# M/S. SHANTI CONDUCTORS (P) LTD. & ANR v. ASSAM STATE ELECTRICITY BOARD & ORS

- **Citation:** [2019] 1 S.C.R. 489
- **Court:** Supreme Court of India
- **Decided:** 2019-01-23
- **Case number:** Civil Appeal Nos. 8442-8443 of 2016
- **Bench:** A. K. Sikri, Ashok Bhushan, S. Abdul Nazeer
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-shanti-conductors-p-ltd-anr-v-assam-state-electricity-board-ors-33411
- **Pages:** 44

## Headnote

Interest on Delayed Payment to Small Scale Ancillary
Industrial Undertakings Act, 1993 - Applicability of the Act, 1993
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
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.
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
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
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
[2019] 1 S.C.R. 489
489
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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
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
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
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 -
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
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
Act provides that "the amount due from the buyer, together with
amount of interest calc

## Text

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M/S. SHANTI CONDUCTORS (P) LTD. & ANR.
v.
ASSAM STATE ELECTRICITY BOARD & ORS.
(Civil Appeal Nos. 8442-8443 of 2016)
JANUARY 23, 2019
[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
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
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.
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
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
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
[2019] 1 S.C.R. 489
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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
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
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
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 -
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
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
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
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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 so as to advance the object of the Act
- Interpretation of statutes.
Interest on Delayed Payment to Small Scale Ancillary
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%
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
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
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 ?
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
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
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE
ELECTRICITY BOARD
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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
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
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.
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
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
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.
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 ?
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3.1 Section 10 provided that overriding effect is given to
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
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
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
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
"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,
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
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.
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE
ELECTRICITY BOARD
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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
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
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
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
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
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
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.
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In the Order passed by this Court on 6.8.2001, this Court had
noticed the submission of the appellant that appellant shall move
the High Court in review stating that it has committed error in
recording that "all the bills were paid earlier to the
commencement of this act". In the Review Petition, the review
has been partly allowed by allowing interest @ 9% against which
the appeal has been filed. A perusal of the Review judgment
indicates that High Court has not returned any finding that all
the bills were not paid earlier to the commencement of the Act.
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
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
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
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
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
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
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE
ELECTRICITY BOARD
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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
[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
[2007] 8 SCR 855
referred to
Para 56
[2012] 6 SCR 905
affirmed
Para 79
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 84428443 of 2016.
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.
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
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
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
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questions of law involved in all these appeals. The facts and pleadings in
other appeals shall also be briefly noticed.
C.A.Nos.8442-8443 of 2016
(M/s. Shanti Conductors (P) Ltd. & Anr. vs. Assam State
Electricity Board & Ors.)
2. The appellant is a Private Limited Company which has been
registered as a Small Scale Industrial Unit for manufacturing electrical
conductors and/or wires at Kokrajhar, Assam. On 31.03.1992, the
respondent-Assam State Electricity Board placed an order for supply
of Aluminium Electrical Conductors from the appellants-M/s Shanti
Conductors Pvt. Ltd. for a total consideration of Rs. 1.22 crores. The
supplies were to be made between June and December, 1992. On
13.05.1992, another order was placed by the Electricity Board to M/s
Shanti Conductors for the supply of various types of conductors for a
total consideration of Rs. 32.49 lacs. The supplies of the aforesaid goods
were to be made between January and February, 1993. On 23.09.1992,
the President of India promulgated an ordinance, namely, the Interest on
Delayed Payment to Small Scale Ancillary Industrial 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
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.
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
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
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
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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?
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?
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,
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
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
Private Limited vs. Assam State Electricity Board and another). A twoJudge 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
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
dated 10.07.2012 RFA No.66 of 2000 was decided by the Division Bench
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vide its judgment dated 20.11.2012. The Division Bench of the Gauhati
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
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
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.
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
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
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:
"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."
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
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6. The appellant filed Review Application No.75 of 2001. The
High Court vide its order dated 19.03.2013 partly allowed the review
petition to the extent that the appellant was held to be entitled to interest
at the rate of 9% per annum for the period of delayed payment.
The appellant aggrieved by the said judgment has filed C.A.No.8445
of 2016.
C.A.No.8448 of 2016(Assam State Electricity Board and
Anr. 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)
Ltd. by which order the High Court has partly allowed the review petition
to the extent that the appellant was held to be entitled to interest at the
rate of 9% p.a. as noted above. The Board aggrieved by the grant of
interest of 9% p.a. has come up in this appeal.
C.A.No.8450 of 2016(M/s. Brahmaputra Concrete Pipe
Industries 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
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
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.
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.
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10. All these appeals were heard by a two-Judge Bench of this
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?
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
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 &
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
small scale and ancillary industries, which were suffering as a
result of irregular and delayed payments. A perusal of the statement
of objects and reasons of the Act, the relevant portion of which
has been extracted supra, makes it clear that the small scale
industries were suffering as a result of lack of working capital,
which was affecting the economic health of such industries.
Prompt payment on the outstanding money, it was felt, that was
the need of the hour. In this context, the provisions of Sections 3,
4, 5 of the Act, assume significance. More so in light of the fact
that in the definition clause of Section 2 of the Act, the legislature
has not defined the words 'transaction' or 'supply order'. It chose
to only give definition to the terms, inter alia, 'appointed day',
'buyer' and 'supplier'. Since the focus of the Act is on delayed
payment, which is in consonance with the definition of the term
'appointed day' as well, there is no need to consider when the
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE
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'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
after the date agreed upon or the date of deemed acceptance. A
bare reading of the Section makes it clear that the date of entering
into the agreement or the date of supply order were not in
contemplation of the legislature at all. Thus, it is amply clear from
a bare reading of Section 3 that for the purpose of the Act, it does
not matter when the contract was entered into, as long as the
supply of the goods was after the Act came into force on
23.09.1992. It is in that sense that the question of retrospective
application of the Act does not arise at all. This is further supported
by the use of the non obstante clause in Section 4 of the Act.
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,
notwithstanding anything contained in any agreement between
the buyer and the supplier or in any law for the time being in
force, be liable to pay interest to the supplier on that amount
from the appointed day or, as the case may be, from the date
immediately following the date agreed upon, at one and half
time of prime Lending Rate charged by the State Bank of
India."
 (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
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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by reading the relevant statutory provisions Sections 3, 4, 5 and 6
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
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
No.1 and 2 were answered in favour of the appellant. Other issues
were also answered in favour of the appellant. In paragraphs 56 and 57,
the appeals were allowed by Justice Gowda in the following manner:
"56. For the reasons stated supra, I answer the points framed in
these appeals in favour of the appellants as stated above. The
appeals are accordingly allowed. All pending applications are
disposed of.
57. In the Civil Appeals arising out of SLP (C) Nos. 9924-9925
of 2013,vide order dated 17.02.2015, the appellants M/s Shanti
Conductors were directed to pay an amount of Rs.38,70,000/-
back to the respondents. The respondents shall refund the amount
to the appellants with 9% interest per annum within six weeks
from the date of receipt 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
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
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
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE
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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
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
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
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
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."
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
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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of the supplies have been made after the Act. The provisions of the Act
are applicable and the appellant was clearly entitled for interest on delayed
payment. He submits that the contrary view expressed by this Court in
Purbanchal Cables and Conductors Private Limited judgment does
not correctly interpret the provisions of the Act, 1993. He submits that
what is relevant is amount due to the suppliers and in event the amount
due to supplier is subsequent to Act, 1993 the liability to pay 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
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
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
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
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
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
M/S. SHANTI CONDUCTORS (P) LTD. v. ASSAM STATE
ELECTRICITY BOARD [ASHOK BHUSHAN, J.]
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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.
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.
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.