Holding

The period spent on the writ petition is excluded under Section 14 of the Limitation Act, 1963, and the suit is not barred by limitation.

Summary

Shakti Tubes Ltd., a contractor for the State of Bihar, entered into a contract for supplying black pipes that contained an escalation clause. Disputing the escalated price, the contractor filed a writ petition in 1994, which was partially admitted in 1995. After serving a notice under CPC s.80, it filed a money suit in June 1996. The trial court decreed in its favour, but the High Court set aside the decree, holding the suit barred by limitation. The Supreme Court examined whether the period spent pursuing the writ petition should be excluded from the limitation period under Section 14 of the Limitation Act, 1963. It held that the writ petition was bona‑fide, related to the same issue, and therefore the time spent on it must be excluded, making the suit timely. Consequently, the appeal was allowed and the High Court’s decision set aside.

Issues considered

Whether the period spent pursuing a writ petition should be excluded for computing the limitation period under Section 14 of the Limitation Act, 1963 in a civil suit.
Whether the writ petition was bona‑fide and related to the same matter as the suit.

Legislation cited

Arbitration and Conciliation Act, 1996s. 34
Code of Civil Procedures. 80
Limitation Act, 1963s. 14

Subjects

LimitationSection 14writ petitioncontract escalation clauseState contractcivil suitbona fidegood faithCPC 80money decree

Judgment

(2008] 17 S.C.R. 699

M/S. SHAKTI TUBES LTD. TR. DIRECTOR A
v.
\
,... STATE OF BIHAR & ORS.
(Civil Appeal No. 7315 of 2008)
DECEMBER 16, 2008
B
[S.8. SINHA AND CYRIAC JOSEPH, JJ.]

,..,..
~
Limitation Act, 1963 - s. 14 - Applicability of - Contract
between State and private Contractor --Dispute between
parties - Writ Petition by the Contractor against State- Petition c
partly admitted by High Court - Thereafter, contractor filing
suit against State seeking money decree - decreed by Trial
Court - In appeal, High Court setting aside the decree on the
ground that suit was barred by limitation - On appeal, held:
Suit was not barred by limitation - Time spent in the writ
D
proceedings to be excluded for computing limitation period
in terms of s. 14 because the writ proceedings were pursued
bona fide and in good faith.
Appellant-contractor entered into agreement with the
respondent-State for supply of pipes. Appellant, in terms
E
and conditions of the agreement, demanded escalated
rate of the pipes due to price rise of steel. As a dispute
arose in that regard, appellant filed a Writ Petition on
10.1.1994, alleging arbitrary refusal on the part of
respondent to pay the price of the steel in terms of
escalation clause. The petition was partly admitted on F
14.9.1995 on the question of payment of interest and
delayed payments and the same was not entertained in
respect of escalated price.
Appellant issued a notice u/s 80 CPC on 7.10.1995
and filed a suit on 25.6.1996 seeking money decree G
against the State. Suit was decreed rejecting the plea of
State that the suit was barred by limitation. Appeal against
the same was allowed by High Court holding the suit
barred by limitation. Hence, the present appeal.
699 H
700 SUPREME COURT REPORTS [2008] 17 S.C.R.

A The question for consideration, before this Court was
whether the period, spent on pursuing a writ petition
should be excluded for the purpose of computing period T
.'"'
of limitation in filing a suit in terms of s.14 of Limitation
Act, 1963.
B Allowing the appeal, the court
HELD: 1.1. The provisions of Section 14 of the
Limitation Act, 1963 were applicable to the facts of the
present case. Section 14(1) should be construed liberally.
Tt
Section 14 speaks of prosecution of the proceedings in
c court which, from defect of jurisdiction or other cause
a
of a like nature, is unable to entertain it. The words "other
cause of a like nature", must relate to the subject matter
of the issue. [Paras 21, 22 and 26] [708-E; 710-0]
Rameshwarlal vs. Municipal Council, Tonk and Ors.
D (1996) 6 SCC 100; Union of India and Ors. vs. West Coast
Paper Mills Ltd. and Anr. (Ill) (2004) 3 SCC 458 and India
Electric Works Ltd. vs.. Jamesh Mantosh and Anr. (1971) 2
SCR 397, relied on
Gulbarga University v. Mallikarjun S. Kodagali and Anr.
E (2008) 11 SCALE 791 referred to
1.2. 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 was maintainable. Appellant ~
.
was, therefore, pursuing_ the said remedy bona .fide and
F in good faith. [Para 21] [708-D]
1.3. It is not correct to say that the writ petition filed )"- '
by the appellant had nothing to do with the escalation
clause. In the writ petition, the entire contention of. the
appellant revolved around the arbitrary refusal on the part
G of respondent to pay the price of the steel in terms of the
escalation clause. Even the amount claimed in the writ
petition, 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. [Paras 18 and 20] [707-A-C]
H
SHAKTI TUBES LTD. TR. DIRECTOR v. STATE OF 701
BIHAR & ORS.

Case Law Reference: A
1996 (6) sec oo
1 Relied on Para 22
2004 (3) sec
458 Relied on Para 23
1911 (1) sec
24 Relied on Para 24
(2008) 11 SCALE 79 Referred to Para 25 B
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
7315 of 2008.

From the Judgment and final Order dated 03.10.2007 of
the High Court of Judicature at Patna in First Appeal No. 388 c
of 1997.
R.F. Nariman, Devashish Bharuka, Jaya Bharuka and
Hansa Bharuka for the Appellant.
Dr. Rajeev Dhawan and Gopal Singh for the Respondents.
The Judgment of the Court was delivered by D
S.S. 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 E
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. F
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 . G
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.
H
702 SUPREME COURT REPORTS [2008] 17 S.C.R.

A 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.
B 199.04.
)

5. On or about 18.03.1993, orders were placed for further
supply of 50000 meters.
6. It is also not in dispute that 900/o of the payment was to
be made at the time of making supply and the rest 10% of the
a
c consideration was· to be paid within 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
D 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
E per meter of pipe. As against this, '!le 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
F mentioned by us above.
We invite your attention to our letters dated 09.1 t92~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
G 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."
H
SHAKTI TUBES LTD. TR. DIRECTOR v. STATE OF 703
BIHAR & ORS. [S.8. SINHA, J.] •

The said letter was not responded to. A
8. Appellant filed a writ petition before the Patna High
f 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 B
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 c
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 D
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 E
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.
10. By an order dated 14.09.1995, a learned Single Judge
of the said Court, opined: F

-1' "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, G
the terms of the Small Scale and Ancillary Industrial
Undertakings Act, 1992 on payments made to him after
"'1--
some delays.
A counter affidavit has been filed in this case on
·" H
704 SUPREME COURT REPORTS [2008) 17 S.C.R.
•

A behalf of the Respondent Nos. 1 and 2 in which any liability
to make any payment to the petitioner is totally denied. In
"l
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
B 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 J
law and on its merits without being influenced by the fact
c 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 -
D prior to 03.04.1993, the date on which the Act came into t-
force. A question thus arises whether the petitioner can be
allowed interests on delayed payments by a writ court, in ~
view of these disputed facts.
However, I am inclined to admit this writ petition on
E 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
F 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
G Trial Judge held that the appellant was entitled to the benefit of
the escalation clause contained in the agreement between the
parties.
)r-
12. An appeal was preferred thereagainst. A learned
Single Judge of the High Court held:
H

:
SHAKTI TUBES LTD. TR. DIRECTOR v. STATE OF 705
BIHAR & ORS. [S.B. SINHA, J.]
"Therefore, I am of the view that the same escalation rate A
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 of the B
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,
c
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 .Rf. ,
steel. Thus, on the basis of the above discussion, I find and , D
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: E
"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 F
has placed reliance upon the decision reported in AIR (36)
-1,
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 G
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 wrong court in
""°t'
consequence of a bonafide mistake of law of defect of
. procedure and not in cases where the party has chosen
H
706 SUPREME COURT REPORTS [2008] 17 S.C.R.

A 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
8 difficulty in holding that the plaintiffs 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
c 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 writ petition filed by the plaintiff - appellant having
0 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 withir a period of
E three years thereafter.
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.
F 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
G 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
H
SHAKTI TUBES LTD. TR. DIRECTOR v. STATE OF 707
... BIHAR & ORS. [S.B. SINHA, J.]
period prescribed by the Limitation Act, 1963 .. A
18. Dr. Dhawan is not correct in contending that the writ
"' petition filed by the appellant had nothing to do with the
·escalation clause.
19. We are not unmindful of the fact that the plaintiff filed
three suits being Money Suit Nos. 97of1996, 153of1997 and B
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. c
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 D
averments whereof are as under:
-1- 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 E
at 190.48 pa_ise 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 F
II
.... ... 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." G
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 H
708 SUPREME COURT REPORTS [2008] 17 S.C.R.
...-
A (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 'f
instance or of appeal or revision, against the defendant
shall be excluded, where the proceeding relates to the
B 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 n'Ot in dispute that the writ remedy was resorted to by I
c 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 nourt 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 11,ot maintainable. It was no_t dismissed at the
-\.-
D threshold. In view of the fact that a part of the writ petition was·
admitted for he~ring, there cannot be any doubt whatsoever that
the same was maintainable. Appellant was, therefore, pursuing
the said remed¥ bona fide and in good faith. )r

22. Section 14 of the Limitation Act speaks of prosecution
E 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 Threei..Judge Bench of this Court had an occasion to .._
consider the same in Rameshwar/al v. Municipal Council,
F Tonk and Others [(1996) 6 sec
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
G 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
H -
:""
. SHAKTI JljBES LTD. TR. DIRECTOR v. STATE OF
BIHAR&-ORS. [S.B. SINHA, J.]

bona fide, needs to be excluded."
709

A

" 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 (Ill) [(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 B
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 c
•
'
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 D
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 E
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 F
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. G
v. Jamesh Mant6sh &Anr. [1971 (2) SCR 397: (1971) 1 SCC
-.;- 24], this Court held:
~
_"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 H

...
710 SUPREME COURT REPORTS [2008] 17 S.C.R.
~

A like nature" must be construed liberally. Some clue is
furnished with regard to the intention of the Legislature by ~
the Explanation Ill 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-
B · 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 Ill was added. An extended
meaning was thus given to these words. Strictly speaking f
--r
mis-joinder or non:..joinder of parti.es could hardly be
regarded as a defect of jurisdiction or something similar
c 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) "'
D 11 SCALE 79]
26. We, therefore, have no hesitation in holding that the )I.

provisions of Section 14 of the Limitation Act, 1963 were
applicable to the fact of the present case.
E 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/-.
K.KT Appeal allowed.
...'
r-