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 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 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 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 ?
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. 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. 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 of India and others (2007) 12 SCC 198 : [2007] 8 SCR 855 – referred to
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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