9911796707
TMI Blog2013 (3) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... . in June 1992, September 1992 and December 1992 with the appellant vide supply order dated 31.3.1992. In pursuance to the said supply order, the supplier had initially made delivery of goods with respect to three bills on 16.09.1992, but did not receive payment from the respondent. Subsequently, the supplier had made another delivery of goods with respect to nine other bills in between 25.09.1992 and 30.03.1993. These supplies were made after the expiry of the time stipulated in the agreement/supply order, but after obtaining specific extension of time by the buyer. The supplier had completed the entire supply by 12.10.1993 and received the payment for such supplies from the respondent in the month of September and October, 1993. In pursuance to such supplies, the supplier has raised the demand for interest on delayed payment made by the respondent, vide its letters dated 14.12.1992 and 3.12.1993, however, the same was not acceded to by the buyer. 3. The supplier had instituted a Money Suit No.109 of 1996 before Assistant District Judge No.1, Kamrup for the payment of interest to the tune of Rs. 24,57,927.28/-, on delayed payment of principal amount by the respondent, under the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Being aggrieved by the said order, the Board preferred a Regular First Appeal (F.A. No. 66 of 2000) before the Guahati High Court. The Division Bench hearing the appeal of the Board in the case of Shanti Conductors doubted the correctness of the view taken by the Division Bench in the case of Trusses & Towers (P.) Ltd. (supra), and referred the matter to the Full Bench to determine whether a suit is maintainable only for interest and whether the provisions of the Act is applicable to contracts concluded prior to its commencement, where the delayed payment is made after its commencement. 5. The Full Bench of the High Court after considering the provisions of the Act, concluded that the findings of the Division Bench in the case of Trusses & Towers (P.) Ltd. (supra) that once a principal amount is received without any protest, then no further claim for interest can be made; is not the correct legal position in law. In other words, the Full Bench came to the conclusion that a suit for only interest was also maintainable. Further, the Full Bench also held that the Act is applicable to any contracts entered into prior to the commencement of the Act, and a higher rate of interest cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... takings and for matters connected therewith or incidental thereto." The Act though enacted on 2nd April 1993, by a legal fiction is deemed to have come into effect from the date of promulgation of the Ordinance, i.e. 23rd September 1992. The provisions of the Act largely deal with the liability of the buyer to make payment for supplies, determination of the date from which and the rate at which interest is payable to the supplier from the buyer, liability of the buyer to pay compound interest, recovery of the amount due to the supplier from the buyer, and other provisions relating to appeal, etc. 9. Section 2(b) of the Act defines the meaning of the expression 'appointed day' to mean the day following immediately after the expiry of the payment period of thirty days from the date of payment, acceptance of any goods or any services by a buyer from a supplier. Section 3 of the Act imposes a statutory liability upon the buyer to make payment for the supplies of any goods either on or before the appeal date or where there is no agreement, before the appointed day. Section 4 provides for the award of interest where the price has not been paid within time. Section 5 provides for the lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, no suit would lie for the recovery of the interest on the delayed payments, which might have already accrued. If such an interpretation is given the very object of enacting the Act would be frustrated. The Act had been enforced to see that small-scale industries get the payment regarding supply made by them within the prescribed period and in case of delay in payments the interest would be at a much higher rate (one-and-a-half times of lending rate charged by State Bank of India). The obligation of payment of higher interest under the Act is mandatory. Sections 4 and 5 of the Act of 1993 contain a non obstante clause i.e. 'Notwithstanding anything contained in any agreement between the buyer and the supplier'. In other words, the parties to the contract cannot even contract out of the provisions of the 1993 Act. Even if such provision that interest under the Act on delay meant would not be chargeable is incorporated in the contract, Sections 4 and 5 of the Act of 1993 would still prevail as the very wording of these sections indicate. Take for instance that the buyer has not paid the outstanding amount of the supply by the due date. After much delay he offers the outstanding amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the scheme of Section 6 of the 1993 Act read with Sections 3, 4 and 5 does not envisage multiple proceedings as canvassed. Rather, whole idea of Section 6 is to provide a single window to the supplier for redressal of his grievance where the buyer has not made payment for goods supplied or services rendered in its entirety or part of it or such payment has not been made within time prescribed in Section 3 for whatever reason and/or for recovery of interest as per Sections 4 and 5 for such default. It is for this reason that sub-section (1) of Section 6 provides that "amount due from a buyer together with the amount of interest calculated in accordance with the provisions of Sections 4 and 5" shall be recoverable by the supplier from buyer by way of a suit or other legal proceeding. Sub-section (2) of Section 6 talks of a dispute being referred to IFC in respect of the matters referred to in sub-section (1) i.e. the dispute concerning amount due from a buyer for goods supplied or services rendered by the supplier to the buyer and the amount of interest to which the supplier has become entitled under Sections 4 and 5. 45. It is true that word "together" ordinarily means conjointly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, whereas the supplies being made after the commencement of the Act. In other words, the question we are called upon to answer is with regard to the status of contracts of supply concluded prior to the commencement of the Act vis-à-vis the Act. Arguments on behalf of the suppliers 14. Shri Rakesh Dwivedi, learned Senior Counsel, would submit that the Act is a beneficial legislation and is aimed at providing relief to suppliers which are small scale industries, who are not paid on time even after supplies are effected and accepted and hence had to suffer severe financial crunch. He would submit that the Act is supply oriented and the date of the supply is the critical and crucial date for applying the provisions of the Act, and not the date on which the contract is entered into by the parties. Shri. Dwivedi, learned Senior Counsel would state that Section 1(3) of the Act by way of a deeming fiction, brought the Act into force from the date of the promulgation of the Ordinance i.e. 23rd September 1992. He would then draw our attention to the text of Section 3, and submit that the liability of a buyer to make payment arose on the completion of the event of supply of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of the Act; (3) the emphasis on the text of Section 3 on the supply of the goods and the liability of the buyer arose on the supply of goods; (4) It is a beneficial legislation and a purposive construction is required to be adopted. He points out that since these salient features are neither noticed nor considered in Assam Small Scale Industries Development Corprn. Ltd. (supra) the decision needs reconsideration by a larger Bench. 16. Shri Sunil Gupta, learned Senior Counsel while adopting the principal arguments of Shri Rakesh Dwivedi would submit, that, on a plain reading of the Statement of Objects and Reasons of the Act, it is clear that Parliament enacted the legislation in order to assist the small scale industries to get their payment on time from the buyers. He would state that there is extrinsic evidence in the Act to show that the Act would apply even to those contracts, which were executed prior to 23rd September 1992. Shri Gupta would further rely on the long title of the Act to make good his submission that the scope of the Act was not restricted to contracts entered into after the Act came into force. He would further submit that the Act did not apply to thos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a civil proceeding, it had to be filed by the same party, which is not the case in the present suit. The writ petition, he would state, was filed by an Association for different relief, than what was sought by the supplier in the suit, and hence, the benefit of Section 14 of the Limitation Act would not be available. 19. In case of Shanti Conductors (C.A. No. 2351 of 2003), the supply order was completed on 4th October 1993 and the suit was filed only on 10th January 1997 i.e. after the expiry of three year limitation period. The learned Senior Counsel would submit that there was no specific pleading with regard to applicability of Section 14 of the Limitation Act, 1963, though it was raised by the defendant in the suit. He would assail the trial court's reasoning wherein it is held that in view of the Section 10 of the Act, the Limitation Act does not apply. He would submit that in the light of the judgment of this Court in Mukri Gopalan v. Cheppilat Puthanpurayil Aboobacker [1995] 5 SCC 5, this Court while construing Section 29 (2) of the Limitation Act has held that if the operation of the Limitation Act has to be barred, then a time schedule has to be given under the specia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aning, it is always necessary to get an exact conception, scope and object of the whole Act. 23. In the case of Zile Singh v. State of Haryana [2004] 8 SCC 1, this Court observed that there were four relevant factors which needed to be considered while considering whether a statute applied prospectively or retrospectively: "15....Four factors are suggested as relevant: (i) general scope and purview of the statute; (ii) the remedy sought to be applied; (iii) the former state of the law; and (iv) what it was the legislature contemplated...." 24. The general scope of the Act has been discussed above. The remedy sought to be applied by the Act is made clear in the Statement of Objects and Reasons, in which, it is stated that due to the delayed payments by buyers to the small scale industries, their working capital was being affected, causing great harm to the small scale industries in general. This Act was passed by Parliament to impose a heavy interest on the buyers who delayed the payments of the small scale industries, in order to deter the buyers from delaying the payments after accepting the supplies made by the suppliers. The policy statement of the Ministry of Micro, Small an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed by the Act. This position has been approved by this Court in the case of Modern Industries (supra). If a suit for interest simpliciter is maintainable as held by this Court in Modern Industries (supra), then a new liability qua the buyer is created with the commencement of the Act giving a vested right to the supplier in case of delayed payment. In other words, if there is a delayed payment by the buyer, then a right to claim a higher rate of interest as prescribed by the Act accrues to the supplier. 28. The phrase 'vested right' has been defined by this Court in the case of Bibi Sayeeda v. State of Bihar [1996] 9 SCC 516 as: "17. The word 'vested' is defined in Black's Law Dictionary (6th Edn.) at p. 1563 as: "Vested; fixed; accrued; settled; absolute; complete. Having the character or given the rights of absolute ownership; not contingent; not subject to be defeated by a condition precedent." Rights are 'vested' when right to enjoyment, present or prospective, has become property of some particular person or persons as present interest; mere expectancy of future benefits, or contingent interest in property founded on anticipated continuance of existing laws, does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shyam Sunder v. Ram Kumar [2001] 8 SCC 24, a Constitution Bench of this Court discussing the scope and ambit of a declaratory law has observed: "39. Lastly, it was contended on behalf of the appellants that the amending Act whereby new Section 15 of the Act has been substituted is declaratory and, therefore, has retroactive operation. Ordinarily when an enactment declares the previous law, it requires to be given retroactive effect. The function of a declaratory statute is to supply an omission or to explain a previous statute and when such an Act is passed, it comes into effect when the previous enactment was passed. The legislative power to enact law includes the power to declare what was the previous law and when such a declaratory Act is passed, invariably it has been held to be retrospective. Mere absence of use of the word "declaration" in an Act explaining what was the law before may not appear to be a declaratory Act but if the court finds an Act as declaratory or explanatory, it has to be construed as retrospective. Conversely where a statute uses the word "declaratory", the words so used may not be sufficient to hold that the statute is a declaratory Act as words may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect attributed to them, provisions which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment (see Delhi Cloth and General Mills Co. Ltd. v. ITC.) The second is that a right of appeal being a substantive right the institution of a suit carries with it the implication that all successive appeals available under the law then in force would be preserved to the parties to the suit throughout the rest of the career of the suit. There are two exceptions to the application of this rule viz. (1) when by competent enactment such right of appeal is taken away expressly or impliedly with retrospective effect and (2) when the court to which appeal lay at the commencement of the suit stands abolished (see Garikapati Veeraya v. N. Subbiah Choudhury and Colonial Sugar Refining Co. Ltd. v. Irving). 35. In K. Kapen Chacko v. Provident Investment Co. (P) Ltd [1977] 1 SCC 593, this Court discussing the dicta of the English Courts on the aspect of retrospectivity observed: "37. A statute has to be looked into for the general scope and purview of the statute and at the remedy sought to be applied. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affect the rights of the parties it will be held to apply prima facie to all actions, pending as well as future." 36. In the case of Dahiben v. Vasanji Kevalbhai [1995] Supp. (2) SCC 295, this Court held: "12. As the amendment in question is not to a procedural law, it may be stated that the settled principle of interpretation, where substantive law is amended, is that the same does not operate retrospectively unless it is either expressly provided or the same follows by necessary implication. Lest it be thought that a vested right cannot be taken away at all by retrospective legislation, reference may be made to Rafiquennessa v. Lal Bahadur Chetri where it was stated that even where vested rights are affected, legislature is competent to take away the same by means of retrospective legislation; and retrospectivity can be inferred even by necessary implication." 37. In the case of Zile Singh (supra), this Court examined the various authorities on statutory interpretation and concluded: "13. It is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have a retrospective operation. But the ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y law operates retrospectively as there is no vested right in procedure. 40. In the absence of any express legislative intendment of the retrospective application of the Act, and by virtue of the fact that the Act creates a new liability of a high rate of interest against the buyer, the Act cannot be construed to have retrospective effect. Since the Act envisages that the supplier has an accrued right to claim a higher rate of interest in terms of the Act, the same can only said to accrue for sale agreements after the date of commencement of the Act, i.e. 23rd September 1992 and not any time prior. Earlier Precedents 41. On a careful perusal of the judgment of this Court in Assam Small Scale Industries Development Corpn. Ltd. (supra), we find that even the question regarding the applicability of the Act to contracts concluded prior to coming into force of the Act is no longer res integra. This question is answered by this Court in the case of Assam Small Scale Industries Development Corpn. Ltd. (supra) as under: "37. We have held hereinbefore that clause 8 of the terms and conditions relates to the payments of balance 10%. It is not in dispute that the plaintiff had demanded bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers to the expression "transactions". According to him, the transactions would be complete only when the appellant-plaintiff made the supply and since the supply was made in the instant case after coming into force of the Act, the appellant-plaintiff would be entitled to the benefit of Sections 4 and 5 of the Act. Refuting the aforesaid submission, the learned Senior Counsel appearing for the respondents submitted that the aforesaid contention is completely misplaced. He pointed out that if such a meaning, as sought to be given by the learned Senior Counsel appearing for the appellant-plaintiff, is accepted that would lead to giving benefit of the provisions of the Act to unscrupulous suppliers who, in order to get the benefit of the Act, would postpone the delivery of the goods on one pretext or the other. 21. We have considered the aforesaid rival submissions. This Court in Assam Small Scale Industries case has finally set at rest the issue raised by stating that as to what is to be considered relevant is the date of supply order placed by the respondents and when this Court used the expression "transaction" it only meant a supply order. The Court made it explicitly clear in par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of precedent, namely, per incurium and sub silentio. It was on the strength of the latter that Shri Gupta would submit that the decisions of this Court in Assam Small Scale Industries Development Corpn. Ltd. (supra) and Shakti Tubes Ltd. (supra) cannot be considered as precedents. The learned Senior Counsel would state that a decision would not apply as a precedent when the Court has failed to consider the objects and purpose of the Act in question and also certain previous judgments of this Court. He would further contend that the aforesaid judgments suffer from the sub-silentio principle being rendered without full and adequate arguments on the issue. The learned Senior Counsel would also state that the Court did not look at the issue from the viewpoint canvassed presently. 47. The learned Senior Counsel would rely on the decision of this Court in Municipal Corpn. of Delhi v. Gurnam Kaur [1989] 1 SCC 101. This Court has held: "11. Pronouncements of law, which are not part of the ratio decidendi are classed as obiter dicta and are not authoritative. With all respect to the learned Judge who passed the order in Jamna Das case and to the learned Judge who agreed with him, we canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt now raised had been deliberately passed sub silentio by counsel in order that the point of substance might be decided. He went on to say that the point had to be decided by the earlier court before it could make the order which it did; nevertheless, since it was decided "without argument, without reference to the crucial words of the rule, and without any citation of authority", it was not binding and would not be followed. Precedents sub silentio and without argument are of no moment. This rule has ever since been followed. One of the chief reasons for the doctrine of precedent is that a matter that has once been fully argued and decided should not be allowed to be reopened. The weight accorded to dicta varies with the type of dictum. Mere casual expressions carry no weight at all. Not every passing expression of a judge, however eminent, can be treated as an ex cathedra statement, having the weight of authority." 48. In the case of State of U.P. v. Synthetics & Chemicals Ltd. [1991] 4 SCC 139, His Lordship R.M. Sahai. J., in his concurring judgment set out the principles of per incurium and sub silentio has held thus: "40. 'Incuria' literally means 'carelessness'. In practic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atio and the principles, laid down therein'. Any declaration or conclusion arrived without application of mind or preceded without any reason cannot be deemed to be declaration of law or authority of a general nature binding as a precedent. Restraint in dissenting or overruling is for sake of stability and uniformity but rigidity beyond reasonable limits is inimical to the growth of law." 49. In the case of Arnit Das v. State of Bihar [2000] 5 SCC 488, this Court held: "20. A decision not expressed, not accompanied by reasons and not proceeding on a conscious consideration of an issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. That which has escaped in the judgment is not the ratio decidendi. This is the rule of sub silentio, in the technical sense when a particular point of law was not consciously determined. (See State of U.P. v. Synthetics & Chemicals Ltd. SCC, para 41.)" 50. In the case of Tika Ram v. State of U.P [2009] 10 SCC 689, it was held: "104. We do not think that the law laid down in these cases would apply to the present situation. In all these cases, it has been basically held that a Supreme Court decision do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and therefore, the appellant-plaintiff was entitled to claim interest at a higher rate as envisaged in Sections 4 and 5 of the said Act. 11. Mr Dinesh Dwivedi, learned Senior Counsel appearing for the respondents strongly refuted the aforesaid submissions made by the learned Senior Counsel appearing for the appellant-plaintiff on the ground that the supply order was issued in the instant case on 16-7-1992 and therefore, in terms of and in line with the decision of this Court in Assam Small Scale Industries case the appellant-plaintiff was entitled to be paid interest only at the rate of 9% per annum and not at a higher rate as contended by the appellant-plaintiff." 53. This Court, in Shakti Tubes Ltd. (supra) expressly rejected the argument of the learned Senior Counsel appearing for the appellant in that case, that the Act should be given retrospective effect because it was a beneficial legislation, in paragraphs 24 to 26, which have been set out below: "24. Generally, an Act should always be regarded as prospective in nature unless the legislature has clearly intended the provisions of the said Act to be made applicable with retrospective effect. "13. It is a cardinal prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subsequent statute has relation back to the time when the prior Act was passed. The rule against retrospectivity is inapplicable to such legislations as are explanatory and declaratory in nature. A classic illustration is Attorney General v. Pougett (Price at p. 392). By a Customs Act of 1873 (53 Geo. 3, c. 33) a duty was imposed upon hides of 9s 4d, but the Act omitted to state that it was to be 9s 4d per cwt., and to remedy this omission another Customs Act (53 Geo. 3, c. 105) was passed later in the same year. Between the passing of these two Acts some hides were exported, and it was contended that they were not liable to pay the duty of 9s 4d per cwt., but Thomson, C.B., in giving judgment for the Attorney General, said: (ER p. 134) 'The duty in this instance was, in fact, imposed by the first Act; but the gross mistake of the omission of the weight, for which the sum expressed was to have been payable, occasioned the amendment made by the subsequent Act: but that had reference to the former statute as soon as it passed, and they must be taken together as if they were one and the same Act;' (Price at p. 392)" 26. There is no dispute with regard to the fact that the Act in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating as a binding principle in future cases. In this latter aspect lies their particular value in developing the jurisprudence of the law. 9. The doctrine of binding precedent has the merit of promoting a certainty and consistency in judicial decisions, and enables an organic development of the law, besides providing assurance to the individual as to the consequence of transactions forming part of his daily affairs. And, therefore, the need for a clear and consistent enunciation of legal principle in the decisions of a court." 57. In Krishena Kumar v. Union of India [1990] 4 SCC 207, this Court observed: "33. Stare decisis et non quieta movere. To adhere to precedent and not to unsettle things which are settled. But it applies to litigated facts and necessarily decided questions. Apart from Article 141 of the Constitution of India, the policy of courts is to stand by precedent and not to disturb settled point. When court has once laid down a principle of law as applicable to certain state of facts, it will adhere to that principle, and apply it to all future cases where facts are substantially the same. A deliberate and solemn decision of court made after argument on question o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onvention, may find most appropriate. The Constitution Bench reaffirmed the doctrine of binding precedents as it has been merit of promoting certainty and consistency in judicial decisions and enables an organic development of the law, besides providing assurance to the individual as to the consequence of transactions forming part of his daily affairs." 60. In the case of Shanker Raju v. Union of India [2011] 2 SCC 132, this Court observed: "10. It is settled principle of law that a judgment, which has held the field for a long time, should not be unsettled. The doctrine of stare decisis is expressed in the maxim stare decisis et non quieta movere, which means "to stand by decisions and not to disturb what is settled". Lord Coke aptly described this in his classic English version as "those things which have been so often adjudged ought to rest in peace". The underlying logic of this doctrine is to maintain consistency and avoid uncertainty. The guiding philosophy is that a view which has held the field for a long time should not be disturbed only because another view is possible...." 61. In the case of Fida Hussain v. Moradabad Development Authority [2011] 12 SCC 615, this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on identical matters. Classification of particular goods adopted in earlier decisions must not be lightly disregarded in subsequent decisions, lest such judicial inconsistency should shake public confidence in the administration of justice...." 64. Shri Vijay Hansaria, learned Senior Counsel contends that a case for referring the matter to a larger Bench though is pleaded by the learned Senior Counsel, Shri Rakesh Dwivedi, this Court ought to test the same by the parameters laid down by this Court in the case of Jt. CIT v. Saheli Leasing & Industries Ltd. [2010] 191 Taxman 165 to find out whether the matter deserves to be referred to a larger Bench. In Saheli Leasing, this Court held: "29...(x) In order to enable the Court to refer any case to a larger Bench for reconsideration, it is necessary to point out that particular provision of law having a bearing over the issue involved was not taken note of or these is an error apparent on its face or that a particular earlier decision was not noticed, which has direct bearing or has taken a contrary view...." 65. The Constitution Bench of this Court in the case of Keshav Mills Co. Ltd. v. CIT [1965] 2 SCR 908 crystallized the positio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral administration of law or public good? Has the earlier decision been followed on subsequent occasions either by this Court or by High Courts? And, would the reversal of the earlier decision lead to public inconvenience, hardship or mischief? These and other relevant considerations must be carefully borne in mind whenever this Court is called upon to exercise its jurisdiction to review and revise its earlier decisions...." 66. We are in full agreement with the view expressed in Keshav Mills Co. Ltd.'s case (supra). The learned Senior Counsel Shri Rakesh Dwivedi has not been able to make out a case for reconsideration of the decision of this Court in Assam Small Scale Industries Development Corpn. Ltd (supra). In fact, a plea for reconsideration of the same was rejected by a Division Bench of this Court in Shakti Tubes Ltd. (supra). We are unable to agree with the argument of Shri Dwivedi and Shri Gupta that the provisions of the Act were not considered in its entirety. In fact, the entire scheme of the Act has been considered in the case of Rampur Fertilizers Ltd. (supra) and specific answer to the issue under consideration was answered. 67. In the case of Ambika Prasad Mish ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
