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2019 (1) TMI 1906
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....otice the pleadings in C.A. Nos. 8442-8443 of 2016 for deciding the common questions of law involved in all these appeals. The facts and pleadings in other appeals shall also be briefly noticed. C.A. Nos. 8442-8443 of 2016 (M/s. Shanti Conductors (P) Ltd. and Anr. v. Assam State Electricity Board and Ors.) 2. The Appellant is a Private Limited Company which has been registered as a Small Scale Industrial Unit for manufacturing electrical conductors and/or wires at Kokrajhar, Assam. On 31.03.1992, the Respondent-Assam State Electricity Board placed an order for supply of Aluminium Electrical Conductors from the Appellants- M/s. Shanti Conductors Pvt. Ltd. for a total consideration of Rs. 1.22 crores. The supplies were to be made between June and December, 1992. On 13.05.1992, another order was placed by the Electricity Board to M/s. Shanti Conductors for the supply of various types of conductors for a total consideration of Rs. 32.49 lacs. The supplies of the aforesaid goods were to be made between January and February, 1993. On 23.09.1992, the President of India promulgated an ordinance, namely, the Interest on Delayed Payment to Small Scale Ancillary Industrial Undertakin....
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....at Act, 1993 is also applicable to contracts entered into prior to 23.09.1992. It held that interest under the Act would be calculated from 23.09.1992 till the payment is made to the supplier. The Board filed an appeal against the judgment of the Full Bench dated 05.03.2002 in this Court being C.A. No. 2351 of 2003 (Assam State Electricity Board and Ors. v. Shanti Conductors Private Limited and Anr.. The appeal filed by the Board was heard along with another C.A. No. 2348 of 2003 (Purbanchal Cables and Conductors Private Limited v. Assam State Electricity Board and Anr.) A two-Judge Bench of this Court decided both the appeals vide common judgment dated 10.07.2012 which judgment is reported in (2012) 7 SCC 462 (Purbanchal Cables and Conductors Private Limited v. Assam State Electricity Board and Anr.) The two-Judge Bench relying on earlier judgments of this Court held that suit for recovery of interest alone under the Act, 1993 is maintainable. It further held that the Act, 1993 has no retrospective application. It further held that the supplier has an accrued right to claim a higher rate of interest in terms of the Act only with regard to sale agreements entered after the date of ....
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....e special leave petition. He states that he will move the High Court in review stating that it has erred in recording that "all the bills were paid and cleared earlier to the commencement of the Act." The special leave petition is dismissed as withdrawn accordingly. 6. The Appellant filed Review Application No. 75 of 2001. The High Court vide its order dated 19.03.2013 partly allowed the review petition to the extent that the Appellant was held to be entitled to interest at the rate of 9% per annum for the period of delayed payment. The Appellant aggrieved by the said judgment has filed C.A. No. 8445 of 2016. C.A. No. 8448 of 2016(Assam State Electricity Board and Anr. v. Trusses and Towers (P) Ltd.) 7. The above appeal has been filed by the Board against the order in Review Petition No. 75 of 2001 filed by M/s. Trusses & Towers (P) Ltd. by which order the High Court has partly allowed the review petition to the extent that the Appellant was held to be entitled to interest at the rate of 9% p.a. as noted above. The Board aggrieved by the grant of interest of 9% p.a. has come up in this appeal. C.A. No. 8450 of 2016(M/s. Brahmaputra Concrete Pipe Industries v. Assam S....
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..... The Act was enacted in order to provide a boost to the small scale and ancillary industries, which were suffering as a result of irregular and delayed payments. A perusal of the statement of objects and reasons of the Act, the relevant portion of which has been extracted supra, makes it clear that the small scale industries were suffering as a result of lack of working capital, which was affecting the economic health of such industries. Prompt payment on the outstanding money, it was felt, that was the need of the hour. In this context, the provisions of Sections 3, 4, 5 of the Act, assume significance. More so in light of the fact that in the definition Clause of Section 2 of the Act, the legislature has not defined the words 'transaction' or 'supply order'. It chose to only give definition to the terms, inter alia, 'appointed day', 'buyer' and 'supplier'. Since the focus of the Act is on delayed payment, which is in consonance with the definition of the term 'appointed day' as well, there is no need to consider when the 'transaction' was entered into or the date of the 'supply order'. Section 3 of the Act clearly p....
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....ioned therein, renders the said judgment sub silentio on this question. The contention advanced by Mr. Vijay Hansaria, learned senior Counsel appearing on behalf of the Electricity Board in this regard cannot be accepted. 12. It was further observed that this Court in Purbanchal Cables and Conductors (P) Ltd. did not consider the important aspect of the matter as to whether provisions of the Act are retroactive or not. Issue No. 1 and 2 were answered in favour of the Appellant. Other issues were also answered in favour of the Appellant. In paragraphs 56 and 57, the appeals were allowed by Justice Gowda in the following manner: 56. For the reasons stated supra, I answer the points framed in these appeals in favour of the Appellants as stated above. The appeals are accordingly allowed. All pending applications are disposed of. 57. In the Civil Appeals arising out of SLP (C) Nos. 9924-9925 of 2013, vide order dated 17.02.2015, the Appellants M/s. Shanti Conductors were directed to pay an amount of Rs. 38,70,000/- back to the Respondents. The Respondents shall refund the amount to the Appellants with 9% interest per annum within six weeks from the date of receipt o....
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....f the divergent opinion expressed by learned Judges consisting the Bench the matter has been placed before this three-Judge Bench. 15. Shri Ajit Kumar Sinha, leaned Senior Counsel for the Appellant in his submission referred to and relied on the opinion of Hon'ble Judge allowing the appeal. He submits that the Act, 1993 was enacted as beneficial legislation to protect the small scale industries. The Act, 1993 focused on supplies and the date of the agreement for supply has no relevance. The Act applies and protect the suppliers in the event supplies have been effected subsequent to Act, 1993. Learned Counsel submits that even if the orders for supply were issued prior to 23.09.1992 some of the supplies have been made after the Act. The provisions of the Act are applicable and the Appellant was clearly entitled for interest on delayed payment. He submits that the contrary view expressed by this Court in Purbanchal Cables and Conductors Private Limited judgment does not correctly interpret the provisions of the Act, 1993. He submits that what is relevant is amount due to the suppliers and in event the amount due to supplier is subsequent to Act, 1993 the liability to pay inter....
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....as not maintainable. 20. Shri Hansaria submits that judgments of this Court in Assam Small Scale Industries Development Corporation Ltd. and Ors. v. J.D. Pharmaceuticals and Anr. (2005) 13 SCC 19, Shakti Tubes Ltd. v. State of Bihar and Ors. (2009) 7 SCC 673, Modern Industries v. Steel Authority of India Limited, (2010) 5 SCC 44, as well as judgment of this Court in Purbanchal Cables and Conductors Private Limited (supra) having held that Act has no applicability with regard to contracts entered into prior to enforcement of Act, the said law which is a settled law for a quite long time need not be unsettled by this Court. In view of the judgment of this Court in Purbanchal Cables, the appeal of the Appellant has rightly been dismissed by the Gauhati High Court. 21. Replying the submission of Shri Patil, Shri Hansaria submits that when the SLP by this Court was dismissed on 06.08.2001 against the judgment of the High Court dated 05.04.2001 allowing the appeal of the Board, this Court having not granted further liberty it is not open for the Appellant to file the appeal against the impugned judgment deciding review petition. 22. Shri Hansaria further submits that the Board h....
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.... appeal of M/s. Shanti Conductors was also dismissed is binding between the parties i.e. M/s. Shanti Conductors and Assam Electricity Board and the Appellant cannot be allowed to question the said judgment in these appeals? (5) Whether the suit filed by the Appellants for recovery of only interest when admittedly entire principal amount was paid prior to filing of the suit can be said to be maintainable? (6) Whether appeal filed by M/s. Trusses and Towers Pvt. Ltd. challenging the review judgment dated 19.03.2003 cannot be entertained since no liberty was granted by this Court in SLP(C) No. 12217 of 2001 when the SLP filed against the main judgment of the High court dated 05.04.2001 was dismissed as withdrawn? (7) Whether the High court while considering the Review petition No. 75 of 2001 M/s. Trusses & Towers Pvt. Ltd. even after expressing that Act, 1993 is not applicable could have allowed 9% interest to the Plaintiff? 28. Before we consider the issues which have arisen in these appeals it is necessary to notice the provisions of the Act, 1993. In the Parliament, the Government of India made a policy statement on small scale industries. It was also ....
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....g shall exceed one hundred and twenty days from the day of acceptance or the day of deemed acceptance. Section 4. Date from which and rate at which interest is payable.- Where any buyer fails to make payment of the amount to the supplier, as required Under Section 3, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay interest to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at one and half time of prime Lending Rate charged by the State Bank of India. Explanation.- For the purposes of this section," Prime Lending Rate" means the Prime Lending Rate of the State Bank of India which is available to the best borrowers of the bank. Section 5. Liability of buyer to pay compound interest.- Notwithstanding anything contained in any agreement between a supplier and a buyer or in any law for the time being in force, the buyer shall be liable to pay compound interest (with monthly interests) at the rate mentioned in Section 4 on the amount due to the supplier. ....
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....d and payment on the other has to be after the enforcement of Act, 1993. Statutory provision of Section 3 further creates statutory liability to make payment on the agreed day in writing between the buyers and the supplier and if there is no agreement then before appointed day. The fact that agreement in writing between buyer and supplier for supply and payment is prior to the enforcement of the Act is neither relevant nor material, what is material is that supply and services had to be after the enforcement of the Act, only then the liability of payment shall accrue. 34. We have already noticed that the purpose and object of legislation was prompt payments of money by buyer which has been statutorily ensured in Act, 1993 by containing mandatory provisions of payment of interest. 35. Section 4 which deals with date from which and rate at which interest is payable. The liability to make payment of the amount to the supplier only arises when any buyer fails to make payment as required Under Section 3. 36. Section 4 further provides "notwithstanding anything contained in any agreement between the buyer and the supplier or any law for the time being in force", thus, even if th....
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....te of 1993 Act coming into force. Only the transactions at sl. No. 27 to 71 (that is supply orders between 22.10.1992 to 19.6.1993). will attract the provisions of the 1993 Act. 38. The 1993 Act, thus, will have no application in relation to the transactions entered into between June, 1991 and 23.9.1992. The Trial Court as also the High Court, therefore, committed a manifest error in directing payment of interest at the rate of 23% upto June, 1991 and 23.5% thereafter. 39. The word 'transaction' used in the above judgment has to include the supply, in the event word transaction is understood as supply there cannot be any quarrel with the proposition that Act will not apply with regard to supply made prior to the Act. 40. The next judgment of this Court is Shakti Tubes Ltd. v. State of Bihar and Ors. (2009) 7 SCC 673. In the said case, Shakti Tubes had filed a suit for payment of interest. In the above case, supply orders were placed by the State of Bihar on 16.07.1992, reliance on Act, 1993 was placed by the Appellant. It was also noticed in the said case that earlier supply order dated 16.07.1992 was materially altered and substituted by a fresh supply order....
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....ent case we find that there is no dispute with regard to the fact that the supply order was placed with the Respondents on 16.07.1992 for supply of the pipes which date is admittedly prior to the date on which this Act came into effect. 41. The Bench further referring to earlier judgment of this Court in Assam Small Scale Industries observed that the use of expression 'transaction' was only for supply order. In paragraph 21 following was laid down: 21. We have considered the aforesaid rival submissions. This Court in Assam Small Scale Industries case has finally set at rest the issue raised by stating that as to what is to be considered relevant is the date of supply order placed by the Respondents and when this Court used the expression "transaction" it only meant a supply order. The Court made it explicitly clear in paragraph 37 of the judgment which we had already extracted above. In our considered opinion there is no ambiguity in the aforesaid judgment passed by this Court. The intent and the purpose of the Act, as made in paragraph 37 of the judgment, are quite clear and apparent. When this Court said "transaction" it meant initiation of the transaction i.e....
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....le only if it is for recovery of principal sum along with interest as per Sections 4 and 5 and not for interest alone? The answer has to be in negative. 46. We approve the view of Gauhati High Court in Assam State Electricity Board (2002) 2 GLR 550 that word 'together' in Section 6(1) would mean 'alongwith' or 'as well as'. Seen thus, the action Under Section 6(2) could be maintained for recovery of principal amount and interest or only for interest where liability is admitted or has been disputed in respect of goods supplied or services rendered. In our opinion, Under Section 6(2) action by way of reference to IFC cannot be restricted to a claim for recovery of interest due Under Sections 4 and 5 only in cases of an existing determined, settled or admitted liability. IFC has competence to determine the amount due for goods supplied or services rendered in cases where the liability is disputed by the buyer. Construction put upon Section 6(2) by learned senior Counsel for the buyer does not deserve to be accepted as it will not be in conformity with the intention, object and purpose of 1993 Act. Preamble to 1993 Act, upon which strong reliance has be....
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....arly made out in the language of the statute. Only a procedural or declaratory law operates retrospectively as there is no vested right in procedure. 49. The Court further held that Act, 1993 shall be applicable only for sale agreements after the date of the commencement of the Act and not any time prior. Following was laid down in paragraph 52: 52. In the absence of any express legislative intendment of the retrospective application of the Act, and by virtue of the fact that the Act creates a new liability of a high rate of interest against the buyer, the Act cannot be construed to have retrospective effect. Since the Act envisages that the supplier has an accrued right to claim a higher rate of interest in terms of the Act, the same can only be said to accrue for sale agreements after the date of commencement of the Act i.e. 23-9-1992 and not any time prior. 50. The Bench also expressly rejected the submission of the learned Counsel appearing for the supplier that the earlier judgments of this Court in Assam Small Scale Industries and Shakti Tubes need consideration. On question of limitation of the suit no final opinion was expressed. The appeals were ultimately d....
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....tection on the pretext that agreement in his case was entered prior to enforcement of the Act. When the date of agreement is not referred as material or incidence for fastening the liability, by no judicial interpretation the said date can be treated as a date for fastening of the liability. The Act, 1993 being beneficial legislation enacted to protect small scale industries and statutorily ensure by mandatory provision for payment of interest on the outstanding money, accepting the interpretation as put by learned Counsel for the Board that the day of agreement has to be subsequent to the enforcement of the Act, the entire beneficial protection of the Act shall be defeated. The existence of statutory liability depends on the statutory factors as enumerated in Section 3 and Section 4 of the Act, 1993. Factor for liability to make payment Under Section 3 being the supplier supplies any goods or renders services to the buyer, the liability of buyer cannot be denied on the ground that agreement entered between the parties for supply was prior to Act, 1993. To hold that liability of buyer for payment shall arise only when agreement for supply was entered subsequent to enforcement of th....
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....ation, imposes a new duty, or attaches a new disability, in respect to transaction or considerations already past. 21. In Advanced Law Lexicon by P. Ramanath Aiyar (3rd Edition, 2005) the expressions "retroactive" and "retrospective" have been defined as follows at page 4124 Vol. 4) Retroactive-Acting backward; affecting what is past. (Of a statute, ruling, etc.) extending in scope or effect to matters that have occurred in the past. - Also termed retrospective. (Black, 7th Edn. 1999) 'Retroactivity' is a term often used by lawyers but rarely defined. On analysis it soon becomes apparent, moreover, that it is used to cover at least two distinct concepts. The first, which may be called 'true retroactivity', consists in the application of a new Rule of law to an act or transaction which was completed before the Rule was promulgated. The second concept, which will be referred to as 'quasi-retroactivity', occurs when a new Rule of law is applied to an act or transaction in the process of completion.... The foundation of these concepts is the distinction between completed and pending transactions.... (T.C. Hartley, The Foundati....
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....d before us. 59. From the pleadings on the record it transpires that two supply orders dated 31.03.1992 and 13.05.1992 was issued to the Appellant for supply of conductors. In the Plaint, the Appellant had given the details of date of supply orders and date when supply was made on different stores. The supplies made by the Appellant were both before enforcement of the Act i.e. 23.09.1992 and after the enforcement of the Act. 60. In view of the discussions as made above only the supplies received after 23.09.1992 are relevant for purposes of 1993 Act. As per pleadings on the record entire supplies by the Appellant was completed on 04.10.1993. Details of the payment has also been given in the plaint which indicate that last payment dated 05.03.1994 was received. Paragraph 24 of the plaint gives the details of cause of action for the suit which states that cause of action for the suit arose on 31.03.1992 and thereafter on different date last date being mentioned in paragraph 24 was 05.10.1993 and each date subsequent thereafter. With regard to limitation there is specific pleading in paragraph 21 of the plaint which is to the following effect: 21. That the transaction b....
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.... considered or decided the question of limitation. 63. Against the judgment dated 05.03.2002 of Full Bench of High Court answering the reference, the Assam State Electricity Board had filed appeal in this Court being Civil Appeal No. 2351 of 2003. This Court decided Civil Appeal No. 2351 of 2003 along with Civil Appeal No. 2348 of 2003 on 10.07.2002 which judgment is Purbanchal Cables and Conductors (P) Ltd. (Supra). This Court in paragraph 31 has noticed the submission of learned Counsel for the State Electricity Board that suits filed by both the suppliers were barred by time but this Court did not express any opinion. Paragraph 31 of the judgment is to the following effect: 31. Though the learned Senior Counsel would state that the suits filed by both the suppliers in the present batch of appeals were barred by limitation. We do not intend to express our view on the issue, since some of the appeals filed by the suppliers are still pending before the High Court. Any observation that we may make would certainly affect the interest of both the parties since that issue is yet to be decided by the High Court. 64. After the judgment of this Court dated 10.07.2012 when t....
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....much as Section 14(2) of the Limitation Act, 1963, provides that in computing the period of limitation for any suit, the time during which the applicant had been prosecuting with due diligence another civil proceeding, the said period has to be excluded. Under Section 2(a) of the Limitation Act, 1963, points out Mr. Sinha, an applicant includes:(I) Petitioner; and (II) a person from or through whom an applicant derives his right to apply. Thus, even assuming that the Limitation Act, 1963, applies, then also, the period during which the writ petition and the writ appeal of the said Association was pending on behalf of, amongst others, M/s. Shanti Conductors, the said period, contends Mr. Sinha, deserves to be excluded under the provisions of Section 14(2) of the Limitation Act and, thus, the suit was, reiterates Mr. Sinha, within time. 26. Above all, points out Mr. Sinha, learned Senior Counsel, that the Appellants, in the present appeal, have not challenged the learned trial Court's decision on the issue of limitation. In this regard, taking the Court through the memorandum of appeal, which the Appellants have preferred, Mr. Sinha, Learned Senior Counsel, has pointed o....
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....il and override any inconsistent law. For example, when Section 4 requires payment of interest at particular rate on delayed payment the said rate shall have overriding effect to rate of interest provided in any other law. 69. Further, as per Section 7 no appeal can be filed against the decree or other order passed regarding recovery of amount due without depositing 75 % of the amount. Thus in a suit if a decree is passed on amount due of interest appeal has to be entertained after depositing 75% or as per any other order passed by the Court. Normal right of appeal shall be overridden by virtue of Section 7 of 1993 Act. The Trial Court fell in error in reading overriding effect given in Section 10 to the Limitation Act also. There is no provision in 1993 Act pertaining to limitation, the provision of Limitation Act pertaining to filing suit shall continue to operate there being nothing contrary or overriding under 1993 Act. Section 10 will operate only with regard to expressed provisions contained in 1993 Act which shall be given overriding effect but reading Section 10 to the effect that it shall override Limitation Act is not correct interpretation of Section 10 and Trial Cour....
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....e treated from that day only and thereafter suit could be filed within three years. 74. Article 113 as noted above provides for "time from which period begins as when the right to sue accrues". 1993 Act Section 4 creates statutory liability to pay interest from the day as mentioned in Section 4 the liability to pay is fastened on buyer. The amount become due as soon as liability to pay arises. Section 6 also uses the word "amount due from buyer". The amount due is amount which is liable to be paid by buyer Under Section 4. Thus the fact that last payment was made on 05.03.1994 cannot be treated as period for beginning of the limitation and on that ground it cannot be held that suit was within time. 75. Shri Sinha had made an alternative submission that Plaintiff was entitled for the benefit Under Section 14 of limitation Act. Since a W.P. No. giving rise to Civil Rule No. 1531 of 1993 on behalf of five main members of the Associations i.e. Assam Conductors Manufacture Association was filed in the High Court which on 06.09.1994 directed the Petitioner to move to Civil Court for realization of the dues of its member, hence the period during which the writ was pending has to be ....
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....lier for recovery of only interest is maintainable. Issue No. 6 80. The submission of the counsel to the board is that since against the judgment of Gauhati High Court dated 15.04.2001, S.L.P. No. 12217 of 2001 filed by M/s. Trusses & Towers was withdrawn without obtaining the liberty, Civil Appeal No. 8445 of 2016 is not maintainable challenging the Review Order and judgment dated 19.03.2003. In the Order passed by this Court on 06.08.2001, this Court had noticed the submission of the Appellant that Appellant shall move the High Court in review stating that it has committed error in recording that "all the bills were paid earlier to the commencement of this act". In the Review Petition, the review has been partly allowed by allowing interest @ 9% against which the appeal has been filed. A perusal of the Review judgment indicates that High Court has not returned any finding that all the bills were not paid earlier to the commencement of the Act. 81. A perusal of Division Bench judgment of High Court indicates that High Court proceed on the presumption that even if 1993 Act is not applicable the entitlement of the Plaintiff could be considered in equity. When the liberty to....
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....realization. The judgment and decree to that extent requires to be modified. It is directed accordingly. 84. High Court did not commit any error in awarding 9% interest to Plaintiff Respondent. We thus did not find any error in the judgment dated 19.03.2013 allowing partly the review application filed by the Plaintiff. Civil Appeal No. 8450 of 2016 85. Now, we come to Civil Appeal No. 8450 of 2016. The Appellant has filed Money Suit No. 32 of 1996 for recovery of a sum of Rs. 10,34,065.23 p. and Rs. 23,738.49 p. being the outstanding against the bills for supply made and amount of security deposited and amount of Rs. 10,10,326.74 p. being the amount of delayed interest. The suit was decreed by the learned Civil Judge (Senior Division) vide its judgment and order dated 30.09.2002 for recovery of Rs. 5,46,233.14 p. as on 18.12.93 from the date of enforcement of the Act, 1993 and future interest on the decretal amount @ 6% simple interest per annum with effect from 19.12.1993. Appeal was filed by the Respondent in the High Court being RFA No. 78 of 2003, which has been allowed on 12.02.2015 setting aside the decree for recovery of the amount and interest but maintaining the c....