Jay Lakshmi Salt Works (P) ltd v. State of Gujarat, 1994 SCC (4) 1

JAY LAKSHMI SALT WORKS (P) LTD V. STATE OF GUJARAT

Whether the limitation period under Article 36 or Article 120 of Limitation Act, 1908 would be applicable?

Negligence while performing a duty is only to decide if the governmental actions have resulted in not compensating an individual for the losses caused. A common man should not have to bear the brunt of actions of the government which are in fact injurious.
The computation of limitation period for Article 36 of Limitation Act, 1908 would begin from the date when either malfeasance/misfeasance/date of damage/date of filing claim/rejecting the claim took place.

The State of Saurashtra in 1954 began a reclamation project that would stop saltwater from the sea into creeping into the land by introducing a reclamation bundh that was finished in 1955.
In 1956, the first monsoon spell changed the stream of water flow and the water ended up flooding the factory of Jay Lakshmi Salt Works Pvt Ltd which caused intense flooding between 4th and 5th July 1956.
In spite of the factory owner warning the government about the possible of flooding because of the faulty design of the bundh, the government failed to take any actions.
The factory was negatively impacted and suffered immense damage, and when assessed, the damage quantified to Rs 1,58,735 yet the government did not pay.
The trial court rejected the suit of the factory owner on the grounds that it was an Act of God and the suit being affected by limitation. The High Court however found the government guilty of negligence but rejected the suit since the limitation period of 2 years under Article 36 of the Limitation Act, 1908 was crossed.
The High Court itself was conflicted with respect to the limitation period of 2 years (Article 36) and 6 years (Article 120) coupled with whether or not the rule of strict liability will be applicable. The 3rd judge held that Article 36 would be applicable, thus rejecting the suit and rejected the applicability of strict liability.

The Supreme Court allowed the appeal of the factory owner and set aside the decisions passed by the trial court and high court. It also ordered the government to pay the damages along with interest between 6-12% for the time periods involved in the legal proceedings.
The Supreme Court recognized that the concepts of strict liability, absolute liability and fault liability cannot be clubbed together while determining the guilt of negligence.
The Supreme Court identified that the computation of limitation period cannot be done from the date of initiation/completion of the bundh construction since it would be inconsistent with the objective of Article 36 of Limitation Act, 1908.
The Supreme Court held that since the government failed to pay the compensation to the factory owner for the damage caused, the limitation period will be calculated for 2 years from that particular date otherwise it would lead to gross violation of justice.
The Supreme Court laid down that a common man should not be burdened to pay exorbitant court fees only because he was duly following the right to remedy in the state.