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2016 (8) TMI 1612 - SC - Indian LawsApplication of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act 1993 - provisions of the Act are retroactive in nature or not - non consideration of this aspect of the matter renders the decisions of this Court in Modern Industries 2010 (4) TMI 903 - SUPREME COURT and Purbanchal Cables Conductors Pvt. Ltd. 2013 (3) TMI 518 - SUPREME COURT as sub silentio - judgment rendered in Purbanchal Cables Conductors Pvt. Ltd. 2013 (3) TMI 518 - SUPREME COURT operates as res judicata in the instant case or not - suit filed by the appellants is barred by limitation or not - maintainability of appeal against the review. As per V. GOPALA GOWDA J Whether provisions of the Act are retroactive in nature? - Whether non consideration of this aspect of the matter renders the decisions of this Court in Modern Industries and Purbanchal Cables Conductors Pvt. Ltd. as sub silentio? - HELD THAT - Though a catena of cases which have been extensively adverted to in the case of Purbanchal Cables Conductors Pvt. Ltd. have held that the statutory provisions of the 1993 Act do not have retrospective operation they have failed to consider the aforesaid statutory aspects in a proper perspective keeping in view the objects and reasons of the Act and the usage of the non obstante clause phrase in Section 4 of the Act. 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 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. Further even on the issue of retrospectivity what was required to be examined by this Court in the aforesaid cases was whether 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. and cases mentioned therein renders the said judgment sub silentio on this question. Purbanchal Cables Conductors Pvt. Ltd. and other decisions of this Court referred to supra did not consider the important aspect of the matter namely as to whether the provisions of the Act are retroactive or not? They merely held that the provisions of the Act have no retrospective effect. Thus the judgments have been rendered sub silentio on this aspect. Whether the judgment rendered in Purbanchal Cables Conductors Pvt. Ltd. (supra) operates as res judicata in the instant case? - Whether the suit filed by the appellants is barred by limitation? - Whether the appeal against the review in the connected matter is maintainable? - HELD THAT - Taking into consideration the supply order against the actual supply of the goods with payment made the last payment was made on 05.03.1994. Thus time began to run from that date. Taking into consideration the fact that the date of the institution of the suit is 10.01.1997 the suit has been filed within the period of limitation as prescribed in the Limitation Act. Though on this aspect of the matter no finding has been recorded either by the Trial Court or by the High Court the question is answered in favour of the appellants. Appeal allowed. As per Arun Mishra J. HELD THAT - The decision of a Co-ordinate Bench is binding and there has to be consistency and settled principle should not be unsettled as laid down in Raghubir Singh and other decisions. Judicial discipline demands that a decision of the Division Bench of this Court should be followed by another Bench of two Judges. In Modern Industries a Division Bench of this Court has also held that the Act of 1993 is prospective in operation is settled by two decisions of this Court in Assam Small Scale Industries case 2005 (10) TMI 494 - SUPREME COURT and Shakti Tubes 2009 (7) TMI 1033 - SUPREME COURT . This Court has observed that since the earlier contract got altered from time to time it was last altered on 29.4.1995. By that time Act of 1993 had already come into force. Hence the date of alteration in the agreement was held to be material for the applicability of the provisions of the Act. In Rampur Fertiliser Ltd. 2009 (2) TMI 694 - SUPREME COURT a Division Bench of this Court has held that the provisions of the Act of 1993 are prospective. The Court considered various provisions contained in sections 1 3 4 5 and 10 of the Act. 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 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 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. 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. Appeal dismissed. Conclusion - i) The Act is prospective not retroactive and applies only to transactions initiated after its commencement. ii) The res judicata did not apply allowing for the re-litigation of the issue. iii) The suit was filed within the limitation period. iv) The maintainability of the appeal against the review upheld. In a dissenting opinion it was argued that the Act should not apply retroactively and that prior decisions were correctly decided.
The judgment revolves around a series of appeals concerning the application of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 ("the Act"). The core issues involve the applicability of the Act to contracts entered into before its enactment, the retroactive nature of the Act, and the maintainability of claims for interest under the Act.
Issues Presented and Considered: The Court identified several key legal questions:
Issue-Wise Detailed Analysis: Retroactivity of the Act:
Sub Silentio and Per Incuriam:
Res Judicata:
Limitation:
Maintainability of Appeal:
Significant Holdings:
In a dissenting opinion, it was argued that the Act should not apply retroactively and that prior decisions were correctly decided. The dissent emphasized the importance of adhering to established precedents and the prospective nature of the Act.
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