RASHTRIYA ISPAT NIGAM LTD. Vs. M/S. PRATHYUSHA RESOURCES & INFRA PRIVATE LIMITED & ANR.

Supreme Court of India (Division Bench (DB)- Two Judge)

Appeal (Civil), 3699 of 2006, Judgment Date: Feb 12, 2016

                                                                  REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 3699 OF 2006

RASHTRIYA ISPAT NIGAM LTD.                                      APPELLANT(S)

                                   VERSUS

M/S. PRATHYUSHA RESOURCES & INFRA
PRIVATE LIMITED AND ANR.                                       RESPONDENT(S)


                                O  R  D  E  R
1.    The present appeal is filed by the appellant challenging the  judgment
and order dated 16.12.2005 passed by the Division Bench of  the  High  Court
of Judicature for Andhra Pradesh  at  Hyderabad,  whereby  the  order  dated
6.7.2004, passed by the learned  District  Judge,  Vishakhapatnam,  was  set
aside and the arbitration award was confirmed.

2.    The appellant - Rashtriya Ispat Nigam Ltd., which is  popularly  known
as Visakhapatnam Steel Plant, is a Government of  India  Undertaking,  inter
alia, engaged in manufacture and sale of steel products and pig iron in  the
domestic and export markets. Respondent No.1 is a transporter,  stevedoring,
clearing & forwarding  agent  at  Visakhapatnam.  The  appellant  floated  a
tender vide Notification dated 31.03.1992 for  transportation  of  pig  iron
etc. from its Visakhapatnam Steel Plant  to  the  Visakhapatnam  Port  area.
Respondent No.1 being the successful bidder, was awarded the work  order  on
28.07.1992.  An  Agreement  was  entered  into  between  the  appellant  and
respondent No.1 on 24.02.1993 which was to expire on 31.03.1993.  But  owing
to circumstances, the work was extended several times and the  contract  was
finally completed on 23.10.1997. Issues arose as to the rate  of  escalation
based on the base year 1992 or 1994. Respondent No.1  submitted  final  bill
having three annexures out of which first two were  admitted,  however,  the
appellant rejected the third one which was as to deciding the base year  for
calculating escalation.

3.    The Arbitration Tribunal (consisting of a retired Judge  of  the  High
Court) decided the five issues framed in favour of  the  respondent/claimant
whereby the base year was adjudged  as  1992,  the  bar  of  limitation  was
negated  and  the  calculations  made  by  the  Claimant  were  upheld.  The
appellant challenged the said award under  Section  34  of  the  Arbitration
Act, 1996 before the Ld. District Court which set aside  the  award  as  the
relief was barred by limitation. Upon appeal under Section 37 of the Act  by
the respondent/claimant, the High Court set aside the order of the  District
Judge and upheld the award of the Arbitrator.

4.    The appellant/ Employer herein have challenged the said Order  of  the
High Court. The bone of contention in this appeal is the question of  relief
being barred by the law of limitation. The appellant submits that  the  High
Court has arrived at a wrong conclusion  by  invoking  Article  137  of  the
Limitation Act, 1963, and since the contract  was  in  the  nature  of  work
contract,  Article 18 would apply. This Article would thereby  provide  that
the right to sue accrued when the contract  was  completed  i.e.  23.10.1997
and hence notice for arbitration was beyond the period  of  limitation.  The
respondent/claimant also argued that the  dispute  as  to  determination  of
base year for calculating escalation arose vide letter dated  15.7.1996  and
hence  the  notice  for  arbitration  was  issued  beyond  the   period   of
limitation.  Either  ways  the  cause   of   action   in   favour   of   the
respondent/claimant accrued, if any, is an imperfect right.
5.    We shall now consider the settled law on the subject. This Court in  a
catena of judgments has laid down that the cause of action arises  when  the
real dispute arises i.e. when one party asserts and the other  party  denies
any right. The cause of action in the present  case  is  the  claim  of  the
respondent/claimant to the determination of base year for  the  purposes  of
escalation and  the  calculation  made  thereon,  and  the  refusal  of  the
appellant to pay as per the calculations.

6.    We find that the view taken by the High Court is correct  as  to  when
the real dispute  arose  between  the  parties  to  be  adjudicated  by  the
Arbitrator. It is nobody's  case  that  the  contract  came  to  an  end  on
23.10.1997, but the difference on determination of base year first arose  in
the letter dated 15.7.1996. The said letter is already controverted  as  the
service of the same was seriously contested before in Arbitration.  However,
the said letter was there even before completion of the work  and  prior  to
that the respondent/claimant had reserved his right  to  claim  money  later
since the contract  was  still  subsisting  then.  In  light  of  the  above
reservation by the respondent/claimant,  bills  were  raised  in  1998  vide
letter dated 4.9.1998, which actually  resulted  into  exchange  of  letters
which formed the base of dispute between the  parties.  It  is  an  admitted
fact that the bills were not finalized as could be  seen  from  the  letters
dated 7.2.2000 and 9.5.2000. Therefore, we find that  the  findings  of  the
learned Arbitrator and concurrently affirmed by the High Court  are  correct
on the point that the cause of action arose on  or  after  4.9.1998.  Hence,
the said letter by the respondent/claimant  to  the  appellant  to  initiate
arbitration was not barred by the law of limitation.
7.    Accordingly, the civil appeal is dismissed with no order as to costs.



                                     ….....................................J
                                                      (Pinaki Chandra Ghose)



                                       ……..................................J
                                                              (R.K. Agrawal)
New Delhi;
February 12, 2016.


ITEM NO.1C               COURT NO.10               SECTION XIIA
(For judgment)
               S U P R E M E  C O U R T  O F  I N D I A
                       RECORD OF PROCEEDINGS

                       Civil Appeal  No(s).  3699/2006

RASHTRIYA ISPAT NIGAM LTD.                                  Appellant(s)

                                VERSUS

M/S. PRATHYUSHA RESOURCES & INFRA PRIVATE LIMITED
 & ANR.                                                   Respondent(s)


Date : 12/02/2016      This appeal was called on for pronouncement of
            judgment today.

For Appellant(s) Mr. Pratap Venugopal, Adv.
                       Ms. Surekha Raman, Adv.
                       Mr. Anuj Sarma, Adv.
                       Ms. Niharika, Adv.
                       For M/s. K. J. John & Co.

For Respondent(s)      Mr. Mohan Parasaran, Sr. Adv.
                       Mr. K. Raghavacharyulu, Adv.
                       Mr. Sridhar Potaraju, AOR
                       Mr. Kailash Pandey, Adv.
                       Mr. Gaichangpou Gangmei, Adv.
                       Mr. Arjun Singh, Adv.
                       Mr. Mukunda Rao Angara, Adv.
                       Mr. Ranjeet Singh, Adv.

                                            *****

      Hon'ble Mr. Justice Pinaki Chandra  Ghose  pronounced  the  reportable
judgment of the Bench comprising His Lordship and Hon'ble Mr.  Justice  R.K.
Agrawal.
      The appeal is dismissed in terms of the signed reportable judgment.


      (R.NATARAJAN)                                   (MADHU NARULA)
       Court Master                                    Court Master
            (Signed reportable judgment is placed on the file)