M/S. MODERN INDUSTRIESversusM/S. STEEL AUTHORITY OF INDIA LTD. TH. M.D. & ORS.

                         [2010] 4 S.C.R. 560


A                   M/S. MODERN INDUSTRIES
                                  v.
    M/S. STEEL AUTHORITY OF INDIA LTD. TH. M.D. & ORS.
            (Civil Appeal Nos. 3305-3306 of 2010)

                           APRIL 15, 2010
B
           [R.V. RAVEENDRAN AND R.M. LODHA, JJ.]

        Interest on Delayed Payments to Small Scale and
    Ancillary Industrial Undertakings Act, 1993:
c
        s. 6(1) and (2) - Object and purpose of - Expression
    'amount due from a buyer', followed by expression 'together
    with the amount of interest' u/s 6(1)- Interpretation of- Held:
    Object and the purpose of the Act is to ensure that buyer
    promptly pays the amount due towards the goods supplied
D   or services rendered by the supplier - It also provides for
    payment of interest statutorily on the outstanding money in
    case of default- Said expression must be interpreted keeping
    in mind the purpose and the object of the Act and its
    provisions - Restricted meaning is not justified - s. 6(1)
E   provides that the amount due from buyer together with amount
    of interest calculated as per ss.4 and 5 shall be recoverable
    by supplier from buyer by way of suit or other proceeding
    under any law for the time being in force - Scheme of s. 6 rl
    w ss. 3, 4 and 5 does not envisage multiple proceedings - On
F   facts, order of High Court that expression 'amount due from.
    a buyer' would be amount admitted to be due in its plain and
    natural meaning and when admitted due amount is not paid
    by buyer, ss.3 to 6 along with other provisions of the Act would
    be applicable, cannot be accepted and is set aside - The Act
G   is applicable to the instant case, since parties entered into
    contract in 1983 which got altered from time to time and was
    last altered in 1995, and by that time the Act had come into
    force.

H                                560
   MODERN INDUSTRIES v. STEEL AUTHORITY OF                   561
          INDIA LTD. TH. M.D. & ORS.
     s. 6(1) and (2) - Action contemplated ins. 6 by way of A
 suit or any other legal proceeding uls. 6(1) or by making
reference to Industry Facilitation Council u/s. 6(2) -
 Maintainability of, only if it is for recovery of principal sum
 along with interest as per ss. 4 and 5 and not for interest alone
- Held: Uls. 6(2) action by way of reference to IFC could be         B
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 -
 IFC has competence to determine the amount due for goods
supplied or services, rendered in cases where the liability is       c
disputed by the buyer- On facts, order of High Court that since
buyer has alleged breach of contract by supplier, there was
no amount admitted to be due or settled amount and, thus,
there wa~ no question of delayed payment and reference of
.the dispute to IFC uls. 6(2) was without jurisdiction, cannot be    D
accepted and is set aside.

     Words and Phrases:

     Word 'together' - Meaning of, ill the context of s. 6(1)
of the Interest on Delayed Payments to Small Scale and               E
Ancillary Industrial Underlakings Act, 1993 - Held: Word
'together' ordinarily means conjointly or simultaneously but
the said meaning may not be apt in the context of s. 6 - Word
'together' ins. 6(1) would mean 'along with' or 'as well as'.
                                                                     F
      Word 'Due' - Meaning of - Held: Has different meanings
in different context - In narrow sense, word 'due' may imporl
a fixed and settled obligation or liability - In wider context,
amount can be said to be 'due', which may be recovered by
action - Amount that can be claimed as 'due' and recoverable
by an action may sometimes be also covered by expression             G
'due'.

    The questions which arose for consideration in these
appeals are as to the meaning of the expression, 'amount
due from a buyer, together with the amount of interest'              H
    562      SUPREME COURT REPORTS             [2010] 4 S.C.R.


A under sub-section (1) of s. e of the Interest on Delayed
  Payments to Small Scale and Ancillary Industrial
  Undertakings Act, 1993 and as to whether the Industry
  Facilitation Council cannot go beyond the scope of
  interest on delayed payments upon the matter being
B referred to it by any party to dispute under sub section
  (2) of s. 6 of the Act.

          Allowing the appeals, the Court

         HELD: 1. The wholesome purpose and object behind
C   the Interest on Delayed Payments to Small Scale and
    Ancillary Industrial Undertakings Act, 1993 as amended
    in 1998 is to ensure that buyer promptly pays the amount
    due towards the goods supplied or the services rendered
    by the supplier. It also provides for payment of interest
D   statutorily on the outstanding money in case of default.
    Section 4 fixes the rate of interest at one-and-half time of
    Prime Lending Rate charged by the SBI in case of default
    by the buyer in making payment of the amount to the
    supplier. The rate of interest fixed in section 4 overrides
E   any agreement between the buyer and supplier to the
    contrary. Section 5 imposes a liability on the buyer to pay
    compound interest at the rate mentioned in section 4 on
    the amount due to the supplier. Section 6 is a crucial
    provision. Sub-section l1) thereof provides that the
F   amount due from buyer together with amount of interest
    calculated in accordance with the provisions of sections
    4 and 5 shall be recoverable by supplier from the buyer
    by way of a suit or other proceeding under any law for
    the time being in force. It thus provides for enforcement
G   of right relating to recovery of amount due and the
    amount of interest which supplier may be entitled to in
    accordance with sections 4 and 5. The mode of such
    enforcement is by way of suit or any other proceeding
    under any law for the time being in force. Sub-section (2),
    however, overrides the mode of enforcement of right
H
   MODERN INDUSTRIES v. STEEL AUTHORITY OF                 563
          INDIA LTD. TH. M.D. & ORS.
provided in sub-section (1) by enabling any party to a            A
dispute to make a reference to the Industry Facilitation
Council (IFC) for recovery of amount due together with
amount of interest as provided in sections 4 and 5. Once
such dispute is referred, IFC acts as an arbitrator or
conciliator and the provisions of Arbitration and                 B
Conciliation Act, 1996 get attracted as if the arbitration
and conciliation were being conducted pursuant to an
arbitration agreement referred to in sub-section (1) of
section 7 of that Act. A plain reading of section 6 would
show that nature of dispute to be adjudicated by the IFC          c
as an arbitrator or resolution thereof as a conciliator is
in respect of the matters referred to in sub-section (1), i.e.,
the amount due from a buyer together with the amount
of interest calculated in accordance with the provisions
of sections 4 and 5. [Para 19] [576-F;. 577-A-H; 573-A]
                                                                  D
       2.1. The word 'due' has variety of meanings, in
  different context It may have different meanings. In its
 narrowest meaning, the word 'due' may import a fixed
 and settled obligation or liability. In a wider context the
 amount can be said to be 'due', which may be recovered           E
 by action. The amount that can be claimed as 'due' and
 recoverable by an action may sometimes be also covered
 by the expression 'due'. The expression 'amount due
.from a buyer' followed by the expression 'together with
 the amount of interest' under sub-section (1) of section         F
 6 of 1993 Act must be interpreted keeping the purpose
 and object of 1993 Act and its provisions, particularly
 sections 3, 4 and 5 in mind. This expression does not
 deserve to be given a restricted meaning as that would
 defeat the whole purpose and object of 1993 Act. [Para           G
 34] [584-G-H; 585-A-C]

    2.2. The scheme of section 6 of 1993 Act read with
sections 3, 4 and 5 does not envisage multiple
proceedings. Rather, whole idea of section 6 is to _ H
   564      SUPREME COURT REPORTS               [2010] 4 S.C.R.


A provide single window to the supplier for redressal of his
  grievance where the buyer has not made payment for
  goods supplied or services rendered in its entirety or part
  of it or such payment has not been made within time
  prescribed in section 3 for whatever reason and/or for
B recovery of interest as per sections 4 and 5 for such
  default. It is for this reason that sub-section (1) of section
  6 provides that 'amount due from the buyer together with
  the amount of interest calculated in accordance with the
  provisions of sections 4 and 5' shall be recoverable by
c the supplier from buyer by way of a suit or other legal
  proceeding. Sub-section (2) of section 6 talks of a dispute
  baing referred to IFC in respect of the matters referred to
  in sub-section (1), i.e. the dispute concerning amount due
  from a buyer for goods supplied or services rendered by
0 the supplier to buyer and the amount of interest to which
  supplier has become entitled under sections 4 and 5.
  [Para 34] [585-F-H; 586-A-B]

       2.3. It i~ true that word 'together' ordinarily means
  conjointly or simultaneously but this ordinary meaning
E put upon the said word may not be apt in the context of
  section 6. It cannot 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
F recovery of principal sum along with interest as per
  sections 4 and 5 and not for interest alone. The 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
G interest or only for interest where liability is admitted or
  has been disputed in respect of goods supplied or
  services rendered. 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
H cases of an existing determined, settled or admitted
  MODERN INDUSTRIES v. STEEL AUTHORITY OF                565
         INDIA LTD. TH. M.D. & ORS.
liability. IFC has competence to determine the amount           A
due for goods supplied or services rendered in cases
where the liability is disputed by the buyer. Construction
put upon section 6(2) by the buyer does not deserve to
be accepted as it will not be in conformity with the
intention, object and purpose of 1993 Act. Preamble to          B
1993 Act, does not persuade to hold otherwise. It is so
because Preamble may not exactly correspond with the
enactment; the enactment ma~· go beyond Preamble.
[Para 34) [586-B-G]

   Assam State Electricity Board and Ors. v. Shanti
                                                                c
Conductors Pvt. Ltd. and Anr. (2002) 2 GLR 550, approved.

     State of Kera/a and Ors. v. V.R. Kalliyanikutty and Anr.
(1999) 3 SCC 657; State of Gujarat v. Mirzapur Moti Kureshi
Kassab Jamat and Ors. (2005) 8 SCC 534; Bonam                   D
Satyavathi v. Adda/a Raghavulu 1994 (Suppl) 2 SCC 556;
Central Bank of India v. State of Kera/a and Ors. (2009) 4
SCC 94; Eastern Coalfields Limited v. Sanjay Transport
Agency and Anr. (2009) 7 SCC 345; Assam Small Scale
Industries Development Corpn. Ltd. and Ors. v. J.D.             E
Pharmaceuticals and Anr. (2005) 13 SCC 19; Shakti Tubes
Ltd. v. State of Bihar and Ors. (2009) 7 SCC 673; Madan
Mohan and Anr. v. Krishan Kumar Sood 1994 Supp (1) SCC
437; Maharashtra State Cooperative Bank Limited v. The
Assistant Provident Fund Commissioner and Ors. (2009) 10        F
SCC 123; Secur Industries Ltd. v. Godrej & Boyce Mfg. Co.
Limited and Anr. (2004) 3 sec 447, referred to.

     Irish Land Commission v. Viscount Massereene and
Ferrard (1904) 2 l.R. 1113; Hibernian Bank v. Yourell (1919)
1 l.R. Ch. D. 310, referred to.                                 G

    Webster Comprehensive Dictionary, International
Edition; Concise Oxford English Dictionary 10th Edition,
Revised ; Black's Law Dictionary Eighth Edition; Wharton's
Law Lexicon Fourteenth Edition; Law Lexicon by P.               H
    566    SUPREME COURT REPORTS                [2010] 4 S.C.R.


A Ramanatha Aiyar; 2nd Edition Reprint 1997; Jowitt's
  Dictionary of English Law 2nd Edition (Vol. 1); Stroud's
  Judicial Dictionary' of Words and Phrases, Referred to.

       3. The reasoning of the High Court that expression
  'amount due from a buyer' would be amount admitted to
8
  be due in its plain and natural meaning and when
  admitted due amount is not paid by the buyer, the
  provisions of sections 3 to 6 along with other provisions
  of 1993 Act would be applicable; and that High Court's
  finding that since the buyer has alleged breach of
C contract by the supplier, there was no amount admitted
  to be due or settled amount and, therefore, there was no
  question of delayed payment and reference of the dispute
  to the IFC under sub-section(2) of section 6 was without
  jurisdiction, cannot be accepted. The interpretation put
D by the High Court upon the expression 'amount  . due from
  the buyer' is fallacious. [Paras 36 and 37] [587-D; 588-C-
  E]                         .

       4. It cannot be said that 1993 Act is not applicable to
E the instant case as contract was entered into on January
  15, 1983 and 1993 Act came into effect on September 23,
  1992. Such a contention was not raised before the High
  Court; it is canvassed before this Court for the first time.
  Secondly, and more importantly, from the available
F material, it transpires that although the initial contract was
  entered into between the parties in January 1983 but it
  got altered from time to time in view of negotiations
  between the parties about supply of raw-materials by the
  buyer free of cost; the defect in drawings and assignment
G of additional works and last of such alteration was on
  April 29, 1995. By that time, the 1993 Act had already come
  into force. The 1993 Act is prospective in operation.
  [Paras 38, 39 and 41] [588-F-H; 589-A]

       Assam Small Scale Industries Development Corporation
H Ltd. and Ors. v. J.D. Pharmaceuticals and Anr. (2005) 13 SCC
  MODERN INDUSTRIES v. STEEL AUTHORITY OF               567
         INDIA LTD. TH. M.D. & ORS.

19; Shakti Tubes Limited v. State of Bihar and Ors. (2009) 7   A
sec 673, referred to.
      5. It was submitted on behalf of the buyer that IFC's
award was delivered ex-parte and no reasons have been
 given in support thereof; the award does not reflect any
                                                               8
 application of mind; and that if appeals are allowed and
 award is sustained that would cause grave prejudice to
 the buyer inasmuch as the original contract was for a sum
 of Rs. 8.19 lakhs, out of which Rs. 6.07 lakhs have already
 been paid in July, 1997 and goods worth balance amount
were given to the supplier and yet buyer is saddled with       C
the liability for an amount of Rs. 24,86,998/- with interest
at the rate of 18 per cent compounded with monthly rests
from September 24, 1997 which may run into crores of
rupees. The situation in which the buyer has been placed
is their own creation. They chose not to contest the claim     D
of the supplier before IFC on merits. No written statement
was filed despite opportunity granted by IFC·. The buyer
did not challenge nor disputed diverse claims made by
the supplier (including additional work) before IFC. Even
before the High Court, no submission seems to have             E
been made on merits of the award at all. In the
circumstances, the buyer does not deserve any
indulgence from this Court. Pertinently, though 1993 Act
provides a statutory remedy of appeal against the award
but the buyer did not avail the statutory remedy and           F
instead challenged the. award passed by IFC before High
Court in extraordinary jurisdiction under Article 226 of the
Constitution bypassing statutory remedy which, was not
justified. [Para 42] [591-D-H; 592-A-Bl
                    Case Law Reference:                        G

   (2005) 8 sec 534          Referred to.    Para 17
  1994 (Suppl) 2 SCC 556 Referred to.        Para 17
                                                               H
    568       SUPREME COURT REPORTS               [2010] 4 S.C.R.


A      (2009) 4 sec 94            Referred to.    Para 17

       (2009) 1 sec 345           Referred to.    Para 17

       (1904) 2 l.R. 1113         Referred to.    Para 27

       (1919) 1 l.R. Ch. D. 310   Referred to.    Para 28
B
       1994 Supp (1) sec 437 Referred to.         Para 29

       (1999) 3 sec 657           Referred to.    Para 30
       (2009) 1o sec 123          Referred to.    Para 31
c       (2002) 2 GLR 550          Approved.       Para 34
       (2004) 3 sec 447           Referred to.    Para 35
       (2005) 13 sec 19           Referred to.    Para 39, 40
D      (2009) 1 sec 673           Referred to.    Para 40

        CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
    3305-3306 of 2010.

      From the Judgment & Order dated 18.2.2008 of the High
E Court of Orissa, Cuttack in OJC Nos. 4271 and 9111 of 2000.

          Prashant Bhushan, Sumeet Sharma, Y. Raja Gopala Rao
    for the Appellant.

F      Ashwani Kumar, Sunil Kumar Jain, Aneesh Mittal, K.P.S.
    Chani, Shibashish Misra, D.S. Mahra for the Respondent.

          The Judgment of the Court was delivered by

          R.M. LODHA, J. 1. Leave granted.
G
         2. Two main questions arise for consideration - first, as
    to the meaning of the expression, 'amount due from a buyer,
    together with the amount of interest' under sub-section (1) of
    Section 6 of the Interest on Delayed Payments to Small Scale

H
  MODERN INDUSTRIES v. STEEL AUTHORITY OF                    569
   INDIA LTD. TH. M.D. & ORS. [R.M. LODHA, J.]

and Ancillary Industrial Undertakings Act, 1993 (for short, '1993   A
Act') and then, as to whether the Industry Facilitation Council
(IFC) cannot go beyond the scope of interest on delayed
payments upon the matter being referred to it by any party to
dispute under sub-section (2) of Section 6.
                                                                     B
       3. M/s. Modern Industries, Rourkela (for short, 'supplier')
got an order from the Steel Authority of India Limited -
Rourkela Steel Plant (for short, 'buyer') on January 15, 1983
for manufacture of Right Manipulator Side Guard. The order .
value was Rs. 8.19 lakhs. Inter alia, the terms and conditions C
of the order were : (i) the job should be done exactly as
specified in the drawings; (2) the alignment of bearing housings
be made by the supplier and for this purpose, a spare shaft
assembly would be issued against indemnity bond for checking
the perfect alignment and free rotation of the shaft ; (3) the
essentiallty certificate would be issued by the buyer; (4) O.S.TJ D
T.O.T. 5% to be paid extra and (5) 90 per cent payment to be
made against the proof of dispatch ·(R/R) and inspection
certificate, balance 10 per cent paymerit would be made within
thirty days after receipt of materials at site in good condition. It
appears that initially buyer did not issue raw-materials but later E
on the buyer on May 28, 1985 agreed to supply the materials
free of cost. The supplier also informed the buyer that the
drawings were defective. According to the supplier, there was
delay in supply of materials and removal of defects from
drawings. The buyer ultimately extended the period of supplies F
till June 4, 1997. It is admitted case of the parties that supplies
were made within extended period. The buyer ordered for
release of Rs. 6,07, 493/- as an interim payment but deducted
the balance payment of Rs. 2, 11,506/- out of Rs. 8.19 lakhs of
the original order as the cost of the supply of materials. The G
supplier, accordingly, raised a dispute in respect of balance
payment together with interest on delayed payment before IFC
under Section 6(2) of 1993 Act.

    4. IFC took cognizance of the dispute referred to it by the     H
    570      SUPREME COURT REPORTS                  [2010] 4 S.C.R.


A supplier and issued notice to the buyer on September 21,
   1999. On October 23, 1999, nobody appeared for buyer before
  IFC. However, IFC directed the buyer to settle the claims of the
  supplier within thirty days of receipt of the communication and
  gave an opportunity to submit their defence within ten days of
B receipt of the said communication and also depute a duly
  authorized officer to attend the proceedings. Vide its letter
  dated December 20, 1999, the buyer objected to the jurisdiction
  of IFC in dealing with the matter. It appears that on February
  15, 2000, a representative of the buyer appeared before the
c IFC. On that date, the IFC again directed the buyer to settle the
  dispute amicably in the presence of Joint Director of Industries
  (Planning), Rourkela and also file its written statement regarding
  its outcome on March 24, 2000. On March 24, 2000, the
  representative of the buyer was not present before IFC nor any
D written statement was filed as directed on February 15, 2000.
  In the circumstances, IFC passed an ex-parte award against
  the b.uyer in the sum of Rs. 24,86,998/- with interest at the. rate
  of 18 per cent being one-and-half times of Prime Lending Rate
  of the SBI compounded with monthly rests. IFC also directed
E that the interest would be payable with effect from September
  24, 1997 (the date of last delivery, i.e., May 28, 1997 plus
  maxim um 120 days of credit period) till the date of full payment.

       5. The ex-parte award passed against the buyer was kept
  in abeyance by IFC on May 6, 2000 for one month at the
F instance of the buyer to enable it to discuss and settle the
  matter with the supplier. However, no settlement took place
  between the parties and IFC on July 11, 2000 reiterated its ex-
  parte award dated March 24, 2000.

G      6. Two writ petitions came to be filed by the buyer before
  the High Court of Orissa. In the first writ petition, ex-parte award
  dated March 24, 2000 was challenged and in the other, award
  dated July 11, 2000 as well as ex-parte award dated March
  24, 2000 was assailed. In both writ petitions, the buyer also
H challenged the validity of the Interest on Delayed Payments to
   MODERN INDUSTRIES v. STEEL AUTHORITY OF                     571
    INDIA LTD. TH. M.D. & ORS. [R.M. LODHA, J.]
 Small Scale and Ancillary Industrial Undertakings (Amendment)         A
 Act 1998 (for short, '1998 Amendment Act').

      7. The Division Bench of the High Court vide its judgment
 dated February 18, 2008 allowed these writ petitions and
 quashed and set aside the awards dated March 24, 2000 and             B
 July 11, 2000. It is from this judgment that present appeals by
 special leave have arisen.                                 ·

       8. 1993 Act was sequel to a policy statement on small
  scale industries made by the Government in Parliament that
  suitable legislation would be brought to ensure prompt payment       C
  of money by buyers to the small industrial units. It was felt that
  inadequate working capital in a small scale and ancillary
  industrial undertaking was causing an endemic problem and
· such undertakings were very much affected. The Small Scale
  Industries Board - an apex advisory body on policies relating        D
  to small scale industrial units - also expressed its views 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. It
  was felt that the buyers, if required ur.der law to pay interest,    E
  would refrain from withholding payments to small scale and
  ancillary industrial undertakings. With these objects and
  reasons, initially an Ordinance, namely, the Interest on Delayed
  Payments to Small Scale and Ancillary Industrial Undertakings
  Ordinance, 1992 was promulgated by the President on                  F
  September 23, 1992 and then Bill was placed before both the
  Houses of Parliament and the said Bill having been passed,
  1993 Act was enacted. The Preamble to the 1993 Act reads,
  'An Act to provide for and regulate the payment of interest on
  delayed payments to small scale and ancillary industrial             G
  undertakings and for matters connected therewith or incidental
 thereto'.

    9. By 1998 Amendment Act, with effect from August 10,
1998, 1993 Act was amended whereby few new provisions
were inserted and some existing provisions amended.                    H
                SUPREME COURT REPORTS                 [2010] 4 S.C.R.


A       10. Section 2(c), (e) and (f) define "buyer", "small scale
    industrial undertaking" and "supplier'' as follows :

         "S.2.- Definitions. - In this Act, unless the context otherwise
         requires, -
B         (c)    "buyer" means whoever buys any goods or receives
                 any services from a supplier for consideration;

          (e)    "Small scale industrial undertaking" has the
                 meaning assigned to it by clause 0) of section 3 of
c                the Industries (Development and Regulation) Act,
                 1951 (65 of 1951);

          (f)    "supplier'' means an ancillary industrial undertaking
                 or a small scale industrial undertaking holding a
                 permanent registration certificate issued by the
D                Directorate of Industries of a State (or Union
                 territory and includes, -

                 (i) the National Small Industries Corporation, being
                 a company, registered under the Companies Act,
E                1956 (1 of 1956);

                 (ii) the Small Industries Development Corporation
                 of a State or a Union territory, by whatever name
                 called, being a company registered under the
                 Companies Act, 1956 ( 1 of 1956).]"
F
          11. Section 3 fastens liability on buyer to make payment
    for the goods supplied or the services rendered by the supplier
    to him within the time mentioned therein. It reads :

G       "S.3.- Liability of buyer to make payment.-Where any
        supplier supplies any goods or renders any services to any
        buyer, the buyer shall make payment therefor on or before
        the date agreed upon between him and the supplier in
        writing or, where there is no agreement in this behalf,
H       before the appointed day:"
  MODERN INDUSTRIES v. STEEL AUTHORITY OF                    573
   INDIA LTD. TH. M.D. & ORS. [R.M. LODHA, J.)

     12. Section 4 imposes a liability of interest upon the buyer   A
on failure to make payment of the amount due to the supplier.
Originally in 1993 Act, Section 4 was as follows :

    "S.4.- Date from which and rate at which interest is
    payab/e.-Where any buyer fails to make payment of the           B
    amount to the supplier, as required under Section 3, the
    buyer shall, notwithstanding anything contained in any
    agreement between the buyer and the supplier or in any
    law for the time being in force, be liable to pay interest to
    the supplier on that amount from the appointed day or, as       C
    the case may be, from the date immediately following the
    date agreed upon, at such rate which is five per cent points
    above the floor rate for comparable lending.

    Explanation.-For the purposes of this section, "floor rate
    for comparable lending" means the highest of the minimum        D
    lending' rates charged by scheduled banks (not being co
    operative banks) on credit limits in accordance with the
    directions given or issued to banking companies generally
    by the Reserve Bank of India under the Banking Regulation
    Act, 1949 (10 of 1949)."                                        E

    After amendment in 1998, Section 4 reads :

    "S.4.- Date from which and rate at which interest is
    payab/e.-Where any buyer fails to make payment of the
    amount to the supplier, as required under section 3, the        F
    buyer shall, notwithstanding anything contained in any
    agreement between the buyer and the supplier or in any
    law for the time being in force, be liable to pay interest to
    the supplier on that amount from the appointed day or, as
    the case may be, from the date immediately following the        G
   ·date agreed upon, at one-and-half time of Prime Lending
    Rate charged by the State Bank of India.

         Explanation.-For the purposes of this section,
    "Prime Lending Rate" means the Prime Lending Rate of            H
    574       SUPREME COURT REPORTS                    [2010] 4 S.C.R.

A         the State Bank of India which is available to the best
          borrowers of the bank."

       13. Section 5 imposes a liability on the buyer to pay-
    compound interest. It reads :
B         "S.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 rests) at the rate mentioned in
c         section 4 on the amount due to the supplier."

         14. The mode of recovery of amount due is provided in
    Section 6. Erstwhile Section 6 in 1993 Act read:

       ."S.6-. Recovery of amount due.-The amount due. from
D
        a buyer, together with the amount of interest calculated in
        accordance with the provision.s of Sections 4 and 5, shall
        be recoverable by the supplier from the buyer by way of a
        suit or other proceedings under any law for the time being
        in force."
E
          After amendment in 1998, Section 6 provides :

          "S.6.- Recovery of amount due.-(1) The amount due from
          a buyer, together with the amount of interest calculated in
          accordance with the provisions of sections 4 and 5, shall
F
          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.

          (2) Notwithstanding anything contained in sub-section (1),
G         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 1996) shall apply to such disputes as if the
H         arbitration or conciliation were pursuant to an arbitration
   MODERN INDUSTRIES v. STEEL AUTHORITY OF                    575
    INDIA LTD. TH. M.D. & ORS. [R.M. LODHA, J.]
      agreement referred to in sub-section (1) of section 7 of that   A
      Act."

      15. Section 7 provides that no appeal against any decree,
 award or other order will be entertained by any court or other
 authority unless the appellant (not being a supplier) has            B
 deposited with it seventy-five per cent of the amount in terms
 of the decree, award or, as the case may be, other order in
 the manner directed by such court or, as the case may be, such
 authority.

       16. Mr. Prashant Bhushan, learned counsel for the supplier     C
 urged that the IFC under Section 6(2) has jurisdiction to decide
 the dispute between supplier and buyer relating not only in
 respect of interest but also the principal amount payable by
 buyer to supplier. He submitted that the interpretation put by the
 High Court upon the provisions of 1993 Act is erroneous and          D
 that jurisdiction of IFC in resolving the dispute under Section 6
 (2) is ·not only confined to the dispute relating to interest·but
 would also be available where there is dispute regarding the
 principal amount payable by the buyer to the supplier. He
 submitted that the High Court seriously erred in holding that the    E
 requirement of 'settled amount' between the supplier and buyer
 is sine qua non for the applicability of 1993 Act.

        17. On the other hand, Mr. Ashwani Kumar, learned senior
  counsel for the buyer submitted that findings of the High Court
  on the applicability of 1993 Act and the issue of jurisdiction of   F
  the IFC are meritorious in law for the reasons given in the
  judgment. He submitted that the entire scheme and structure
  of 1993 Act, including the Preamble and the Statement of
  Objects and Reasons when construed harmoniously, would
  show that Section 6(2) can only be invoked in cases of an           G
  existing determined, settled or admitted liability. He would
  submit that the use of word 'due' in Section 6 indicates that
. penal interest provisions in Sections 4 and 5 of 1993 Act get
  attracted where the principal amount payable is not in dispute,
  is settled or admitted or has been found by a competent forum       H
    576       SUPREME COURT REPORTS                [2010] 4 S.C.R.


A to be 'due'. According to him, special law does not intend to
  substitute the regular procedure for determining a disputed
  liability where there is a bona fide dispute as to the amount due.
  He referred to the Blacks Law Dictionary, Stroud's Judicial
  Dictionary of Words and Phrases and Aiyer's Law Lexicon and
B also invited our attention to the decision of this Court in State
  of Kera/a and Others v. V.R. Kalliyanikutty and Another1 in
  support of his argument that the expression 'amount due' in
  Section 6 pre-supposes an existing determined, settled or
  admitted liability. He would submit that the Preamble and the
c Statement of Objects and Reasons and the headings of
  Section can be referred to in determining the applicability and
  scope of a statutory enactment. In this regard, he relied upon
  decisions of this Court in State of Gujarat v. Mirzapur Moti
  Kureshi Kassab Jamat and Others2 , Bonam Satyavathi v.
D Adda/a Raghavulu, 3 Central Bank of India v. State of Kera/a
  and Others 4 and Eastern Coalfields Limited v. Sanjay
  Transport Agency and Another6.

       18. Mr. Ashwani Kumar would also submit that 1993 Act
  even otherwise is not applicable to the present case as the
E contract pertaining to which the buyer has been saddled with
  a monetary liability was executed on January 15, 1983 and that
  1993 Act came into effect much later. He relied upon two
  decisions of this Court, namely, Assam Small Scale Industries
  Development Corpn. Ltd. and Others v. J.D. Pharmaceuticals
F and Another and Shakti Tubes Ltd., v. State of Bihar and
  Others. 7

          19. The wholesome purpose and object behind 1993 Act
    1.   (1999) 3 sec 657.
G   2.   (2005) a sec 534.
    3.   1994 (Suppl) 2 sec 556.
    4.   (2009) 4 sec 94.
    5.   (2009) 1 sec 345.
    6.   (2005) 13 sec 19.
H 1.     (2009) 1 sec 673.
  MODERN INDUSTRIES v. STEEL AUTHORITY OF                  577
   INDIA LTD. TH. M.D. & ORS. [R.M. LODHA, J.]

 as amended in 1998 is to ensure that buyer promptly pays the A
 amount due towards the goods supplied or the services
 rendered by the supplier. It also provides for payment of interest
 statutorily on the outstanding money in case of default. Section
 3, accordingly, fastens liability upon the buyer to make payment
 for goods supplied or services rendered to the buyer on or B
 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. Section 4 fixes the rate of interest at one-and-half
 time of Prime Lending Rate charged by the SBI in case of         c
 default by the buyer in making payment of the amount to the
supplier. The rate of interest fixed in Section 4 overrides any
 agreement between the buyer and supplier to the contrary.
 Section 5 imposes a liability on the buyer to pay compound
 interest at the rate mentioned in Section 4 on the amount due D
to the supplier. Section 6 is a crucial provision. Sub-section (1)
thereof provides that the amount due from buyer together with
amount of interest calculated in accordance with the provisions
of Sections 4 and 5 shall be recoverable by supplier from the
buyer by way of a suit or other proceeding under any law for
the time being in force. It thus provides for enforcement of right E
 relating to recovery of amount due and the amount of interest
which supplier may be entitled to in accordance with Sections
4 and 5. The mode of such enforcement is by way of suit or
any other proceeding under any law for the time being in force.
Sub-section (2), however, overrides the mode of enforcement F
of right provided in sub-section (1) by enabling any party to a
dispute to make a reference to the IFC for recovery of amount
due together with amount of interest as provided in Sections 4
and 5. Once such dispute is referred, IFC acts as an arbitrator
or conciliator and the provisions of Arbitration and Conciliation G
Act, 1996 get attracted as if the arbitration and conciliation were
being conducted pursuant to an arbitration agreement referred
to in sub-section (1) of Section 7 of that Act. A plain reading of
Section 6 would show that nature of dispute to be adjudicated
by the IFC as an arbitrator or resolution thereof as a conciliator H
    578       SUPREME COURT REPORTS                   [2010] 4 S.C.R.


A is in respect of the matters referred to in ~ub-section (1), i.e.,
  the amount due from a buyer together with the amount of
  interest calculated in accordance with the provisions of Sections
  4 and 5.

        20. What exactly is the meaning of words 'amount due from
8
    a buyer' which are followed by the expression 'together with the
    amount of interest' under sub-section (1) of Section 6 of 1993
    Act? Do these words mean an admitted sum due? Or do they
    mean the amount claimed to be due?

c        21. The meaning of the word 'due' has been explained in
    Webster Comprehensive Dictionary, (International Edition) as
    follows:

          "1. Owing and demandable; owed; especially, payable
          because of the arrival of the time set or agreed upon. 2.
D
          That should be rendered or given; justly claimable;
          appropriate."

        22. Concise Oxford English Dictionary (10th Edition,
    Revised) explains 'due' as follows :
E
          "DUE • .................. ?(of a person) at a point where
          something is owed or merited. ?required as a legal or
          moral obligation. 2 proper; appropriate ........... .

F
          -ORIGIN ME: from OFr. deu 'owed', based on L. debitus
          'owed', from debere 'owe' ".

       23. In Black's Law Dictionary (Eighth Edition), the word
G 'due' is explained :

          "adj. 1. Just, proper, regular, and reasonable <due care>
          <due notice>. 2. Immediately enforceable <payment is due
          on delivery>. 3. Owing or payable; constituting a debt. .... "

H         24. Wharton's Law Lexicon (Fourteenth Edition) makes the
     MODERN INDUSTRIES v. STEEL AUTHORITY OF                   579
      INDIA LTD. TH. M.D. & ORS. [R.M. LODHA, J.]
following comment with regard to word 'due' :                          A

       "anything owing. That which one contracts to pay or
       perform to another; that which law or justice requires to be
       paid or done."

     25. P. Ramanatha Aiyar in 'Law Lexicon'; 2nd Edition              B
(Reprint 1997) explains the word 'due'; as a noun: an existing
obligation; an indebtedness; a simple indebtedness without
reference to the time of payment : a debt ascertained and fixed
though payable in future; as an adjective : capable of being justly
demanded; claimed as of right; owing and unpaid, remaining             C
unpaid; payable; regular; formal; according to rule or form.

      26. Jowitt's Dictionary of English Law; 2nd Edition (Vol.
1) defines 'due'; 'anything owing, that which one contracts to
pay or perform to another. As applied to a sum of money, 'due'         D
means either that it is owing or that it is payable; in other words,
it may mean that the debt is payable. at once or at a future time.
It is a question of construction which of these two meanings the
word 'due' bears in a given case'.

     27. In Irish Land Commission v. Viscount Massereene               E
and Ferrard, 8 Gibson J. stated that word 'due' may mean
immediately payable (its common signification), or a debt
contracted, but payable in future. It was also highlighted that the
interpretation of the word 'due' must be according to the reason
and context of the statute.                                            F

     28. In the case of Hibernian Bank v. Youre/19, O'Connor
M. R. construed the word 'due' in Section 24(8) of the
Conveyancing and Law of Property Act, 1881 as due and
legally recoverable.
                                                                       G
     29. The expression 'amount due' occurring in different
statutes has come up for consideration before this Court. In

8.    (1904) 2 l.R. 1113.
9.    (1919) I l.R. Ch. D. 310.                                        H
    580       SUPREME COURT REPORTS                     [2010] 4 S.C.R.


A Madan Mohan and Another v. Krishan Kumar Sood10 , this
  Court while dealing with the expression 'amount due' occurring
  in the third proviso to clause (i) of sub-section (2) of Section
  14 of H.P. Urban Rent Control Act, 1987, held that the
  expression 'amount due' in the context wiH mean the amount
B due on and up to the date of the order of eviction; it wiH take
  into account not merely #le arrears of rent which gave cause _
  of action to file a petition for eviction but will include the rent
  which accumulated during the pendency of the eviction petition
  as well.
c        30. A three-Judge Bench of this Court in V.R.
    Kal/iyanikutty1 had an occasion to interpret the words 'amounts
    due' used in Section 71 of Kerala Revenue Recovery Act,
    1968. Section 71 of Kerala Act provided thus :

D         "S.71.- Power of Government to declare the Act
          applicable to any institution.-The Government may, by
          notification in the Gazette, declare, if they are satisfied that
          it is necessary to do so in public interest, that the
          provisions of this Act shall be applicable to the recovery
E         of amounts due from any person or class of persons to any
          specified institution or any class or classes of institutions,
          and thereupon all the provisions of this Act shall be
          applicable to such recovery."

    After referring to Wharton in Law Lexicon and Black's Law
F Dictionary, it was held that the words 'amounts due' in Section
  · 71 did not include time barred debt. This Court, however,
    highlighted that in every case the exact meaning of the word
    'due' will depend upon the context in which the word appears.

G        31. In Maharashtra State Cooperative Bank Limited v.
    The Assistant Provident Fund Commissioner and Others 1 1,
    before a three-Judge Bench of this Court interpretation of the

  10. 1994 supp (1) sec 437.
H 11. (2009) 10 sec 123.
  MODERN INDUSTRIES v. STEEL AUTHORITY OF                 581
   INDIA LTD. TH. M.D. & ORS. [R.M. LODHA, J.]
expression 'any amount due from an employer' used in Section A
11 (2) of the Employees Provident Fund and Miscellaneous
Provisions Act, 1952 came up for consideration. Section 11 (2)
of the said Act is as follows:

    "S.11.- Priority of payment of contributions over other
                                                              8
    debts.-(1) Where any employer is adjudicated insolvent
    or, being a company, an order for winding up is made, the
    amount due-

    (a)   * * * * *
                                                                 c
    (b)   * * * * *

      (2) Without prejudice to the provisions of sub-section (1),
      if any amount is due from an employer whether in respect
      of the employee's contribution (deducted from the wages D
      of the employee) or the employer's contribution, the amount
      so due shall be deemed to be the first charge on the
      assets of the establishment, and shall, notwithstanding
      anything contained in any other law for the time being in
      force, be paid in priority to all other debts."
                                                                  E
While interpreting the said expression 'any amount due from
an employer', this Court referred to Section 11 (1) besides the
other provisions of the said Act, namely, Sections 7A, 70, 148
and 15(2) and held that the said expression cannot be accorded
restricted meaning confining it to the amount determined under F
Section 7(A) or the contribution payable under Section 8. This
is what this Court said :

    "67. The expression "any amount due from an employer"
    appearing in sub-section (2) of Section 11 has to be
    interpreted keeping in view the object of the Act and other G
    provisions contained therein including sub-section (1) of
    Section 11 and Sections 7-A, 7-Q, 14-B and 15(2) which
    provide for determination of the dues payable by the
    employer, liability of the employer to pay interest in case
    the payment of the amount due is delayed and also pay H
    582      SUPREME COURT REPORTS                  [2010] 4 S.C.R.


A         damages, if there is default in making contribution to the
          Fund. If any amount payable by the employer becomes due
          and the same is not paid within the stipulated time, then
          the employer is required to pay interest in terms of the
          mandate of Section 7-Q. Likewise, default on the
B         employer's part to pay any contribution to the Fund can
          visit him with the consequence of levy of damages.

          68. As mentioned earlier, sub-section (2) was inserted in
          Section 11 by Amendment Act 40 of 1973 with a view to
          ensure that payment of provident fund dues of the workers
c         are not defeated by the prior claims of the secured and/or
          of the unsecured creditors. While enacting sub-section (2),
          the legislature was conscious of the fact that in terms of
          existing Section 11 priority has been given to the 'amount
          due from an employer in relation to an establishment to
D         which any scheme or fund is applicable including damages
          recoverable under Section 14-B and accumulations
          required to be transferred under Section 15(2). The
          legislature was also aware that in case of delay the
          employer is statutorily responsible to pay interest in terms
E         of Section 17. Therefore, there is no plausible reason to
          give a restricted meaning to the expression "any amount
          due from the employer" and confine it to the amount
          determined under Section 7-A or the contribution payable
          under Section 8.
F
          69. If interest payable by the employer under Section 7-Q
          and damages leviable under Section 14 (sic Section 14-
          8) are excluded from the ambit of expression "any amount
          due from an employer", every employer will conveniently
          refrain from paying contribution to the Fund and other dues
G         and resist the efforts of the authorities concerned to
          recover the dues as arrears of land revenue by contending
          that the movable or immovable property of the
          establishment is subject to other debts. Any such
          interpretation would frustrate the object of introducing the
H
  MODERN INDUSTRIES v. STEEL AUTHORITY OF                  583
   INDIA LTD. TH. M.D. & ORS. [R.M. LODHA, J.]
    deeming provision and non obstante clause in Section A
    11 (2). Therefore, it is not possible to agree with the learned
    Senior Counsel for the appellant Bank that the amount of
    interest payable under Section 7-Q and damages leviable
    under Section 14-B do not form part of the amount due from
    an employer for the purpose of Section 11 (2) of the Act." B

       32. In Assam State Electricity Board and Ors. v. Shanti
Conductors Pvt. Ltd. and Another12 , inter-alia, the question that
fell for consideration before the Full Bench of Gauhati High Court
was as to whether the suit for recovery of a mere interest under C
1993 Act is maintainable. The argument on behalf of the
appellant therein was that no suit merely for the recovery of the
interest under 1993 Act is maintainable under the provisions
of Section 6. It was contended that both principal sum and the
interest on delayed payment simultaneously must co-exist for
maintaining a suit under Section 6 of the 1993 Act.                D

     33. The Full Bench held that the suit is maintainable for
recovery of the outstanding principal amount, if any, along with
the interest on delayed payments as calculated under Sections
4 and 5 of the 1993 Act. It said :                          ·    E

    'The opening words of Section 6(1) "the amount due from
    the buyer, together with the amount of interest.. ... " can only
    mean that the principal sum due from the buyer as well as
    or along with the amount of interest calculated under the
    provisions of the Act, are recoverable. The word 'together' F
    here would mean 'as well as' or 'alongwith'. This cannot
    mean that the principal sum must be due on the date of
    the filing of the suits. The suits are maintainable for recovery
    of the outstanding, principal amount, if any, along with the
    amount of interest on the delayed payments as calculated G
    under Sections 4 and 5 of the Act. We are unable to agree
    with that if the principal sum is not due, no suit would lie
    for the recovery of the interest on the delayed payments,

12. (2002) 2 GLR 550                                              H
    584       SUPREME COURT REPORTS                   [2010] 4 S.C.R.


A         which might have already accrued. If such an interpretation
           is given the very object of enacting the Act would be
           frustrated. The Act had been enforced to see that small
           scale industries get the payment regarding supply made
          by them within the prescribed period and in case of delay
B         in payments the interest would be at a much higher rate
           (1 1/2 times of lending rate charged by the State Bank of
           India). The obligation of payment of higher interest under
          the Act is mandatory. Sections 1 and§ of the Act of 1993
           contain a non-obstante clause i.e. "Notwithstanding any
c         thing contained in any agreement between the buyer and
          the supplier". In other words, the parties to the contract
          cannot even contract out of the provisions of the 1993 Act.
           Even if such provision that interest under the Act on delay
          meant would not be chargeable is incorporated in the
D         contract, Sections 1 and§ of the Act of 1993 would still
          prevail as the very wording of these sections indicate. Take
          for instance that the buyer has not paid the outstanding
          amount of the supply by the due date. After much delay he
          offers the outstanding amount of the supply to the supplier.
          If the argument of the learned counsel for the appellant is
E
          to be accepted, then, if the supplier accepts entire amount
          he would be losing, his right to recover the amount of
          interest on the delayed payment under the Act. Therefore,
          he would have to refuse to accept the amount of payment
          and then file a suit for recovery of the principal amount and
F
          the interest on the delayed payment under the Act. The Act
          does not create any embargo against supplier not to
          accept principal amount at any stage and thereafter file a
          suit for the recovery or realization of the interest only on
          the delayed payments under the Act."
G
         34. The word 'due' has variety of meanings, in different
    context it may have different meanings. In its narrowest
    meaning, the word 'due' may import a fixed and settled
    obligation or liability. In a wider context the amount can be said
H
  MODERN INDUSTRIES v. STEEL AUTHORITY OF                   585
   INDIA LTD. TH. M.D. & ORS. [R.M. LODHA, J.]

to be 'due', which may be recovered by action. The amount that A
can be claimed as 'due' and recoverable by an action may
sometimes be also covered by the expression 'due'. The
expression 'amount due from a buyer' followed by the
expression 'together with the amount of interest' under sub-
section (1) of Section 6 of 1993 Act must be interpreted B
keeping the purpose and object of 1993 Act and its provisions,
particularly Sections 3, 4 and 5 in mind. This expression does
not deserve to be given a restricted meaning as that would
defeat the whole purpose and object of 1993 Act. Sub-section
(1) of Section 6 provides that the amount due from buyer           c
together with 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 suit or other proceeding under
any law for the time being in force. If the argument of senior
counsel for the buyer is accepted, that would mean that where D
the buyer has raised some dispute in respect of goods supplied
or services rendered by the supplier or disputed his liability to
make payment then the supplier shall have to first pursue his
 remedy for recovery of amount due towards goods supplied or
services r.endered under regular procedure and after the E
amount due is adjudicated, initiate action for recovery of amount
of interest which he may be entitled to in accordance with
Sections 4 and 5 by pursuing remedy under sub-section (2) of
Section 6. We are afraid the scheme of Section 6 of 1993 Act
read with Sections 3,4 and 5 does not envisage multiple
proceedings as canvassed. Rather, whole idea of Section 6 F
is to provide single window to the supplier for redressal of his
grievance where the buyer has not made payment for goods
supplied or services rendered in its entirety or part of it or such
payment has not been made within time prescribed in Section
3 for whatever reason and/or for recovery of interest as per G
Sections 4 and 5 for such default. It is for this reason that sub-
section (1) of Section 6 provides that 'amount due from the
buyer together with the amount of interest calculated in
accordance with the provisions of Sections 4 and 5' shall be
                                                                    H
    586      SUPREME COURT REPORTS                   (2010] 4 S.C.R.


A  recoverable by the supplier from buyer by way of a suit or other
   legal proceeding. Sub-section (2) of Section 6 talks of a
   dispute being referred to IFC in respect of the matters referred
   to in sub-section (1 ), i.e. the dispute concerning amount due
   from a buyer for goods supplied or services rendered by the
B supplier to buyer and the amount of interest to which supplier
   has become entitled under Sections 4 and 5. 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
c  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. We approve the view of
0 Gauhati High Court in Assam State Electricity Board12 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
E respect of goods supplied or services rendered. In our opinion,
  under Section 6(2) action by way of reference to IFC cannot
  be restricted to a claim for recovery of interest due under
  Sections 4 and 5 only in cases of an existing determined,
  settled or admitted liability. IFC has competence to determine
  the amount due for goods supplied or services rendered in
F cases where the liability is disputed by the buyer. Construction
  put upon Section 6(2) by learned senior counsel for the buyer
  does not deserve to be accepted as it will not be in conformity
  with the intention, object and purpose of 1993 Act. Preamble
  to 1993 Act, upon which strong reliance has been placed by
G learned senior counsel, does not persuade us to hold
  otherwise. It is so because Preamble may not exactly
  correspond with the enactment; the enactment may go beyond
  Preamble.

H
   MODERN INDUSTRIES v. STEEL AUTHORITY OF                 587
    INDIA LTD. TH. M.D. & ORS. [R.M. LODHA, J.]

     35. In Secur Industries Ltd. v. Godrej & Boyce Mfg. Co. A
Limited and Another13 , this Court observed that sub-section (2)
of Section 6 expressly incorporates the provisions of the
Arbitration and Conciliation Act, 1996 and it further creates a
legal fiction whereby disputes referred to IFC are to be deemed
to have been made pursuant to an arbitration agreement as B
defined in sub-section (1) of Section 7 of that Act. There is,
thus, no reason as to why IFC, which acts as an Arbitrator or
Conciliator under the provisions of Arbitration and Conciliation
Act, 1996, cannot deal with the dispute concerning principal
amount due to the supplier for the goods supplied or services      c
rendered.

      36. The High Court, in the impugned order, however, held
that expression 'amount due from a buyer' would be amount
admitted to be due in its plain and natural meaning and when
admitted due amount is not paid by the buyer, the provisions D .
of Sections 3 to 6 along with other provisions of 1993 Act would
be applicable. In the opinion of High Court since the buyer has
alleged breach of contract by the supplier, there was no amount
admitted to be due or settled amount and, therefore, there was
 no question of delayed payment and reference of the dispute E
to the IFC under sub-section(2) of Section 6 was without
jurisdiction. The High Court in the impugned order held thus :

     "16. Therefore, the said matter before the IFC would be
     limited to the amount due from the buyer together with        F
     amount of interest calculated only in accordance with the
     provisions of Sections 4 and 5 of the Act. Section 4
     applies only when Section 3 is applied. Therefore, the
     ultimate focus in the Act is on Section 3 as already
     discussed above. Section 3 speaks about the settled           G
     amount and not th~ amount which may be calculated
     according to the calculations of the supplier disputed by
     the buyer or where there is dispute ·regarding delayed
     supply causing loss to the buyer or defective supply of the
13. c2004) 3 sec 447.                                              H
    588      SUPREME COURT REPORTS                    [2010] 4 S.C.R.


A         materials. Therefore "the amount due from a buyer would
          be interpreted in its plain and natural manner i.e. amount
          admitted to be due" and when it is not paid by the buyer,
          the provisions of Section 3 to 6 along with other provisions
          of the Act would be applicable.
8
          17. In the instant case, the buyer i.e. the petitioner has
          alleged that the supply was not made by the opposite party
          No. 2 in time and there was delay in supply of materials
          which caused loss to the petitioner and by the time of
          supply of materials, technology has already been changed.
c         Therefore, in nutshell, the petitioner has alleged breach of
          contract by opposite party No. 2 and therefore, in case of
          allegation of breach of contract, it cannot be said that there
          is any amount admitted to be due or settled amount.
          Hence, there is no question of delayed payment and
D         referring the dispute to the IF'C under the provisions of Sub-
          section 2 of the Section 6, to our mind, would be without
          j1 irisd°iction."

        37. We find it difficult to accept the reasoning of the High
E   Court. The interpretation put by the High Court upon the
    expression 'amount due from the buyer' is fallacious for the
    reasons indicated above which we need not respect.

         38. Now, the submission of learned senior counsel for the
    buyer with regard to the applicability of the 1993 Act to the
F   present case may be considered. His argument is that 1993
    Act is not applicable to the present case as contract was
    entered into on January 15, 1983 and 1993 Act came into
    effect on September 23, 1992. The argument does not appeal
    us for more than one reason. In the first place, this contention
G   was not raised before the High Court; it is canvassed before
    us for the first time. Secondly, and more importantly, from the
    available material, it transpires that although the initial contract
    was entered into between the parties in January 1983 but it got
    altered from time to time in view of negotiations between the
H
   MODERN INDUSTRIES v. STEEL AUTHORITY OF                    589
    INDIA LTD. TH. M.D. & ORS. [R.M. LODHA, J.]

· parties about supply of raw-materials by the buyer free of cost;   A
  the defect in drawings and assignment of additional works and
  last of such alteration was on.April 29, 1995.

      39. That 1993 Act is prospective in operation is settled
 by. two decisions of this Court.. In Assam Small Scale              8
 lndus't(ie$ Development Corporation Ltd. and Others6, this
 Court~~:                                                 '
      "37. We have held herein before that clause 8 of the terms
      and conditions rel.ates to the payments of balance 10%. It
      is not in dispute that the plaintiff had demanded both the     C
      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         D
      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,· SI. Nos. 1 to
      26 (referred to in the penultimate para of the trial court     E
    · 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 SI. Nos. 27 to 71 (that is
      supply orders between 22-10-1992 to 19-6-1993), will
      attract the prov:sions of the 1993 Act.                        F

     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% up to June 1991 and 23.5% thereafter."       G

      40. Assam Small Scale Industries Development
 Corporation Ltd. and Others6 has been followed recently by
 this Court in the case of Shakti Tubes Limited7 . In Shakti
 Tubes LimitecF, this Court said :                                   H
    590       SUPREME COURT REPORTS                  [2010] 4 S.C.R.


A          "18. In our considered opinion, the ratio of the aforesaid
           decision in Assam Small Scale Industries case, (2005) 13
          sec    19, is clearly applicable and would squarely govern
          the facts of the present case as well. The said decision
          was rendered by this Court after appreciating the entire
B         facts as also all the relevant laws on the issue 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
c         at after appreciating all the facts and circumstances of the
          case.

        21. We have considered the aforesaid rival submissions.
        This Court in Assam Small Scale Industries

D
        case,(2005)13     sec     19 has finally set at rest the issue
        raised by stating that as to what is to be considered
      . relevant is the date of supply order placed by the
        respondents and when this Court used the expression
        "transaction" it only meant a supply order. The Court made
        it explicitly clear in para 37 of the judgment which we have
E       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
F       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.
G
          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.
H
  MODERN INDUSTRIES v. STEEL AUTHORITY OF                   591
  . INDIA LTD. TH. M.D. & ORS. [R.M. LODHA, J.]

     31. Even otherwise, we are of the considered view that         A
     there was neither any alteration of the contract nor any
     novation of the contract in the present case. The
     correspondence between the parties clearly disclosed that
     after the respondents issued the supply order, the
     appellant-plaintiff did not supply the pipes in terms of the   B
   · supply order and it urged mainly for the increase in the
     price of the goods. Subsequently, they relied upon the price
     escalation clause and asked for increase in the price of
     pipes."
                                                                    c
     41. These two decisions, however, do not help the case
of the buyer for what we have indicated above viz., that in the
present case the original contract got altered from time to time
and it was last altered on April 29, 1995. By that time, 1993
Act had already come into force.
                                                                    D
      42. Lastly, it was submitted by learned senior counsel for
the respondents that IFC's award was delivered ex-parte and
no reasons have been given in support thereof; the award does
not reflect any application of mind. He would submit that if
appeals are allowed and award is sustained that would cause E
grave prejudice to the buyer inasmuch as the original contract
was for a sum of Rs. 8.19 lakhs, out of which Rs. 6,07 lakhs
have already been paid in July, 1997 and goods worth balance
amount were given to the supplier and yet buyer is saddled with ·
the liability for an amount of Rs. 24,86,998/- with interest at the F
rate of 18 per cent compounded with monthly rests from
September 24, 1997 which may run into crores of rupees. The
situation in which the buyer has been placed is their own
creation. They chose not to contest the claim of the supplier
before IFC on merits. No written statement was filed despite G
opportunity granted by IFC. The buyer did not challenge nor
disputed diverse claims made by the supplier (including
additional work) before IFC. Even before the High Court, no
submission seems to have been made on merits of the award
at all. In the circumstances, the buyer does not deserve any H
                                                  :j

    592     SUPREME COURT REPORTS                 [2010] 4 S.C.R.


A indulgence from this Court. Pertinently, though 1993 Act
  provides a statutory remedy of appeal against the award but
  the buyer did not avail of the statutory remedy and instead
  challenged the award passed by IFC before High Court in
  extraordinary jurisdiction under Article 226 of the Constitution
B bypassing statutory remedy which, in our view, was not justified.

         43. The result is that appeals are allowed and impugned
    judgment dated February 18, 2008 passed by the High Court
    is set aside. Partres shall bear their own costs.

    N.J.                                        Appeals allowed.