O.P KHANDELWAL vs STEEL AUTHORITY OF INDIA
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on: 28.08.2024
Judgment Pronounced on: 24.09.2024
+ RFA(COMM) 253/2024
O.P KHANDELWAL …..Appellant
Through: Mr Anupam Srivastava and Mr Vipul
Sharma, Advs.
versus
STEEL AUTHORITY OF INDIA …..Respondent
Through: Mr Sharat Kapoor, Mr Shubh Kapoor
and Ms Bhavya Garg, Advs.
CORAM:
HON’BLE MR. JUSTICE RAJIV SHAKDHER
HON’BLE MR. JUSTICE AMIT BANSAL
[Physical Hearing/Hybrid Hearing (as per request)]
AMIT BANSAL, J.
1. The present appeal has been filed by the plaintiff/appellant impugning the judgment dated 4th March, 2024 passed by the District Judge (Commercial), South East, Saket District Courts, Delhi [hereinafter Commercial Court]. Vide the impugned judgment, the suit [CS(Comm)172/2021] filed by the appellant against the respondent/defendant seeking recovery of a sum of Rs. 51,03,760/- was dismissed with costs, on the ground that the suit was time barred.
2. Brief facts that led to the filing of the present appeal are set out below:
2.1. The appellant is the proprietor of M/s Khandelwal Iron Store, which is engaged in the trading of raw iron and steel. The respondent, Steel Authority of India Limited (SAIL) is a Public Sector Undertaking, which is engaged in the business of steel production.
2.2. The parties entered into a Memorandum of Understanding dated 25th April, 2011 [hereinafter MoU], as per which the appellant booked 38,600 metric tonnes of cold rolled coils/sheets with an intention to purchase the same from the respondent. The MoU was for a period of one year from 1st April, 2011 till 31st March, 2012.
2.3. As per the respondents Order Booking Policy [hereinafter the Policy], the respondent provided consistency incentive/benefit to its customers, who purchased a minimum of five percent of the total booked annual quantity every month, during the subsistence of the MoU.
2.4. As per the Policy, in case a customer failed to purchase goods worth the required minimum amount in any one month, the respondent could condone the same and grant the consistency incentive. Further, if in another month, there was a failure on behalf of the respondent to supply the required goods, the respondent could also condone the same for the purpose of granting the consistency incentive.
2.5. Admittedly, the appellant was not granted any consistency incentive for the term of the MoU by the respondent.
2.6. Subsequently, the appellant came to know that an amendment was made to the Policy through Internal Guidelines dated 20th April, 2011 [hereinafter Internal Guidelines], which changed the terms for payment of consistency incentive. The said Internal Guidelines were not available in the public domain.
2.7. The appellant filed an application under the Right to Information Act, 2005, (RTI Act) dated 3rd December, 2014, requesting the details of the Policy with regard to the consistency incentive and whether any amendment was made to the said Policy. Via Reply dated 30th December, 2014, the Public Information Officer (PIO) of the respondent confirmed that there was an amendment to the Policy of the respondent. However, the PIO did not supply a copy of the said amendment in view of Section 8(1)(d) of the RTI Act.
2.8. The appellant preferred an appeal before the Appellate Authority, which was dismissed via order dated 21st January, 2015.
2.9. The appellant filed a second appeal before the Central Information Commission (CIC) impugning the order dated 21st January, 2015 passed by the Appellate Authority. The CIC allowed the said appeal vide order dated 27th April, 2016 and directed the respondent to supply a copy of the Internal Guidelines, which amended the Policy.
2.10. Instead of complying with the order passed by the CIC, the respondent filed a writ petition [W.P.(C) No.6510/2016] before a Single Judge of this Court, challenging the order of the CIC.
2.11. On account of the respondents non-compliance of the order of the CIC, the appellant filed a complaint under Section 18 of the RTI Act against the respondent. In the complaint proceedings, notice was issued to the respondent by the CIC on 30th December, 2019.
2.12. In the meanwhile, the appellant received an envelope from the respondent on 23rd January, 2020, which contained the Internal Guidelines as well as the amended Policy.
2.13. In view of the aforesaid amended Policy, the appellant issued a legal notice dated 13th July, 2020 to the respondent, seeking payment of the amount due qua the consistency incentive, along with interest. However, the respondent failed to make any payments in respect of the same.
3. On 15th March, 2021, the appellant filed the suit for recovery against the respondent claiming the due consistency incentive.
4. The suit was contested on behalf of the respondent by filing a written statement, in which various objections with regard to limitation as well as jurisdiction were raised. Replication was filed on behalf of the appellant.
5. Subsequently, on the basis of the pleadings, the Commercial Court framed the following issues in the suit, which are set out below:
(i) Whether the suit is within the period of limitation? Onus on parties.
(ii) Whether the Commercial Court has got no jurisdiction to entertain and proceed with the present suit? Onus on parties.
(iii) Whether the plaintiff is entitled to recovery of Rs .51,03,760 /-? OPP
(iv) Whether the plaintiff is entitled to any interest, if so at what rate? OPP
(v) Relief.
6. Out of the aforesaid issues, Issues No.1 and 2 were held to be legal issues and hence, the Commercial Court proceeded to decide the said issues as preliminary issues. While Issue No.2 relating to jurisdiction of the Commercial Court was decided in favour of the appellant, Issue No.1 relating to limitation was decided against the appellant. In view thereof, the suit was held to be time barred and hence, dismissed with cost of Rs.25,000.
7. While arriving at the aforesaid conclusion, the Commercial Court observed that:
(i) The appellant in paragraph 3 of the plaint has stated that the appellant wrote various letters to the respondent for releasing the dues qua the consistency incentive, however, none of the aforesaid letters were placed on record. Further, the appellant has not provided any explanation as to why it could not lift material in July, 2011.
(ii) As per Clause F of the MoU, the consistency incentive was payable within one month after completion of the MoU period i.e., 31st March, 2012. The appellant instead of taking any steps for recovery of the due amount, opted to obtain information in respect of the amended Policy and the Internal Guidelines via the RTI route and the first communication seeking such information was made only on 3rd December, 2014.
(iii) The relationship between the parties was governed by the terms of the MoU which contained a specific clause regarding the grant of consistency incentive within a period of one month. Therefore, the period of limitation would not be extended on account of the appellant seeking to obtain information under the RTI Act.
8. Counsel appearing on behalf of the appellant submits that the suit in question would be governed by Article 113 of the Limitation Act, 1963, which provides that limitation begins to run from the date when the right to sue last accrues. It is stated that the right to sue only accrued when the appellant gained actual knowledge of the contents of the Internal Guidelines that amended the Policy, i.e., on 23rd January, 2020. Reliance in this regard is placed on the judgment in Shakti Bhog Food Industries Ltd. v. The Central Bank of India, (2020) 17 SCC 260.
9. It is further submitted on behalf of the appellant that in the present case, the issue of limitation was a mixed question of law and fact and therefore, the Commercial Court could not have decided the same as a preliminary issue, without recording evidence.
10. Counsel appearing on behalf of the respondent has submitted that the appellant was duly made aware of the Policy of the respondent regarding payment of consistency incentive via the response dated 30th December, 2014, issued by the PIO of the respondent. It is further submitted that in respect of the conditions for grant of consistency incentive, the relevant provisions of the original MoU as well as the amending Internal Guidelines of the respondent are analogous in nature. Therefore, the period of limitation in the suit was triggered when the appellant received the response to its RTI query. Thus, the suit filed by the appellant in 2021 was hopelessly time barred.
11. We have heard the counsel for the parties and perused the material on record.
ANALYSIS AND FINDINGS
12. It is an admitted position that the initial Policy of the respondent with regard to payment of consistency incentive to the MoU customers for the financial year 2011-12 was amended by way of Internal Guidelines dated 20th April, 2011. It is also an admitted position that whereas the initial Policy was in the public domain on the website of the respondent, the Internal Guidelines amending the initial Policy were not available in the public domain. This position clearly emerges from a perusal of the response dated 30th December, 2014 issued by the respondent to the RTI application filed on behalf of the appellant. The relevant extracts from the appellants RTI application and their respective responses by the respondents PIO are set out below:
(a) What was the initial policy declared by Steel Authority of India Ltd. (SAIL) for Payment of Consistency Benefit to its MOU Customers of CR Coil/HR Coil for the financial year 2011-12 (from 1st April 2011 to 31st March 2012); a certified copy may please be provided.
Ans. Information is available in the Archive Section of public domain of SAIL website www.sail.co.in.
(b) Whether this was put in public domain on its website towards the end of March 2011?
Ans. Yes
(c) Whether subsequently any internal circular dated 20th April 2011 was issued amending the initial policy?
Ans. Yes
(d) If the answer to (c) above is “yes”, then a certified photo-copy of the internal circular dated 20th April 2011 may kindly be provided
Ans. Unable to provide the information as per Section 8(1)(d) of RTI Act 2005.
(e) What was the final amended policy of SAIL for payment of consistency benefit for its CR Coil / HR Coil Customers after giving effect to the internal circular dated 20th April 2011? Certified Copy may please be provided.
Ans. No such policies by way of final amended policy was issued by SAIL.
(f) Whether this final amended policy was put in public domain on its (SAIL’s) website?
Ans. As mentioned at point (e), no final amended policy was issued by SAIL.
(g) Names of CR Coil/HR Coil customers to whom the payment of consistency benefit was made by SAIL for the year 2011-12 on successful completion of their MOUs alongwith the amounts paid to such customers by way of consistency benefit. A list, duly certified, may be provided.
Ans. Unable to provide the information as per Sections 11(1) & 8(1)(d) of RTI Act 2005.
[Emphasis is Ours]
13. It is the stand of the appellant that he was not aware of the contents of the Internal Guidelines dated 20th April, 2011 amending the initial Policy. However, since the appellant suspected that the Internal Guidelines could have had a bearing on the claim of the appellant, the appellant via the said RTI application had sought a copy of the Internal Guidelines. Since the respondent did not provide the Internal Guidelines to the appellant, the appellant took recourse of the appellate remedies under the RTI Act and ultimately succeeded in the proceedings before the CIC.
14. The CIC vide its order dated 27th April, 2016, held that any amendment to the initial Policy becomes a part of the Policy and since the initial Policy was in the public domain, the respondent cannot claim that the Internal Guidelines amending that Policy would be commercially confidential.
15. Ultimately, the respondent supplied the Policy for the year 2011-12 along with the Internal Guidelines dated 20th April, 2011 to the appellant on 23rd January, 2020.
16. Clause F of the initial Policy, which provided for grant of consistency incentive, is set out below for ease of reference:
F Consistency Incentive:
Consistency incentive shall be offered at the rate of Rs.50/- per tonne subject to monthly lifting of minimum 5% of MoU booking quantity or at the rate of Rs.75/- per tonne subject to monthly lifting of minimum 6.5% of MoU booking quantity. Consistency Incentive will be payable subject to successful completion of MoU anytime during the year and shall be paid alongwith TOD at the end of the MoU period and normally within one month after completion of MoU period. Consistency Incentive shall be paid on actual quantity lifted limited to maximum 120% lifting of original/ enhanced MoU quantity.
In case of non-fulfillment of the condition of consistent lifting in any one month during the period of MoU on account of the customer due to valid reasons, SAIL may consider condonation of the same.
In addition, if in any other one month, the condition of consistent lifting is not fulfilled on account of SAIL’s inability to supply despite the customer having released the orders in time, SAIL may also consider condoning the same.
[Emphasis is Ours]
17. Clause 2 of the Internal Guidelines, which amended the aforementioned Clause F, is set out below:
2. If in any one month, the condition of consistent lifting cannot be fulfilled by the customer on account of SAIL’s inability to supply despite the customer having released the orders in time, RM-ICWF may condone the same. Further, in case of non-fulfillment of the condition of consistent lifting in any one month during the period of MoU on account of the customer due to valid reasons, the same may be condoned by RM-ICWF. Subsequently in case of non-fulfillment by the customer of the condition of consistent lifting in any other month (second) during the period of MoU on account of SAIL’s inability to supply despite the customer having released the orders in time, the same may be condoned by the respective EDS.
[Emphasis is Ours]
18. A comparison of the aforesaid two clauses would demonstrate that there is a material change that was brought up by the Internal Guidelines. The initial Policy gave the benefit of one month default each to the customer as well as the respondent. The Internal Guidelines, in addition to the aforesaid default benefits, also provided for an additional default benefit on account of the respondents inability to supply the material despite the customer having placed the order. Therefore, we are unable to agree with the submission of the respondent that the aforesaid two clauses are analogous in nature.
19. It is the case of the appellant that the appellant was not entitled to the consistency incentive under the initial Policy, but became entitled to the same as per the amending Internal Guidelines. In this regard, repeated assertions have been made by the appellant in the plaint [Reference may be made to paragraphs 3, 10 and 12 of the plaint].
20. In these circumstances, no fault can be found with the approach of the appellant in filing the suit for recovery only after obtaining a copy of the Internal Guidelines, which amended the initial Policy. In our view, the appellant could have filed the suit only on the basis of concrete knowledge of the terms of the Internal Guidelines and not on a speculative basis.
21. The appellant has correctly relied upon Article 113 of the Limitation Act, 1963 which has been set out below:
Description of suit
Period of limitation
Time from which period begins to run
113.
Any suit for which no period of limitation is provided elsewhere in this Schedule.
Three years
When the right to sue accrues.
22. The scope of Article 113 of the Limitation Act, 1963 has been considered by the Supreme Court in the judgment of Shakti Bhog Food Industries (supra). The relevant portions of the same are set out below:
17. The expression used in Article 113 of the 1963 Act is when the right to sue accrues, which is markedly different from the expression used in other Articles in First Division of the Schedule dealing with suits, which unambiguously refer to the happening of a specific event. Whereas, Article 113 being a residuary clause and which has been invoked by all three courts in this case, does not specify happening of particular event as such, but merely refers to the accrual of cause of action on the basis of which the right to sue would accrue.
18. Concededly, the expression used in Article 113 is distinct from the expressions used in other Articles in the First Division dealing with suits such as Article 58 (when the right to sue first accrues), Article 59 (when the facts entitling the plaintiff to have the instrument or decree cancelled or set aside or the contract rescinded first become known to him) and Article 104 (when the plaintiff is first refused the enjoyment of the right). The view taken by the trial court, which commended to the first appellate court and the High Court in the second appeal, would inevitably entail in reading the expression in Article 113 as when the right to sue (first) accrues. This would be rewriting of that provision and doing violence to the legislative intent. We must assume that Parliament was conscious of the distinction between the provisions referred to above and had advisedly used generic expression when the right to sue accrues in Article 113 of the 1963 Act. Inasmuch as, it would also cover cases falling under Section 22 of the 1963 Act, to wit, continuing breaches and torts.
23. The aforesaid view taken by the Supreme Court makes it clear that in a suit where Article 113 of the Limitation Act is invoked, the period of limitation would be calculated from the date on which the cause of action last arose, which in the present case would be on 23rd January, 2020, when the appellant was supplied the amending Internal Guidelines by the respondent.
24. It is argued on behalf of the respondent that the appellant has wrongly stated that the envelope supplied by the respondent to the appellant on 23rd January, 2020 contained the Internal Guidelines of the respondent. It is contended that the respondent only supplied the reply to the complaint made by the appellant before the CIC. Even if that be so, it would be a matter to be determined in a trial after the parties have led evidence.
25. In fact, while dismissing the suit of the appellant on the ground of limitation, the Commercial Court has proceeded to deliver findings on the merits of the case i.e., the appellant has not given cogent reasons for not lifting the requisite amount of material in the month of July, 2011 and it is within the discretion of the respondent to condone the same or not.
26. The Commercial Court has also proceeded to make an observation with regard to the fact that there was a delay of 31 months on the part of the appellant in filing the RTI application. However, the aforesaid delay would not be relevant for the purpose of deciding the issue of limitation involved in the present case.
27. In our considered view, the issue of limitation in the present case could not have been decided by the Commercial Court as a preliminary issue. The same could only have been decided after parties were given an opportunity to lead evidence.
28. In view of the discussion above, the present appeal is allowed. The findings in the impugned judgment cannot be sustained and are therefore, set aside. The matter is remanded back to the Commercial Court for deciding the suit on merits after giving the parties an opportunity to lead evidence.
29. The suit shall be listed before the Commercial Court on 8.10.2024.
30. All pending applications stand disposed of.
AMIT BANSAL
(JUDGE)
RAJIV SHAKDHER
(JUDGE)
SEPTEMBER 24, 2024
ds
RFA(COMM) 253/2024 Page 2 of 2