2016 Supreme(SC) 680

SUPREME COURT OF INDIA
V. Gopala Gowda, Arun Mishra, JJ.
M/s Shanti Conductors(P) Ltd. Anr. – Appellants
Versus
Assam State Electricity Board & Ors. – Respondents
Civil Appeal Nos. 8442-8443 of 2016 (Arising out of SLP (C) Nos. 9924-9925 of 2013) With Civil Appeal No. 8445 of 2016 (Arising Out of SLP (C) No. 15274 Of 2013), Civil Appeal No. 8448 of 2016 (Arising Out of SLP (C) No. 9898 of 2014) and Civil Appeal No. 8450 of 2016 (Arising Out of SLP (C) No. 538 Of 2016)
Decided On : 31-08-2016

IMPORTANT POINTS
Per V. Gopala Gowda, J.
The focal date is the date of actual delivery of goods or the rendering of services, and not the date on which the transaction was entered into.
Statement of objects and reasons and Parliamentary debates cannot be used to ascertain the meaning of the specific words of an enactment, but can be used to understand the general context in which the legislation was passed by the Parliament, as well as the evil it sought to remedy.
In terms of Section 3, 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. In this sense the question of retrospective application of the Act does not arise at all.
Non-consideration of a provision in a proper perspective would render a judgment per incuriam.
Per Arun Mishra, J.
The Act came into force w.e.f. 23.9.1992 and would not apply to transactions which took place prior to that date.
Decision of co-ordinate Bench is binding.

Headnote:Per V. Gopala Gowda, J.

       (a) Interest on Delayed Payment to Small Scale and Ancillary Industrial Undertakings Act, 1993 – Section 2(b) and 4 – Liability on the buyer to pay interest accrues from the appointed day – That is, the day following the expiry of thirty days from the date of acceptance, that is, the day of delivery of goods or rendering of services – Thus focal date is the date of actual delivery of goods or the rendering of services, and not the date on which the transaction was entered into. (Para 26, 33)

       (2005) 13 SCC 19; (2009) 7 SCC 673; (2012) 7 SCC 462 – Distinguished

       (2010) 5 SCC 44; (1974) 1 SCC 42; 2011 (100) CLA (Bom.); AIR 1961 SC 307; (2009) 4 SCC 219 – Referred

       (b) Interpretation of statute – External aids – Statement of objects and reasons and Parliamentary debates – Cannot be used to ascertain the meaning of the specific words of an enactment – But can be used to understand the general context in which the legislation was passed by the Parliament, as well as the evil it sought to remedy. (Para 28)

       AIR 1954 SC 92 – Relied upon

       (c) Interest on Delayed Payment to Small Scale and Ancillary Industrial Undertakings Act, 1993 – Section 3 and 4 – Retrospectivity of the Act – In terms of Section 3, 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 – In this sense the question of retrospective application of the Act does not arise at all. (Para 36)

       (d) Interest on Delayed Payment to Small Scale and Ancillary Industrial Undertakings Act, 1993 – Section 3 and 4 – Once the money becomes due after supply of the goods and rendering services, the buyer becomes liable to pay the statutory interest on the delayed payment to the supplier notwithstanding contents of the agreement between the buyer and the supplier. (Para 36)

       (e) Interpretation of judgment – Non-consideration of a provision in a proper perspective – Would render a judgment per incuriam. (Para 37)

       (1991) 4 SCC 139 – Relied upon

       (2000) 5 SCC 488; (2004) 8 SCC 1 – Referred

       (2012) 7 SCC 462 – Per incuriam

       (f) Res judicata – Section 4 – Present case concerns appellant’s entitlement to prefer a claim on the interest as provided under Section 4 – This was not an issue in Purbanchal Cables & Conductors Pvt. Ltd. – It cannot operate as res judicata. (Para 39)

       (1990) 1 SCC 193; (1970) 1 SCC 613 – Referred

       (g) Limitation Act, 1963 – Section 19 r/w Article 25 – Last payment made on 05.03.1994 – Suit instituted on 10.01.1997 – Within limitation – Suit and appeal held maintainable. (Para 41)

       2007 (4) Mh.L.J. 618; (1975) 1 SCC 774; (2012) 6 SCC 782 – Referred

       Per Arun Mishra, J.

       (h) Sections 2, 3, 4 and 5 – Nothing in the Act gives it retrospective or retroactive operation – A validly made transaction/agreement cannot be invalidated by subsequent prohibition or provision – The Act came into force w.e.f. 23.9.1992 and would not apply to transactions which took place prior to that date. (Para 53, 55, 56, 63, 64)

       (2012) 7 SCC 462; (2005) 13 SCC 19; (2009) 7 SCC 673 – Relied upon

       (i) Binding precedent – Decision of co-ordinate Bench is binding. (Para 61)

       (1989) 2 SCC 754 – Relied upon

       Facts of the case:

       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 was enacted and it was deemed to have come into force with effect from 23.09.1992.

       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.

       On 10.01.1997, M/s Shanti Conductors filed a suit for recovery of Rs. 53.68 lacs on account of interest on delayed payments and future interest at the rate of 27% per annum on the decreetal amount.

       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. with monthly rests from the date of the suit till realization.

       The Electricity Board filed Regular First Appeal before the High Court. The Division Bench of the High Court referred the matter to the Full Bench.

       The Full Bench answered the reference in affirmative by holding that a suit for interest alone could be filed.

       In terms of the judgment in Purbanchal Cables & Conductors Pvt. Ltd. the Division Bench of the High Court set aside the judgment of the Trial Court by allowing Regular First Appeal.

       Finding of the Court:

       Appeal is maintainable. (Per V. Gopala Gowda, J.)

       The Act of 1993 cannot be said to be retrospective in operation or having retroactive operation. (Per Arun Mishra, J.)

       Result: Appeals allowed. (Per V. Gopala Gowda, J.)

       Appeals dismissed. (Per Arun Mishra, J.)