JAY LAXMI SALT WORKS (P) LTD. versus THE STATE OF GUJARAT

Citation: [1994] 3 S.C.R. 866 · Decided: 04-05-1994 · Supreme Court of India · Bench: KULDIP SINGH, R.M. SAHAI

Judgment (excerpt)

A 
B 
JAY LAXMI SALT WORKS (P) LTD. 
v. 
THE STATE OF GUJARAT 
MAY 4, 1994 
(KULDIP SINGH AND R.M. SABAJ, JJ.j 
Limitation Act, 1908 (as it stood prior to 1963) :Articles 36 and 
120-Reclamation bund/t-Erection of by Govemment-f'tood due to mon-
soon-Nearby factory flooded-Claim for damages-Independent assessment 
C by Government-Non-payment of even the compensation assessed by Govern-
ment-Filing of suit-Whether suit ba"ed by limitation under Alticle 36 or is 
covered under Article 12o-Held : suit covered under Article 120-Strict 
liability-Rule in Rylands v. FletcheHleld: not modified by Supreme Court 
in State of Punjab v. Modem Cultivators. 
D 
In 1954, the then State of Saurashtra made a plan for reclamation 
of vast area of land from saltish water of sea by erecting a reclamation 
bundh. This work was completed in the year 1955. The appellant-factory, 
which was located nearby, which was requesting the authorities either to 
abandon the bundh or to change the location of the weirs so as not to face 
E 
the factory. But before it could suceed in. its attempts, the 1956 mansoon 
arrived and on the night between the 4th and 5th July, 1956 flood water 
filtered to the premises of the factory breaking even the protective bundh 
made by the appellant on the border of its factory. 
After the flood receded, the appellant approached the authorities for 
F 
redress and claimed damages of approximately rupees four lakh. At the 
instance of the Government, the Chief Engineer submitted his report and 
an Official Committee was appointed which found that the appellant 
suffered a loss of Rs. 1,58,735. Since this amount was not paid, appellant 
filed a suit for damages against the State Government and pleaded that 
G there was no negligence either in the construction of the bcndh or in the 
action of the officers and that the suit was barred by time. The Trial Court 
dismissed the suit as it did not find any negligence as the damage was an 
act of God. It also found that the suit was barred by time. 
In appeal to the High Court, one of the Judges in the Division Bench 
H held that the act of planning and construction of the bundh was done in a 
866 
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JAYLAXMI SALT WORKS LID. v. STATEOFGUJARAT 
867 
negligent manner and so the damage caused to the appellant was due to A 
the negligence. He set aside the finding of the Trial Court that the damage 
suffered by the appellant was due to an act of God. However, the Judge 
dismissed the suit as barred by time, as it could have been filed within two 
years from the date the cause of action arose under Article 36 of the 
Limitation Act, 1908. The other Judge agreed on questions of fact, but B 
differed on applicability of Article 36, as according to him Article 120 
applied and the suit could have been instituted within six years from the 
.. 
date the appellant suffered the damage . 
In view of the difference of opinion among the Judges of the Division 
Bench, the matter was referred to a third Judge, who held that Article 36 c 
of the Limitation Act, 1908 was applicable to the suit and so it was barred 
by limitation, and that the rule of strict liability in Rylands v. Fletcher, 
[(1868) LR 3(330)] has not in terms been modified by the Supreme Court 
in State of Punjab v. Mis Modem Cultivators, AIR (1965) SC 17. Hence this 
appeal. 
D 
Allowing the appeal, this Court 
HELD : 1. In between strict liability and fault liability there may be 
numerous circumstances in which one may be entitled to sue for damages. 
And it may be partly one or the other or may be both. In a welfare society 
construction of dam or bundh for the sake of community is essential E 
function and use of land or accumulation of water for the benefit of society 
cannot be non-natural user. But that cannot absolve the State from its 
duty of being responsible and result in damage, loss or injury. What is 
fundamental is injury and not the manner in which it has been caused. 
'Strict liability', 'absolute liability', .'fault liability', am: neighbour F 
proxmimity', are all refinements and development of law by English courts 
for the benefit of society and the common man. Once the occasion for loss 
or damage is failure of duty, general or specific, the cause of action under 
tort arises. It may be due to negligence, nuisance, trespass, inevitable 
mistake etc. It may be even otherwise. In a developed or developing society 
the concept of duty keeps on changing and may extend to even such G 
matters. They may ind

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