M/S Shakti Tubes Ltd.
Tr. Director Vs. State of Bihar & Ors.  INSC 2179 (16 December 2008)
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
S.B. SINHA, J :
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.
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.
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.
or about 18.03.1993, orders were placed for further supply of 50000 meters.
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
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
4 The said letter was
not responded to.
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;"
notice was directed to be issued by a learned Judge of the High Court.
an order dated 14.09.1995, a learned Single Judge of the said Court, opined:
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 6 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."
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.
appeal was preferred thereagainst. A learned Single Judge of the High Court
"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 7 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."
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 8 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..."
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.
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.
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.
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..
Dhawan is not correct in contending that the writ petition filed by the
appellant had nothing to do with the escalation clause.
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.
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:
"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."
(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 12 was maintainable. Appellant was, therefore,
pursuing the said remedy bona fide and in good faith.
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
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."
question again came up for consideration before this Court in Union of India
and Others v. West Coast Paper Mills Ltd. and Another (III) 13 [(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.
"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."
may also notice that in India Electric Works Ltd. v. Jamesh Mantosh & Anr.
[1971 (2) SCR 397 : (1971) 1 SCC 24], this Court held:
14 "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."
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
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.
the reasons aforementioned, the impugned judgment cannot be sustained which is
set aside accordingly. The appeal is allowed with costs.
assessed at Rs. 50,000/-.