Supreme Court of India
M/S. SHANTI CONDUCTORS (P) LTD. & ANR.versusASSAM STATE ELECTRICITY BOARD & ORS.
- Citation
- 2019 INSC 81
- Decided
- 23 January 2019
- Disposal
- Dismissed
- Bench
- A K SIKRI
Holding
The 1993 Act applies to supplies made after its commencement irrespective of the contract date, is prospective in operation, the Limitation Act governs the limitation period, the 1997 suit was time‑barred, a suit for interest alone is maintainable, and the appeal against the review order is not maintainable.
Summary
M/s Shanti Conductors entered supply contracts with Assam State Electricity Board before the Interest on Delayed Payment to Small Scale Ancillary Industrial Undertakings Act, 1993 came into force, but the supplies were completed after the Act's commencement. The Supreme Court held that the Act applies to any supply made after its enforcement irrespective of when the contract was executed, and that the Act is prospective, not retrospective. The Court clarified that the Limitation Act, 1963 governs the time limit for suits under the 1993 Act, and the suit filed in 1997 was barred because the cause of action accrued on the appointed day (4 Nov 1993). It affirmed that a suit for recovery of only interest is maintainable, and that the High Court could award 9% interest on equitable grounds even if the Act did not apply. Finally, the Court dismissed the appeals, holding the challenge to the review order untenable.
Issues considered
- Whether the 1993 Act applies when the contract was entered before its enforcement
- Whether the 1993 Act operates retrospectively
- Whether the Limitation Act, 1963 applies to suits under the 1993 Act and the period of limitation
- From which date interest becomes payable under the 1993 Act
- Whether a suit for recovery of only interest is maintainable
- Whether the appeal challenging the review judgment is maintainable
- Whether the High Court could award 9% interest despite finding the Act inapplicable
Legislation cited
- Code of Civil Procedure, 1908s. 34
- Interest on Delayed Payment to Small Scale Ancillary Industrial Undertakings Act, 1993s. 10, s. 2(d), s. 3, s. 4, s. 5, s. 6, s. 7
- Limitation Act, 1963s. 14(2), s. 2(a), s. Part X Schedule Article 113
Subjects
Interest on delayed paymentRetrospective legislationLimitation periodSmall scale industriesStatutory constructionContract before enactmentSuit for interestOverriding clauseReview jurisdiction
Judgment
[2019] 1 S.C.R. 489 489
M/S. SHANTI CONDUCTORS (P) LTD. & ANR. A
v.
ASSAM STATE ELECTRICITY BOARD & ORS.
(Civil Appeal Nos. 8442-8443 of 2016)
JANUARY 23, 2019 B
[A. K. SIKRI, ASHOK BHUSHAN AND
S. ABDUL NAZEER, JJ.]
Interest on Delayed Payment to Small Scale Ancillary
Industrial Undertakings Act, 1993 – Applicability of the Act, 1993
C
when the contract for supply was entered between the parties prior
to enforcement of the Act i.e. 23.09.1992 – Held: The incidence of
applicability of the liability under the Act is supply of goods or
rendering of service – Entering into an agreement being not
expressly or impliedly referred to in the statutory scheme as an
incident for fastening of the liability, making the date of agreement D
as date for imposition of liability does not conform to the statutory
scheme – Thus, even if agreement of sale is entered prior to
enforcement of the Act, liability to make payment under s.3 and
liability to make payment of interest under s.4 shall arise if supplies
are made subsequent to the enforcement of the Act.
E
Interest on Delayed Payment to Small Scale Ancillary
Industrial Undertakings Act, 1993 – Whether the Act, 1993 can be
said to have retrospective operation – Held: The Act is not
retrospective – The liability of buyer to make payment and day from
which payment and interest become payable under ss.3 and 4 does
F
not relate on any event which took place prior to Act, 1993 and,
therefore, it is not even necessary to say that Act, 1993 is retroactive
in operation – The Act, 1993 is clearly prospective in operation –
Retroactive effect.
Interest on Delayed Payment to Small Scale Ancillary
Industrial Undertakings Act, 1993 – s.10 – Limitation – The provision G
of s.10 of 1993 Act gives overriding effect to “the provisions of Act
notwithstanding anything inconsistent herewith contained in any
other law for the time being in force” – However, since there is no
provision in 1993 Act pertaining to limitation, the provision of
H
489
490 SUPREME COURT REPORTS [2019] 1 S.C.R.
A Limitation Act pertaining to filing suit shall continue to operate,
there being nothing contrary or overriding under 1993 Act –
Limitation Act, 1963 is fully applicable with regard to money suit
filed by the appellant hence, the question of limitation has to be
answered as per Limitation Act 1963 – The limitation for suit for
recovery of interest under 1993 Act is a suit of nature which shall
B
be covered by Part X Art.113 of the Schedule – Limitation Act 1963
– Part X Art.113 of the Schedule – Non-obstante clause.
Interest on Delayed Payment to Small Scale Ancillary
Industrial Undertakings Act, 1993 – s.2(d) – Interest – Date from
when payable – Held: Payment shall become due from the appointed
C day – Appointed day is defined in s.2(d) to be “the day following
immediately after the expiry of period of 30 days from the date of
acceptance or the day of deemed acceptance of any goods or any
service from any buyer or supplier” – In the instant case, last supply
was completed on 4.10.1993 – Thus, appointed day would be
D 4.11.1993 – Thus when the payment was not made on 4.11.1993
with regard to amount due, i.e. the interest as per s.4, the limitation
for filing the suit will start running – Art.113 provides for “time
from which period begins as when the right to sue accrues” – s.4
creates statutory liability to pay interest from the day as mentioned
in s.4 – The amount become due as soon as liability to pay arises –
E s.6 also uses the word “amount due from buyer” – Thus the fact
that last payment was made on 5.3.1994 cannot be treated as period
for beginning of the limitation and on that ground it cannot be held
that suit was within time – Thus, benefit of s.14 cannot be claimed
by the plaintiff in the facts of the instant case – Suit filed by the
F plaintiff was clearly barred by time.
Interest on Delayed Payment to Small Scale Ancillary
Industrial Undertakings Act, 1993 – Suit for recovery of only interest
when admittedly entire principal amount was paid prior to filing of
the suit – Maintainability of – Held: Maintainable – s.6 of the 1993
G Act provides that “the amount due from the buyer, together with
amount of interest calculated in accordance with provision of ss.4
and 5 shall be recoverable” – s.6 uses the expression “together
with the amount of interest with the amount due from the buyer” –
The interpretation that proceeding for recovery of interest can be
undertaken only when any amount is due, if accepted then buyer
H
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 491
ELECTRICITY BOARD
will very easily get away from payment of interest only after making A
payment of Principal amount – This interpretation shall defeat very
purposes of 1993 Act – It is well settled that provisions of Act has to
be interpreted in the manner so as to advance the object of the Act
– Interpretation of statutes.
Interest on Delayed Payment to Small Scale Ancillary B
Industrial Undertakings Act, 1993 – Whether the High Court while
considering the review petition even after expressing that Act, 1993
is not applicable could have allowed 9% interest to the plaintiff for
the period of delayed payment– Held: Even if Act 1993 is not
applicable, the Court can very well exercise its jurisdiction to award
interest – High Court did not commit any error in awarding 9% C
interest to plaintiff – Review.
Appeal – Maintainability of – Review – Held: When liberty to
file review was obtained on a ground, the review judgment can be
questioned on the ground on which the review was permitted – In
other words, the ground on which the appellant can challenge the D
review judgment can be the ground on which liberty was obtained
to file review.
Words and Phrases – Retroactive – Meaning of.
Dismissing the appeals, the Court E
HELD:
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 ?
F
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 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 G
liability depends on the statutory factors as enumerated in Section
3 and Section 4 of the Act, 1993. Factor for liability to make
payment under Section 3 being the supplier supplies any goods
or renders services to the buyer, the liability of buyer cannot be
denied on the ground that agreement entered between the parties
H
492 SUPREME COURT REPORTS [2019] 1 S.C.R.
A for supply was prior to Act, 1993. To hold that liability of buyer
for payment shall arise only when agreement for supply was
entered subsequent to enforcement of the Act, it shall be adding
words to Section 3 which is not permissible under principles of
statutory construction. Even if agreement of sale is entered prior
to enforcement of the Act, liability to make payment under Section
B
3 and liability to make payment of interest under Section 4 shall
arise if supplies are made subsequent to the enforcement of the
Act. [Para 52][518-G-H; 519-A-D]
Purbanchal Cables and Conductors Private Limited v.
Assam State Electricity Board and another (2012) 7 SCC
C 462 : [2012] 6 SCR 905 – Not correct law to the extent
it held that the Act, 1993 shall be applicable only when
supply order was entered subsequent to enforcement
of the Act.
Assam Small Scale Industries Development Corp. Ltd.
D and others v. J.D. Pharmaceuticals and another (2005)
13 SCC 19 : [2005] 4 Suppl. SCR 232 – not correct
law.
2. Whether in the event it is found that Act is applicable
also with regard to contract entered prior to Act, 1993 in
E pursuance of which contract, supplies were made after the
enforcement of Act, 1993, the Act, 1993 can be said to have
retrospective operation ?
Retroactivity in the context of the statute consists
application of new rule of law to an Act or transaction which has
F been completed before the Rule was promulgated. In the instant
case the liability of buyer to make payment and day from which
payment and interest become payable under Section 3 and 4 does
not relate on any event which took place prior to Act, 1993, it is
not even necessary to say that Act, 1993 is retroactive in operation.
G The Act, 1993 is clearly prospective in operation and it is not
necessary to term it as retroactive in operation. [Paras 57,
58][521-F-G]
3. Whether money suit by M/s. Shanti Conductors was
barred by limitation ?
H
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 493
ELECTRICITY BOARD
3.1 Section 10 provided that overriding effect is given to A
the provisions of the Act over any inconsistent law for the time
being in force. It simply meant that if there is anything inconsistent
in any other law to the provisions of the Act, the provisions of the
Act shall prevail and override any inconsistent law. There is no
provision in 1993 Act pertaining to limitation, the provision of
B
Limitation Act pertaining to filing suit shall continue to operate
there being nothing contrary or overriding under 1993 Act. Section
10 will operate only with regard to expressed provisions
contained in 1993 Act which shall be given overriding effect but
reading Section 10 to the effect that it shall override Limitation
Act is not correct interpretation of Section 10 and trial court fell C
in error in relying on Section 10 in holding that Limitation Act
will not apply. Thus, Limitation Act, 1963 is fully applicable with
regard to money suit filed by the appellant hence, the question of
limitation has to be answered as per Limitation Act 1963. The
limitation for suit for recovery of interest under 1993 Act is a suit
D
of nature which shall be covered by Part X Article 113 of the
Schedule. [Paras 68-70][526-E-F]
3.2 The period for commencement of limitation for filing
suit under Article 113 begins “when the right to sue accrues”.
Section 4 of 1993 Act deals with date from and rate at which
interest is payable. Section 4 contains expression that where E
“any buyer fails to make any payment of the amount to the supplier
as required under Section 3…. be liable to pay interest to the
supplier on that amount on the appointed day or as the case may
be from the date immediately following the date agreed upon…”.
When there is no agreed date of payment between the parties, F
the payment shall become due from the appointed day. Appointed
day has been defined in Section 2(d) to be “the day following
immediately after the expiry of period of 30 days from the date of
acceptance or the day of deemed acceptance of any goods or any
service from any buyer or supplier.” In the instant case, last
supply was received on 04.10.1993, therefore, at least from G
04.11.1993, if not earlier, the amount of interest under Section 4
shall become due. Article 113 provides for “time from which
period begins as when the right to sue accrues”. 1993 Act Section
4 creates statutory liability to pay interest from the day as
mentioned in Section 4 the liability to pay is fastened on buyer. H
494 SUPREME COURT REPORTS [2019] 1 S.C.R.
A The amount become due as soon as liability to pay arises. Section
6 also uses the word “amount due from buyer”. The amount due
is amount which is liable to be paid by buyer under Section 4.
Thus the fact that last payment was made on 05.03.1994 cannot
be treated as period for beginning of the limitation and on that
ground it cannot be held that suit was within time. Thus, benefit
B
of the Section 14 cannot be claimed by the plaintiff in the facts of
the present case. Thus, suit filed by the plaintiff was barred by
time. [Paras 71, 72, 74, 76][507-F-H, 528-A, C, D-E; 529-A]
4. Whether the suit filed by the appellants for recovery of
only interest when admittedly entire principal amount was paid
C prior to filing of the suit can be said to be maintainable?
Section 6 of the 1993 Act provides that “the amount due
from the buyer, together with amount of interest calculated in
accordance with provision of Section 4 and 5 shall be
recoverable……”. The interpretation that proceeding for
D recovery of interest can be undertaken only when any amount is
due, if accepted then buyer will very easily get away from payment
of interest only after making payment of Principal amount. This
interpretation shall defeat very purposes of 1993 Act. It is well
settled that provisions of Act has to be interpreted in the manner
E so as to advance the object of the Act. [Para 79][529-F-G]
Purbanchal Cables and Conductors Private Limited v.
Assam State Electricity Board and another (2012) 7 SCC
462 : [2012] 6 SCR 905 – affirmed (View that suit by
supplier for recovery of only interest is maintainable
F is fully approved)
5. Whether appeal filed by M/s Trusses and Towers Pvt.
Ltd. challenging the review judgment dated 19.03.2003 cannot
be entertained since no liberty was granted by this Court in
SLP(C)No.12217 of 2001 when the SLP filed against the main
G judgment of the High court dated 05.04.2001 was dismissed as
withdrawn ?
The submission of the counsel to the board is that since
against the judgment of High Court dated 15.4.2001, S.L.P. was
withdrawn without obtaining the liberty, appeal is not maintainable
challenging the Review Order and judgment dated 19.3.2003.
H
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 495
ELECTRICITY BOARD
In the Order passed by this Court on 6.8.2001, this Court had A
noticed the submission of the appellant that appellant shall move
the High Court in review stating that it has committed error in
recording that “all the bills were paid earlier to the
commencement of this act”. In the Review Petition, the review
has been partly allowed by allowing interest @ 9% against which
B
the appeal has been filed. A perusal of the Review judgment
indicates that High Court has not returned any finding that all
the bills were not paid earlier to the commencement of the Act.
A perusal of judgment of High Court indicates that High Court
proceed on the presumption that even if 1993 Act is not applicable
the entitlement of the plaintiff could be considered in equity. When C
the liberty to file review was obtained on the ground as noticed
in the Order the review judgment can be questioned on the
ground on which review was permitted. The Division Bench
judgment does not indicate that it proceeds on the ground as
contended by the appellant and noticed by this Court on
D
06.08.2001. The interest of 9% was allowed on the premise that
1993 Act is not applicable and said interest is allowed on equity
relying on an earlier judgment. Thus, instant appeal challenging
the review judgment cannot be entertained. The ground on which
the appellant can challenge the review judgment can be the ground
on which liberty was obtained to file review. Thus appeal is not E
maintainable. [Paras 80-82][530-A-F]
6. Whether the High court even after expressing that Act,
1993 is not applicable could have allowed 9% interest to the
plaintiff?
The High Court allowed interest @ 9% per annum for the F
period of delayed payment. Even if Act 1993 is not applicable,
the Court can very well exercise its jurisdiction to award interest.
High Court did not commit any error in awarding 9% interest to
plaintiff respondent. [Paras 83, 84][531-A, E-F]
Shakti Tubes Ltd. v. State of Bihar and others (2009) 7 G
SCC 673 : [2009] 10 SCR 739; Modern Industries vs.
Steel Authority of India Limited (2010) 5 SCC 44 : [2010]
4 SCR 560; State Bank’s Staff Union (Madras Circle)
v. Union of India and ors. (2005) 7 SCC 584 : [2005] 3
Suppl. SCR 200; Jay Mahakali Rolling Mills v. Union H
496 SUPREME COURT REPORTS [2019] 1 S.C.R.
A of India and others (2007) 12 SCC 198 : [2007] 8
SCR 855 – referred to
Case Law Reference
[2005] 4 Suppl. SCR 232 not correct law Para 20
B [2009] 10 SCR 739 referred to Para 20
[2010] 4 SCR 560 referred to Para 20
[2005] 3 Suppl. SCR 200 referred to Para 55
[2012] 6 SCR 905 not correct law Para 52
C [2007] 8 SCR 855 referred to Para 56
[2012] 6 SCR 905 affirmed Para 79
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 8442-
8443 of 2016.
D From the Judgment and Order dated 20.11.2012 and 20.12.2012
of the Gauhati High Court at Guwahati in RFA No. 66 of 2000 and MC
3472 of 2012.
WITH
Civil Appeal Nos. 8445, 8448, 8450 of 2016.
E
Ajit Kumar Sinha, Basava Prabhu S. Patil, Navaniti Prasad Singh,
Vijay Hansaria, Sr. Advs., Devashish Bharuka, Ravi Bharuka,
Ms. Sarvshree Singh, Justine George, Akshay Amritanshu, Vaibhav Niti,
Ms. Mohini Priya, Ms. Alankrita Sinha, Ms. Sneha Kalita, A. Pandey,
P. I. Jose, Dushyant Parashar, Raghavendra S. Srivatsa, Venkita
F Subramanian T.R., Ajay Singh, R. Bansal, Ms. Abha R. Sharma,
D. S. Parmar, Sujeeta Srivastava, Mahendra Singh, R. S. Dvidi, Advs.
for the appearing parties.
The Judgment of the Court was delivered by
ASHOK BHUSHAN, J. 1. These appeals have been filed
G questioning judgment of Gauhati High Court by which judgment Regular
First Appeal filed by the Assam State Electricity Board has been allowed
setting aside the judgment and decree passed by trial court in favour of
appellants in original suit proceedings. It shall be sufficient to notice the
pleadings in C.A. Nos. 8442-8443 of 2016 for deciding the common
H
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 497
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
questions of law involved in all these appeals. The facts and pleadings in A
other appeals shall also be briefly noticed.
C.A.Nos.8442-8443 of 2016
(M/s. Shanti Conductors (P) Ltd. & Anr. vs. Assam State
Electricity Board & Ors.) B
2. The appellant is a Private Limited Company which has been
registered as a Small Scale Industrial Unit for manufacturing electrical
conductors and/or wires at Kokrajhar, Assam. On 31.03.1992, the
respondent-Assam State Electricity Board placed an order for supply
of Aluminium Electrical Conductors from the appellants-M/s Shanti C
Conductors Pvt. Ltd. for a total consideration of Rs. 1.22 crores. The
supplies were to be made between June and December, 1992. On
13.05.1992, another order was placed by the Electricity Board to M/s
Shanti Conductors for the supply of various types of conductors for a
total consideration of Rs. 32.49 lacs. The supplies of the aforesaid goods
were to be made between January and February, 1993. On 23.09.1992, D
the President of India promulgated an ordinance, namely, the Interest on
Delayed Payment to Small Scale Ancillary Industrial Undertakings
Ordinance, 1992. Subsequently, on 02.04.1993, the Interest on Delayed
Payment to Small Scale and Ancillary Industrial Undertakings Act, 1993
(in short the “Act”) was enacted and it was deemed to have come into E
force with effect from 23.09.1992. Meanwhile, the supply of equipments
under the aforesaid purchase orders was completed by M/s Shanti
Conductors on 04.10.1993. On 05.03.1994, the entire payment of Rs.
2.15 crores against the aforesaid supply orders was received by M/s
Shanti Conductors.
F
3. On 10.01.1997, M/s. Shanti Conductors filed a suit for recovery
of Rs.53.68 lakhs claiming interest on delayed payments. The Assam
Electricity Board (hereinafter referred to as the “Board”) filed its written
statement raising the plea of limitation and contending that the Act is not
applicable to the case of the appellant as the contract was concluded
prior to enactment of Act, 1993. The trial court decreed the suit on G
02.02.2000 for recovery of the amount of Rs.51,60,507.42 with compound
interest at the rate of 23.75% p.a. The Board filed the Regular First
Appeal No.66 of 2000 before the High Court of Gauhati. The Division
Bench of the High court while hearing the RFA being of the view that
H
498 SUPREME COURT REPORTS [2019] 1 S.C.R.
A certain important issues arise for consideration, referred the matter to
the Full Bench. The Full Bench framed following questions of law:
“i) Whether the suit for recovery of mere interest under the Interest
on Delayed Payments to Small Scale and Ancillary Industrial
Undertakings Act, 1993 is maintainable?
B ii) Whether in the present case the suit for recovery of Interest
under the Delayed Payments to Small Scale and Ancillary
Industrial Undertakings Act, 1993 would not be maintainable as
the contract for supply of goods between the parties was entered
into prior to enforcement of the Act, i.e. on 23.09.1992?
C iii) Whether the suit for recovery of interest under the Delayed
Payments to Small Scale and Ancillary Industrial Undertakings
Act, 1993 would not be maintainable if no reservation is made by
the supplier retaining to it the right to recovery interest under the
Act when the payment(s) of the principal sum is/are accepted,
D though these may be made beyond the prescribed period?”
4. The Full Bench of the High Court vide its judgment dated
05.03.2002 answered the reference holding that a suit for interest could
be filed. It further held that Act, 1993 is also applicable to contracts
entered into prior to 23.09.1992. It held that interest under the Act
E would be calculated from 23.09.1992 till the payment is made to the
supplier. The Board filed an appeal against the judgment of the Full
Bench dated 05.03.2002 in this Court being C.A. NO.2351 of 2003
(Assam State Electricity Board and others vs. Shanti Conductors Private
Limited and another). The appeal filed by the Board was heard along
with another C.A.No.2348 of 2003( Purbanchal Cables and Conductors
F Private Limited vs. Assam State Electricity Board and another). A two-
Judge Bench of this Court decided both the appeals vide common
judgment dated 10.07.2012 which judgment is reported in (2012) 7 SCC
462 (Purbanchal Cables and Conductors Private Limited vs.
Assam State Electricity Board and another). The two-Judge Bench
G relying on earlier judgments of this Court held that suit for recovery of
interest alone under the Act, 1993 is maintainable. It further held that the
Act, 1993 has no retrospective application. It further held that the supplier
has an accrued right to claim a higher rate of interest in terms of the Act
only with regard to sale agreements entered after the date of the
commencement of the Act i.e. 23.09.1992. After judgment of this Court
H dated 10.07.2012 RFA No.66 of 2000 was decided by the Division Bench
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 499
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
vide its judgment dated 20.11.2012. The Division Bench of the Gauhati A
High Court by the impugned judgment has allowed the appeal of the
Board. The Division Bench following judgment of this Court in
Purbanchal Cables and Conductors Private Limited held that Act,
1993 would not apply to a contract entered prior to the enforcement of
the Act, 1993. The contract between the parties being prior to the
B
enforcement of the Act, the appeal filed by the Board was thus allowed
setting aside the judgment and decree of the trial court. A subsequent
order dated 20.12.2012 was also passed by the Division Bench directing
the refund of amount of Rs.38,03,381/-. Aggrieved by both the judgments
dated 20.11.2012 and 20.12.2012 passed by the Division Bench of the
Gauhati High Court, Civil Appeal Nos.8442-8443 of 2016 have been C
filed by the appellants.
C.A.No.8445 of 2016 (M/s. Trusses and Towers (P) Ltd. V
Assam State Electricity Board and Anr.)
5. The Board placed two orders dated 17.02.1992 and 17.03.1992
with the appellant for supply of pre-stressed cement concrete poles. D
Written contract dated 10.06.1992 was entered between the parties.
Poles were supplied by the appellant to the Board during the period
30.03.1992 to 30.09.1992. Payments were also made between 23.04.1993
to 08.10.1993. The appellant filed suit on 16.05.1994 against the Board
seeking decree of Rs.16,55,623/- with interest towards the amount of E
delayed payment as per Act, 1993. The trial court vide its judgment
dated 15.06.1995 decreed the suit. The Board filed Regular First Appeal
against the judgment of the trial court. On 05.04.2001, the High Court
allowed the Regular First Appeal filed by the Board. The High Court
held that all the bills raised by the appellant were cleared by the Board
prior to commencement of Act, 1993. Further, the appellant having F
received the principal amount could not sue for interest. There was
nothing on record to indicate that the appellant has received the amount
in question under protest. The appellant filed SLP(C)No.12217/2001
against the judgment of the High court dated 05.04.2001. By following
order the SLP was permitted to be withdrawn by this Court: G
“Learned counsel for the petitioner seeks leave to withdraw the
special leave petition. He states that he will move the High Court
in review stating that it has erred in recording that “all the bills
were paid and cleared earlier to the commencement of the Act.”
The special leave petition is dismissed as withdrawn accordingly.” H
500 SUPREME COURT REPORTS [2019] 1 S.C.R.
A 6. The appellant filed Review Application No.75 of 2001. The
High Court vide its order dated 19.03.2013 partly allowed the review
petition to the extent that the appellant was held to be entitled to interest
at the rate of 9% per annum for the period of delayed payment.
The appellant aggrieved by the said judgment has filed C.A.No.8445
B of 2016.
C.A.No.8448 of 2016(Assam State Electricity Board and
Anr. vs.Trusses and Towers (P) Ltd.)
7. The above appeal has been filed by the Board against the order
in Review Petition No.75 of 2001 filed by M/s. Trusses & Towers (P)
C Ltd. by which order the High Court has partly allowed the review petition
to the extent that the appellant was held to be entitled to interest at the
rate of 9% p.a. as noted above. The Board aggrieved by the grant of
interest of 9% p.a. has come up in this appeal.
C.A.No.8450 of 2016(M/s. Brahmaputra Concrete Pipe
D Industries vs. Assam State Electricity Board)
8. The Board placed two supply orders dated 17.02.1992 &
17.03.1992 for pre-stressed cement concrete poles to the appellant. The
payment to the tune of Rs.23,04,585.90 was withheld by the Board,
principal amount, however, was started making payment with effect
E from 23.04.1993 and the whole sum was paid upto 18.12.1993. The
appellant filed Money Suit No.32/1996 for recovery of sum of
Rs.10,03,466.23 with interest. The Civil Judge has decreed the Suit No.32/
1996 by order dated 30.09.2002 for an amount of Rs.5,46,233.14 with
interest and costs. Board filed RFA No.78 of 2003 against the judgment
F of the trial court. The High Court vide judgment dated 12.02.2005 allowed
the appeal filed by the Board and dismissed the suit filed by the appellant.
The High Court relied on the judgment of the Purbanchal Cables and
Conductors (P) Ltd. held that there is no applicability of Act, 1993
with regard to transaction which took place prior to 23.09.1992. Against
the judgment dated 12.02.1015. appeal NO.8448/2016 has been filed.
G
9. We have heard Shri Ajit Kumar Sinha, Shri Basava Prabhu S.
Patil and Shri Navaniti Prasad Singh, learned senior counsel appearing
for the appellants. Shri Vijay Hansaris, learned senior counsel has
appeared for Assam State Electricity Board.
H
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 501
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
10. All these appeals were heard by a two-Judge Bench of this A
Court consisting of Justice V. Gopala Gowda and Justice Arun Mishra.
Both Hon’ble Judges of the Bench delivered separate opinion dated
31.08.2016. In paragraph 28 of the judgment following questions of law
have been noticed:
“i) Whether provisions of the Act are retroactive in nature? B
ii) Whether non consideration of this aspect of the matter renders
the decisions of this Court in Modern Industries (supra) and
Purbanchal Cables & Conductors Pvt. Ltd. (supra) as sub silentio?
iii) Whether the judgment rendered in Purbanchal Cables &
Conductors Pvt. Ltd. (supra) operates as res judicata in the instant C
case?
iv) Whether the suit filed by the appellants is barred by limitation?
v) Whether the appeal against the review in the connected matter
in Civil Appeal @ SLP (C) No.15274 of 2013 (M/s Trusses & D
Towers Pvt. Ltd.) is maintainable?
vi) What order?”
11. Dealing with Sections 3, 4, 5 of Act,1993 following opinion
was expressed by Justice Gowda:
“44.The Act was enacted in order to provide a boost to the E
small scale and ancillary industries, which were suffering as a
result of irregular and delayed payments. A perusal of the statement
of objects and reasons of the Act, the relevant portion of which
has been extracted supra, makes it clear that the small scale
industries were suffering as a result of lack of working capital, F
which was affecting the economic health of such industries.
Prompt payment on the outstanding money, it was felt, that was
the need of the hour. In this context, the provisions of Sections 3,
4, 5 of the Act, assume significance. More so in light of the fact
that in the definition clause of Section 2 of the Act, the legislature
has not defined the words ‘transaction’ or ‘supply order’. It chose G
to only give definition to the terms, inter alia, ‘appointed day’,
‘buyer’ and ‘supplier’. Since the focus of the Act is on delayed
payment, which is in consonance with the definition of the term
‘appointed day’ as well, there is no need to consider when the
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502 SUPREME COURT REPORTS [2019] 1 S.C.R.
A ‘transaction’ was entered into or the date of the ‘supply order’.
Section 3 of the Act clearly provides that the liability of the buyer
to make payment accrues after the supplier supplies goods or
renders any services to the buyer. Thus, what was envisaged by
the legislature as delayed payment was payment of the outstanding
money due to the supplier after the goods had been supplied, and
B
after the date agreed upon or the date of deemed acceptance. A
bare reading of the Section makes it clear that the date of entering
into the agreement or the date of supply order were not in
contemplation of the legislature at all. Thus, it is amply clear from
a bare reading of Section 3 that for the purpose of the Act, it does
C not matter when the contract was entered into, as long as the
supply of the goods was after the Act came into force on
23.09.1992. It is in that sense that the question of retrospective
application of the Act does not arise at all. This is further supported
by the use of the non obstante clause in Section 4 of the Act.
D 45. At the cost of repetition, Section 4 of the Act is extracted
hereunder:
“4.Date from which and rate at which interest is payable.-
Where any buyer fails to make payment of the amount to the
supplier, as required under section 3, the buyer shall,
E notwithstanding anything contained in any agreement between
the buyer and the supplier or in any law for the time being in
force, be liable to pay interest to the supplier on that amount
from the appointed day or, as the case may be, from the date
immediately following the date agreed upon, at one and half
time of prime Lending Rate charged by the State Bank of
F India.”
(emphasis supplied)
The use of the non obstante clause before the term “agreement”
also makes it clear that once the money becomes due, which is
G after the supply of the goods and rendering services, the buyer is
liable to pay the statutory interest on the delayed payment to the
supplier no matter what is contained in the agreement between
the buyer and the supplier.
46.Further, even on the issue of retrospectivity, what was required
to be examined by this Court in the aforesaid cases was whether
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M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 503
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
by reading the relevant statutory provisions Sections 3, 4, 5 and 6 A
of the Act, a vested statutory right is conferred. As I have already
held that aforesaid provisions of the Act are retroactive in nature
therefore, non-consideration of this aspect in Purbanchal Cables
& Conductors Pvt. Ltd. (supra) and cases mentioned therein,
renders the said judgment sub silentio on this question. The
B
contention advanced by Mr. Vijay Hansaria, learned senior counsel
appearing on behalf of the Electricity Board in this regard cannot
be accepted.”
12. It was further observed that this Court in Purbanchal Cables
and Conductors (P) Ltd. did not consider the important aspect of the
matter as to whether provisions of the Act are retroative or not. Issue C
No.1 and 2 were answered in favour of the appellant. Other issues
were also answered in favour of the appellant. In paragraphs 56 and 57,
the appeals were allowed by Justice Gowda in the following manner:
“56. For the reasons stated supra, I answer the points framed in
these appeals in favour of the appellants as stated above. The D
appeals are accordingly allowed. All pending applications are
disposed of.
57. In the Civil Appeals arising out of SLP (C) Nos. 9924-9925
of 2013,vide order dated 17.02.2015, the appellants M/s Shanti
Conductors were directed to pay an amount of Rs.38,70,000/- E
back to the respondents. The respondents shall refund the amount
to the appellants with 9% interest per annum within six weeks
from the date of receipt of the copy of this Order.”
13. Another Hon’ble Judge, Justice Arun Mishra who delivered
separate opinion disagreed with the opinion of Justice Gowda. While F
disagreeing with the opinion of Justice Gowda following was held in
paragraphs 77, 78, 79 and 80:
“77. In view of the aforesaid catena of decisions of this Court, it
has to be held that the Act of 1993 cannot be said to be retrospective
in operation or having retroactive operation. The question stands G
answered affirmatively beyond pale of doubt and the decisions
are binding on a Co-ordinate Bench. It cannot be said that the
decisions are sub silentio or per incuriam in any manner whatsoever
and, in my opinion, it is not open to the Co-ordinate Bench to take
a different opinion. There is no confusion with respect to meaning
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504 SUPREME COURT REPORTS [2019] 1 S.C.R.
A of transaction, supply order and agreement. This Court while
deciding aforesaid cases was not in oblivion of aims and objects
of beneficial legislation, considered same and it has Page 104
104 affirmatively pronounced on all the aspects. Hence, I find no
scope to dwell further into the same arena to declare the various
judgments to be sub silentio, per incuriam or not laying down the
B
law correctly.
78. Even otherwise, on merits, in my opinion, considering the
scheme of the Act, various provisions of the Act it cannot be said
to have retrospective operation or retroactive operation and where
a supply order has been placed before the date of commencement
C of the Act, that is before 23.9.1992, the beneficial provisions of
the Act regarding higher interest would not be applicable.
79. In the case of appellant M/s. Shanti Conductors (P) Ltd. itself
decided along with Purbanchal Cables (supra) aforesaid findings
have been recorded by this Court while remanding the case to the
D High Court for decision on merits as an appeal arising of same lis
was pending before the High Court and the High Court has rightly
followed the decisions in Purbanchal Cables & Conductors (supra)
decided along with M/s. Shanti Conductors (P) Ltd. The finding
recorded by this Court in the remand order is final and binding on
E the appellant- M/s. Shanti Conductors (P) Ltd. They cannot
question the same again in the instant appeals. Page 105 105
80. In view of the aforesaid discussion, the appeals have no merit
and the same deserve dismissal and are hereby dismissed. No
costs.”
F 14. In view of the divergent opinion expressed by learned Judges
consisting the Bench the matter has been placed before this three-Judge
Bench.
15. Shri Ajit Kumar Sinha, leaned senior counsel for the appellant
in his submission referred to and relied on the opinion of Hon’ble Judge
G allowing the appeal. He submits that the Act, 1993 was enacted as
beneficial legislation to protect the small scale industries. The Act, 1993
focused on supplies and the date of the agreement for supply has no
relevance. The Act applies and protect the suppliers in the event supplies
have been effected subsequent to Act, 1993. Learned counsel submits
that even if the orders for supply were issued prior to 23.09.1992 some
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M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 505
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
of the supplies have been made after the Act. The provisions of the Act A
are applicable and the appellant was clearly entitled for interest on delayed
payment. He submits that the contrary view expressed by this Court in
Purbanchal Cables and Conductors Private Limited judgment does
not correctly interpret the provisions of the Act, 1993. He submits that
what is relevant is amount due to the suppliers and in event the amount
B
due to supplier is subsequent to Act, 1993 the liability to pay interest on
delayed payment accrues and is fastened on the buyer.
16. The Act was brought by an Ordinance. The Act applies on
amount due not for any previous period prior to Act, 1993 but subsequent
to enforcement of the Act, 1993. The Act, 1993 has prospective
application and it is not the case of the appellant that Act has any C
retrospective operation.
Shri Patil adopting the arguments of Shri Sinha, further submits
that withdrawal of SLP (C)No.12217 of 2001 by the appellant shall not
preclude the appellant from challenging the subsequent order dated
19.03.2013 passed by the Gauhati High Court which has given a fresh D
cause of action.
17. Shri Navaniti Prasad Singh submits that Act, 1993 was enacted
for prompt payments of money by buyers and to statutorily ensure by
mandatory provisions for payment of interest on the outstanding money,
in case of default. He submits that payment of interest even on E
commercial transactions was a concept already contained in several
statutory provisions. By the Act, 1993 nothing new was done except
payment of interest on delayed payment was ensured to deter the buyer
from withholding amount of suppliers.
18. Shri Vijay Hansaria, learned senior counsel for Board submits F
that two-Judge Bench of this Court in Purbanchal Cables and
Conductors (P) Ltd. has correctly interpreted provisions of Act, 1993.
The Act has no application when contract to supply was entered prior to
enforcement of the Act, 1993. He submits that suit filed by Shanti
Conductors was barred by time. According to the case of the appellant G
the amount became due on 04.10.1993, the limitation will start running
from 04.11.1993 and suit having not been filed within three years suit
was barred by limitation. He submits that benefit of the Act, 1993 cannot
be allowed to the appellant. He further submits that the appellant was
bound by the judgment of this Court in Purbanchal Cables and
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506 SUPREME COURT REPORTS [2019] 1 S.C.R.
A Conductors (P) Ltd. since by the said judgment dated 10.07.2012 the
appeal filed by the Board in which Shanti Conductors was also respondent
has been decided. The appellants are bound by the judgment dated
10.07.2012 and what has been held in the said judgment cannot be
questioned by the appellant the judgment being binding inter-parties.
B 19. He further submits that admittedly the entire principal amount
stood paid to the appellant by 04.10.1993 hence suit for only interest
was not maintainable.
20. Shri Hansaria submits that judgments of this Court in Assam
Small Scale Industries Development Corp. Ltd. and others vs.
C J.D. Pharmaceuticals and another, (2005) 13 SCC 19, Shakti Tubes
Ltd. vs. State of Bihar and others, (2009) 7 SCC 673, Modern
Industries vs. Steel Authority of India Limited, (2010) 5 SCC 44,
as well as judgment of this Court in Purbanchal Cables and
Conductors Private Limited (supra) having held that Act has no
applicability with regard to contracts entered into prior to enforcement
D of Act, the said law which is a settled law for a quite long time need not
be unsettled by this Court. In view of the judgment of this Court in
Purbanchal Cables, the appeal of the appellant has rightly been
dismissed by the Gauhati High Court.
21. Replying the submission of Shri Patil, Shri Hansaria submits
E that when the SLP by this Court was dismissed on 06.08.2001 against
the judgment of the High Court dated 05.04.2001 allowing the appeal of
the Board, this Court having not granted further liberty it is not open for
the appellant to file the appeal against the impugned judgment deciding
review petition.
F 22. Shri Hansaria further submits that the Board has also filed
appeal against the order of the High Court deciding the review petition
wherein the High Court has granted 9% interest. Shri Hansaria lastly
submitted that the interest if any can be claimed by the appellant only till
the date they receive the final payment.
G 23. In the rejoinder, Shri A.K. Sinha has refuted the submissions
of Shri Hansaria. He submits that the judgment of this Court in
Purbanchal Cables cannot operate as res judicata, since appeal which
was decided on 10.07.2012 was only against the reference of the Full
Bench. The Full Bench having only answered the legal questions, the
appeal in the High Court being still pending and there being no decision
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M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 507
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
in appeal the principle of merger shall not be attracted. Shri Sinha, A
however, submits that the suit was not barred by limitation. The last
payment made to the appellant being on 05.03.1994, the suit filed by the
appellant on 10.01.1997 was well within limitation.
24. Shri Patil in rejoinder submits that the order passed in the
review petition being an order partly allowing the review petition the B
appeal filed by the appellant is on separate cause of action and the earlier
order passed by this Court on 06.08.2001 shall not come in the way of
deciding the appeal on merits.
25. Learned counsel for the parties have relied on various
judgments of this Court which shall be referred to while considering the C
submissions of the parties.
26. We have considered the submissions of the learned counsel
for the parties and have perused the divergent opinion dated 31.08.2016
given by two Hon’ble Judges of this Court in C.A.Nos.8442-8443 of
2016. D
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 E
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 F
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 G
also dismissed is binding between the parties i.e. M/s. Shanti
Conductors and Assam Electricity Board and the appellant
cannot be allowed to question the said judgment in these
appeals?
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508 SUPREME COURT REPORTS [2019] 1 S.C.R.
A (5) Whether the suit filed by the appellants for recovery of only
interest when admittedly entire principal amount was paid prior
to filing of the suit can be said to be maintainable ?
(6) Whether appeal filed by M/s Trusses and Towers Pvt. Ltd.
challenging the review judgment dated 19.03.2003 cannot be
B entertained since no liberty was granted by this Court in
SLP(C)No.12217 of 2001 when the SLP filed against the main
judgment of the High court dated 05.04.2001 was dismissed
as withdrawn ?
(7) Whether the High court while considering the Review petition
C no.75 of 2001 M/s Trusses & Towers Pvt. Ltd. even after
expressing that Act, 1993 is not applicable could have allowed
9% interest to the plaintiff?
28. Before we consider the issues which have arisen in these
appeals it is necessary to notice the provisions of the Act, 1993. In the
D Parliament, the Government of India made a policy statement on small
scale industries. It was also announced that suitable legislation would be
brought to ensure prompt payment of money by buyers to the small
industrial units. An Ordinance, namely, the Interest on Delayed Payments
to Small Scale and Ancillary Industrial Undertakings Ordinance, 1992
E was promulgated by the President on 23.09.1993. To replace the
Ordinance, The Interest on Delayed Payments to Small Scale and
Ancillary Industrial Undertakings Act, 1993 was introduced in the
Parliament. The Statement of Objects and Reasons of the Act throws
considerable light on the prevalent situation and the remedially measures
which was sought in the legislation. In the Statement of Objects and
F reasons following was observed:
“2. Inadequate working capital in a small scale or an ancillary
industrial undertakings causes serious and endemic problems
affecting the health of such undertaking. Industries in this sector
have also been demanding that adequate measures be taken in
G this regard. The Small Scale Industries Board, which is an apex
advisory body on policies relating to small scale industrial units
with representatives from all the States, governmental bodies and
the industrial sector, also expressed this view. It was, therefore,
felt that prompt payments of money by buyers should be statutorily
ensured and mandatory provisions for payments of interest on the
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M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 509
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
outstanding money, in case of default, should be made. The buyers, A
if required under law to pay interest, would refrain from withholding
payments to small scale and ancillary industrial undertakings.”
29. Act, 1993 is a special legislation. Section 2 of the Act provides
definitions, its clause (b) defined the “appointed day” in the following
manner: B
“2(b)”appointed day” means the day following immediately after
the expiry of the period of thirty days from the day of acceptance
or the day of deemed acceptance of any goods or any services by
a buyer from a supplier;”
30. Sections 3 to 6 of the Act, 1993 are as follows: C
“Section 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, before the appointed day: D
Provided that in no case the period agreed upon between the
supplier and the buyer in writing shall exceed one hundred and
twenty days from the day of acceptance or the day of deemed
acceptance.
E
Section 4. Date from which and rate at which interest is
payable.- Where any buyer fails to make payment of the amount
to the supplier, as required under section 3, the buyer shall,
notwithstanding anything contained in any agreement between
the buyer and the supplier or in any law for the time being in
force, be liable to pay interest to the supplier on that amount from F
the appointed day or, as the case may be, from the date immediately
following the date agreed upon, at one and half time of prime
Lending Rate charged by the State Bank of India.
Explanation.- For the purposes of this section,” Prime Lending
Rate” means the Prime Lending Rate of the State Bank of India G
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
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510 SUPREME COURT REPORTS [2019] 1 S.C.R.
A 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.-
(1) The amount due from a buyer, together with the amount of
B 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.
(2) Notwithstanding anything contained in sub- section (1), any
C party to a dispute may make a reference to the Industry Faciliation
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 dispute as if the arbitration or conciliation were pursuant to
D an arbitration agreement referred to in sub- section (1) of section
7 of that Act.
31. Section 3 creates a statutory liability of buyer to make payment.
The statutory liability is to the effect that where any supplier supplies
any goods to any buyer, the buyer shall make payment, therefor on or
E before the date agreed upon between him and the supplier in writing or,
where there is no agreement in this behalf, before the appointed day.
The statutory liability has been fastened on the buyer to make payment
in the following manner:
(i) on or before the date agreed upon between him and on the
F supplier in writing, or
(ii) where there is no agreement in this behalf before the appointed
day.
32. ‘Appointed day’ as defined in Section 2(b) means the day
following immediately after the expiry of the period of thirty days from
G the day of acceptance or the day of deemed acceptance of any goods or
any services by a buyer from a supplier. Thus, statutory liability to make
payment accrues to buyer as per Section 3, it is relevant to notice the
event contemplated under Section 3 is “where any supplier supplies any
goods or renders any services to any buyer”. The incidence of liability
is supply of goods or rendering any service. The Act is clearly
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M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 511
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
prospective in nature and shall govern the incidence of supply and A
rendering service which happens after enforcement of the Act i.e.
23.09.1992.
33. The second part of Section 3 is “buyer shall make payment”.
Obviously, question of payment shall arise only after supply of goods or
rendering any service. Thus, by virtue of Section 3, both the incidents B
i.e. supply or service on the one hand and payment on the other has to
be after the enforcement of Act, 1993. Statutory provision of Section 3
further creates statutory liability to make payment on the agreed day in
writing between the buyers and the supplier and if there is no agreement
then before appointed day. The fact that agreement in writing between
buyer and supplier for supply and payment is prior to the enforcement of C
the Act is neither relevant nor material, what is material is that supply
and services had to be after the enforcement of the Act, only then the
liability of payment shall accrue.
34. We have already noticed that the purpose and object of
legislation was prompt payments of money by buyer which has been D
statutorily ensured in Act, 1993 by containing mandatory provisions of
payment of interest.
35. Section 4 which deals with date from which and rate at which
interest is payable. The liability to make payment of the amount to the
supplier only arises when any buyer fails to make payment as required E
under Section 3.
36. Section 4 further provides “notwithstanding anything contained
in any agreement between the buyer and the supplier or any law for the
time being in force”, thus, even if the agreement between the buyer and
the supplier contains clause that no interest on late payment shall be F
made the liability to pay interest is fastened by virtue of Section 4
disregarding any contract to the contrary. Whether the contract between
buyer and supplier is prior to enforcement of Act, 1993 is also neither
relevant nor material and the material is that buyer fails to make payment
to supplier as required under Section 3. The liability to pay interest thus G
arises when the payment is not made as per Section 3.
37. The liability to make payment under Section 3 and the liability
to pay interest under Section 4 is not dependent on date of agreement
between the parties to make supply. When the question of supply and
payment are incidents contemplated under the Act which have to take
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512 SUPREME COURT REPORTS [2019] 1 S.C.R.
A place after the enforcement of the Act the day of agreement between
the parties has no relevance in so far as statutory liability under the Act
is concerned.
38. There are several two-Judge Benches judgments of this Court
where provisions of Act, 1993 especially Sections 3 and 4 have been
B interpreted. We now refer to judgments of this Court which have
considered the above provisions. The first judgment which has been
noticed is Assam Small Scale Industries Development Corp. Ltd.
and others vs. J.D. Pharmaceuticals and another, (2005) 13 SCC
19. This Court in the above judgment laid down that Act, 1993 will not
apply to transactions which took place prior to enforcement of the Act.
C Following was laid down in paragraphs 37 and 38:
“37. We have held hereinbefore that Clause 8 of the terms and
conditions relate to the payments of balance 10%. It is not in
dispute that the plaintiff had demanded both the principal amount
as also the interest from the Corporation. Section 3 of the 1993
D Act imposes a statutory liability upon the buyer to make payment
for the supplies of any goods either on or before the agreed date
or where there is no agreement before the appointed day. Only
when payments are not made in terms of Section 3, Section 4
would apply. The 1993 Act came into effect with effect from
E 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
F 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
G 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.
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M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 513
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
40. The next judgment of this Court is Shakti Tubes Ltd. vs. A
State of Bihar and others, (2009) 7 SCC 673. In the said case, Shakti
Tubes had filed a suit for payment of interest. In the above case, supply
orders were placed by the State of Bihar on 16.07.1992, reliance on Act,
1993 was placed by the appellant. It was also noticed in the said case
that earlier supply order dated 16.07.1992 was materially altered and
B
substituted by a fresh supply order issued on 18.03.1993. Referring to
the judgment of this Court in Assam Small Scale Industries case,
two-Judge Bench held that ratio of aforesaid decision is clearly applicable.
In paragraphs 17, 18 and 19 following was laid down:
“17. In the light of the said facts in Assam Small Scale Industries
case, it was recorded in paragraph 37 of the judgment that while C
the Act came into effect from 23rd September, 1992, the supply
orders were placed only in respect of Serial Nos. 1 to 26
immediately and before coming into effect of the Act and rest of
the supply orders namely, supply orders at Serial Nos. 27 to 71
were placed between 22.10.1992 to 19.06.1993 which were D
subsequent to the date when the Act came into force. In that
context, it was clearly recorded in the judgment that the Act will
have no application to the transactions that took place prior to the
commencement of the Act. In the next sentence the Court made
it clear as to what is referred to and understood by the expression
“transaction” when it clearly stated that out of 71 transactions, E
Serial Nos. 1 to 26, i.e. supply orders between 05.06.1991 to
28.07.1992 being prior to 23rd September, 1992 when the Act
came into force, higher interest as envisaged under Sections 4
and 5 of the Act cannot be paid and demanded in respect of the
said supply orders/transactions. It was also made clear that the F
transactions at Serial Nos. 27 to 71 only i.e. supply orders between
22.10.1992 to 19.06.1993, would attract the provisions of the Act.
therefore, those supply orders which were issued by the
Corporation between 22.10.1992 to 19.06.1993 were held to be
the transactions which would be entitled to get the benefit of the
provisions of the Act. G
18. In our considered opinion, the ratio of the aforesaid decision
in Assam Small Scale Industries case 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
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514 SUPREME COURT REPORTS [2019] 1 S.C.R.
A entire 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 at after appreciating all the facts and
circumstances of the case.
B
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. “
C
41. The Bench further referring to earlier judgment of this Court
in Assam Small Scale Industries observed that the use of expression
‘transaction’ was only for supply order. In paragraph 21 following was
laid down:
D “21. We have considered the aforesaid rival submissions. This
Court in Assam Small Scale Industries case has finally set at rest
the issue raised by stating that as to what is to be considered
relevant is the date of supply order placed by the respondents and
when this Court used the expression “transaction” it only meant a
supply order. The Court made it explicitly clear in paragraph 37 of
E the judgment which we had already extracted above. In our
considered opinion there is no ambiguity in the aforesaid judgment
passed by this Court. The intent and the purpose of the Act, as
made in paragraph 37 of the judgment, are quite clear and
apparent. When this Court said “transaction” it meant initiation of
F the transaction i.e. placing of the supply orders and not the
completion of the transactions which would be completed only
when the payment is made. therefore, the submission made by
the learned senior counsel appearing for the appellant-plaintiff
fails .”
G 42. The Court further held that there was neither any alteration of
the contract nor novation of the contract in paragraph 31 which is to the
following effect:
“31. Even otherwise, we are of the considered view that there
was neither any alteration of the contract nor any novation of the
contract in the present case. The correspondence between the
H
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 515
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
parties clearly disclosed that after the respondents issued the supply A
order, the appellant-plaintiff did not supply the pipes in terms of
the 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 .”
43. Next judgment we notice is Modern Industries vs. Steel B
Authority of India Limited, (2010) 5 SCC 44. Noticing the purpose
and object of the Act, 1993 following was observed in paragraph 23:
“23. The wholesome purpose and object behind 1993 Act as
amended in 1998 is to ensure that buyer promptly pays the amount
due towards the goods supplied or the services rendered by the C
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 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 D
120 days from the day of acceptance. “
44. The Court had also considered one of the submissions that the
suit for recovery of mere interest under Act, 1993 is not maintainable.
The Bench answered the issue by holding that the suit even for interest
is also maintainable. Following was laid down in paragraphs 45-46: E
“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 F
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 G
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
H
516 SUPREME COURT REPORTS [2019] 1 S.C.R.
A reference to IFC cannot be restricted to a claim for recovery of
interest due under Sections 4 and 5 only in cases of an existing
determined, settled or admitted liability. IFC has competence to
determine the amount due for goods supplied or services rendered
in cases where the liability is disputed by the buyer. Construction
put upon Section 6(2) by learned senior counsel for the buyer
B
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 learned
senior counsel, does not persuade us to hold otherwise. It is so
because Preamble may not exactly correspond with the enactment;
C the enactment may go beyond Preamble.
45. In the above case also the contract was entered on 15.01.1993
but the contract was subsequently altered. Last alteration being on
29.04.1995 hence the Bench repelled the submission that Act, 1993 was
not applicable.
D 46. Now we come to the judgment of this Court in Purbanchal
Cables and Conductors Private Limited (supra) which is a judgment
on which reliance has been placed by the High Court while allowing the
appeal of the Board. Learned counsel for the Board has also placed
heavy reliance on the said judgment.
E 47. In the above case, Board placed order dated 31.03.1992 for
delivery of goods on 16.09.1992. Further, supplies were made between
25.9.1992 and 30.03.1993. Entire supply was completed on 12.10.1993
entire payment was received by October, 1993. The supplier instituted
money suit for payment of interest on delayed payment under Act, 1993.
F The issues to be answered have been noted in paragraph 10 of the
judgment which is to the following effect:
“10.The issues that are required to be answered by us in these
appeals are whether a suit for interest along is maintainable under
the provisions of the Act, and whether the Act would be applicable
G to contracts that have been concluded prior to the commencement
of the Act. In other words, we are required to examine whether
the Act would apply to those contracts which were entered into
prior to the commencement of the Act but supplies were effected
after the Act came into force.”
H
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 517
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
48. On the question of maintainability of the suit for interest, the A
Bench held that the supplier may file suit only for a higher rate of interest
on delayed payment made by the buyer from the commencement of the
Act. The Bench held that Act, 1993 being a substantive law it shall
operate prospectively. In paragraph 51 following has been laid down:
“51. There is no doubt about the fact that the Act is a substantive B
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 C
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: D
“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 E
claim a higher rate of interest in terms of the Act, the same can
only be said to accrue for sale agreements after the date of
commencement of the Act i.e. 23-9-1992 and not any time prior.”
50. The Bench also expressly rejected the submission of the learned
counsel appearing for the supplier that the earlier judgments of this Court F
in Assam Small Scale Industries and Shakti Tubes need
consideration. On question of limitation of the suit no final opinion was
expressed. The appeals were ultimately dismissed by the Bench.
Issue NO.1
G
51. The judgment of this Court in Purbanchal Cables and
Conductors Pvt. Ltd relying on Assam Small Scale Industries and
Shakti Tubes had laid down that Act, 1993 cannot be made applicable
with regard to sale agreements which were entered into prior to the
enforcement of the Act and Act can be invoked only for the sale
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518 SUPREME COURT REPORTS [2019] 1 S.C.R.
A agreements which were entered after the enforcement of the Act.
Although attempt was made in Purbanachal Cables to get judgment in
Assam Small Scale Industries and Shakti Tubes reconsidered but
co-ordinate Bench in Purbanchal Cables has refused to permit any
such reconsideration. The matter now having been referred to this three-
Judge Bench we have to consider and answer as to whether the above
B
interpretation of Act, 1993 as given is in consonance with the statutory
scheme.
52. We have noticed above that the incidence of applicability
of the liability under the Act is supply of goods or rendering of service.
In event the supply of goods and rendering of services is subsequent to
C Act, can liability to pay interest on delayed payment be denied on the
ground that agreement in pursuance of which supplies were made were
entered prior to enforcement of the Act? Entering into an agreement
being not expressly or impliedly referred to in the statutory scheme as
an incident for fastening of the liability, making the date of agreement as
D date for imposition of liability does not conform to the statutory scheme.
This can be illustrated by taking an example. There are two small scale
industries who received orders for supply of materials. ‘A’ received such
orders prior to the enforcement of the Act and ‘B’ received the order
after the enforcement of the Act. Both supplied the goods subsequent to
enforcement of the Act and became entitled to receive payment after
E the supply, on or before the day agreed upon between the supplier and
buyer or before 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.
F 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
G 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
H
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 519
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
enforcement of the Act, the entire beneficial protection of the Act shall A
be defeated. The existence of statutory liability depends on the statutory
factors as enumerated in Section 3 and Section 4 of the Act, 1993.
Factor for liability to make payment under Section 3 being the supplier
supplies any goods or renders services to the buyer, the liability of buyer
cannot be denied on the ground that agreement entered between the
B
parties for supply was prior to Act, 1993. To hold that liability of buyer
for payment shall arise only when agreement for supply was entered
subsequent to enforcement of the Act, it shall be adding words to Section
3 which is not permissible under principles of statutory construction.
We, thus, are of the view that judgments in Purbanchal Cables and
Conductors (supra), Assam Small Scale Industries and Shakti C
Tubes which held that Act, 1993 shall be applicable only when the
agreement to sale/contract was entered prior/subsequent to the
enforcement of the Act, does not lay down the correct law. We accept
the submission of learned counsel for the appellants that even if
agreement of sale is entered prior to enforcement of the Act, liability to
D
make payment under Section 3 and liability to make payment of interest
under Section 4 shall arise if supplies are made subsequent to the
enforcement of the Act.
Issue No.2
53. In all the judgments of this Court referred above, it has been E
held that Act, 1993 is not retrospective. It is not even contended before
us by any of the parties that the Act, 1993 is retrospective in operation.
Judgments of this Court as noticed above rightly hold that Act, 1993 is
not retrospective.
54. The opinion of Justice Gowda dated 31.08.2016 although holds F
that Act is not retrospective but he holds the Act retroactive. The word
retroactive has been defined in Black’s Law Dictionary in the following
words:
“Retroactive.adj.(17C) (Of a statute, ruling, etc.) extending in
scope or effect to matters that have occurred in the past. -Also G
termed retrospective. Cf. Prospective (1).-retroact,vb.”
55. Two-Judge Bench of this Court in State Bank’s Staff Union
(Madras Circle) vs. Union of India and ors., (2005) 7 SCC 584,
had occasion to examine the concept of retroactive and retrospective.
In paragraphs 20 and 21 of the judgment following has been laid down:
H
520 SUPREME COURT REPORTS [2019] 1 S.C.R.
A “20. Judicial Dictionary (13th Edn.) K.J. Aiyar, Butterworth, p.
857, states that the word “retrospective” when used, with
reference 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.
B
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
C 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
D 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
E cover at least two distinct concepts. The first, which may be called
‘true retroactivity’, consists in the application of a new rule of law
to an act or transaction which was completed before the rule was
promulgated. The second concept, which will be referred to as
‘quasi-retroactivity’, occurs when a new rule of law is applied to
F an act or transaction in the process of completion.... The foundation
of these concepts is the distinction between completed and pending
transactions....”
(T.C. Hartley, The Foundations of European Community Law 129
(1981).
G * * *
Retrospective- Looking back; contemplating what is past.
Having operation from a past time.
H
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 521
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
‘Retrospective’ is somewhat ambiguous and that good deal of A
confusion has been caused by the fact that it is used in more
senses than one. In general however the Courts regards as
retrospective any statute which operates on cases or facts coming
into existence before its commencement in the sense that it affects
even if for the future only the character or consequences of
B
transactions previously entered into or of other past conduct. Thus,
a statute is not retrospective merely because it affects existing
rights; nor is it retrospective merely because a part of the requisite
for its action is drawn from a time and antecedents to its passing.
(Vol.44 Halsbury’s Laws of England, Fourth Edition, page 570
para 921) “ C
56. Further in Jay Mahakali Rolling Mills vs. Union of India
and others, 2007 (12) SCC 198, explaining the retroactive and
retrospective following has been laid down:
“8. “Retrospective” means looking backward, contemplating
what is past, having reference to a statute or things existing before D
the statute in question. Retrospective law means a law which
looks backward or contemplates the past; one, which is made to
affect acts or facts occurring, or rights occurring, before it comes
into force. Retroactive statute means a statute, which creates a
new obligation on transactions or considerations or destroys or E
impairs vested rights.”
57. Retroactivity in the context of the statute consists application
of new rule of law to an Act or transaction which has been completed
before the Rule was promulgated.
58. In the present case the liability of buyer to make payment and F
day from which payment and interest become payable under Section 3
and 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 G
to the opinion dated 31.08.2016 of one of the Hon’ble Judges holding
that the Act, 1993 as retroactive.
Issue No.3
Whether money suit no.21 of 1997 filed by appellant is barred by
time is one of the issues which has been raised before us. H
522 SUPREME COURT REPORTS [2019] 1 S.C.R.
A 59. From the pleadings on the record it transpires that two supply
orders dated 31.03.1992 and 13.05.1992 was issued to the appellant for
supply of conductors. In the Plaint, the appellant had given the details of
date of supply orders and date when supply was made on different stores.
The supplies made by the appellant were both before enforcement of
the Act i.e. 23.09.1992 and after the enforcement of the Act.
B
60. In view of the discussions as made above only the supplies
received after 23.09.1992 are relevant for purposes of 1993 Act. As per
pleadings on the record entire supplies by the appellant was completed
on 04.10.1993. Details of the payment has also been given in the plaint
which indicate that last payment dated 05.03.1994 was received.
C Paragraph 24 of the plaint gives the details of cause of action for the suit
which states that cause of action for the suit arose on 31.03.1992 and
thereafter on different date last date being mentioned in paragraph 24
was 05.10.1993 and each date subsequent thereafter. With regard to
limitation there is specific pleading in paragraph 21 of the plaint which is
D to the following effect: -
“21. That the transaction between the plaintiffs and the
defendants are duly maintained by the plaintiffs in the Books
of Accounts like ledger, Sale Register etc. which are kept in
the usual course of the business of the plaintiffs and those
E accounts between the plaintiffs and the defendants are in
continuity and the interest payable by the defendants to the
plaintiffs are carried over till date. As such the suit of the
plaintiff’s is in within time. Apart from that the provisions of
the Limitation Act does not apply in view of the provisions
contained in the Act, 1993 as because the Act of 1993 is having
F overriding effect over the Limitation Act and all other Acts.”
61. Written statement was filed by the defendants in which written
statement in paragraph 4 of the statement plea was taken that suit is
barred by limitation. Trial Court in its judgment dated 02.02.2000 has
noticed the issues which were framed, one of the issues i.e. Issue no.2
G was “whether the issue was barred by the limitation.” The entire
discussion of issue no.2 by the Trial Court is to the following effect: -
“Issue No.2: -
The supply order placed by the defendant no.2 was exhibited
as Exts-6 and 7 by the plaintiff. The goods were supplied
H
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 523
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
vide challans which were exhibited as Exts-8 to 37 and 69 to A
71 and 73. The delivery commenced on 21.06.92 and ended
on 23.03.93. The bills were raised vide Exts-38 to 55 and
Ext-60 to 68. The plaintiff had not denied about the receipt
of the bill amount. The bill Exxt-55 was raised on 02.01.93
and the bill Ex-68 was raised on 18.12.93. This is a case
B
under the provision of the interest on Delayed Payments to
Small Scale and Ancillary Industrial Undertakings Act and
Section 10 of the said gives over-riding effect as follows:-
“10. Over-riding effect:- The provisions of this Act shall
have
effect notwithstanding anything inconsistent therewith C
contained in any other law for the time being in force.”
So, Section 10 has taken away the plea of limitation in such
type of cases. So issue no.2 is also decided in favour of the
plaintiff.”
D
62. The Trial Court held that by virtue of Section 10 of Act, 1993
plea of limitation is taken away and the suit is not barred by the limitation.
The Division Bench of the High Court in RFA No. 66 of 2000 filed by
the defendant had made a reference to the full bench. Full Bench in its
order dated 05.03.2002 has not considered or decided the question of
limitation. E
63. Against the judgment dated 05.03.2002 of Full Bench of High
Court answering the reference, the Assam State Electricity Board had
filed appeal in this court being Civil Appeal No. 2351 of 2003. This Court
decided Civil Appeal No.2351 of 2003 along with Civil Appeal No. 2348
of 2003 on 10.07.2002 which judgment is Purbanchal Cables and F
Conductors (P) Ltd. (Supra). This Court in paragraph 31 has noticed
the submission of learned Counsel for the State Electricity Board that
suits filed by both the suppliers were barred by time but this Court did
not express any opinion. Paragraph 31 of the judgment is to the following
effect: - G
“31. Though the learned Senior Counsel would state that the
suits filed by both the suppliers in the present batch of appeals
were barred by limitation. We do not intend to express our
view on the issue, since some of the appeals filed by the
suppliers are still pending before the High Court. Any
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524 SUPREME COURT REPORTS [2019] 1 S.C.R.
A observation that we may make would certainly affect the
interest of both the parties since that issue is yet to be decided
by the High Court.”
64. After the judgment of this Court dated 10.07.2012 when the
matters went back to the High Court, Division Bench decided the RFA
B 66 of 2000 by impugned judgment dated 20.11.2012. The Division Bench
in the impugned judgment has noticed the issues in paragraph 5 of the
judgment and submissions on the limitations. In paragraph 22, the
submissions on behalf of the Assam State Electricity Board have been
noticed whereas the reply given by the learned counsel for the appellant
has been noticed in paragraph 22, 24, 25 & 26 of the judgment which are
C as follows: -
“22. Yet another ground of challenge, advanced at the time
of hearing of this appeal, by Mr. Das, learned Senior counsel,
is that the learned trial Court has wrongly held that the suit
was not barred by limitation and, in this regard, reference
D made by the learned trial Court to Section 10 of 1993 Act is
wholly erroneous in as much as Section 10 merely lays down
that provisions of 1993 Act shall have effect notwithstanding
anything inconsistent therewith contained in any other law
for the time being in force.
E 24. As regards the question as to whether 1993 Act would
apply to the contract at hand and whether the suit was barred
by limitation. Mr. AK Sinha, learned Senior counsel, has
pointed out that it is not in dispute that the payment of the
dues of the plaintiffs-respondents was made by ASEB as late
F as 05.03.1994 and, in such circumstances, the period of
limitation started, in the present case, with effect from
05.03.1994 and the suit, having been instituted on
10.01.1997, it is clear, submits Mr. A.K. Sinha, that the suit
deserved to be treated as a suit instituted within the period of
limitation. This apart, it is the submission of Mr. Sinha, learned
G Senior Counsel, that on 06.09.1994 , Assam Conductors
Manufacturers Association had filed a writ petition, which
gave rise to Civil Rule No. 1531 of 1993 on behalf of its five
named members of the Association, which included M/s Shanti
Conductors,(i.e. the plaintiff in the present suit), and the High
H
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 525
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
Court, vide its order, dated 06.09.1994, directed the writ A
petitioner to move the Civil Court for realization of the dues
of its members, whereupon the Association, immediately, filed
Writ Appeal No.474 of 1994, which was finally dismissed on
28.08.1997.
25. In such a situation, as indicated above, section 14(2) of B
the Limitation Act, 1963, is, according to Mr. Sinha, of great
relevance in as much as Section 14(2) of the Limitation Act,
1963, provides that in computing the period of limitation for
any suit, the time during which the applicant had been
prosecuting with due diligence another civil proceeding, the
said period has to be excluded. Under Section 2(a) of the C
Limitation Act, 1963, points out Mr. Sinha, an applicant
includes:(I) petitioner; and (II) a person from or through whom
an applicant derives his right to apply. Thus, even assuming
that the Limitation Act, 1963, applies, then also, the period
during which the writ petition and the writ appeal of the said D
Association was pending on behalf of, amongst others, M/s
Shanti Conductors, the said period, contends Mr. Sinha,
deserves to be excluded under the provisions of Section 14(2)
of the Limitation Act and, thus, the suit was, reiterates Mr.
Sinha, within time.
E
26. Above all, points out Mr. Sinha, learned Senior counsel,
that the appellants, in the present appeal, have not challenged
the learned trial Court’s decision on the issue of limitation. In
this regard, taking the Court through the memorandum of
appeal, which the appellants have preferred,Mr. Sinha,
Learned Senior counsel, has pointed out that the memorandum F
of appeal is wholly silent and does not raise or challenge the
learned trial Court’s decision on the issue of limitation.
Furthermore, points out Mr. Sinha, the Full Bench, while
deciding the reference, has clearly observed, in its decision
that the suit was, admittedly, within three years of the last G
payment made by the appellant Board. The observations of
the Full Bench read as follows: -
“The suit was admittedly within 3 years of the last payment
made by the appellant Board.””
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526 SUPREME COURT REPORTS [2019] 1 S.C.R.
A 65. It is thus clear that the Division Bench although noticed the
submissions of both the parties on the question as to whether the suit
was barred by limitation or not but Division Bench allowed the appeal on
the ground that supply orders having been issued prior to enforcement
of the Act. Act 1993 is not applicable. The Division Bench did not
return any finding as to whether the suit was barred by the limitation or
B
not. The submission that suit has barred by limitation has been pressed
before us.
66. Shri Hansaria submits that according to the own case of the
appellant supplies was completed on 04.10.1993, hence, as per Section
4 of the 1993 Act amount and interest shall become due after one month
C i.e. w.e.f. 04.11.1993. Suit having not been filed within 3 years from
04.11.1993 was clearly barred by time.
67. The Trial court has held that suit is not barred by time relying
on Section 10 of 1993 Act. Section 10 of the 1993 Act is as follows: -
D “10. Overriding effect: - The provisions of this Act shall have
effect notwithstanding anything inconsistent therewith
contained in any other law for the time being in force.”
68. Plaintiff themselves in the plaint as noted above has pleaded
that limitation will not apply by virtue of Section 10 which submission
E was accepted by the Trial Court. The provision of Section 10 of 1993
Act gives overriding effect to “the provisions of Act notwithstanding
anything inconsistent herewith contained in any other law for the time
being in force”. The overriding effect was given to the provisions of the
Act which were contained in the Act. Section 10 provided that overriding
effect is given to the provisions of the Act over any inconsistent law for
F the time being in force. It simply meant that if there is anything inconsistent
in any other law to the provisions of the Act, the provisions of the Act
shall prevail and override any inconsistent law. For example, when Section
4 requires payment of interest at particular rate on delayed payment the
said rate shall have overriding effect to rate of interest provided in any
G other law.
69. Further, as per Section 7 no appeal can be filed against the
decree or other order passed regarding recovery of amount due without
depositing 75 % of the amount. Thus in a suit if a decree is passed on
amount due of interest appeal has to be entertained after depositing
75% or as per any other order passed by the Court. Normal right of
H
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 527
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
appeal shall be overridden by virtue of Section 7 of 1993 Act. The Trial A
Court fell in error in reading overriding effect given in Section 10 to the
Limitation Act also. There is no provision in 1993 Act pertaining to
limitation, the provision of Limitation Act pertaining to filing suit shall
continue to operate there being nothing contrary or overriding under
1993 Act. Section 10 will operate only with regard to expressed provisions
B
contained in 1993 Act which shall be given overriding effect but reading
Section 10 to the effect that it shall override Limitation Act is not correct
interpretation of Section 10 and Trial Court fell in error in relying on
Section 10 in holding that Limitation Act will not apply.
70. We thus are of the view that Limitation Act, 1963 is fully
applicable with regard to money suit filed by the appellant hence, the C
question of limitation has to be answered as per Limitation Act 1963.
The limitation for suit for recovery of interest under 1993 Act is a suit of
nature which shall be covered by Part X Article 113 of the Schedule
which is to the following effect: -
“ PART X-SUITS FOR WHICH THERE IS NO PRECRIBED D
PERIOD
1 13. Any suit for Three When the
wh ich no period y ears righ t to
o f li mitation is sue
p rovided accrues E
el sewhere in this
S chedu le”
71. The period for commencement of limitation for filing suit under
Article 113 begins “when the right to sue accrues”. We have now to find F
out as to when the right to sue accrues to the plaintiff as per 1993 Act.
Section 4 of 1993 Act deals with date from and rate at which interest is
payable. Section 4 contains expression that where “any buyer fails to
make any payment of the amount to the supplier as required under Section
3……..be liable to pay interest to the supplier on that amount on the
appointed day or as the case may be from the date immediately following G
the date agreed upon…….”. There is no agreed date of payment between
the parties as is clear from both the supplies orders which are on the
record. Thus, the payment shall become due from the appointed day.
Appointed day has been defined in Section 2(d) to be “the day following
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528 SUPREME COURT REPORTS [2019] 1 S.C.R.
A immediately after the expiry of period of 30 days from the date of
acceptance or the day of deemed acceptance of any goods or any service
from any buyer or supplier.” It is pleaded by the appellant that last
supply was completed on 04.10.1993. Thus, appointed day will be
04.11.1993. Thus when the payment was not made on 04.11.1993 with
regard to amount due, the interest as per Section 4, the limitation for
B
filing the suit will start running.
72. We have already held that Act shall apply with regard to supplies
made after the date of enforcement of Act i.e. 23.03.1992. Last supply
being received on 04.10.1993 at least from 04.11.1993, if not earlier, the
amount of interest under Section 4 shall become due.
C
73. Shri Sinha has submitted that last payment having been made
on 05.03.1994 suit filed within 3 years and suit being filed on 10.01.1997
was within 3 years from 05.03.1994 and hence was well within time. He
submits that last payment being on 05.03.1994 the refusal to pay has to
be treated from that day only and thereafter suit could be filed within
D three years.
74. Article 113 as noted above provides for “time from which
period begins as when the right to sue accrues”. 1993 Act Section 4
creates statutory liability to pay interest from the day as mentioned in
Section 4 the liability to pay is fastened on buyer. The amount become
E due as soon as liability to pay arises. Section 6 also uses the word “amount
due from buyer”. The amount due is amount which is liable to be paid by
buyer under Section 4. Thus the fact that last payment was made on
05.03.1994 cannot be treated as period for beginning of the limitation
and on that ground it cannot be held that suit was within time.
F 75. Shri Sinha had made an alternative submission that plaintiff
was entitled for the benefit under section 14 of limitation Act. Since a
W.P.No. giving rise to Civil Rule No.1531 of 1993 on behalf of five main
members of the Associations i.e. Assam Conductors Manufacture
Association was filed in the High Court which on 06.09.1994 directed
G the petitioner to move to Civil Court for realization of the dues of its
member, hence the period during which the writ was pending has to be
given benefit. According to pleading in paragraph 24, the Writ Petition
was filed by Assam Conductors Manufacture Association. M/s Shanti
Conductor(P) Ltd. and another, is a different entity than the Association.
H
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 529
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
76. We thus are of the view that benefit of the Section 14 cannot A
be claimed by the plaintiff in the facts of the present case. We, thus in
view of the foregoing discussion come to the conclusion that suit filed
by the plaintiff being Money Suit No. 21 of 1997 was barred by time.
Issue No.4
77. While deciding Issue No.3 we having held that Money Suit B
filed by the appellant was barred by time, it is not necessary to express
any opinion on the above issue.
Issue No. 5
78. The question as to whether suit filed only for interest is C
maintainable has been considered in detail by this Court. In paragraph
17, following has been laid down in Purbanchal Cables (Supra) :-
“17. The decision of the Full Bench of the Gauhati High Court
which has been approved by this Court in Modern Industries
is impugned before us in one of the appeals. Since a Division D
Bench of this Court has already approved the dictum of the
Full Bench of the High Court with regard to the maintainability
of a suit only for interest that question is no longer res integra.
Therefore, the suppliers may file a suit only for a higher rate
of interest on delayed payments made by the buyer from the
commencement of the Act.” E
79. Section 6 of the 1993 Act provides that “the amount due from
the buyer, together with amount of interest calculated in accordance
with provision of Section 4 and 5 shall be recoverable ……”. Section 6
uses the expression “together with the amount of interest with the amount
due from the buyer.” The interpretation put by learned counsel for the F
Board is that proceeding for recovery of interest can be undertaken only
when any amount is due. He submits that amount due used in Section 6
is Principal amount. In event we accept the interpretation put by counsel
for the Board, then buyer will very easily get away from payment of
interest only after making payment of Principal amount. This interpretation
G
shall defeat very purposes of 1993 Act. It is well settled that provisions
of Act has to be interpreted in the manner so as to advance the object of
the Act. We thus fully approve the view taken by this Court in Purbanchal
Cables (Supra) that suit by supplier for recovery of only interest is
maintainable.
H
530 SUPREME COURT REPORTS [2019] 1 S.C.R.
A Issue No.6
80. The submission of the counsel to the board is that since against
the judgment of Gauhati High Court dated 15.04.2001, S.L.P. No.12217
of 2001 filed by M/s Trusses & Towers was withdrawn without obtaining
the liberty, Civil Appeal No. 8445 of 2016 is not maintainable challenging
B the Review Order and judgment dated 19.03.2003. In the Order passed
by this Court on 06.08.2001, this Court had noticed the submission of the
appellant that appellant shall move the High Court in review stating that
it has committed error in recording that “all the bills were paid earlier to
the commencement of this act”. In the Review Petition, the review has
been partly allowed by allowing interest @ 9% against which the appeal
C has been filed. A perusal of the Review judgment indicates that High
Court has not returned any finding that all the bills were not paid earlier
to the commencement of the Act.
81. A perusal of Division Bench judgment of High Court indicates
that High Court proceed on the presumption that even if 1993 Act is not
D applicable the entitlement of the plaintiff could be considered in equity.
When the liberty to file review was obtained on the ground as noticed in
the Order the review judgment can be questioned on the ground on
which review was permitted.
82. The Division Bench judgment does not indicate that it proceeds
E on the ground as contended by the appellant and noticed by this Court on
06.08.2001. The interest of 9% was allowed on the premise that 1993
Act is not applicable and said interest is allowed on equity relying on an
earlier judgment on this court in Assam Small Scale Industry
Development Corporation and others versus G.D. Pharmaceuticals
F and others, 2005(13) SCC 19. We thus are of the view that present
appeal challenging the review judgment cannot be entertained. The
ground on which the appellant can challenge the review judgment can
be the ground on which liberty was obtained to file review. We thus hold
that Civil Appeal No. 8445 of 2016 is not maintainable.
G Issue No.7
Whether the High court while considering the Review Petition
No.75 of 2001 (M/s Trusses & Towers Pvt. Ltd.) even after expressing
that Act 1993 is not applicable could have allowed 9% interest to the
plaintiff?
H
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE 531
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
83. The High Court in its judgment dated 19.03.2013 allowed A
interest @ 9% per annum for the period of delayed payment. Even if
Act 1993 is not applicable, the Court can very well exercise its jurisdiction
to award interest. In Assam Small Scale Industry Development
Corporation and others versus G.D. pharmaceuticals and others
(Supra), this Court in paragraph 40 while considering the claim of the
B
respondent in a suit filed for recovery of interest under 1993 Act has
allowed 9% interest with respect to the transaction made prior to coming
into force of the 1993 Act. Paragraph 40 is to the following effect: -
“40.We, therefore, are of the opinion that in relation to the
transactions made prior to coming into force of the said Act,
simple interest at the rate of 9% per annum, which was the C
bank rate at the relevant time, shall be payable both prior to
date of filing of the suit and pendente lite and as future interest
in terms of Section 34 of the Code of Civil Procedure. Interest,
however, will be payable in terms of the provisions of the
1993 Act(compound interest at the rate of 23.5 % per annum) D
in relation to the transactions made after coming into force
of the Act, both in respect of interest payable up to the date of
institution of the suit and pendente lite and till realization.
The judgment and decree to that extent requires to be modified.
It is directed accordingly.”
E
84. High Court did not commit any error in awarding 9% interest
to plaintiff respondent. We thus did not find any error in the judgment
dated 19.03.2013 allowing partly the review application filed by the
plaintiff.
Civil Appeal No. 8450 of 2016 F
85. Now, we come to Civil Appeal No. 8450 of 2016. The appellant
has filed Money Suit No. 32 of 1996 for recovery of a sum of Rs.
10,34,065.23 p. and Rs. 23,738.49 p. being the outstanding against the
bills for supply made and amount of security deposited and amount of
Rs.10,10,326.74 p. being the amount of delayed interest. The suit was G
decreed by the learned Civil Judge (Senior Division) vide its judgment
and order dated 30.09.2002 for recovery of Rs. 5,46,233.14 p. as on
18.12.93 from the date of enforcement of the Act, 1993 and future interest
on the decretal amount @ 6% simple interest per annum with effect
from 19.12.1993. Appeal was filed by the respondent in the High Court
H
532 SUPREME COURT REPORTS [2019] 1 S.C.R.
A being RFA No. 78 of 2003, which has been allowed on 12.02.2015
setting aside the decree for recovery of the amount and interest but
maintaining the claim of refund of security deposit to the tune of Rs.
23,738.49 with 9% interest. The High Court following the judgment of
this Court in Purbanchal Cables and Conductors Pvt. Ltd. (supra)
held that with regard to transaction, which had taken place prior to
B
23.09.1992, the 1993 Act is not applicable. The appellants have appealed
against the judgment of High Court dated 20.02.2015. The pleading on
the record does not indicate that any supply was made by the appellant
subsequent to enforcement of the 1993 Act. We have already held that
the mere fact that supply orders were issued prior to enforcement of the
C Act does not deny the applicability of the 1993 Act, in event, supply has
been made after the enforcement of the Act. There being nothing on
record to come to the conclusion that any supply was made after the
enforcement of the Act so as to enable the appellant to claim interest
under Section 3 read with Section 4 of the 1993 Act, we are of the view
that judgment of the High Court does not need any interference in this
D
appeal.
86. Intervention applications are not entertained.
87. In result, all the appeals are dismissed.
E
Devika Gujral Appeals dismissed.
F
G
H
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