The appellant awarded the work order for transportation to Respondent on 28th July, 1992 and an agreement was entered into between the appellant and respondent No. 1 on 24th February, 1993 which was to expire on 31st Mar

For the purposes of analysis of the problem in hand, it is important to take note of the following decision of the Hon'ble Supreme Court of India in Rashtriya Ispat Nigam Ltd. vs. M/S. Prathyusha Resources & Infra, Civil Appeal No. 3699 of 2006 , wherein Supreme Court considered settled law on the cause of action and observed that the cause of action arises when the real dispute arises i.e. when one party asserts and the other party denied any right. In the said case, Supreme Court noted that the cause of action was 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. When disputes arose, the Arbitration Tribunal 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. Thereafter, 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 of the Arbitration Act, 1996 by the respondent/claimant, the High Court set aside the order of the District Judge and upheld the award of the Arbitrator. In the aforesaid case, Appellant submitted 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 which provided 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. Hon'ble Supreme Court held that the view taken by the High Court was correct as to when the real dispute arose between the parties to be adjudicated by the Arbitrator. In this regard, Supreme Court noted that the difference on determination of base year first arose in the letter dated 15.7.1996 and the said letter was 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 right to claim money later since the contract was still subsisting then. Supreme Court also noted that "In light of the above reservation by the respondent/claimant, bills were raised in 1998 vide letter dated 4.9.1998, which actually resulted into exchange of letters which formed the base of dispute between the parties." Finally, Hon'ble Supreme Court observed that the findings of the learned Arbitrator and concurrently affirmed by the High Court were 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. Accordingly, claims of the Respondent including the issue relating to the determination of the base year for calculating escalation can be considered in the light of aforesaid Supreme Court decision in Rashtriya Ispat Nigam Ltd case.