TaxTMI 
TaxTMI 
2016 (8) TMI 1612
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....RFA No. 66 of 2000 and MC No. 3472 of 2012 respectively, by the Gauhati High Court at Guwahati. The facts of the case which are required to appreciate the rival legal contentions advanced on behalf of the parties are stated in brief as under: On 31.03.1992, the respondent-Assam State Electricity Board (hereinafter referred to as the "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. 4. On 23.09.1992, the President of India promulgated an ordinance, namely, the Interest on Delayed Payment to Small Scale Ancillary Industrial Undertakings Ordinance, 1992. Subsequently, on 02.04.1993, the Interest on Delayed Payment to Small Scale and Ancillary Industrial Undertakings Act, 1993 (in short the "Act") was en....
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....ng that a suit for interest alone could be filed. It further held that the Act is applicable to contracts entered into prior to 23.09.1992, i.e. the date on which the Act came into force. It was further held that the interest under the Act would be calculated from 23.09.1992 till the payment is made to the supplier. Having answered the reference in the above terms, the matter was sent back to the Division Bench for consideration of the appeal on merits. 8. Accordingly, the matter was placed before the Division Bench for its consideration in accordance with the decision of the Full Bench of the High Court in the reference. The Electricity Board contended before the Division Bench that this Court in the case of Purbanchal Cables & Conductors Pvt. Ltd. v. Assam State Electricity Board & Anr. [(2012) 7 SCC 462] has held that the Act is applicable only to the agreements entered into after 23.09.1992. Accordingly, in terms of the judgment of this Court in Purbanchal Cables & Conductors Pvt. Ltd. (supra), the Division Bench of the High Court vide judgment and order dated 20.11.2012 set aside the judgment of the Trial Court by allowing Regular First Appeal No. 66 of 2000. 9. Sim....
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....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 para 37 of the judgment which we have 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 para 37 of the judgment, are quite clear and apparent. When this Court said "transaction" it meant initiation of the transaction i.e. placing of the supply orders and not the completion of the transactions which would be completed only when the payment is made. Therefore, the submission made by the learned Senior Counsel appearing for the appellant-plaintiff fails. 22. Consequently, we hold that the supply order having been placed herein prior to the coming into force of the Act, any supply made pursuant to the said supply orders would be governed not by the provisions of the Act but by the provisions of Section 34 of the CPC." In the above case, it was held that an Act cannot be given retrospective effect. The learned senior counsel contend that what was however, not considered by this Court, is that though an Act may ....
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....52...... 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." It is contended that the term "sale agreement" is not defined in the Act and thus, cannot be a legal test for applicability of the Act. 14. It is further contended that if the term "sale agreement" is to be the legal test for the applicability of the Act, then the same would be inconsistent with the judgment of this Court in Assam Small Scale Industries Development Corporation Ltd. (supra) where the "sale agreement" was prior to the date of commencement of the Act yet the Court applied the "transaction" and "supply order" test and applied the provisions of the Act on such "transactions" and "supply orders" which were issued on or after the aforesaid date of commencement of the Act. If the "sale agreement" test as has been held in Purbanchal Cables & Conductors Pvt. Ltd. (supra) is applied, then the sellers in Assam Small Scale Industries Development Corporation Ltd. (supra) would not be entitled to higher rate of i....
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.... on the amount due to the supplier." Mr. Basava Prabhu Patil, learned senior counsel contends that from a reading of Section 2(b) of the Act, it becomes clear that "appointed day" means the day following immediately after the expiry of the period of thirty days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier. It is submitted that a careful reading of Section 2(b) along with Sections 3, 4 and 5 of the Act would show that a statutory right is conferred upon the suppliers for payment of interest on the delayed payments. Therefore, the provisions of the Act are retroactive in nature. The learned senior counsel further contends that the judgments of this Court sought to be relied upon by the learned senior counsel appearing on behalf of the Electricity Board have no application to the facts of the instant case, as in those cases two Judge Benches of this Court have not correctly examined the aforesaid statutory provisions of the Act while holding that the same is prospective in nature. 16. Mr. Ajit Kumar Sinha, learned senior counsel contends that the provisions of the Act are retroactive in nature and places relia....
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....racts concluded prior to coming into force of the Act is no longer res integra. This question is answered by this Court in Assam Small Scale Industries Development Corpn. Ltd. v. J.D. Pharmaceuticals as under: (SCC p. 36, paras 37-38) "37. We have held hereinbefore that clause 8 of the terms and conditions relates to the payments of balance 10%. It is not in dispute that the plaintiff had demanded both the principal amount as also the interest from the Corporation. Section 3 of the 1993 Act imposes a statutory liability upon the buyer to make payment for the supplies of any goods either on or before the agreed date or where there is no agreement before the appointed day. Only when payments are not made in terms of Section 3, Section 4 would apply. The 1993 Act came into effect from 23-9-1992 and will not apply to transactions which took place prior to that date. We find that out of the 71 suit transactions, Sl. Nos. 1 to 26 (referred to in the penultimate para of the trial court judgment), that is supply orders between 5-6-1991 to 28-7-1992, were prior to the date of the 1993 Act coming into force. Only the transactions at Sl. Nos. 27 to 71 (that is supply orders....
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....eld as barred by res judicata. In support of this contention, the learned senior counsel places strong reliance on the decision of this Court in Sushil Kumar Mehta v. Gobind Ram Bohra [(1990) 1 SCC 193], wherein it was held as under: ".........a pure question of a law unrelated to facts which are the basis or foundation of a right, cannot be deemed to be a matter in issue. The principle of res judicata is a facet of procedure but not of substantive law. The decision on an issue of law founded on fact in issue would operate asres judicata. But when the law has since the earlier decision had been altered by a competent authority or when the earlier decision declares a transaction to be valid despite prohibition by law it does not operate as res judicata. Thus a question of jurisdiction of a Court or of a procedure or a pure question of law unrelated to the right of the parties founded purely on question of fact in the previous suit is not res judicata in the subsequent suit. A question relating to jurisdiction of a Court or interpretation of provisions of a statute cannot be deemed to have been finally determined by an erroneous decision of a Court." The learned senior co....
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....s or Vehicles or price of Trees or growing Crops, for price of work done, for money lent under an agreement, for money lent without an agreement, for money received by the Defendants for Plaintiffs use, for interest on monies lent, for amounts due under Bills of Exchange, Promissory Notes etc. This will show that Article 25 refers to only the debt of interest, while Article 19 refers to the debt of loan. Since there are various types of debts provided under the schedule with different periods of limitation and different dates from which the limitation begins to run, the Parliament in Section 19 of the said Limitation Act, 1963 has advisedly used the generic expression "debt". This debt may be of one type or another type, but the payment on account of one type of debt cannot extend the period of limitation for another type of debt. Debt could be either for principal loan amount or it could be for interest." The learned senior counsel contends that in the instant case, the suit has been filed within the period of limitation as the last payment was made by the buyer on 05.03.1994, and Money Suit 21/97 was filed in March 1997. The period of limitation would start running from then o....
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....uch vacation of the earlier decree or order, passes another decree or order or modifies the one made earlier. The decree so vacated reversed or modified is then the decree that is effective for the purposes of a further appeal, if any, maintainable under law." 23. On the other hand, Mr. Vijay Hansaria, learned senior counsel appearing on behalf of the Electricity Board places strong reliance upon the judgment of this Court in the case of Purbanchal Cables & Conductors Pvt. Ltd. (supra) and contends that it is well settled position of law that the Act has no retrospective application. Therefore, the suit in the instant case which has been filed for claiming interest alone is not maintainable. The learned senior counsel further contends that the suit is barred by limitation. It is submitted that the last date of supply was 04.10.1993. Thus, the period of limitation for recovery of amount of Rs. 53.68 lakhs, which is the amount due towards the interest on delayed payments and the future interest @ 27% expired on 03.10.1996. 24. The learned senior counsel further contends that the case of the first appellant is not maintainable not only on the question of limitation but also....
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....by taken in this regard. The Small Scale Industries Board, which is an apex advisory body on polices relating to small scale industrial units with representatives from all the States, governmental bodies and the industrial sector, also expressed this view. It was, therefore, felt that prompt payments of money by buyers should be statutorily ensured and mandatory provisions for payment of interest on the outstanding money, in case of default, should be made. The buyers, if required under law to pay interest, would refrain from withholding payment to small scale and ancillary industrial undertakings. ......." Before examining the decisions of this Court in which the provisions of the Act have been interpreted, it would be useful to advert to the provisions themselves and understand the scheme of the Act. Section 2(b) of the Act defines 'appointed day' as under: "b) "Appointed day, means the day following immediately after the expiry of the period of thirty days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier. Explanation- For the purposes of this clause, - (i) 'The day of acceptanc....
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....he delivery of the goods or the rendering of service. Section 4 of the Act provides the date from which the interest is payable. According to Section 4 of the Act, the liability on the buyer accrues from the appointed day. At the cost of repetition, as Section 2(b) of the Act makes explicitly clear, appointed day is the day following the expiry of thirty days from the date of acceptance, which is the day of delivery of goods or rendering of services. In my considered view, the language of the legislature could not have been more clearer than what has been explicitly made it very clear. It has clearly stated what the legislature had in contemplation at the time of enactment of the Act as the focal date was the date of actual delivery of goods or the rendering of services, and not the date on which the transaction was entered into. 27. The interpretation of the provisions of the Act has been the subject matter of four recent decisions of this Court. Starting with the case of Assam Scale Industries Development Corporation Ltd (supra), wherein it was erroneously held that the Act came into force with effect from 23.09.1992 and therefore the provisions of the Act has no application t....
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....e remedied, in addition to testing the reasonableness of the restrictions imposed by the impugned provision. In his opinion, it was indeed very unfortunate that the Statement of Objects and Reasons was not placed before the High Court which would have assisted the High Court in arriving at the right conclusion as to the reasonableness of the restriction imposed. State of West Bengal v. Union of India approved the use of Statement of Objects and Reasons for the purpose of understanding the background and the antecedent state of affairs leading upto the legislation." 29. Again in the case of Shakti Tubes (supra) this Court continued to use the words "transaction" and "supply orders" as have been referred to in the case of Assam Small Scale Industries Development Corporation Ltd. (supra). It was held that the Act in question cannot be given retrospective effect. On this aspect, this Court observed as under: "26. There is no dispute with regard to the fact that the Act in question is a welfare legislation which was enacted to protect the interest of the suppliers especially suppliers of the nature of a small scale industry. But, at the same time, the intention and the purpo....
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....ability upon the buyer to make payment for goods supplied or services rendered to the buyer on or before the date agreed upon in writing or before the appointed day and when there is no date agreed upon in writing, the appointed day shall not exceed 120 days from the day of acceptance." (emphasis laid by this Court) In the said case, while it was held that the provisions of the Act are prospective in nature based on the decisions of this Court in the case of Assam Small Scale Industries Development Corporation Ltd. (supra) and Shakti Tubes (supra), it was observed that the said cases have no applicability to the facts of the case because while the contract had been entered into on 15.01.1983, there were alterations to it through the years, with the last alteration on 29.04.1995. Since the contract was last altered in 29.04.1995, the Act would be applicable to the facts of the case. 30. Thus, while the 'transaction', as understood from the meaning sought to be given to them in the judgments of Assam Small Scale Industries Development Corporation Ltd. (supra) and Shakti Tubes (supra) was entered into in that case prior to the Act coming into force, the Act was made applicabl....
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....ansaction, or supply order, or contract alteration, but quite simply, the date of the delivery of goods or rendering of services. What is also interesting to note in this case at this stage is point no. 3 of the statement of objects and reasons appended to the Act, which reads as under: "Since Parliament was not in session and circumstances existed which rendered it necessary to take immediate action, the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Ordinance, 1992 (15 of 1992) was promulgated by the President on the 23rd September, 1992." (emphasis laid by this Court) 34. Further, Section 4 did not figure in the Act when it was originally passed. It was introduced by way of an amendment (Act 23 of 1998). The statement of objects and reasons of the Amendment Act reads as under: "Though the Act has been in operation for a period of five years, the problem of delays in the payment of outstanding dues to the small scale industrial units continues unabated. There have been widespread discussions on the provisions of the Act among the various interest groups including the Departments of State Governments dealing with industrie....
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....f the buyer to make payment accrues after the supplier supplies goods or renders any services to the buyer. Thus, what was envisaged by the legislature as delayed payment was payment of the outstanding money due to the supplier after the goods had been supplied, and after the date agreed upon or the date of deemed acceptance. A bare reading of the Section makes it clear that the date of entering into the agreement or the date of supply order were not in contemplation of the legislature at all. Thus, it is amply clear from a bare reading of Section 3 that for the purpose of the Act, it does not matter when the contract was entered into, as long as the supply of the goods was after the Act came into force on 23.09.1992. It is in that sense that the question of retrospective application of the Act does not arise at all. This is further supported by the use of the non obstante clause in Section 4 of the Act. At the cost of repetition, Section 4 of the Act is extracted hereunder: "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 anythin....
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....Anr. v. Synthetics And Chemicals Ltd. & Anr. (supra), wherein it was held as under: "39. But the problem has arisen due to the conclusion in the case of Synthetic and Chemicals. The question was if the State legislature could levy vend fee or excise duty on industrial alcohol. The bench answered the question in the negative as industrial alcohol being unfit for human consumption the State legislation was incompetent to levy any duty of excise either under Entry 51 or Entry 8 of List II of the Seventh Schedule. While doing so the bench recorded the conclusion extracted earlier. It was not preceded by any discussion. No reason or rationale could be found in the order. This gives rise to an important question if the conclusion is law declared under Article 141 of the Constitution or it is per incuriam and is liable to be ignored. 40.'Incuria' literally means 'carelessness'. In practice per incuriam appears to mean per ignoratium. English courts have developed this principle in relaxation of the rule of stare decisis. The 'quotable in law' is avoided and ignored if it is rendered, 'in ignoratium of a statute or other binding authority'. (Young v. Bristol Aeroplane Co.....
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...., Purbanchal Cables & Conductors Pvt. Ltd. (supra) and other decisions of this Court referred to supra did not consider the important aspect of the matter namely as to whether the provisions of the Act are retroactive or not? They merely held that the provisions of the Act have no retrospective effect. Thus, the judgments have been rendered sub silentio on this aspect. Therefore, point Nos. 1 and 2 are answered in favour of the appellant-suppliers. Answers to Point Nos. 3,4 and 5: 39. The contention raised by Mr. Vijay Hansaria, the learned senior counsel appearing on behalf of the Electricity Board on the question of res judicata is wholly untenable in law. The substantial question that was in issue in the case of Purbanchal Cables & Conductors Pvt. Ltd. (supra), this Court was not concerned with the issues that arose in Assam Small Scale Industries Development Corporation Ltd. (supra), the findings of which have been extracted supra. This Court was only concerned with maintainability of a suit with regard to the interest on the basis of the statutory provisions of the Act, in relation to those agreements which had been entered into prior to coming into force of....
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....e property over which a right is claimed under sub-section (1) belongs to the Government that sub-section shall be read as if for the words "twenty years" the words "thirty years" were substituted. Explanation - Nothing is an interruption within the meaning of this section, unless where there is an actual discontinuance of the possession or enjoyment by reason of an obstruction by the act of some person other than the claimant and unless such obstruction is submitted to or acquiesced in for one year after the claimant has notice thereof and of the person making or authorising the same to be made." 41. Taking into consideration the supply order against the actual supply of the goods with payment made, the last payment was made on 05.03.1994. Thus, time began to run from that date. Taking into consideration the fact that the date of the institution of the suit is 10.01.1997, the suit has been filed within the period of limitation as prescribed in the Limitation Act. Though on this aspect of the matter no finding has been recorded either by the Trial Court or by the High Court, I answer the question in favour of the appellants. 42. In view of the judgments of this Court....
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....ancillary industrial undertakings. The Act has as many as 11 sections. Section 1 deals with the extent of operation and date of its commencement. The Act came into force on 23rd day of September, 1992. 'Appointed day' has been defined in section 2(b) and 'buyer' in section 2(c). Both the definitions are extracted hereunder : "2(b) "appointed day" means the day following immediately after the expiry of the period of thirty days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier; Explanation,- For the purposes of this clause, - (i) 'the day of acceptance' means, - (a) the day of the actual delivery of goods or the rendering of services; or (b) where any objection is made in writing by the buyer regarding acceptance of goods or services within thirty days from the day of the delivery of goods or the rendering of services, the day on which such objection is removed by the supplier; (ii) "the day of deemed acceptance" means, where no objection is made in writing by the buyer regarding acceptance of goods or services within thirty days from the day of the delivery of good....
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....in case buyer fails to pay before the appointed day. The buyer shall be liable to pay compound interest, with monthly interest, at the rate mentioned in section 4. Section 5 is extracted hereunder : "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 interest) at the rate mentioned in section 4 on the amount due to the supplier." 9. Section 6 deals with recovery of amount payable under sections 4 and 5 which is recoverable by way of a suit or other proceeding under any law for the time being in force. Section 7 of the Act contains the provision with respect to appeal. The buyer-appellant has to deposit 75 per cent of the amount in terms of the decree, award or, other order in the appeal. Same is a condition precedent for entertainment of the appeal. Section 7A and 7B deal with establishment of Industry Facilitation Council and its composition. Section 7C requires the State Government to lay before the State Legislature every notification and rule made by the State Government after it ....
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.... and the higher interest rate is applicable only on failure to make the payment as envisaged by the Act under section 3. If the buyer fails to make the payment as required under section 3, the liability to make the payment with interest arises. Section 4 contains non-obstante clause and overrides agreement or any other law to the contrary. A conjoint reading of the provisions of appointed day, sections 3 and 4 makes it clear that the Act is prospective in operation. It has no retrospective operation or retroactive operation. The Act does not contain any provision with respect to the existing agreements as on the date of commencement of the Act that would be governed by the provisions in force at the relevant time. The Act does not have the effect of invalidating prior agreements. The liability to make the payment of higher interest cannot operate retrospectively. The provisions of the Act are capable of being complied with prospectively that is from the date on which Ordinance initially came into force i.e. 23.9.1992 from which date the Act has been given effect. There is absolutely no indication in the Act that it has retrospective operation or retroactive operation. Taking not....
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....ovision. 13. This Court in Assam Small Scale Industries Development Corporation Ltd. (supra) has considered the applicability of the Act of 1993 and has laid down thus : "37. We have held hereinbefore that clause 8 of the terms and conditions relates to the payments of balance 10%. It is not in dispute that the plaintiff had demanded both the principal amount as also the interest from the Corporation. Section 3 of the 1993 Act imposes a statutory liability upon the buyer to make payment for the supplies of any goods either on or before the agreed date or where there is no agreement before the appointed day. Only when payments are not made in terms of Section 3, Section 4 would apply. The 1993 Act came into effect from 23-9-1992 and will not apply to transactions which took place prior to that date. We find that out of the 71 suit transactions, Sl. Nos. 1 to 26 (referred to in the penultimate para of the trial court judgment), that is supply orders between 5-6-1991 to 28-7-1992, were prior to the date of the 1993 Act coming into force. Only the transactions at Sl. Nos. 27 to 71 (that is supply orders between 22-10-1992 to 19-6-1993), will attract the provisions....
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....to mean date of supply order. This Court has also considered retrospective applicability of 'welfare legislation'. This Court has followed the decision in Assam Small Scale Industries's case (supra) and has laid down in Shakti Tubes (supra) thus : "17. In the light of the said facts in Assam Small Scale Industries case (2005) 13 SCC 19, it was recorded in para 37 of the judgment that while the Act came into effect from 23-9-1992, the supply orders were placed only in respect of Sl. Nos. 1 to 26 immediately and before coming into effect of the Act and rest of the supply orders, namely, supply orders at Sl. Nos. 27 to 71 were placed between 22-10-1992 to 19-6-1993 which were subsequent to the date when the Act came into force. In that context, it was clearly recorded in the judgment that the Act will have no application to the transactions that took place prior to the commencement of the Act. In the next sentence the court made it clear as to what is referred to and understood by the expression "transaction" when it clearly stated that out of 71 transactions, Sl. Nos. 1 to 26 i.e. supply orders between 5-6-1991 to 28-7-1992 being prior to 23-9-1992 when the Ac....
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....tating 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 para 37 of the judgment which we have 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 para 37 of the judgment, are quite clear and apparent. When this Court said "transaction" it meant initiation of the transaction i.e. placing of the supply orders and not the completion of the transactions which would be completed only when the payment is made. Therefore, the submission made by the learned Senior Counsel appearing for the appellant-plaintiff fails. 22. Consequently, we hold that the supply order having been placed herein prior to the coming into force of the Act, any supply made pursuant to the said supply orders would be governed not by the provisions of the Act but by the provisions of Section 34 CPC. 23. At one stage, the learned Senior Counsel appearing for the appellant-plaintiff submitted that the Act in question....
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.... the statute retrospectivity. Four factors are suggested as relevant: (i) general scope and purview of the statute; (ii) the remedy sought to be applied; (iii) the former state of the law; and (iv) what it was the legislature contemplated. (p. 388) The rule against retrospectivity does not extend to protect from the effect of a repeal, a privilege which did not amount to accrued right. (p. 392) 16. Where a statute is passed for the purpose of supplying an obvious omission in a former statute or to 'explain' a former statute, the subsequent statute has relation back to the time when the prior Act was passed. The rule against retrospectivity is inapplicable to such legislations as are explanatory and declaratory in nature. A classic illustration is Attorney General v. Pougett (1816) 2 Price 381 : 146 ER 130 (Price at p. 392). By a Customs Act of 1873 (53 Geo. 3, c. 33) a duty was imposed upon hides of 9s 4d, but the Act omitted to state that it was to be 9s 4d per cwt., and to remedy this omission another Customs Act (53 Geo. 3, c. 105) was passed later in the same year. Between the passing of these two Acts some hides were exported, and it was contended that they were not l....
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....iii) the former state of the law; and (iv) what it was the legislature contemplated." 34. The general scope of the Act has been discussed above. The remedy sought to be applied by the Act is made clear in the Statement of Objects and Reasons, in which, it is stated that due to the delayed payments by buyers to the small-scale industries, their working capital was being affected, causing great harm to the small-scale industries in general. This Act was passed by Parliament to impose a heavy interest on the buyers who delayed the payments of the small-scale industries, in order to deter the buyers from delaying the payments after accepting the supplies made by the suppliers. 35. The policy statement of the Ministry of Micro, Small and Medium Enterprises dated 6-8-1991, reads: "3. (3.4) A beginning has been made towards solving the problem of delayed payments to small industries by setting up of 'factoring' services through Small Industries Development Bank of India (SIDBI). Network of such services would be set up throughout the country and operated through commercial banks. A suitable legislation will be introduced to ensure prompt payment of small industr....
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....a right to claim a higher rate of interest as prescribed by the Act accrues to the supplier. 40. The phrase "vested right" has been defined by this Court in Bibi Sayeeda v. State of Bihar (1996) 9 SCC 516 as: (SCC p. 527, para 17) "17. The word 'vested' is defined in Black's Law Dictionary (6th Edn.) at p. 1563 as: 'Vested; fixed; accrued; settled; absolute; complete. Having the character or given the rights of absolute ownership; not contingent; not subject to be defeated by a condition precedent.' Rights are 'vested' when right to enjoyment, present or prospective, has become property of some particular person or persons as present interest; mere expectancy of future benefits, or contingent interest in property founded on anticipated continuance of existing laws, does not constitute vested rights. In Webster's Comprehensive Dictionary (International Edn.) at p. 1397 'vested' is defined as: '[L]aw held by a tenure subject to no contingency; complete; established by law as a permanent right; vested interests.'" 41. A statute creating vested rights is a substantive statute. This Court, in Dhenkanal Minor Irrigation Division v. N.....
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....refore, has retroactive operation. Ordinarily when an enactment declares the previous law, it requires to be given retroactive effect. The function of a declaratory statute is to supply an omission or to explain a previous statute and when such an Act is passed, it comes into effect when the previous enactment was passed. The legislative power to enact law includes the power to declare what was the previous law and when such a declaratory Act is passed, invariably it has been held to be retrospective. Mere absence of use of the word 'declaration' in an Act explaining what was the law before may not appear to be a declaratory Act but if the court finds an Act as declaratory or explanatory, it has to be construed as retrospective. Conversely where a statute uses the word 'declaratory', the words so used may not be sufficient to hold that the statute is a declaratory Act as words may be used in order to bring into effect new law." 44. In Katikara Chintamani Dora v. Guntreddi Annamanaidu (1974) 1 SCC 567 this Court held: (SCC p. 582, para 50) "50. It is well settled that ordinarily, when the substantive law is altered during the pendency of an action, rights of the pa....
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....ment.' (See Delhi Cloth and General Mills Co. Ltd. v. CIT (1926-27) 54 IA 421, IA p. 425.) The second is that a right of appeal being a substantive right the institution of a suit carries with it the implication that all successive appeals available under the law then in force would be preserved to the parties to the suit throughout the rest of the career of the suit. There are two exceptions to the application of this rule viz. (1) when by competent enactment such right of appeal is taken away expressly or impliedly with retrospective effect and (2) when the court to which appeal lay at the commencement of the suit stands abolished (see Garikapati Veeraya v. N. Subbiah Choudhry AIR 1957 SC 540 and Colonial Sugar Refining Co. Ltd. v. Irving 1905 AC 369 : (1904-07) All ER Rep Ext 1620 [PC])." 47. In K. Kapen Chako v. Provident Investment Co. (P) Ltd. (1977) 1 SCC 593 this Court discussing the dicta of the English courts on the aspect of retrospectivity observed: (SCC pp. 602-03, paras 37-39) "37. A statute has to be looked into for the general scope and purview of the statute and at the remedy sought to be applied. In that connection the former state of th....
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....n other words, if a statute deals merely with the procedure in an action, and does not affect the rights of the parties it will be held to apply prima facie to all actions, pending as well as future." 48. In Dahiben v. Vasanji Kevalbha 1995 Supp (2) SCC 295 this Court held: (SCC pp. 299-300, para 12) "12. As the amendment in question is not to a procedural law, it may be stated that the settled principle of interpretation, where substantive law is amended, is that the same does not operate retrospectively unless it is either expressly provided or the same follows by necessary implication. Lest it be thought that a vested right cannot be taken away at all by retrospective legislation, reference may be made to Rafiquennessa v. Lal Bahadur Chetri AIR 1964 SC 1511 where it was stated that even where vested rights are affected, legislature is competent to take away the same by means of retrospective legislation; and retrospectivity can be inferred even by necessary implication." 49. In Zile Singh v. State of Haryana (2004) 8 SCC 1 this Court examined the various authorities on statutory interpretation and concluded: (SCC pp. 8-9, paras 13-14) "13. It ....
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....d on the buyer. This Court, time and again, has observed that any substantive law shall operate prospectively unless retrospective operation is clearly made out in the language of the statute. Only a procedural or declaratory law operates retrospectively as there is no vested right in procedure. 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." 16. This Court in Purbanchal Cables (supra) has also taken note of earlier decisions of Assam Small Scale Industries' case (supra) and Shakti Tubes (supra) and after referring to them has rejected the submission that the Court in Assam Small Scale Industries (supra) did not consider and decide the issue whether the Act would apply to those supply orders placed pr....
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....ons of this Court in Assam Small Scale Industries (2005) 13 SCC 19 and Shakti Tubes (2009) 7 SCC 673 cannot be considered as precedents. The learned Senior Counsel would state that a decision would not apply as a precedent when the court has failed to consider the objects and purpose of the Act in question and also certain previous judgments of this Court. He would further contend that the aforesaid judgments suffer from the sub silentio principle being rendered without full and adequate arguments on the issue. The learned Senior Counsel would also state that the Court did not look at the issue from the viewpoint canvassed presently. 59. The learned Senior Counsel would rely on the decision of this Court in MCD v. Gurnam Kaur (1989) 1 SCC 101. This Court has held: (SCC pp. 110-11, paras 11-12) "11. Pronouncements of law, which are not part of the ratio decidendi are classed as obiter dicta and are not authoritative. With all respect to the learned Judge who passed the order in Jamna Das case [WPs Nos. 981-82 of 1984 decided on 29.3.1985 (SC)] and to the learned Judge who agreed with him, we cannot concede that this Court is bound to follow it. It was delivere....
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.... the point now raised had been deliberately passed sub silentio by counsel in order that the point of substance might be decided. He went on to say that the point had to be decided by the earlier court before it could make the order which it did; nevertheless, since it was decided 'without argument, without reference to the crucial words of the rule, and without any citation of authority', it was not binding and would not be followed. Precedents sub silentio and without argument are of no moment. This rule has ever since been followed. One of the chief reasons for the doctrine of precedent is that a matter that has once been fully argued and decided should not be allowed to be reopened. The weight accorded to dicta varies with the type of dictum. Mere casual expressions carry no weight at all. Not every passing expression of a Judge, however eminent, can be treated as an ex cathedra statement, having the weight of authority." 60. In State of U.P. v. Synthetics and Chemicals Ltd. (1991) 4 SCC 139, His Lordship R.M. Sahai, J., in his concurring judgment set out the principles of per incuriam and sub silentio and has held thus: (SCC pp. 162-63, paras 40-41) "40. 'Inc....
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....icherry AIR 1967 SC 1480 it was observed, 'it is trite to say that a decision is binding not because of its conclusions but in regard to its ratio and the principles, laid down therein'. Any declaration or conclusion arrived without application of mind or preceded without any reason cannot be deemed to be declaration of law or authority of a general nature binding as a precedent. Restraint in dissenting or overruling is for sake of stability and uniformity but rigidity beyond reasonable limits is inimical to the growth of law." 61. In Arnit Das (1) v. State of Bihar (2000) 5 SCC 488 this Court held: (SCC p. 498, para 20) "20. A decision not expressed, not accompanied by reasons and not proceeding on a conscious consideration of an issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. That which has escaped in the judgment is not the ratio decidendi. This is the rule of sub silentio, in the technical sense when a particular point of law was not consciously determined. (See State of U.P. v. Synthetics & Chemicals Ltd. (1991) 4 SCC 139, SCC para 41.)" 62. In Tika Ram v. State of U.P. (2009) 10 SCC 689 it was ....
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....ff is entitled to be paid in terms of the provisions of the Act. 10. Mr Bharuka contended that the earlier supply order which was issued on 16-7-1992 came to be materially altered and substituted by a fresh supply order issued on 18-3-1993 by which date the aforesaid Act had already been enforced and therefore, the appellant-plaintiff was entitled to claim interest at a higher rate as envisaged in Sections 4 and 5 of the said Act. 11. Mr Dinesh Dwivedi, learned Senior Counsel appearing for the respondents strongly refuted the aforesaid submissions made by the learned Senior Counsel appearing for the appellant-plaintiff on the ground that the supply order was issued in the instant case on 16-7-1992 and therefore, in terms of and in line with the decision of this Court in Assam Small Scale Industries case (supra) the appellant-plaintiff was entitled to be paid interest only at the rate of 9% per annum and not at a higher rate as contended by the appellant-plaintiff." 65. This Court in Shakti Tubes Ltd. (2009) 7 SCC 673 expressly rejected the argument of the learned Senior Counsel appearing for the appellant in that case, that the Act should be given retrosp....
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....stries Development Corporation Ltd. (supra) was also rejected by a Division Bench of this Court in Shakti Tubes (supra). 18. The Court in Purbanchal Cables (supra) has referred to large number of decisions and made the following discussion with respect to binding value of the precedent : "Binding value of a precedent 67. In Waman Rao v. Union of India (1981) 2 SCC 362, His Lordship Y.V. Chandrachud, C.J., speaking for the Constitution Bench, held: (SCC p. 393, para 40) "40. It is also true to say that for the application of the rule of stare decisis, it is not necessary that the earlier decision or decisions of long standing should have considered and either accepted or rejected the particular argument which is advanced in the case on hand. Were it so, the previous decisions could more easily be treated as binding by applying the law of precedent and it will be unnecessary to take resort to the principle of stare decisis. It is, therefore, sufficient for invoking the rule of stare decisis that a certain decision was arrived at on a question which arose or was argued, no matter on what reason the decision rests or what is the basis of the decision. In o....
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....be invariably applied and should not ordinarily be departed from where decision is of long standing and rights have been acquired under it, unless considerations of public policy demand it." 70. In Mishri Lal v. Dhirendra Nath (1999) 4 SCC 11 this Court held: (SCC p. 18, para 13) "13. ... It is further to be noted that Meharban Singh case (1969) 3 SCC 542 came to be decided as early as 1970 and has been followed for the last three decades in the State of Madhya Pradesh and innumerable number of matters have been dealt with on the basis thereof and in the event, a different view is expressed today, so far as this specific legislation is concerned, it would unsettle the situation in the State of Madhya Pradesh and it is on this score also that reliance on the doctrine of 'stare decisis' may be apposite. While it is true that the doctrine has no statutory sanction and the same is based on a rule of convenience and expediency and as also on 'public policy' but in our view, the doctrine should and ought always to be strictly adhered to by the courts of law to subserve the ends of justice." 71. In Central Board of Dawoodi Bohra Community v. State of Maharashtra....
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....n Gafar case (supra) this Court had meticulously examined all the legal contentions canvassed by the parties to the lis and had come to the conclusion that the High Court has not committed any error which warrants interference. In the present appeals, the challenge is for the compensation assessed for the lands notified and acquired under the same notification pertaining to the same villages. Therefore, it would not be proper for us to take a different view, on the ground that what was considered by this Court was on a different fact situation. This view of ours is fortified by the judgment of this Court in Ballabhadas Mathurdas Lakhani v. Municipal Committee, Malkapur (1970) 2 SCC 267, wherein it was held that a decision of this Court is binding when the same question is raised again before this Court, and reconsideration cannot be pleaded on the ground that relevant provisions, etc. were not considered by the Court in the former case." 74. Judicial discipline demands that a decision of a Division Bench of two Judges should be followed by another Division Bench of two Judges and this has been stated time and again by this Court. In Raghubir Singh (1989) 2 SCC 754, a Const....
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....tion of an earlier judgment is made. It was held: (AIR p. 1644, para 23) "23. ... When it is urged that the view already taken by this Court should be reviewed and revised it may not necessarily be an adequate reason for such review and revision to hold that though the earlier view is a reasonably possible view, the alternative view which is pressed on the subsequent occasion is more reasonable. In reviewing and revising its earlier decision, this Court should ask itself whether in the interests of the public good or for any other valid and compulsive reasons, it is necessary that the earlier decision should be revised. When this Court decides questions of law, its decisions are, under Article 141, binding on all courts within the territory of India, and so, it must be the constant endeavour and concern of this Court to introduce and maintain an element of certainty and continuity in the interpretation of law in the country. Frequent exercise by this Court of its power to review its earlier decisions on the ground that the view pressed before it later appears to the court to be more reasonable, may incidentally tend to make law uncertain and introduce confusion which must ....
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....ecision of a Co-ordinate Bench is binding and there has to be consistency and settled principle should not be unsettled as laid down in Raghubir Singh (supra) and other decisions referred to above. Judicial discipline demands that a decision of the Division Bench of this Court should be followed by another Bench of two Judges. 19. In Modern Industries (supra), a Division Bench of this Court has also held that the Act of 1993 is prospective in operation is settled by two decisions of this Court in Assam Small Scale Industries' case (supra) and Shakti Tubes (supra). This Court has observed that since the earlier contract got altered from time to time, it was last altered on 29.4.1995. By that time Act of 1993 had already come into force. Hence the date of alteration in the agreement was held to be material for the applicability of the provisions of the Act. In Rampur Fertiliser Ltd. (supra), a Division Bench of this Court has held that the provisions of the Act of 1993 are prospective. The Court considered various provisions contained in sections 1, 3, 4, 5 and 10 of the Act. This Court followed the decision in Assam Small Scale Industries' case and has laid down thus : "....