Statutory purchasing scheme and delayed-payment interest: payment liability upheld, but enhanced interest applied only prospectively.

A statutory preferential purchasing scheme was construed as a whole, and contractual labels of "principal" and "agent" could not override the substance of the payment obligation. On that construction, the Corporation was liable to pay the supplier under the scheme, and the State of Assam was not a necessary party because payments were routed through the Corporation. The later interest statute applied only prospectively, so it did not govern transactions completed before its commencement; interest on earlier supplies was limited to the ordinary civil rate, while post-commencement supplies attracted the statutory regime. The supplier succeeded on liability, but interest was modified accordingly.

---

---

Issues: (i) Whether, on a proper construction of the Assam Preferential Stores Purchase Act, 1989, the marketing support scheme and the supply orders, the Corporation was liable to pay the supplier the price of the goods and the State of Assam was a necessary party. (ii) Whether the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 applied to transactions concluded before its commencement and governed the rate of interest recoverable.

Issue (i): Whether, on a proper construction of the Assam Preferential Stores Purchase Act, 1989, the marketing support scheme and the supply orders, the Corporation was liable to pay the supplier the price of the goods and the State of Assam was a necessary party.

Analysis: The statutory scheme conferred a preferential purchasing mechanism for small scale industries and required the Corporation to collect 90% advance from the indenting departments and release it to the supplier on supply. The agreement and supply orders had to be read with the Act, the scheme and the official memorandum, and the labels of "principal" and "agent" could not prevail over the substance of the transaction. The Corporation was not a mere conduit, but the statutory channel through which payment was to move, and no waiver of the supplier's statutory entitlement was shown. Since the purchasing departments routed all payments through the Corporation, the State of Assam was not a necessary party.

Conclusion: The Corporation was liable to the supplier under the statutory scheme, and the State of Assam was not a necessary party.

Issue (ii): Whether the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 applied to transactions concluded before its commencement and governed the rate of interest recoverable.

Analysis: The 1993 Act created liability for delayed payment from the appointed day and operated prospectively. Transactions completed before the Act came into force did not attract its enhanced statutory interest, though transactions after commencement did. For the earlier transactions, interest could be granted only at the applicable ordinary rate under the Code of Civil Procedure, while the later transactions attracted compound interest under the Act.

Conclusion: The Act did not apply to pre-commencement transactions, and the decree required modification on interest accordingly.

Final Conclusion: The supplier succeeded on the question of liability and non-joinder, but the appellant obtained partial relief by confining the statutory interest regime to post-commencement transactions and limiting interest on earlier supplies to ordinary civil interest.

Ratio Decidendi: A statutory purchasing scheme must be construed as a whole, and contractual labels cannot defeat the substantive statutory obligation to pay; a later interest statute applies only prospectively unless the legislature clearly provides otherwise.

---