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2010 (5) Supreme 99
SUPREME COURT OF INDIA
R. V. Raveendran, R. M. Lodha, JJ.
M/s. Modern Industries — Appellant
versus
M/s. Steel Authority of India Ltd. & Ors. — Respondents
Civil Appeal Nos. 3305-3306 of 2010
Arising out of SLP(C) Nos. 26087-26088 of 2008)
Decided on : 15-4-2010
(2002) 2 GLR 550 – Cited with approval
(2004) 3 SCC 447 – Relied upon
(2005) 8 SCC 534; 1994 (Suppl) 2 SCC 556; (2009) 4 SCC 94; (2009) 7 SCC 345; (1904) 2 I.R. 1113; (1919) 1 I.R. Ch. D. 310; 1994 Supp (1) SCC 437; (2009) 10 SCC 123 – Referred
(b) Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings (Amendment) Act 1998 – Section 6(2) – Though the contract was originally entered into in 1983, it kept on being altered till 1995 – Thus attaining finality in 1995 when the Act had already come into force – Hence the Act applies to the resent case. (Paras 38 and 41)
(2005) 13 SCC 19; (2009) 7 SCC 673; (1999) 3 SCC 657 – Distinguished
(c) Constitution of India – Article 226 – Invoking the extraordinary jurisdiction by passing the statutory remedy of appeal is not justified. (Para 42)
Facts of the case:
1.Two main questions have been raised in this appeal - first, what is the meaning of the expression, ‘amount due from a buyer, together with the amount of interest’ under sub-section (1) of Section 6 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, and
2.Whether the Industry Facilitation Council (IFC) cannot go beyond the scope of interest on delayed payments upon the matter being referred to it by any party to dispute under sub-section (2) of Section 6.
Finding of the Court:
The 1993 Act applies to the present case.
Result : Appeal allowed.
JUDGEMENT
R.M. Lodha, J. —
Leave granted.
2.Two main questions arise for consideration - first, as to the meaning of the expression, ‘amount due from a buyer, together with the amount of interest’ under sub-section (1) of Section 6 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (for short, ‘1993 Act’) and then, as to whether the Industry Facilitation Council (IFC) cannot go beyond the scope of interest on delayed payments upon the matter being referred to it by any party to dispute under sub-section (2) of Section 6.
3.M/s. Modern Industries, Rourkela (for short, ‘supplier’) got an order from the Steel Authority of India Limited - Rourkela Steel Plant (for short, ‘buyer’) on January 15, 1983 for manufacture of Right Manipulator Side Guard. The order value was Rs. 8.19 lakhs. Inter alia, the terms and conditions of the order were : (i) the job should be done exactly as specified in the drawings; (2) the alignment of bearing housings be made by the supplier and for this purpose, a spare shaft assembly would be issued against indemnity bond for checking the perfect alignment and free rotation of the shaft ; (3) the essentiality certificate would be issued by the buyer; (4) O.S.T./ T.O.T. 5% to be paid extra and (5) 90 per cent payment to be made against the proof of dispatch (R/R) and inspection certificate, balance 10 per cent payment would be made within thirty days after receipt of materials at site in good condition. It appears that initially buyer did not issue raw-materials but later on the buyer on May 28, 1985 agreed to supply the materials free of cost. The supplier also informed the buyer that the drawings were defective. According to the supplier, there was delay in supply of materials and removal of defects from drawings. The buyer ultimately extended the period of supplies till June 4, 1997. It is admitted case of the parties that supplies were made within extended period. The buyer ordered for release of Rs. 6,07, 493/- as an interim payment but deducted the balance payment of Rs. 2,11,506/- out of Rs. 8.19 lakhs of the original order as the cost of the supply of materials. The supplier, accordingly, raised a dispute in respect of balance payment together with interest on delayed payment before IFC under Section 6(2) of 1993 Act.
4.IFC took cognizance of the dispute referred to it by the supplier and issued notice to the buyer on September 21, 1999. On October 23, 1999, nobody appeared for buyer before IFC. However, IFC directed the buyer to settle the claims of the supplier within thirty days of receipt of the communication and gave an opportunity to submit their defence within ten days of receipt of the said communication and also depute a duly authorized officer to attend the proceedings. Vide its letter dated December 20, 1999, the buyer objected to the jurisdiction of IFC in dealing with the matter. It appears that on February 15, 2000, a representative of the buyer appeared before the IFC. On that date, the IFC again directed the buyer to settle the dispute amicably in the presence of Joint Director of Industries (Planning), Rourkela and also file its written statement regarding its outcome on March 24, 2000. On March 24, 2000, the representative of the buyer was not present before IFC nor any written statement was filed as directed on February 15, 2000. In the circumstances, IFC passed an ex-parte award against the buyer in the sum of Rs. 24,86,998/- with interest at the rate of 18 per cent being one-and-half times of Prime Lending Rate of the SBI compounded with monthly rests. IFC also directed that the interest would be payable with effect from September 24, 1997 (the date of last delivery, i.e., May 28, 1997 plus maximum 120 days of credit period) till the date of full payment.
5.The ex-parte award passed against the buyer was kept in abeyance by IFC on May 6, 2000 for one month at the instance of the buyer to enable it to discuss and settle the matter with th
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