Money Suit No. 97 of 1996, the relevant averments whereof are as under:
Writ Petition
“17. That the petitioner in this regard states and
submits that the petitioner is entitled for escalated
price of steel as per the terms of agreement and it
has wrongly been fixed at 190.48 paise whereas
according to the admitted position as accepted by
the Secretary of the Department and as approved
by the Minister incharge, it should have been
199.04 paise.”
Money Suit No. 97 of 1996
“…It is also said further that due to price
escalation the defendants had to fix the rate at 199
and 4 paise per metre with effect from 19.07.92
but the granted escalation price only at rupees 190
and 40 paise which is an apparent calculation
mistake.”
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21. Sub-section (1) of Section 14 of the Limitation Act, 1963 reads as
under:
“14 - Exclusion of time of proceeding bona fide in
court without jurisdiction
(1) In computing the period of limitation for any
suit the time during which the plaintiff has been
prosecuting with due diligence another civil
proceeding, whether in a court of first instance or
of appeal or revision, against the defendant shall
be excluded, where the proceeding relates to the
same matter in issue and is prosecuted in good
faith in a court which, from defect of jurisdiction
or other cause of a like nature, is unable to
entertain it...”
The said provision should be construed liberally.
It is not in dispute that the writ remedy was resorted to by the
plaintiff. A part of the writ petition was admitted. The writ petition was not
entertained in respect of the escalated price by the High Court for the
reasons stated by the High Court in its order dated 14.09.1995. It has not
been held that the writ petition was not maintainable. It was not dismissed
at the threshold. In view of the fact that a part of the writ petition was
admitted for hearing, there cannot be any doubt whatsoever that the same
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was maintainable. Appellant was, therefore, pursuing the said remedy bona
fide and in good faith.
22. Section 14 of the Limitation Act speaks of prosecution of the
proceedings in a court which, from defect of jurisdiction or other cause of a
like nature, is unable to entertain it. What would be the true purport of the
words “other cause of a like nature”? The same must relate to the subject
matter of the issue. A Three-Judge Bench of this Court had an occasion to
consider the same in Rameshwarlal v. Municipal Council, Tonk and Others
[(1996) 6 SCC 100] wherein it was held:
“3. Normally for application of Section 14, the
court dealing with the matter in the first instance,
which is the subject of the issue in the later case,
must be found to have lack of jurisdiction or other
cause of like nature to entertain the matter.
However, since the High Court expressly declined
to grant relief relegating the petitioner to a suit in
the civil court, the petitioner cannot be left
remediless. Accordingly, the time taken in
prosecuting the proceedings before the High Court
and this Court, obviously pursued diligently and
bona fide, needs to be excluded.”
23. The question again came up for consideration before this Court in
Union of India and Others v. West Coast Paper Mills Ltd. and Another (III)
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[(2004) 3 SCC 458] wherein Lahoti, J. (as the learned Chief Justice then
was), held as under:
“In the submission of the learned Senior Counsel,
filing of civil writ petition claiming money relief
cannot be said to be a proceeding instituted in
good faith and secondly, dismissal of writ petition
on the ground that it was not an appropriate
remedy for seeking money relief cannot be said to
be “defect of jurisdiction or other cause of a like
nature” within the meaning of Section 14 of the
Limitation Act. It is true that the writ petition was
not dismissed by the High Court on the ground of
defect of jurisdiction. However, Section 14 of the
Limitation Act is wide in its application, inasmuch
as it is not confined in its applicability only to
cases of defect of jurisdiction but it is applicable
also to cases where the prior proceedings have
failed on account of other causes of like nature.
The expression “other cause of like nature” came
up for the consideration of this Court in Roshanlal
Kuthalia v. R.B. Mohan Singh Oberoi and it was
held that Section 14 of the Limitation Act is wide
enough to cover such cases where the defects are
not merely jurisdictional strictly so called but
others more or less neighbours to such
deficiencies. Any circumstance, legal or factual,
which inhibits entertainment or consideration by
the court of the dispute on the merits comes within
the scope of the section and a liberal touch must
inform the interpretation of the Limitation Act
which deprives the remedy of one who has a
right.”
24. We may also notice that in India Electric Works Ltd. v. Jamesh
Mantosh & Anr. [1971 (2) SCR 397 : (1971) 1 SCC 24], this Court held:
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“7. It is well settled that although all questions of
limitation must be decided by the provisions of the
Act and the courts cannot travel beyond them the
words “or other cause of a like nature” must be
construed liberally. Some clue is furnished with
regard to the intention of the Legislature by the
Explanation III in Section 14(2). Before the
enactment of the Act in 1908, there was a conflict
amongst the High Courts on the question whether
mis-joinder and non-joinder were defects which
were covered by the words “or other cause of a
like nature”. It was to set at rest this conflict that
Explanation III was added. An extended meaning
was thus given to these words. Strictly speaking
mis-joinder or non-joinder of parties could hardly
be regarded as a defect of jurisdiction or
something similar or analogous to it.”
25. Provisions of Section 14 of the Limitation Act have been held to be
applicable even in a proceeding arising under Section 34 of the Arbitration
and Conciliation Act, 1996. [See Gulbarga University v. Mallikarjun S.
Kodagali & Anr. (2008) 11 SCALE 79]
26. We, therefore, have no hesitation in holding that the provisions of
Section 14 of the Limitation Act, 1963 were applicable to the fact of the
present case.
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27. For the reasons aforementioned, the impugned judgment cannot be
sustained which is set aside accordingly. The appeal is allowed with costs.
Counsel’s fee assessed at Rs. 50,000/-.
………………………….J.
[S.B. Sinha]
..…………………………J.
[Cyriac Joseph]
New Delhi;
December 16, 2008