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.

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

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