TaxTMI 
TaxTMI 
2010 (1) TMI 1223
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....st on Delayed Payments to Small Scale and Ancillary Undertakings Act, 1993 (hereinafter referred to as 'the Interest Act'). The facts of the case can be summarised as follows: 4.1. The appellant company is a Small Scale Industrial Undertaking for the purposes of the Interest Act. The Maharashtra State Electricity Board (in short 'MSEB') issued a Work Order dated 27th of March, 1995 in favour of Maharashtra Small Scale Industries Development Corporation (hereinafter referred to as 'the Corporation'). The order was for supply of pipeline, bends and fixtures to be used for laying a slurry pipeline at the Chandarpur Thermal Power Station. The Corporation, in their turn, issued a Supply Order dated 30th of March, 1995 in favour of the appellant-company. The work was completed and the bills were duly submitted by the appellant-company. However, there was a huge delay on the part of the Corporation in paying the said bills to the appellant company and no reasonable cause was shown. Resultantly, the appellant company demanded interest on delayed payment under the Interest Act by a letter dated 7th of December, 1999. The claim was allegedly denied by the Corporati....
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....e Division Bench of the High Court, by its order dated 17th of November, 2005 had set aside the judgment and order of the learned Single Judge and restored the Arbitration Petition for consideration of the issue whether Section 7 of the Interest Act was applicable in the instant case. The Learned Single Judge vide his judgment and Order dated 25th of January, 2006 held that an application made under Section 34 of the Arbitration Act is an 'appeal' for the purpose of Section 7 of the Interest Act. The learned Single Judge had taken into consideration the fact that the Interest Act was a beneficial piece of legislation. Since the term 'appeal' takes colour from its context, it must be given the widest meaning for the purposes of the case at hand. A learned Single Judge relied on a decision of this Court in the case of State of Gujarat v. Salimbhai Abdul Gaffar Shaikh [JT 2003 (7) SC 550 : 2003 (8) SCC 50] to understand the meaning of the word 'appeal' and held that the word appeal for the purposes of Section 7 of the Interest Act shall include an application filed under Section 34 of the Arbitration Act. The prerequisite to an appeal in form of deposit, henc....
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....t Act, 2006 (in short 'the Act of 2006') cannot be made applicable to the present case as the reference to arbitration was not in terms of Section 19 of the Act of 2006. At the time when the challenge of pre deposit under section 7 of the Interest Act was heard by the learned Single Judge of the High Court, the Act of 2006 was not in force. (6.) THE Division Bench of the High Court after considering various decisions cited by both the parties before us and some of the dictionaries dealing with the term 'appeal', held: "Applying these principles, in our opinion and considering the history of the Act and the Legislation which were in force when the Interest Act was enacted, it would be clear that the application to challenge the award under Section 34 apart from it not being a judicial proceedings or emanating from the court, cannot be considered as an appeal within the meaning of Section 7 of the Act." As regards the question, whether the respondents were buyers, and not suppliers, the High Court was of the opinion that the said issue would have to be decided when the challenge to the award under Section 34 will be heard and finally disposed of. In sum, the Hig....
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....rt 'the Code') against a decree or against an order under Section 4 of the Code. The learned counsel further argued that the word award' in Section 7 cannot be ignored, nor can it be rendered meaningless and hence an "appeal" within the meaning of the said section could lie from an arbitral award as well. The respondents, on the other hand, submit that when a statutory provision is clear and unambiguous, the Court is not empowered to read anything extraneous to the Statute into it. The words of the Statute shall be given effect to, irrespective of the consequences. (9.) THE contention of the appellant company that while interpreting a statutory provision, its context and the object behind the same cannot be lost view of, is no doubt, correct. At the same time, the contention of the respondents that when a term appearing in the Statute is clear and unambiguous, only the literal rule of interpretation will apply, must also be accepted. What then has to be seen is whether the term 'appeal' is one of clear and definite meaning. If it is so, that meaning shall be given effect to irrespective of the consequences of such construction. If, on the other hand, the me....
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....ders, not the judgment debtors, were made parties. Further, it was incorrectly stated that no decree was drawn up and the 'appeal' was purported to be from the order' of the Court below. It was contended that the application was not an appeal', but a merely abortive attempt to mean 'appeal' as not all necessary parties were made a party to it, and also because it did not imperil the whole decree. The Court held that: "any application by a party to an appellate Court, asking it to set aside or revise a decision of a subordinate court, is an "appeal" within the ordinary acceptation of the term, and that it is no less appeal because it is irregular or incompetent." Their Lordships, in that case, adopted the literal meaning of the term appeal' and held that it was not open for them to read into the Statute any qualification as to the character of the appeal or as to the parties to it. (12.) IN the case of Raja Kulkarni v. State of Bombay [AIR 1954 SCR 384], a similar question was raised in the context of INdustrial Tribunals (Appellate Tribunal) Act, 1950 which prohibited a workman from going on a strike during the pendency of an appeal. Relying on the dec....
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...., is an appeal within the ordinary acceptation of the term.... Similarly in Raja of Ramnad v. Kamid Rowthen and Ors. 53 I.A.74 a civil revision petition was considered to be an appropriate form of appeal from the judgment in a suit of small causes nature. A full bench of the Madras High Court in P.P.P. Chidambara Nadar v. C.P.A. Rama Nadar and Ors. A.I.R. 1937 Mad. 385 had to decide whether with reference to Article 182(2) of the Limitation Act, 1908 the term "appeal" was used in a restrictive sense so as to exclude revision petitions and the expression "appellate court" was to be confined to a court exercising appellate, as opposed to, revisional powers. After an exhaustive examination of the case law including the decisions of the Privy Council mentioned above the full bench expressed the view that Article 182(2) applied to civil revisions as well and not only to appeals in the narrow sense of that term as used in the Civil Procedure Code....[right of appeal] was one of entering a superior Court and invoking its aid and interposition to redress the error of the court below. Two things which were required to constitute appellate jurisdiction were the existence of the relation of s....
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....jurisdiction to reverse, confirm, annul or modify the decree or order of the forum appealed against and in the event of a remand the lower forum shall have to rehear the matter and comply with such directions as may accompany the order of remand." The High Court had considered this decision while delivering the impugned judgment and order. It is the contention of the learned counsel for the respondent- corporation, on the other hand, that Section 7 is applicable only when an appeal is filed from a decree or order, under which the entire matrix of facts and law could be re-agitated. Section 34(2) of the Arbitration Act enumerates the limited grounds of challenge under Section 34 and such a challenge is not an "appeal". (15.) ON a perusal of the plethora of decisions aforementioned, we are of the view that "appeal" is a term that carries a wide range of connotations with it and that appellate jurisdiction can be exercised in a variety of forms. It is not necessary that the exercise of appellate jurisdiction will always involve reagitation of entire matrix of facts and law. We have already seen in the case of Abhayankar (supra) that even an order passed by virtue of limited po....
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....e buyer to pay interest to the supplier 'notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force.' Thus, Interest Act is a special legislation as far as the liability to pay interest, or to make a deposit thereof, while challenging an award/decree/order granting interest. Section 6(1) empowers the supplier to whom payment is due, to recover the same by way of a suit or any other proceedings. Section 6(2), which was inserted by way of an amendment in 1998, states that any dispute can be resolved by reference to the Industries Facilitation Council who shall conduct arbitration or conciliation proceedings in accordance with the Arbitration Act. It may be noted that section 6(1) empowers the buyer to obtain the due payment by way of any proceedings. Thus the proceedings that the buyer can resort to, no doubt, includes arbitration as well. It is pertinent to note that as opposed to section 6(2), Section 6(1) does not state that in case the parties choose to resort to arbitration, the proceedings in pursuance thereof will be governed by Arbitration Act. Hence, the right context in which the meaning of t....
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....Defence of India Act, 1939 was an award and not a judgment, decree or order within the meaning of sections 109 and 110 of the Code of Civil Procedure, and that accordingly the appeal before the Court was incompetent. Thus, the question was whether an order made in an appeal under Section 19(1)(f) of Defence of India Act, 1939 will be a judgment, decree, or order to the effect that it is possible to file an appeal from such order under the appeal provisions of Code. The Court held that when the Court acts in the capacity of an arbitrator, as it does under the Section in question, the verdict rendered by it will not be a judgment, decree or order and hence an appeal will be incompetent under the provisions of Code. The High Court, while delivering the impugned judgment had taken this decision into consideration. While we are in respectful agreement with the decision, we have already stated that the word 'appeal' appearing in Section 7 of Interest Act need not be necessarily interpreted within the meaning of that word in CPC. (19.) IN its impugned judgment, the Division Bench of the High Court had held that if one considers the expression "appeal" in the context of the ex....
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....fore, we will be rendering the term 'award' a nullity, which we are not empowered to do. The requirement of pre-deposit of interest is introduced as a disincentive to prevent dilatory tactics employed by the buyers against whom the Small Scale Industry might have procured an award, just as in cases of a decree or order. Presumably, the legislative intent behind section 7 was to target buyers, who, only with the end of pushing off the ultimate event of payment to the small scale industry undertaking, institute challenges against the award/decree/order passed against them. Such buyers cannot be allowed to challenge arbitral awards indiscriminately, especially when the section requires pre-deposit of 75 % interest even when appeal is preferred against an award, as distinguished from an order or decree. (20.) IN Sri Paravathi Parameshwara Cables, K.M. Valasa, represented by its Managing Partner, K. Surapu Naidu and Ors. v. A.P. Transmission Corpn. Ltd. represented by Chairman and Managing Director and Anr. [2006 (5) ALT 647], a case decided by the High Court of Andhra Pradesh the identical question of law was raised. The Court held, relying on the definition of 'appeal....
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.... authority' in S. 7 will be rendered redundant. The terminology of the section indicates that it is intended to cover a wide range of judicial/non-judicial determinations and challenges instituted therefrom before Courts or any other authority empowered to entertain such challenge. 2) Section 37 (2) provides for appeals from arbitral tribunals. Thus it is not impossible to have appeals lying from arbitral tribunals to Courts. 3) Though practically unknown in India, there are two tier arbitration mechanisms known to other jurisdictions. These contemplate appeal from an arbitral award to yet another appellate arbitral tribunal. The arbitrator and the appellate arbitral tribunal do not constitute inferior and superior Courts, but a challenge instituted against the award passed by the former before the latter is treated as an 'appeal' nonetheless. 4) There are other legislations in which the term 'appeal' is used when Courts are not in the context of reference. For instance, under the Right to Information Act, 2005 an appeal lies from the order of the Central/State public information officer to a senior official of higher rank. These officials, no doubt, cannot be c....
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....y way of what is known as an exclusion agreement') the right to file certain applications to invoke the Court's indulgence in the matter is also taken away. Hence, it is not difficult to see that ordinarily, an application under section 34 is referred to as an appeal. The learned counsel for the Corporation contends that if an application under S. 34 is treated as an appeal, an appeal under S. 37 from the order disposing of such an application, then will be a second appeal, which is prohibited under Section 37(3) of the Arbitration Act. Section 37 (3) of the Arbitration Act reads: "No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court". (24.) A second appeal is prohibited from an order that is passed under S. 37. This bar operates with respect to the period post such appeal, and not prior to it. The Section prohibits a second appeal only from an order passed in appeal under that very section. An award may be challenged by an application under section 34, which may be treated as an appeal for the purposes of Interest Act, and an order can be made eith....
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.... Council itself or by any institution or centre providing alternate dispute resolution services to which a reference is made by the Council, shall be entertained by any court unless the appellant company (not being a supplier) has deposited with it seventy-five per cent of the amount in terms of the decree, award or, as the case may be, the other order in the manner directed by such court : Provided that pending disposal of the application to set aside the decree, award or order, the court shall order that such percentage of the amount deposited shall be paid to the supplier, as it considers reasonable under the circumstances of the case subject to such conditions as it deems necessary to impose." (25.) THIS provision, no doubt, requires the deposit to be made before an application under Section 34 of the Arbitration Act is filed. However, we are not inclined to read this provision of a subsequent legislation into the provision in question. While the learned counsel for the appellant company urged that the Legislature had used the terms 'appeal' and application' interchangeably, we are of the view that we cannot conclusively infer the same. Use of the term 'applic....