In Brief
A contractor claimed recovery of additional payments for extra works and cost escalation after receiving final payment from the Tamil Nadu Electricity Board. The High Court dismissed the suit as barred by limitation, calculating the three-year limit from the date of final payment. The Supreme Court held that the cause of action arose when the defendant finally rejected the plaintiff's additional claims, not from the initial payment date. The suit filed three years after that rejection was therefore timely. The Court also reversed the High Court's denial of escalation charges, holding that the contractual "firm rates" clause could not penalize the plaintiff for delays caused by the defendant, and awarded 50% escalation corresponding to the defendant's share of responsibility for the contract delays."
The lawyer headnote and full judgment text are available to registered users.