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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,

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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

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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.

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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

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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.

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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)