What was the key limitation question?

Whether Article 36 (2 years) or Article 120 (6 years) of the Limitation Act, 1908 governed the claim for flood damage caused by a government bundh.

When does the Article 36 period start?

From the date the government failed to pay compensation for the loss, not from the date of constructing the bundh.

Did the Court find negligence?

Yes. Government negligence in design/response led to flooding; citizens should not bear injury from such actions.

What relief was granted?

Damages were ordered with interest between 6–12% for the relevant periods of litigation.

What about strict vs absolute vs fault liability?

The Court said these concepts cannot be mixed up when deciding negligence; each has its own field and test.

Jay Lakshmi Salt Works (P) Ltd v. State of Gujarat

1994 SCC (4) 1 • Supreme Court of India • Limitation & Government Negligence

Supreme Court 1994 Reclamation Bundh Flooding 1994 SCC (4) 1 Torts • Limitation ~7 min read

PRIMARY_KEYWORDS: Article 36 vs 120; Limitation Act 1908; government negligence SECONDARY_KEYWORDS: reclamation bundh; flood damage; compensation with interest

AUTHOR_NAME: Gulzar Hashmi LOCATION: India PUBLISH_DATE: 31 Oct 2025 Slug: jay-lakshmi-salt-works-p-ltd-v-state-of-gujarat

Quick Summary

The Supreme Court held that the government’s negligence in a coastal reclamation bundh led to flooding and loss to the factory. For limitation, Article 36 applies, but the 2-year period starts when compensation is refused or not paid, not from the date of construction. Damages with interest (6–12%) were awarded.

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Issues

Which article governs limitation—Article 36 (2 years) or Article 120 (6 years) of the Limitation Act, 1908?
From what date should limitation be computed in negligence claims against the State for flood damage caused by public works?

Rules

Government duty of care: The State must act with reasonable care in public projects. Citizens should not suffer injury due to State action or omission.

Article 36 (Limitation Act, 1908): The 2-year period is computed from the injury-linked date such as the date of damage, refusal/non-payment of compensation, or other operative event—not from merely starting/finishing the bundh.

Facts (Timeline)

Timeline visual for Jay Lakshmi Salt Works case

1954–55: Saurashtra started a reclamation project; a sea bundh was completed to stop saltwater ingress.

July 4–5, 1956: First strong monsoon altered flow; the factory of Jay Lakshmi Salt Works was flooded and badly damaged.

Warnings ignored: Despite alerts about faulty design, corrective steps were not taken by the government.

Loss assessed: Damage was valued at ₹1,58,735; compensation was not paid.

Lower courts: Trial court called it an “Act of God” and time-barred; High Court found negligence but dismissed as barred under Article 36 (2 years).

Arguments

Appellant (Factory)

Bundh was negligently designed/maintained; warnings were ignored.
Limitation should run from refusal/non-payment of compensation, not construction.
Citizens should not bear losses caused by State works.

Respondent (State)

Flooding was an Act of God; no actionable negligence.
Suit was barred by Article 36; limitation expired.
Strict/absolute liability should not be imported.

Judgment

Appeal allowed: Trial and High Court decisions were set aside; State’s negligence established.
Compensation: Government directed to pay damages with 6–12% interest for relevant litigation periods.
Limitation holding: Article 36 applies, but time starts from refusal/non-payment of compensation (or other injury-linked dates), not from bundh initiation/completion.
Liability doctrines: Strict, absolute, and fault liability are distinct; do not mix while judging negligence.
Access to justice: Common citizens should not be burdened with prohibitive fees for pursuing rightful remedies.

Ratio (Legal Principle)

For negligence claims against the State, Article 36 governs. The start of limitation aligns with the actionable failure—like non-payment of compensation—so that justice is not defeated by technicality.

Why It Matters

Prevents unfair limitation bars where government delays or refuses payment.
Clarifies that liability doctrines must be applied correctly and separately.
Affirms State accountability for negligent public works.

Key Takeaways

Article 36 applies; clock starts from refusal/non-payment or injury-linked date.
State negligence proved for bundh-caused flooding and loss.
Damages + 6–12% interest awarded; citizens must not bear State-caused injury.

Mnemonic + 3-Step Hook

Mnemonic: “BUNDH = Begin Using New Date for Harm”

Begin count from refusal/non-payment, not construction.
Using Article 36 for negligence.
Harm to citizens must be compensated with interest.

IRAC Outline

Issue: Which limitation article applies and when does time start for a negligence claim against the State?

Rule: Article 36 applies; compute from refusal/non-payment or injury-linked date.

Application: Damage followed faulty bundh; government did not compensate despite assessment; counting from construction would defeat Article 36’s purpose.

Conclusion: Suit within time on proper start date; negligence established; damages with interest granted.

Glossary

Article 36 (Limitation): Two-year period for compensation for acts causing injury—time runs from injury-linked dates like refusal to pay.
Article 120 (Limitation): Residual six-year period (not applied here given the specific claim type).
Reclamation Bundh: An embankment to control sea ingress; faulty design can cause flooding inland.