RASHTRIYA !SPAT NIGAM LTD. versus M/S. PRATHYUSHA RESOURCES & INFRA PRIVATE  LIMITED AND ANR.
[2016] 2 S.C.R. 80, Supreme Court of India, 2016
Outcome: Appeal(s) allowed (Granted)
Segment: Facts
A 
B 
[2016] 2 S.C.R. 80 
RASHTRIYA !SPAT NIGAM LTD. 
v. 
MIS. PRATHYUSHA RESOURCES & INFRA PRIVATE 
LIMITED AND ANR. 
(Civil Appeal No. 3699 of2006) 
FEBRUARY 12, 2016 
[PINAKI CHANDRA GHOSE AND R.K. AGRAWAL, JJ.] 
Limitation - Notice of Arbitration. - Whether beyond- limitation 
C - Held: The cause of action arises when the real dispute arises i.e. 
when one party asserts and the other party denies any right - Jn 
the facts of the present case, the date when the. cause of action 
arose, was not beyond limitation period - Hence the notice of 
arbitration was not barred by limitation ·-Appeal is dismissed. 
D 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3699 
of 2006 
From the Judgment and Order dated 16.12.2005 of the Division 
Bench of the High Court of Judicature for Andhra Pradesh at Hyderabad 
in C.M.A. No. 254 of2005. 
E 
Chander Uday Singh, Sr. Adv., Pratap Venugopal, Ms. Surekha 
Raman, Anuj Sarma, Ms. Niharika, (For M/s. K. J. John & Co.), Advs. 
with him for the Appellant. 
Mohan Parasaran, Sr. Adv., K. Raghavacharyulu, Sridhar Potaraju, 
Kai lash Pandey, Gaichang Pou Gangmei, Ranjit Singh,Arjun Singh, A. 
F 
Mukunda Rao Angara, Ms. Arunima Pal, Advs. with him for the 
Respondent. 
The Order of the Court was delivered by 
0 R ID E R 
G 
I . 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. 
H 
2. The appellant- Rashtriya lspatNigam Ltd., which is popularly 
80
RASHTRIYA !SPAT NIGAM LTD. v. MIS. PRATHYUSI-iA 
81 
RESOURCES & INFRA PVT. LTD. 
known as Yisakhapatnam Steel Plant, is a Government of India 
A 
Undertaking, inter alia, engaged in manufacture and sale of steel products 
and pig iron in the domestic and export markets. Respondent No. I 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. I being the successful bidder, 
was awarded the work order on 28.07.1992. An Agreement was entered 
into between the appellant and respondent No. I on 24.02. I 993 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 
B 
23 .10.1997. Issues arose as to the rate of escalation based on the base 
C 
year I 992 or 1994. Respondent No. I 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 
cakulating escalation. 
3. The Arbitration Tribunal (consisting of a retired Judge of the 
D 
High Court) decided the five issues framed in favour of the respondent/ 
claimant whereby the base year was adjudged as 1992, the bar ofl imitation 
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 oftheAct . E 
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 ofcontention in this appeal is the question 
ofreliefbeing barred by the law oflimitation. The appellant submit~ 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. l 0.1997 and hence notice for arbitration was beyond the period 
oflimitation. 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 
resp.ondent/claimant accrued, if any, is an imperfect right. 
F 
G 
H
82 
A 
B 
c 
D 
E 
F 
SUPREME COURT REPORTS 
[2016] 2 S.C.R. 
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/claiman.t, bills were raised in 1998 
vide letter dated 4.9.1998, which actually resulted into exchange ofletters 
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 tlie 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 appella.nt to 
initiate arbitration was not barred by the law oflimitation. 
7. Accordingly, the civil appeal is dismissed with no order as to 
costs. 
Kalpana K. Tripathy 
Appeal dismissed.