TaxTMI 
TaxTMI 
2025 (8) TMI 708
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...." jointly financed an industrial unit, namely, M/s. Manorama Chemicals Works Ltd., (Respondent No. 2 herein) on 22.11.1984 for setting up a bleaching powder unit at Ganjam, Odisha. M/s.Vigyan Chemical Industries Limited Dehradun (Respondent No.1 herein) supplied raw materials worth Rs. 66,454.65 to Respondent No. 2 on 29.07.1985. Since Respondent No. 2 defaulted in repaying the financial assistance received from the appellant and IPICOL, possession of the industry of Respondent No.2 was taken over by the appellant on 18.08.1987 under Section 29 of the State Financial Corporation Act, 1951 For short, "S.F.C. Act, 1951". 3.1. Thereafter, Respondent No. 1 filed Recovery Suit No.103 of 1988 against Respondent Nos. 2, 3, and 4 in the Court of Second Additional Civil Judge (Senior Division), Dehradun For short, "the trial Court", claiming Rs. 90,400/- with interest as the outstanding amount. Respondent No. 1/Plaintiff also claimed pendente lite and future interest at the rate of 24% per annum till realization of the amount. The appellant was sought to be impleaded in the suit on 11.02.1993, which was allowed by the trial Court on 06.12.1994, and the appellant was added as Defendant No....
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....ed 22.03.2006, the trial Court held that the suit had been filed within limitation against the appellant. Thereafter, the appeal filed by the appellant was dismissed, and the cross-objection filed by Respondent No.1 was allowed, and consequently, the suit was decreed in its entirety, by the Additional District Judge, Fast Track Court No.VI, Dehradun For short, "the First Appellate Court", by judgment dated 08.08.2006. 3.5. Aggrieved by the judgment dated 08.08.2006 in First Appeal No.182 of 2001, concurring with the trial Court's order dated 22.03.2006 with the decision that the suit was filed within limitation against the appellant, and the decree dated 20.08.2001 in Suit No.103/88, the appellant preferred Second Appeal No.78 of 2006 before the High Court. By order dated 30.11.2006, the High Court stayed the judgment and decree, subject to the condition that the appellant deposit the decretal amount within 45 days. As stated earlier, two bank guarantees for Rs.6,36,243/- and Rs.3,50,000/- had been opened by the appellant on 27.11.1998 and 16.10.1999 respectively and were offered as deposit. 3.6. Thereafter, by judgment, dated 07.05.2007 in Second Appeal No.78 of 2006, the Hi....
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....appellant is at liberty to pursue any other remedy available under law. 3.10. Thereafter, the appellant filed Misc. Petition No. 156/21 under Section 47 of the Code of Civil Procedure, 1908 For short, "CPC", seeking a stay of execution proceedings of Execution Case No.107/2018. The said petition was dismissed on 18.04.2022. Aggrieved, the appellant preferred Civil Revision No.40/2022 before the District Judge, Dehradun, along with an application for stay of further proceedings in Execution Case No.107/2018. During its pendency, the Execution Court, by order dated 05.08.2022, directed the Odisha State Co- operative Bank to deposit the decretal amount by 30.08.2022, failing which, coercive steps would be taken against the appellant. 3.11. Aggrieved by the order dated 05.08.2022 passed in Execution Case No.107/2018, the appellant preferred Writ Petition (C) No.2069/2022 before the High Court. By order dated 30.08.2022, the High Court disposed of the writ petition with a direction to the Revisional Court to consider the stay application on 02.09.2022. However, on 02.09.2022, the Revisional Court dismissed Civil Revision No.40/2022. 3.12. Consequently, the appellant approached ....
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....erred in holding that such a deposit must be voluntary and not under compulsion. Despite furnishing bank guarantee in excess of the decretal amount, the High Court adopted an unduly narrow view of Section 47 CPC, while exercising jurisdiction under Article 227 of the Constitution. 4.3. Learned Senior Counsel further submitted that the execution application filed by Respondent No. 1 was not maintainable before the civil Court in view of Section 15(2) of the Commercial Courts Act, 2015. Although this point may not have been specifically pleaded before the lower courts, it was raised before the High Court and hence, the same ought to have been considered by the High Court. 4.4. Learned Senior Counsel emphasized that the High Court failed to appreciate that the computation of interest on the decretal amount was not only erroneous but also exorbitant. Interest at the rate of 24% was impermissible under Section 34 CPC. Furthermore, the appellant / Defendant No. 4 did not place any orders for purchase; in fact, it had clearly pleaded in its written statement that it had no connection with the underlying transaction and hence, no liability can be fastened on them. It was also contend....
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....17. In contrast, Respondent No. 1, the decree holder, neither invoked the bank guarantee nor initiated execution proceedings for nearly 17 years, after the decree was passed. According to the learned Senior Counsel, the decree holder received Rs.58,16,905/- on 05.10.2020 and Rs.2,34,40,654/- on 07.01.2022, thereby totaling Rs.2,92,57,559/- out of attachment and encashment of two bank guarantees and one fixed deposit of the appellant corporation. 4.8. Furthermore, reliance was placed on the decision of this Court in Fertilizer Corporation of India Ltd and others v. M/s. Coromandel Sacks Pvt. Ltd (2024) 5 SCR 321, (rendered on 26.04.2024), wherein this Court applied the principle of harmonious construction to balance competing interests and safeguard the rights of judgment debtors. In that case, the Court emphasized the benefit available to the judgment debtor under Order XXIV CPC, particularly, when the bank guarantee was furnished before the decree was passed. This principle contrasts with the interest calculation under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 which resulted in the mounting of compound interest from 23.09.19....
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.... with another bank guarantee for Rs.6,36,243/-, were released to Respondent No.1 on 05.10.2020, and further, that the interest has been erroneously calculated at 24% per annum compounded monthly, is wholly incorrect, false, unsubstantiated, and specifically denied. f) The bank guarantee furnished by the appellant Corporation was not voluntary, but given under compulsion and only pursuant to repeated directions of the Court. Moreover, the said bank guarantee had already expired in the year 2000. The amount was not paid to the Respondent on 05.10.2020, but only on 23.02.2021 - twenty years after the decree and twenty-two years after furnishing the bank guarantee. In fact, the first actual payment came through attachment proceedings pursuant to the orders of the Execution Court in 2020. The amount was deposited by the bank directly into the Court through a demand draft, which was then transferred to the Respondent. But the appellant had made all efforts to avoid payment. Furthermore, the rate of interest at 24% per annum compounded monthly was awarded by the trial Court in its judgment dated 20.08.2001 and was rightly upheld by the Appellate Court in its judgment dated 08.08.....
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....in Civil Revision No.40/2022 and finally by the High Court of Uttarakhand on 22.11.2022 in WP (M/S) 2314/2022 - the Judgment now impugned in this Special Leave Petition. All these judicial forums have rightly rejected the appellant's objections, and hence, no interference is warranted by this Court. 5.1. Thus, the learned Senior Counsel submitted that the decree dated 20.08.2001 passed in the suit has attained finality in 2017, and Respondent No.1 is entitled to the interest awarded in terms of the Interest on Delayed Payments to Small scale and Ancillary Industrial Undertakings Act, 1993, which comes to Rs.35,94,02,420.75 as on 10.02.2025. However, the appellant has acted without bona fides and has attempted to obstruct execution of the decree by initiating and pursuing frivolous proceedings. Therefore, this appeal deserves to be dismissed. 6. Mr. Shubhranshu Padhi, learned Counsel for Respondent No. 3 - IPICOL, while adopting and supporting the arguments advanced by the learned Senior Counsel for the appellant, inter alia, contended as under: 6.1. Both the appellant (OSFC) and Respondent No. 3 (IPICOL) are Public Sector Undertakings that extended financial assistance to ....
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.... Respondent No. 2, for the purpose of setting up a bleaching powder unit. Respondent No.1 had, in the course of business, supplied raw materials worth Rs.66,454.65 to the said unit. Due to persistent default in repayment of the loan by Respondent No.2, the appellant in exercise of its statutory powers under section 29 of the S.F.C. Act, 1951, took over possession of the industrial unit of Respondent No. 2 in the year 1987 for realization of its dues. Subsequently, on 29.02.1988, Respondent No. 1 filed Civil Suit No. 103/1988 before the trial Court seeking recovery of Rs.90,400/- with interest from the said unit. Initially, the appellant was not made a party to the suit, nor was any relief claimed against it. 8.1. Thereafter, the appellant was impleaded as a defendant in the said suit on 06.02.1994 by Respondent No. 1, nearly, six years after the date of institution of the suit. Despite the objections raised by the appellant regarding its impleadment, liability and maintainability, the suit was decreed against the appellant on 20.08.2001 for an amount of Rs. 90,400/- with simple interest at 24% per annum from 01.03.1988 to 23.09.1992, and 2% monthly compound interest from 23.09.1....
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.... the decree - was intended to cover the decretal amount and is squarely covered by the provisions of Order XXIV Rules 1 - 3 CPC, which aim to ensure that interest stops accruing once a deposit has been made. Therefore, the appellant contends that due to the opening and subsequent encashment of the bank guarantee, the claim for accrual of interest itself is bad in law. 11. The appellant further contends that the decree holder, Respondent No. 1 did not make any attempt to encash the said bank guarantee immediately after the suit was decreed, or initiate execution proceedings for over 17 years, thereby allowing the interest to accumulate unduly. On the other hand, the appellant had pursued remedies in good faith under the belief that interest would freeze once a deposit was made under Order XXIV Rule 3 CPC. The respondent's delay in executing the decree unjustly enabled them to claim exorbitant interest, thereby facilitating unjust enrichment. Such delay should not impose an undue interest burden on the appellant. Notably, Respondent No.1 has already received Rs.58,16,905/- on 05.10.2020 and Rs.2,34,40,654/- on 07.01.2022, thereby totaling Rs.2,92,57,559/- through bank guarantees a....
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....articular point of law is applied or passed upon by a court silently, without any consideration of the applicable law or without argument, and the judgment is rendered on another question of law or fact. According to the Black's Law Dictionary, "the precedents that pass sub silentio are of little or no authority". Literally, it means 'in silence' and is used to refer to something that is not expressly stated. Therefore, it can safely be concluded that the judgment of this Court in Civil Appeal No.2073/2010 is silent on the issues now under consideration. When the judgment of a Court is silent on questions of law either raised earlier but not decided, or raised in the subsequent proceedings, it is settled law that constitutional courts are empowered to decide such questions of law independently and the earlier judgment cannot be cited as a binding precedent or conclusive. It will be useful to refer to the following judgments of this Court on this aspect. 13.1. In Municipal Corpn. of Delhi v. Gurnam Kaur (1989) 1 SCC 101, while considering the exercise of power by the Commissioner of the Delhi Corporation to remove encroachments, this Court referred to an earlier decision relied u....
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.... pass sub silentio. 12. In Gerard v. Worth of Paris Ltd. (k). [(1936) 2 All ER 905 (CA)], the only point argued was on the question of priority of the claimant's debt, and, on this argument being heard, the court granted the order. No consideration was given to the question whether a garnishee order could properly be made on an account standing in the name of the liquidator. When, therefore, this very point was argued in a subsequent case before the Court of Appeal in Lancaster Motor Co. (London) Ltd. v. Bremith Ltd. [(1941) 1 KB 675], the court held itself not bound by its previous decision. Sir Wilfrid Greene, M.R., said that he could not help thinking that 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....
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....n expressed on that point. Accordingly, this Court applied the concept of 'sub silentio' and declined to uphold the order of the High Court. The relevant paragraph is extracted below for ready reference: "41. Does this principle extend and apply to a conclusion of law, which was neither raised nor preceded by any consideration. In other words can such conclusions be considered as declaration of law? Here again the English courts and jurists have carved out an exception to the rule of precedents. It has been explained as rule of sub-silentio. "A decision passed sub-silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind." (Salmond on Jurisprudence 12th Edn., p. 153). In Lancaster Motor Company (London) Ltd. v. Bremith Ltd. [(1941) 1 KB 675, 677 : (1941) 2 All ER 11] the Court did not feel bound by earlier decision as it was rendered 'without any argument, without reference to the crucial words of the rule and without any citation of the authority'. It was approved by this Court in Municipal Corporation of Delhi v. Gurnam Kaur [(1989) 1 SCC 101....
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....ed both on merits and on technical grounds by the trial court, and the appellate court maintains it on technical ground of limitation or suit being not properly constituted then the decision rendered on merits by the trial court ceases to have finality. In Abdullah Ashgar Ali Khan v. Ganesh Dass [AIR 1917 PC 201: 45 Cal 442 : 19 Bom LR 972] the Court while considering the expression, "heard and finally decided" in Section 10 of the British Baluchistan Regulation IX of 1896 held that where the suit was dismissed by two courts on merits but the decree was maintained in second appeal because the suit was not properly constituted then the finality on merits stood destroyed. In Sheosagar Singh v. Sitaram Singh [ILR (1897) 24 Cal 616 : 24 IA 50 : 1 CWN 297] where parentage of defendant was decided in his favour by the trial court but the High Court maintained the order as the suit was defective the claim of the defendant in the latter suit that the finding on parentage operated as res judicata was repelled and it was held that the question of parentage had not been heard and finally decided in the suit of 1885. The appeal in that suit had put an end to any finality in the decision of the....
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....e same evidence, the court should lean in favour of holding the accused to be a juvenile in borderline cases; and (iii) the provisions of the Act are mandatory and while implementing the provisions of the Act, those charged with responsibilities of implementation should show sensitivity and concern for a juvenile. However, in none of the cases the specific issue - by reference to which date (the date of the offence or the date of production of the person before the competent authority), the court shall determine whether the person was a juvenile or not, was neither raised nor decided. 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, para 41] SCC, para 41.)" 13.5. In the State of W.B. v. Kesoram Industries Ltd. (2004) 10 SCC 201: (2004) 266 ITR 721: 2004 SC....
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....Effect of the expression "immovable property" in the Cess Act, 1880 was also not brought to its notice and had the same been done, there would not have been a conclusion that tea estate would be treated as a unit as therefrom the standing crops and structures were required to be excluded. Goodricke Group case [1995 Supp (1) SCC 707] does not, therefore, lay down a good law and should be overruled. Summary of our findings ... (viii) Tax on lands and buildings in terms of Entry 49 of List II of the Seventh Schedule of the Constitution of India can be levied on land as a unit and not otherwise. (ix) As green tea leaves are marketable, the decision in Goodricke Group [1995 Supp (1) SCC 707] having mainly been rendered on the premise that green tea leaves are not marketable must be held to have passed sub silentio and, thus, does not lay down correct legal position. (x) In view of the definitions of "land" and "immovable property" contained in the Bengal Cess Act, 1880, as no road cess or public works cess can be imposed on standing crops or any kind of structures, houses, shops or other buildings which would include factories and workshops f....
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....n a point does not fall for decision of a court but incidentally arises for its consideration and is not necessary to be decided for the ultimate decision of the case, such a decision does not form a part of the ratio of the case but the same is treated as a decision passed sub silentio. 43. The concept of "sub silentio" has been explained by Salmond on Jurisprudence, 12th Edn. as follows: (Gurnam Kaur case [(1989) 1 SCC 101 : AIR 1989 SC 38], SCC pp. 110-11, para 11) "11. ...'A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the Court or present to its mind. The Court may consciously decide in favour of one party because of Point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided Point B in his favour; but Point B was not argued or considered by the Court. In such circumstances, although Point B was logically involved in the facts and although the case had a specific outcome, the decision is not an authority on Poin....
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....MANU/SC/0376/2000 : (2000) 5 SCC 488 where it was held that "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". 28. In this context, it is also important to note that, as an institution, our Supreme Court performs the twin functions of decision-making and precedent- making. A substantial portion of our jurisdiction under Article 136 is reflective of regular appellate disposition of decision making. Every judgment or order made by this Court in disposing of these appeals is not intended to be a binding precedent under Article 141. Though the arrival of a dispute for this Court's consideration, either for decision-making or precedent-making is at the same tarmac, every judgment or order which departs from this Court lands at the doorstep of the High Courts and the subordinate courts as a binding precedent. We are aware of the di....
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....ust execute the decree according to its tenor, and cannot entertain objections on the ground that the decree is erroneous in law or on facts. Until it is set aside by an appropriate proceeding in appeal or revision, a decree, even if erroneous, remains binding on the parties. A decree may, however, be challenged in execution proceedings, if it is a nullity - for instance, if it is passed without bringing on record the legal representative of a person who was dead at the time the decree was passed, or where the cause of action was not maintainable, or if it was passed against a ruling prince without a certificate. An objection in that behalf may be raised in the execution proceedings. Similarly, when the decree is made by a court that has no inherent jurisdiction to pass it, an objection as to its validity may be raised in an execution proceeding if the objection appears on the face of the record. 17. While dealing with the scope of interference of the Executing Court in modifying a decree or award, this Court in Brakewel Automotive Components (India) (P) Ltd. v. P.R. Selvam Alagappan (2017) 5 SCC 371 : (2017) 3 SCC (Civ) 152 : 2017 SCC OnLine SC 265 at page 379, held as follows ....
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....petition and underscoring the importance of bringing finality to concluded litigations, applying the Henderson's rule, refused to accept the contentions against the original order, holding that a defence, which ought to have been raised, if not raised, is deemed to have been raised and overruled. The said judgment arises in a contempt matter, where the law that a court hearing the contempt case can neither expand the scope of original order nor modify it is well settled [See: Midnapore Peoples Co-operative Bank Ltd and others v. Chunilal Nanda and others (2006) 5 SCC 399]. However, the case on hand is completely different, and the scope of interference by the execution court is to be understood in the light of the power conferred upon it by Section 47 and the settled position that the executing court can refuse to execute the decree if it is a nullity. In addition to the settled position that a decree obtained by fraud or against the wrong person is a nullity, there are other circumstances which can render a decree to be a nullity. Jurisdiction 20. A decree passed without jurisdiction is null and void. A court is said to lack jurisdiction if it has no territorial jurisdiction....
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....as only in 1998 that an application for amendment of written statement was filed raising a plea as to absence of jurisdiction of the court. Both the courts were wholly wrong in allowing the amendment and in ignoring Section 21 of the Code. Our attention in this connection was invited by the learned counsel to Hira Lal v. Kali Nath MANU/SC/0041/1961 : [1962]2 SCR 747 and Bahrein Petroleum Co. v. Pappu MANU/SC/0012/1965 : (1966) II LLJ 144 SC. 28. We are unable to uphold the contention. The jurisdiction of a court may be classified into several categories. The important categories are (i) Territorial or local jurisdiction; (ii) Pecuniary jurisdiction; and (iii) Jurisdiction over the subject matter. So far as territorial and pecuniary jurisdictions are concerned, objection to such jurisdiction has to be taken at the earliest possible opportunity and in any case at or before settlement of issues. The law is well settled on the point that if such objection is not taken at the earliest, it cannot be allowed to be taken at a subsequent stage. Jurisdiction as to subject matter, however, is totally distinct and stands on a different footing. Where a court has no jurisdicti....
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.... could be set up whenever and it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction strikes at the very authority of the court to pass any decree, and such a defect cannot be cured even by consent of parties." 21.1. In Jagmittar Sain Bhagat v. Dir. Health Services, Haryana and Others MANU/SC/0703/2013: 2013 10 SCC 136, this Court dealt with the issue of jurisdiction in the context of a government servant seeking retiral benefits under the Consumer Protection Act, 1986 and held that a decree passed without statutory jurisdiction is null and void, and this defect can be challenged at any stage including execution. The relevant paragraphs are extracted below: "7. Indisputably, it is a settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior Court, and if the Court passes a decree having no jurisdiction over the matter, it would amount to nullity as the matter goes to the roots of the cause. Such an issue can be raised at any stage of the proceedings. The finding of a Court or Tribunal ....
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....C/0672/1996 : AIR 1996 SC 2664; Harshad Chiman Lal Modi v. D.L.F. Universal Ltd. and Anr. MANU/SC/0710/2005 : AIR 2005 SC 4446; and Carona Ltd. v. Parvathy Swaminathan and Sons MANU/SC/3938/2007 : AIR 2008 SC 187)." 21.2. In Shri Saurav Jain and another v. M/s. A.B.P Design & another MANU/SC/0509/2021 : 2022 18 SCC 633, this Court discussed the issue of territorial jurisdiction in respect of a property dispute involving cancellation of a sale deed and possession and held as under: "29. With regard to new grounds being raised before this Court in a special leave petition Under Article 136, we note that Under Order 21 Rule 3(c) of the Supreme Court Rules 2013, SLPs are to be confined to the pleadings before the court whose order is challenged. However, with the leave of the Court, additional grounds can be urged at the time of the hearing. 30. This Court in Bharat Kala Bhandar (P) Ltd. v. Municipal Committee MANU/SC/0267/1965 : AIR 1966 SC 249 dealt with a civil appeal where a contention had not been raised in the suit or in the grounds of appeal before the High Court, and was advanced before this Court for the first time. Although the Court noted that the scope ....
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.... before us has to be filed before a Special Court created under the Act within a period of limitation specially prescribed under the Rules made under the Act and the jurisdiction of the ordinary civil court is absolutely barred." 22. In Most Rev. P.M.A. Metropolitan v. Moran Mar Marthoma MANU/SC/0407/1995 : 1995 Supp (4) SCC 286 as well, a three Judge Bench of this Court entertained an objection as to maintainability of the suit under Section 9 of the Code of Civil Procedure, despite the plea not having been raised before the courts below. The Court observed that the plea of a bar or lack of jurisdiction can be entertained at any stage, since an order or decree passed without jurisdiction is non est in law. 23. The position of law has been consistently applied even in criminal proceedings under Article 136 of the Constitution. In Masalti v. State of Uttar Pradesh MANU/SC/0074/1964 : AIR 1965 SC 202, the confirmation of the death sentence of a number of accused persons by the High Court was under challenge before this Court. Chief Justice Gajendragadkar, speaking for a four judge Bench of this Court, observed that: "11. We are not prepared to accept Mr. Sawhney's ....
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.... or left at the office of] (a) in the case of a suit against the Central Government, [except where it relates to a railway] a Secretary to that Government; [(b)] in the case of a suit against the Central Government where it relates to railway, the General Manager of that railway; [(bb) in the case of a suit against the Government of the State of Jammu and Kashmir, the Chief Secretary to that Government or any other officer authorized by that Government in this behalf;] (c) in the case of a suit against [any other State Government], a Secretary to that Government or the Collector of the district; and, in the case of a public officer, delivered to him or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims; and the plaint shall contain a statement that such notice has been so delivered or left. (2) A suit to obtain an urgent or immediate relief against the Government (including the Government of the State of Jammu and Kashmir) or any public officer in respect of any act purporting to be done by such public officer in his official capacity, may....
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....y complied with. Failure to do so renders the suit liable to be dismissed at the threshold. The absence of such notice is treated as a formal defect, and the Court is duty bound to reject the plaint under Order VII Rule 11(d) CPC, if it discloses non-compliance with Section 80 CPC. 26. In cases such as the one under consideration, the State, which was not originally a party, could be impleaded and the plaint could be amended by inclusion of pleadings, cause of action and relief against the State. In such cases also, the plaintiff, immediately upon becoming aware of the necessity to implead the State, is duty bound to either issue a notice as contemplated under Section 80(1) CPC or obtain leave under Section 80(2) CPC before an application for impleadment is taken out. Failure to do so will bar the civil court from exercising jurisdiction against the State, and the court will have no option but to dismiss the suit. This is so because when a state government or its instrumentality is impleaded in a pending suit, a new or fresh cause of action is introduced. Similarly, if the amendment sought by the plaintiff introduces a new cause of action within the period of limitation and with....
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....retary to that Government or the Collector of the district; * * * and, in the case of a public officer, delivered to him or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and relief which he claims; and plaint shall contain a statement that such notice has been so delivered or left." 4. The effect of the Section is clearly to impose a bar against the institution of a suit against the Government or a public officer in respect of any act purported to be done by him in his official capacity until the expiration of two months after notice in writing has been delivered to or left at the office of the Secretary to Government or Collector of the concerned district and in the case of a public officer delivered to him or left at his office, stating the particulars enumerated in the last part of Sub-section (1) of the Section. When we examine the scheme of the Section it becomes obvious that the Section has been enacted as a measure of public policy with the object of ensuring that before a suit is instituted against the Government or a public officer, the Government or the officer concerned is afforded an oppo....
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....e Section should be relaxed by implication of a suitable exception or a qualification in respect of a suit for emergent relief, such as one for injunction. That contention did not find favour with the Privy Council and it was held that Section 80 is express, explicit and mandatory aid it admits no implications or exceptions. The Judicial Committee observed: To argue as appellants did, that the plaintiffs had a right urgently calling for a remedy, while Section 80 is mere procedure, is fallacious, for Section 80 imposes a statutory and unqualified obligation upon the Court. 7. This decision was subsequently followed by the Judicial Committee in Vellayan v. Madras Province. 74 I.A. 223 The dictum laid down by the Judicial Committee in Bhagchand Dogadusa v. Secretary of State for India. 54 I.A. 333 was cited with approval and followed by a Bench of five Judges of this Court in Sawai Singhai Nirmal Chand v. Union of India. [1966] (1) SCR 956 8. It must now be regarded as settled law that a suit against the Government or a public officer, to which the requirement of a prior notice under Section 80 C.P.C. is attracted, cannot be validly instituted until the exp....
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....uit based on this claim was not maintainable is correct and requires no interference. If a new cause of action is being introduced a fresh notice under Section 80 CPC would be required to be given. The same not having been given, the suit on this cause of action was not maintainable." 29. In the present case, the appellant/4th defendant has not pleaded directly that no notice under Section 80 was issued, but the plea of maintainability of the suit was raised. It is not in dispute that the appellant/4th defendant is an instrumentality of the Odisha State, created in pursuance of a requirement under the specific enactment of the parliament, State Financial Corporations Act, 1951, requiring every State to facilitate and encourage industrial development by creating institutions to fund the Micro, Small, and Medium Scale Enterprises. A reading of the provisions clearly indicate that not only is the appellant/4th defendant, a mandatory creation under a statute but also is substantially controlled by the State to perform a public duty of great importance, the object of which is to promote regional, social and economical empowerment, which in turn is expected to contribute at national l....
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....rporation is acting as an instrumentality or agency of the Government and dealing with that question, observed: "A corporation may be created in one of two ways. It may be either established by statute or incorporated under a law such as the Companies Act 1956 or the Societies Registration Act 1860. Where a Corporation is wholly controlled by Government not only in its policy making but also in carrying out the functions entrusted to it by the law establishing it or by the Charter of its incorporation, there can be no doubt that it would be an instrumentality or agency of Government. But ordinarily where a corporation is established by statute, it is autonomous in its working, subject only to a provision, often times made, that it shall be bound by any directions that may be issued from time to time by Government in respect of policy matters. So also a corporation incorporated under law is managed by a board of directors or committee of management in accordance with the provisions of the statute under which it is incorporated. When does such a corporation become an instrumentality or agency of Government? Is the holding of the entire share capital of the Corporation by Gov....
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....v v. Bhagatram MANU/SC/0667/1975 : (1975) ILLJ 399 SC. So also the existence of deep and pervasive State control may afford an indication that the Corporation is a State agency or instrumentality. It may also be a relevant factor to consider whether the corporation enjoys monopoly status which is State conferred or State protected. There can be little doubt that State conferred or State protected monopoly status would be highly relevant in assessing the aggregate weight of the corporation's ties to the State." There is also another factor which may be regarded as having a bearing on this issue and it is whether the operation of the corporation is an important public function. It has been held in the United States in a number of cases that the concept of private action must yield to a conception of State action where public functions are being performed. Vide Arthur S. Miller: "The Constitutional Law of the Security State" (Stanford Law Review 620 at 664). "It may be noted that besides the so-called traditional functions, the modern state operates as multitude of public enterprises and discharges a host of other public functions. If the functions of the corpora....
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....s case. These tests are not conclusive or clinching, but they are merely indicative indicia which have to be used with care and caution, because while stressing the necessity of a wide meaning to be placed on the expression "other authorities", it must be realised that it should not be stretched so far as to bring in every autonomous body which has some nexus with the Government within the sweep of the expression. A wide enlargement of the meaning must be tempered by a wise limitation. We may summarise the relevant tests gathered from the decision in the International Airport Authority's case as follows : (1) One thing is clear that if the entire share capital of the corporation is held by Government it would go a long way towards indicating that the corporation is an instrumentality or agency of Government. (2) Where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character. (3) It may also be a relevant factor... whether the corporation enjoys monopoly status which is the State conferred or State p....
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....cillary Industrial Undertakings Act, 1993 31. The trial Court is bound to decide all the issues framed. While doing so, it goes without saying that all the applicable legal provisions must be duly analysed. It is to be noted that Issue No.8 as framed by the trial court was: "whether the plaintiff is a small-scale unit, if yes, then its effect?". This issue was taken up for consideration along with Issue No.5, which reads: "whether the plaintiff is entitled to receive interest, if yes, then at what rate?". However, while deciding these issues, the trial Court failed to render any categorical finding on whether the plaintiff was, in fact, a small-scale industry, and if so, whether the provisions of the now-repealed Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 For short, "the Act, 1993" (which came into force only after the suit was filed) would at all be applicable - more particularly against the appellant/4th defendant. Therefore, it has become imperative for this Court to examine the applicability of the Act, 1993. 32. The Act, 1993 came into force with effect from 23.09.1992 and remained in effect until it was repealed by the Mi....
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....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. Section 6. Recovery of amount due.- 43. The amount due from a buyer, together with the amount of interest calculated in accordance with the provisions of Sections 4 and 5, shall be recoverable by the supplier from the buyer by way of a suit or other proceeding under any law for the time being in force. 44. Notwithstanding anything contained in Sub-section (1), any party to a dispute may make a reference to the Industry Facilitation Council for acting as an arbitrator or conciliator in respect of the matters referred to in that Sub- section and the provisions of the Arbitration and Conciliation Act, 1996 (26 of 19....
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....29, a three-Judge Bench of this Court had an occasion to consider the scope of the repealed Act, 1993, its applicability with regard to the date of contract, date of supply, liability to make payments and the conflicting judgments of the Division Bench of this Court, and ultimately, held as under: "27. From the submissions of the learned Counsel for the parties and pleadings on record we need to answer the following questions in these appeals: (1) Whether Act, 1993 is not applicable when the contract for supply was entered between the parties prior to enforcement of the Act i.e. 23.09.1992? (2) Whether in the event it is found that Act is applicable also with regard to contract entered prior to Act, 1993 in pursuance of which contract, supplies were made after the enforcement of Act, 1993, the Act, 1993 can be said to have retrospective operation? (3) Whether money suit by M/s. Shanti Conductors was barred by limitation? (4) Whether judgment of this Court in Purbanchal Cables dated 31.08.2016 by which appeal of M/s. Shanti Conductors was also dismissed is binding between the parties i.e. M/s. Shanti Conductors and Assam Electricity Board....
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.... The 1993 Act came into effect with 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 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 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 Others, (2009) 7 SCC 673. I....
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....e and, therefore, we do not find any reason to take a different view than what was taken by this Court in the aforesaid judgment. Thus, we respectfully agree with the aforesaid decision of this Court which is found to be rightly arrived at after appreciating all the facts and circumstances of the case. 19. Now coming to the facts of the present 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 the 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 expli....
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.... 45 - 46: "45. It is true that word 'together' ordinarily means conjointly or simultaneously but this ordinary meaning put upon the said word may not be apt in the context of Section 6. Can it be said that the action contemplated in Section 6 by way of suit or any other legal proceeding Under Sub-section (1) or by making reference to IFC Under Sub-section (2) is maintainable 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 liabili....
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....51, following has been laid down : "51. There is no doubt about the fact that the Act is a substantive law as vested rights of entitlement to a higher rate of interest in case of delayed payment accrues in favour of the supplier and a corresponding liability is imposed 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." 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....
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....the appointed day. Payments were not made both to A and B as required by Section 3. Can the buyer who has received supplies from supplier A escape from his statutory liability to make payment of interest Under Section 3 read with Section 4? The answer has to be No. Two suppliers who supply goods after the enforcement of the Act, become entitled to receive payment after the enforcement of the Act one supplier cannot be denied the benefit of the statutory protection 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 sta....
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....eference to an enactment may mean (i) affecting an existing contract; or (ii) reopening up of past, closed and completed transaction; or (iii) affecting accrued rights and remedies; or (iv) affecting procedure. Words and Phrases, Permanent Edn., Vol. 37-A, pp. 224-25, defines a "retrospective or retroactive law" as one which takes away or impairs vested or accrued rights acquired under existing laws. A retroactive law takes away or impairs vested rights acquired under existing laws, or creates a new obligation, 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,....
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....nd 4 does not relate on any event which took place prior to Act, 1993, it is not even necessary for us to say that Act, 1993 is retroactive in operation. The Act, 1993 is clearly prospective in operation and it is not necessary to term it as retroactive in operation. We, thus, do not subscribe to the opinion dated 31.08.2016 of one of the Hon'ble Judges holding that the Act, 1993 as retroactive." 33.1. The ratio laid down by this Court in Shanti Conductors case (supra) can be summarised as under: A. The date of contract is irrelevant and what is relevant is the incident of supply or rendering of services as contemplated under Section 3 after the Act, 1993 has come into force, and only if the incidents occur after 23.09.1992, the provisions can be applied thereby overruling the ratio laid down by this Court in Purbanchal Cables & Conductors, Assam Small Scale Industries and Shakti Tubes Ltd., that the Act, 1993 shall be applicable only when the agreement to sale/contract was entered into subsequent to the enforcement of the Act. B. That the Act, 1993 is prospective - it is neither retrospective nor retroactive - and hence, the provisions of the Act cannot be....
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....No.3 - IPICOL, to Respondent No. 2, for the establishment of a bleaching powder unit at Ganjam, Orisha. A pari passu agreement was executed among the appellant, Respondent No. 2 and Respondent No. 3. On 29.07.1985, Respondent No. 1 allegedly supplied raw materials worth Rs.66,454.65 to Respondent No. 2. Owing to the non- repayment of dues arising out of the financial assistance provided by the appellant and Respondent No.3, the appellant took over possession of industrial unit of Respondent No. 2, on 18.08.1987 under Section 29 of the S.F.C. Act, 1951, without encumbrances, as specifically permitted under the Act. Upon a thorough analysis of the records, we find that once the appellant took over the affairs of Respondent No. 2 to realise its dues, all debts and liabilities of Respondent No. 2 automatically fell on the appellant to satisfy those claims only out of the balance sale proceeds, if any, after satisfying its dues as contemplated under Section 29. However, it is claimed that the appellant sold the property in the open market for recovery of the loan amount and thereafter, paid the remaining balance to Respondent No.3 - IPICOL pursuant to a contract between them. On 29.02.1....
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....Act, 1951, the requirement of mandatory notice under Section 80 CPC, the relevance of the repealed Act, 1993, and the specifically contested issue of maintainability, proceeded to render findings only on the limited issues. The judgment was passed without considering or rendering any finding on the core legal issues in the case, thereby vitiating the trial Court's judgment on fundamental jurisdictional grounds. Privity of Contract 39. Admittedly, there was no contract between the appellant and Respondent No. 1. The appellant has been impleaded solely on the ground that it took possession of the defaulting industrial concern and exercised its rights under the S.F.C. Act, 1951 to realize its dues. In the absence of any privity of contract, the liability of the appellant is limited strictly to the extent contemplated under Section 29 of the S.F.C. Act, 1951. The appellant therefore, cannot be saddled with the entire liability arising from a transaction to which it was not a party. It is necessary to understand the object behind Section 29. 40. The object of Section 29 of the State Financial Corporation Act, 1951, is to empower State Financial Corporations to enforce their rig....
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.... funds in its hands, and under no stretch of law, can be extended to its personal or corporate properties. In such a situation, we fail to comprehend how the entire liability has been fastened upon the appellant and how its properties and bank accounts have been attached. This is clearly beyond the jurisdiction of the trial Court or, for that matter, even the Executing Court, which cannot proceed against the personal assets of the appellant in such circumstances. 41. As already stated, the suit was decreed on 20.08.2001. During the pendency of the appeal, it came to light that the trial Court had neither framed any issue on limitation nor adjudicated upon it. The appellate Court accordingly remanded the matter to the trial Court to frame and adjudicate upon the said issue. It was only after the appellant raised this plea, Respondent No. 1/ plaintiff filed an application under Section 21 of the Limitation Act, 1963. On 05.11.2005, the trial Court erroneously held that the impleadment of the appellant would relate back to the date of institution of the suit i.e., 29.02.1988, despite the fact that the decree had already been passed. Thereafter, the trial Court passed an order on 22....
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....on a decree being passed, had become functus officio. Section 21 is applicable only in pending proceedings and the provision is to be pressed into service when the application for impleading is decided and not later. The trial Court, while passing an order for impleadment has to consider the proviso to Section 21, the facts pleaded, and the evidence both documentary or oral, and then decide, whether the legal requirement is satisfied to hold that the suit is deemed to have been instituted against the impleaded party with effect from an earlier date. It is also open to the Court to consider the facts and upon satisfaction, to apply the proviso. However, such an exercise must be done while deciding the application and a further order is to be passed to that effect immediately and not after the suit is decreed. In the present case, the records reveal that the application under section 21 was filed only in 2005 - after the decree had already been passed. Such an application was not maintainable, and the Court had no jurisdiction to entertain it post-decree. Although the appeal filed by the appellant was dismissed by order dated 23.11.2017 in Civil Appeal No. 2073/2010, this Court in th....
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....the maintainability of the suit against the appellant, the imposition and recovery of compound interest is also without any legal authority. The appellant specifically raised an objection regarding the award of interest in its application under Section 47 CPC. However, the trial Court summarily rejected the said application on the ground that the appeals against the original decree were already dismissed, and the High Court also erroneously dismissed the writ petition, holding that the plea regarding interest had been raised for the first time before it. 43.1. Insofar as the rate of interest awarded by the trial Court is concerned, it is clearly excessive and exorbitant, and as held by us, contrary to law. Hence, the order of the Executing Court attaching the fixed deposits and flexi accounts of the appellant with Axis Bank, Union Bank of India and Odisha State Co- operative Bank, is without jurisdiction and legal authority. Furthermore, the bank guarantees furnished by the appellant were also encashed and paid to the decree holder, resulting in huge loss to the appellant, on the basis of an improper claim agitated before the courts below. It is also relevant to note here that t....
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....ealed Act, 1993 were inapplicable to the present case. Consequently, the execution proceedings to realize the principal with exorbitant interest calculated under the repealed Act, 1993 are unsustainable, and the decree cannot be enforced against the appellant. The trial Court, having already passed the decree, could not have entertained an application under Section 21 of the Limitation Act, 1963, and the post-decree application filed by Respondent No.1 was, therefore, not maintainable. Nearly four decades have elapsed in protracted litigation, and we are inclined to bring the matter to a quietus. Article 142 of the Constitution empowers this Court to pass any order necessary for doing complete justice in any cause or matter pending before it. Accordingly, we hold that the appellant (OSFC) is not liable to pay any amount to Respondent No. 1 for the alleged default committed by Respondent No. 2, under the decree. In view of the same, the impugned judgment and orders passed by the Courts below are hereby set aside. 46. It is not in dispute that Respondent No.1 has already received a total sum of Rs.2,92,57,559/-, comprising Rs.58,16,905/- from the encashment of bank guarantees and ....