Neutral Citation No. - 2025:AHC:36157-DB Reserved Chief Justice's Court Case :- APPEAL UNDER SECTION 37 OF ARBITRATION AND CONCILIATION ACT 1996 No. - 297 of 2024 Appellant :- M/s Sureshwari Enterprises and another Respondent :- Purvanchal Vidyut Vitran Nigam Ltd and 2 others Counsel for Appellant :- Akashi Agrawal,Rahul Agarwal Counsel for Respondent :- Udit Chandra Hon'ble Arun Bhansali,Chief Justice Hon'ble Vikas Budhwar,J. (Per: Arun Bhansali, CJ) 1. This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (‘the Act’) is directed against judgement dated 15.2.2024 passed by the Commercial Court, Varanasi whereby the application filed by the appellants under Section 34 of the Act has been dismissed. 2. The appellants entered into an agreement dated 08.01.2016 with the respondents for supply of polycarbonate plastic metering seal against an office order. Under the said agreement, the appellants were to supply 3,20,000 pieces of polycarbonate plastic metering seal with ex-work rate at Rs.12.20, freight & insurance Rs.1.00 and taxes extra. Per piece cost came to be Rs.14.97. 3. In terms of the agreement, the prices were firm and firm in all respect. Whereafter, another order dated 31.1.2017 for a supply of another batch 60,000 pieces under the same quality and specification keeping old agreement the basis for such order was placed whereby the per unit price was kept Rs.14.97. The time schedule of supply was kept till 02.03.2017 and in case the appellants could not deliver such goods within such time frame then 0.5% penalty was to be levied by the respondents per week subject to a maximum of 10%. All the terms and conditions of original purchase order dated 8.1.2016 were maintained. 4. The respondents floated another tender for same material but with different specification which tender was opened on 4.2.2017 and as the rate received was Rs.12.95 per piece in the said tender, a letter dated 27.03.2017 was issued seeking amendment in the quoted rates on the pretext of new tender rates. 5. The appellants objected to the same on the ground that the rates were firm. The appellants could not supply the additional quantity as per the time frame and offered to supply the same after paying penalty as per the agreement, which was accepted by the respondents wherein the goods were supplied in May, 2017 instead of 02.03.2017. However, the respondents made payment based on the rate of the new tender i.e. instead of 14.97 per piece at Rs.12.95 per piece. 6. The claim was made by the appellants and the Arbitrator by his award dated 16.07.2023, inter-alia came to the conclusion that the claim raised was barred by limitation and consequently, dismissed the claim. Feeling aggrieved, application under Section 34 of the Act was filed, wherein the Commercial Court came to the conclusion that the appellants failed to indicate as to on what date cause of action arose and as it has received the payment, there was no substance in the application and consequently, dismissed the same. 7. Learned counsel for the appellants made vehement submissions that the Commercial Court has failed to consider the facts in right perspective and a wholly cursory finding has been recorded without taking into consideration the fact of the case and the law involved. 8. It was emphasized that the cause of action, in the present case arose on issuance of communication dated 27.03.2017 by which, the reduction in price of the goods was communicated. 9. It was also emphasized that the appellants were entitled to the benefit of directions given by Hon’ble Supreme Court for exclusion of the Covid period in Suo Motu Writ Petition (C) No. 3 of 2020 whereby the period from 15.03.2020 till 28.02.2022 was to be excluded while computing the period of limitation and prior to that arbitral proceedings were commenced by the appellants, which resulted in appointment of Arbitrator by this Court on 30.8.2022 and therefore, it cannot be said that the claim made was barred by limitation. 2 10. It was further emphasized that the Arbitrator and the Commercial Court failed to take into consideration the fact that the rate of Rs.12.95 which pertained to EAV-163/16-17 was in relation to goods with different specification and therefore, the same could not be made basis for reducing the rate of the goods supplied by the appellants for which the rate as per EAV-56/15-16 was Rs.14.97 per piece. However, none of the aspects have been considered by the Commercial Court and only on account of fact that payment as per the reduced rate was received by the appellants, the Commercial Court has observed that there was no dispute at all which determination is factually incorrect and therefore, the judgement impugned deserves to be quashed and set aside. 11. Learned counsel appearing for respondents made submissions that the Arbitrator and the Commercial Court were justified in coming to the conclusion that the claim of the appellants was barred by limitation and that on merit there was no substance. 12. It was submitted that as the cause of action in the present case arose on 02.03.2017 when the appellants missed the schedule of delivery of goods pursuant to the order granted, and the limitation therefore, had expired on 01.03.2020 and in terms of the order of Hon’ble Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020 whereby the period from 15.03.2020 till 28.02.2020 was excluded prior to which the claim had already become barred by limitation, therefore, the judgement impugned does not call for any interference. 13. Learned counsel for the respondents attempted to rely on Article 13 of the Limitation Act for emphasizing that the claim was barred by limitation. It was submitted that as the appellants have also questioned the imposition of penalty, the limitation, as sought to be projected, would have no application. It was prayed that the appeal be dismissed. 14. We have considered the submissions made by counsel for the parties and perused the material available on record. 3 15. Undisputed facts which emerge are that the appellants were given an order for supply of 3,20,000 pieces of polycarbonate plastic metering seal @ Rs. 14.97 per piece, qua the said order additional quantity of 60,000 pieces was added at the same rate of Rs.14.97 per piece by order dated 31.01.2017 and delivery was to be effected up to 02.03.2017. On 27.03.2017, a communication was issued by the respondents pertaining to reduction/revision in prices indicating the same at Rs.12.95 per piece instead of 14.97 per piece based on EAV No. 163/16-17 i.e. a subsequent purchase order. The appellants completed the supply in the month of May, 2017 and accepted the payment @ Rs.12.95 per piece and then raised the dispute after the security deposit was returned to them in the year 2019. 16. The Arbitrator, who was appointed by this Court, inter-alia came to the conclusion that as the claim was raised after five years, the same was barred by limitation. No reason for coming to the said conclusion was indicated by the Arbitrator i.e. the date when cause of action arose/the arbitral proceedings were commenced by the appellants and just an off-the- cuff observation was made. 17. Similarly, the Commercial Court also did not deal with the said aspect and only indicated that the claim did not indicate the date when cause of action arose. The mere fact that the claim made before the Arbitrator was deficient in not mentioning the date on which the cause of action arose, the same by itself cannot be a reason to come to a conclusion that the claim made was barred by limitation inasmuch the material was available on record for determination of the said aspect. 18. The appellants claimed that cause of action arose on 27.03.2017 whereas the respondents claimed that cause of action arose on 02.03.2017. The said date is significant as in case it is found that the cause of action arose on date 02.03.2017 when the appellants missed the last date for delivery of goods, the reliance placed on the exclusion granted by Hon’ble Supreme Court in Suo Motu case would not come to the aid of the appellants. However, if the cause of action arose on 27.03.2017, by excluding the said period, cause of the appellants would be within limitation. 4 19. The cause of action implies a right to sue and the same is dependent on a bundle of facts, however, the action, which hurts the plaintiff, essentially gives rise to cause of action. 20. In the present case, the communication dated 27.03.2017 by which the rate of the goods was reduced from Rs.14.97 per piece to Rs.12.95 per piece, was the only cause for the appellants to sue as the said communication only resulted in giving rise to any grievance to the appellants. 21. So far as the missing schedule for supply of the goods i.e. 02.03.2017 is concerned, the same by itself did not give any cause to the appellants as it had agreed to the imposition of penalty at 0.5% per month for the delayed supply of goods and therefore, the said date 02.03.2017 as claimed by the respondents giving cause of action has no relevance. 22. So far as the Article 13 of the Limitation Act relied by counsel for the respondents is concerned, the same has been noticed for rejection only. Article 13 pertains to a suit for balance of money advanced in payment of goods to be delivered. The said Article and the nature of suit, pertains to filing of the suit by the purchaser and not the seller, whereas, in the present case, the claim is by appellants, who are sellers. 23. In view of the above fact situation, apparently with the aid of the exclusion as ordered by Hon’ble Supreme Court in Suo Motu Case (Supra) and the fact that petition seeking appointment of Arbitrator was allowed by this Court on 30.08.2022 i.e. the commencement of arbitral proceedings in terms of Section 22 of the Act took place well before 28.02.2022, it cannot be said that the claim was barred by limitation. 24. So far as the decision by the Commercial Court on merits of the dispute is concerned, the Commercial Court has dealt with the matter in a wholly cursory manner without even noticing the contention raised except for quoting the entire application under Section 34 of the Act. 25. In view thereof, the aspect, pertaining to the merits of the dispute, as decided by the Arbitral Tribunal, needs to be appropriately determined by the Commercial Court. 5 26. Consequently, the appeal is allowed. The judgement dated 15.02.2024 passed by the Commercial Court in Arbitration Case No. 12 of 2023 is quashed and set aside and the matter is remanded back to the Commercial Court, Varanasi for hearing and deciding the application under Section 34 of the Act afresh on the aspect other than limitation, which stands decided in the present appeal. 27. It is expected of the Commercial Court, Varanasi to decide the matter with utmost expedition. Order Date :- 12/03/25 nd (Vikas Budhwar, J.) (Arun Bhansali, CJ) 6 Digitally signed by :- NISITH DEY High Court of Judicature at Allahabad