TaxTMI 
TaxTMI 
2006 (2) TMI 697
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....ild Steel Black Pipes. The defendant Chief Engineer, Minor Irrigation Department issued, notice inviting tenders for the supply of E.R.W. M.S. Black Pipes 100mm N.B. Light Class. The date of opening of the tenders was 21.3.1992. The plaintiff submitted its tender on 21.3.1992 for Supply of 11 lac metres of M.S. Black Pipes. Many other firms also submitted their tenders. All the tenders were opened and the tender of the plaintiff was accepted and after negotiation, the plaintiff offered to supply the pipes at the rate of Rs. 147.95P. per metre. The offer was accepted by the Chief Engineer vide his memo No. 3956 dated 16.7.1992 and by the same memo he also placed orders for the supply of pipes and directed to execute an agreement with the Executive Engineer, Investigation Division, Patna within 15 days of issue of the order. In the above letter it was clearly mentioned that 90% payment of the total value of the material supplied, would be made on receipt of the materials, and the balance would be paid after full verification of the same within one month of the receipt of the materials. 3. The Steel Authority of India Limited, in the meantime, increased price of H.R. coils on 19.5.....
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....f Rs. 8.56P per metre not paid so far comes to Rs. 38,13,480/- and compound interest with monthly rests payable thereon as per the above Act amounted to Rs. 27,83,839.00 at the rate of 26.25 % per annum calculated from 1.6.1993 till 15.6.1993 i.e. the date of filing of the money suit No. 97 of 1996. Thus, the total amount payable remained due with the department till 15.6.1996 became Rs. 65,97,319/- which the department refused to pay. 8. The plaintiff, in the meantime, had filed C.W.J.C. No. 274 of 1994 before the High Court. for payment of the sum of Rs. 38,13,480/- along with interest under the Act, but as, regarding the balance of escalated amount, controversy arose, the Court disposed of the matter with the observation that it was a civil dispute and the plaintiff might file a suit. The plaintiff hence, several notice under Section 80 of the Code of Civil Procedure on the defendants, but they failed to pay the dues. The plaintiff then filed the above Money Suit No. 97 of 1996. They claimed Rs. 38,13,480/- as the balance escalated amount at the rate of Rs. 8.56P per metre and interest thereon as per the Act. In Money Suit No. 97 of 1996 decree was passed in respect of the ba....
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....ning quantity of the materials by -31.12.1992 in clear breach of the contract. The plaintiff supplied the aforesaid materials by 30.4.1993. The defendants, however, on the request of the plaintiff, regularised the supply, in the interest of the work. 13. The further case of the defendants is that the department. of Minor Irrigation after examining the price escalation of the materials decided to fix the escalated rate at the rate of Rs. 190.48 per metre and the same was communicated to the plaintiff vide Chief Engineer's Letter No. 6287 dated 4.11.1992, The same rate was given to the other tenderers also. There was no provision in the agreement for giving inter est. The defendants have also paid the price of materials supplied at the above escalated price. The plaintiff also did not supply the materials on time. Therefore, there was no question of interest on any delayed payment. The escalated rate at Rs. 199.04P as calculated by the plaintiff is wrong. 14. It is also the case of the defendants that in C.W.J.C. No. 274 of 1994 the plaintiff had. two fold claims and as the defendants in the writ petition denied the claims, in respect of first claim, i.e. the liability to m....
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....as a writ petition C.W.J.C. No. 274 of 1994 was pending in the High Court, no order was passed on this issue in the suit. Then though, admittedly in the above writ petition No. 274 of 1994, the plaintiff respondents had claimed the balance escalated amount as well as the interest on delayed payment, it is also admitted that the first claim i.e. liability to make payment on escalated rate was rejected with permission to file a suit, and the writ with regard to the interest on delayed payment was admitted. The order of the High Court passed in C.W.J.C. No. 274 of 1994 in this regard, of course has not been filed by any party, but admittedly this order was passed prior to the filing of Money Suit No. 97 of 1996 and the judgment of Money Suit No. 97 of 1996 (Ext.5) shows, that the order was passed on 14.9.1995 and as per as the averment made in the written statement, which is not controverted, the writ was admitted on the limited question of payment of interest as some other writ petitions were also under consideration and it was further ordered therein that the application would be heard along with C.W.J.C. No. 2959 of 1994. The parties have not filed any order passed in C.W.J.C. No. ....
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....d counsel for the respondents that the suit was not barred by limitation. 25. Point No. (iii) :- It is an admitted position that the appellants had invited tenders for purchase of M.S. Black Pipes and the respondent had participated in it and the tender of the respondent was accepted and after negotiation between the parties, the respondent offered to supply the pipes at the rate of Rs. 174.95 P per metre and the Chief Engineer accepted the offer. Letter No. 3956 dated 16.7.1992 (Ext. 6) also shows that by that letter the Chief Engineer ordered to supply seven lakh metres of the pipe by 13.12.1992 and there was payment clause in that letter under which 90% of the value of the material was to be paid by the district authorities who were consignees of the goods on receipt of the materials and balance 10% was to be paid after full verification of the same within one month of the receipt of the materials. In the letter there is also a clause that in the event of variation in the total cost of steel as notified by the Steel Authority of India Limited, adjustment in the price would be made and revised price would be applicable to "the store tendered for inspection after 30 days from t....
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....l has been filed. It appears from the judgment that the learned Subordinate Judge by the impugned judgment has allowed the prayer of the respondent with respect to interest at the rate of 24% (19% being interest charged by the Bank of India on Cash Credit Account in the year 1992 plus 5%) compounding at a monthly rests on the decretal amount of Rs. 38,13,400/- with effect from 1.6,1993 till realisation as per the provisions of the Act. 29. The question, hence, that arises for determination is whether the Act is applicable in this case and the learned Subordinate Judge was justified. in awarding interest on the delayed payment under the Act. 30. It is not denied that the respondent is a Small Scale Industrial Unit. The certificate (Ext. 3) also proves that M/S. Shakti Tubes Limited (respondent) is registered with the Directorate ,of North Bihar Industrial Area Development Authority for manufacturing ERW Steel Pipes and Tubes. 31. Sections 3, 4 and 5 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (the Act) reads as follows : - Section 3:-" Where any supplier supplies any goods or renders any service to any buyer, t....
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....nt of the value of material had to be made on receipt of the materials and the balance 10% after full verification of the materials within one month of the receipt of the materials. It is also admitted, as already mentioned, that the supply of the materials had been completed on 30.4.1993. Therefore, if the Act is applicable in this case, the respondent is entitled to interest with effect from 1.6.1993 at the rate mentioned in Sections 4 and 5 of the Act. 35. Learned counsel for the appellants, however, submitted that the Act is not applicable in this case and the respondent is not entitled to any interest therein. He contended that (1) there was no agreement between the parties with regard to payment of interest. (2) The Act came into force after execution of the agreement between the parties for supply of the materials. (3) The respondents were required to supply the materials by 31.12.2002 but: they failed to do so in breach of the terms of agreement and, therefore, are not entitled to any interest. 36. Learned counsel for the respondent, on the other hand submitted that in view of the non obstante clauses in Sections 4 & 5 of the Act, the respondent is entitled to interes....
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....that out of 71 suit transactions, serial Nos. 1 to 26 (referred to in the pen ultimate para of the trial court judgment) that is Supply Orders between 5.6.1991 and 28.7.1992, were prior to the date of 1993 Act coming into force. Only the transactions at serial Nos. 27 to 71 (i.e. supply orders between 22.10.1992 and 16.6.1993). will attract the provisions of the 1993 Act. 39. Therefore, according to the above decision, it is not the date of agreement or the date on which payment became due, which is material in determining whether the provisions of the Act would be attracted. The crucial date is the date, of supply order. In this case also it is admitted that the order to supply the pipes was placed by the appellants through Chief Engineer's letter No. 3956 dated 16.7.1992 which is prior to the coming into effect of the Act. Hence, in view of the above decision which is fully applicable in this case, it is obvious that the Act of 1993 would not be applicable in this case and the learned trial court was not justified in allowing interest in terms of the Act. 40. The above decision of the Apex Court, however, further shows that though there was no agreement for payment of i....