9911796707
TMI Blog2016 (8) TMI 1612X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are stated in brief as under: On 31.03.1992, the respondent-Assam State Electricity Board (hereinafter referred to as the "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. 4. 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 (in short the "Act") was enacted and it was deemed to have come into force with effect from 23.09.1992. 5. Meanwhile, 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 paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made to the supplier. Having answered the reference in the above terms, the matter was sent back to the Division Bench for consideration of the appeal on merits. 8. Accordingly, the matter was placed before the Division Bench for its consideration in accordance with the decision of the Full Bench of the High Court in the reference. The Electricity Board contended before the Division Bench that this Court in the case of Purbanchal Cables & Conductors Pvt. Ltd. v. Assam State Electricity Board & Anr. [(2012) 7 SCC 462] has held that the Act is applicable only to the agreements entered into after 23.09.1992. Accordingly, in terms of the judgment of this Court in Purbanchal Cables & Conductors Pvt. Ltd. (supra), the Division Bench of the High Court vide judgment and order dated 20.11.2012 set aside the judgment of the Trial Court by allowing Regular First Appeal No. 66 of 2000. 9. Similarly, in the connected appeals also, the High Court had held in the impugned judgment and orders therein that the appellants are not entitled for the interest on the delayed payment as the contracts had been entered into prior to the commencement of the Act. Hence the present appeals. 10. We have hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of the Act, as made in para 37 of the judgment, are quite clear and apparent. When this Court said "transaction" it meant initiation of the transaction i.e. placing of the supply orders and not the completion of the transactions which would be completed only when the payment is made. Therefore, the submission made by the learned Senior Counsel appearing for the appellant-plaintiff fails. 22. Consequently, we hold that the supply order having been placed herein prior to the coming into force of the Act, any supply made pursuant to the said supply orders would be governed not by the provisions of the Act but by the provisions of Section 34 of the CPC." In the above case, it was held that an Act cannot be given retrospective effect. The learned senior counsel contend that what was however, not considered by this Court, is that though an Act may not be given retrospective effect, it can still have retroactive operation. 12. The learned senior counsel appearing on behalf of the appellants place strong reliance upon another judgment of this Court in the case of Modern Industries v. Steel Authority of India Ltd. [(2010) 5 SCC 44], wherein it was held as under: "9. The 1993 Act w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal test for applicability of the Act. 14. It is further contended that if the term "sale agreement" is to be the legal test for the applicability of the Act, then the same would be inconsistent with the judgment of this Court in Assam Small Scale Industries Development Corporation Ltd. (supra) where the "sale agreement" was prior to the date of commencement of the Act yet the Court applied the "transaction" and "supply order" test and applied the provisions of the Act on such "transactions" and "supply orders" which were issued on or after the aforesaid date of commencement of the Act. If the "sale agreement" test as has been held in Purbanchal Cables & Conductors Pvt. Ltd. (supra) is applied, then the sellers in Assam Small Scale Industries Development Corporation Ltd. (supra) would not be entitled to higher rate of interest under the Act. It is further contended that if "sale agreement" is taken to be the legal test as to the applicability of the Act then the same would also be inconsistent with the decision of this Court in Modern Industries (supra), wherein after consideration of the Aims and Objects of the Act, it was held that interest is payable on "outstanding money" d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a careful reading of Section 2(b) along with Sections 3, 4 and 5 of the Act would show that a statutory right is conferred upon the suppliers for payment of interest on the delayed payments. Therefore, the provisions of the Act are retroactive in nature. The learned senior counsel further contends that the judgments of this Court sought to be relied upon by the learned senior counsel appearing on behalf of the Electricity Board have no application to the facts of the instant case, as in those cases two Judge Benches of this Court have not correctly examined the aforesaid statutory provisions of the Act while holding that the same is prospective in nature. 16. Mr. Ajit Kumar Sinha, learned senior counsel contends that the provisions of the Act are retroactive in nature and places reliance on the decision of the Bombay High Court in the case of Kingfisher Airlines Ltd. v. CCI [2011 (100) CLA (Bom.)] and the decision of this Court in the case of State of Bombay v. Vishnu Ramchandra [AIR 1961 SC 307], wherein it was held as under: "There are, however, statutes which create Do new punishment, but authorise some action based on past conduct. To such statutes, if expressed in lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest from the Corporation. Section 3 of the 1993 Act imposes a statutory liability upon the buyer to make payment for the supplies of any goods either on or before the agreed date or where there is no agreement before the appointed day. Only when payments are not made in terms of Section 3, Section 4 would apply. The 1993 Act came into effect from 23-9-1992 and will not apply to transactions which took place prior to that date. We find that out of the 71 suit transactions, Sl. Nos. 1 to 26 (referred to in the penultimate para of the trial court judgment), that is supply orders between 5-6-1991 to 28-7-1992, were prior to the date of the 1993 Act coming into force. Only the transactions at Sl. Nos. 27 to 71 (that is supply orders between 22-10-1992 to 19-6-1993), will attract the provisions of the 1993 Act. 38. The 1993 Act, thus, will have no application in relation to the transactions entered into between June 1991 and 23-9-1992. The trial court as also the High Court, therefore, committed a manifest error in directing payment of interest at the rate of 23% up to June 1991 and 23.5% thereafter." This Court in the abovesaid case held that any substantial law can only be app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision on an issue of law founded on fact in issue would operate asres judicata. But when the law has since the earlier decision had been altered by a competent authority or when the earlier decision declares a transaction to be valid despite prohibition by law it does not operate as res judicata. Thus a question of jurisdiction of a Court or of a procedure or a pure question of law unrelated to the right of the parties founded purely on question of fact in the previous suit is not res judicata in the subsequent suit. A question relating to jurisdiction of a Court or interpretation of provisions of a statute cannot be deemed to have been finally determined by an erroneous decision of a Court." The learned senior counsel further places reliance on the three Judge Bench decision of this Court in the case of Mathura Prasad Bajoo Jaiswal v. Dossibai N.B. Jeejeebhoy [(1970) 1 SCC 613], wherein it was held as under: "...But the doctrine of res judicata belongs to the domain of procedure: it cannot be exalted to the status of a legislative direction between the parties so as to determine the question relating to the interpretation of enactment affecting the jurisdiction of a Court fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edule with different periods of limitation and different dates from which the limitation begins to run, the Parliament in Section 19 of the said Limitation Act, 1963 has advisedly used the generic expression "debt". This debt may be of one type or another type, but the payment on account of one type of debt cannot extend the period of limitation for another type of debt. Debt could be either for principal loan amount or it could be for interest." The learned senior counsel contends that in the instant case, the suit has been filed within the period of limitation as the last payment was made by the buyer on 05.03.1994, and Money Suit 21/97 was filed in March 1997. The period of limitation would start running from then only. 22. The learned senior counsel further submits that the present appeal is maintainable even in light of the withdrawal of SLP (C) No. 12217 of 2001 in the case of M/s Trusses & Towers (P) Ltd. v. Assam State Electricity Board and Anr. on 06.08.2001. It was stated therein that there was an error in the judgment of the High Court. Accordingly, the petitioner therein filed Review Petition No. 75 of 2001 before the High Court of Gauhati. The High Court on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it is well settled position of law that the Act has no retrospective application. Therefore, the suit in the instant case which has been filed for claiming interest alone is not maintainable. The learned senior counsel further contends that the suit is barred by limitation. It is submitted that the last date of supply was 04.10.1993. Thus, the period of limitation for recovery of amount of Rs. 53.68 lakhs, which is the amount due towards the interest on delayed payments and the future interest @ 27% expired on 03.10.1996. 24. The learned senior counsel further contends that the case of the first appellant is not maintainable not only on the question of limitation but also in view of the decision of this Court in the case of Purbanchal Cables & Conductors Pvt. Ltd. (supra) wherein the appellant was also a party. In that case, this Court while dismissing the appeal reiterated the legal principle that the provisions of the Act do not have retrospective effect. The learned senior counsel contends that the said judgment between the appellant and the respondent-Board is binding on the appellant. Therefore, the same issue cannot be re-agitated in this appeal as the decision of this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial undertakings. ......." Before examining the decisions of this Court in which the provisions of the Act have been interpreted, it would be useful to advert to the provisions themselves and understand the scheme of the Act. Section 2(b) of the Act defines 'appointed day' as under: "b) "Appointed day, means the day following immediately after the expiry of the period of thirty days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier. Explanation- For the purposes of this clause, - (i) 'The day of acceptance' means, - (a) The day of the actual delivery of goods or the rendering of services; or (b) Where any objection is made in writing by the buyer regarding acceptance of goods or services within thirty days from the day of the delivery of goods or the rendering of services, the day on which such objection is removed by the supplier; (ii) 'The day of deemed acceptance' means, where no objection is made in writing by the buyer regarding acceptance of goods or services within thirty days from the day of the delivery of goods or the rendering of services, the day of the actual delivery of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time of enactment of the Act as the focal date was the date of actual delivery of goods or the rendering of services, and not the date on which the transaction was entered into. 27. The interpretation of the provisions of the Act has been the subject matter of four recent decisions of this Court. Starting with the case of Assam Scale Industries Development Corporation Ltd (supra), wherein it was erroneously held that the Act came into force with effect from 23.09.1992 and therefore the provisions of the Act has no application to "transactions" which took place prior to that date. This Court in the said case adverted to the words "transaction" and "supply order" though they are not defined under Section 2 of the Act. This Court further did not take into consideration the statement of objects and reasons of the Act and the Parliamentary debates before the Act was enacted while arriving at the said conclusion regarding the applicability of the Act. 28. While the statement of objects and reasons and Parliamentary debates cannot be used to ascertain the meaning of the specific words of an enactment, it is well settled position of law laid down by various decisions of this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply orders" as have been referred to in the case of Assam Small Scale Industries Development Corporation Ltd. (supra). It was held that the Act in question cannot be given retrospective effect. On this aspect, this Court observed as under: "26. There is no dispute with regard to the fact that the Act in question is a welfare legislation which was enacted to protect the interest of the suppliers especially suppliers of the nature of a small scale industry. But, at the same time, the intention and the purpose of the Act cannot be lost sight of and the Act in question cannot be given a retrospective effect so long as such an intention is not clearly made out and derived from the Act itself." (emphasis laid by this Court) While the Court made this observation, it did not correctly appreciate the intention and purpose of the Act, which was to ensure that the small scale and ancillary industries do not suffer as a result of delay in payment of outstanding money in cases of default. This Court in the case of Modern Industries (supra), interpreted the scope of the Act as under: "9. The 1993 Act was sequel to a policy statement on small-scale industries made by the Government in Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re alterations to it through the years, with the last alteration on 29.04.1995. Since the contract was last altered in 29.04.1995, the Act would be applicable to the facts of the case. 30. Thus, while the 'transaction', as understood from the meaning sought to be given to them in the judgments of Assam Small Scale Industries Development Corporation Ltd. (supra) and Shakti Tubes (supra) was entered into in that case prior to the Act coming into force, the Act was made applicable to it on the basis that the contract has been altered after the Act came into force. Essentially, what the decision in the case of Modern Industries ends up by introducing a new test for the applicability of the Act, that of 'date of contract alteration'. This Court in the case of Purbanchal Cables & Conductors Pvt. Ltd. (supra), has held as under: "52… 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 be said to accrue for sale agreements after the date of commencement of the Act i.e. 23-9-1992 and not any time prior." The said conclusion of the two Judge Bench has been arrived at without noticing that the term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment (Act 23 of 1998). The statement of objects and reasons of the Amendment Act reads as under: "Though the Act has been in operation for a period of five years, the problem of delays in the payment of outstanding dues to the small scale industrial units continues unabated. There have been widespread discussions on the provisions of the Act among the various interest groups including the Departments of State Governments dealing with industries, banks and small industry associations. The general consensus emerged from such discussions is that certain amendments to the Act are necessary in order to make it more effective so that the aims and objectives of the Act are achieved." It was in the backdrop of this introduction that Section 4 of the Act was inserted. The phraseology of the Section makes it amply clear that the liability of the buyer arises after the supply of the goods or rendering of services. Section 4 is just a reiteration of the legislative intent as to the applicability of the Act, which is in those cases where the supply of goods or rendering of services took place after the coming into force of the Act. 35. A cumulative reading of the aforesaid Sections of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question of retrospective application of the Act does not arise at all. This is further supported by the use of the non obstante clause in Section 4 of the Act. At the cost of repetition, Section 4 of the Act is extracted hereunder: "4. Date from which and rate at which interest is payable.- Where any buyer fails to make payment of the amount to the supplier, as required under section 3, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay interest to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at one and half time of prime Lending Rate charged by the State Bank of India." (emphasis laid by this Court) The use of the non obstante clause before the term "agreement" also makes it clear that once the money becomes due, which is after the supply of the goods and rendering services, the buyer is liable to pay the statutory interest on the delayed payment to the supplier no matter what is contained in the agreement between the buyer and the supplier. 37. Further, even on the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41 of the Constitution or it is per incuriam and is liable to be ignored. 40.'Incuria' literally means 'carelessness'. In practice per incuriam appears to mean per ignoratium. English courts have developed this principle in relaxation of the rule of stare decisis. The 'quotable in law' is avoided and ignored if it is rendered, 'in ignoratium of a statute or other binding authority'. (Young v. Bristol Aeroplane Co. Ltd.). Same has been accepted, approved and adopted by this Court while interpreting Article 141 of the Constitution which embodies the doctrine of precedents as a matter of law. In Jaisri Sahu v. Rajdewan Dubey this Court while pointing out the procedure to be followed when conflicting decisions are placed before a bench extracted a passage from Halsbury's Laws of England incorporating one of the exceptions when the decision of an appellate court is not binding." Further, the cases referred to in the decision of this Court in the case of Purbanchal Cables & Conductors Pvt. Ltd. (supra) on the issue of prospectivity have no bearing to the facts of the instant case. In one of the decisions cited in Purbanchal Cables & Conductors Pvt. Ltd. (supra), which is the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t concerned with the issues that arose in Assam Small Scale Industries Development Corporation Ltd. (supra), the findings of which have been extracted supra. This Court was only concerned with maintainability of a suit with regard to the interest on the basis of the statutory provisions of the Act, in relation to those agreements which had been entered into prior to coming into force of the Act. The issue of whether an appellant is entitled to prefer a claim on the interest as provided under Section 4 was not the issue decided in Purbanchal Cables & Conductors Pvt. Ltd. (supra). Therefore, the decision in the same cannot be said to operate as res judicata. The material and substantial issue with regard to legal contention was not framed and answered, therefore, it does not operate as res judicata. 40. On the question of limitation, I answer the same in favour of the appellants by placing reliance on Section 19 read with Article 25 of the Limitation Act, 1963, which have been extracted as hereunder: "19. Effect of payment on account of debt or of interest on legacy - Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitution 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, I answer the question in favour of the appellants. 42. In view of the judgments of this Court referred to supra, upon which strong reliance has been placed by Mr. Ajit Sinha, the learned senior counsel, on the question of maintainability of the appeal filed by M/S Trussees & Towers Pvt. Ltd questioning the correctness of the judgment and order passed in the Review Petition, we hold the same to be maintainable in law. Answer to Point no. 6: 43. For the reasons stated supra, I answer the points framed in these appeals in favour of the appellants as stated above. The appeals are accordingly allowed. All pending applications are disposed of. In the Civil Appeals arising out of SLP (C) Nos. 9924-9925 of 2013,vide order dated 17.02.2015, the appellants M/s Shanti Conductors were directed to pay an amount of Rs. 38,70,000/- back to the respondents. The respondents shall refund the amount to the appellants with 9% interest per annum within six we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of services, the day on which such objection is removed by the supplier; (ii) "the day of deemed acceptance" means, where no objection is made in writing by the buyer regarding acceptance of goods or services within thirty days from the day of the delivery of goods or the rendering of services, the day of the actual delivery of goods or the rendering of services; (c) "buyer" means whoever buys any goods or receives any services from a supplier for consideration;" 6. Section 3 deals with the liability of buyer to make payment. Payment has to be made by the buyer before the appointed day if there is no agreement to the contrary in writing between the buyer and supplier. Section 3 is extracted hereunder : "3. Liability of buyer to make payment.-- Where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day: Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed one hundred and twenty days from the day of acceptance or the day o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal with establishment of Industry Facilitation Council and its composition. Section 7C requires the State Government to lay before the State Legislature every notification and rule made by the State Government after it is issued or made. Section 8 requires a buyer in case of audit to specify the amount together with the interest in his annual statement of accounts as remains unpaid to any supplier at the end of each accounting year. Section 9 provides that interest not to be allowed as deduction from income of a buyer under the provisions of Income Tax Act. The Act has the overriding effect over other laws as provided in section 10. Section 11 contains the provisions with respect to repeal and saving. 10. It is apparent from the provisions of the Act noticed above that none of the provisions in the various sections indicates that the Act is retrospective in operation in any manner whatsoever. On the contrary, the Act requires payment to be made by a buyer before the appointed day that is the day following immediately after the expiry of 30 days from the date of acceptance or the deemed acceptance of the delivery of the goods or services. The day of acceptance means day of actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ordinance initially came into force i.e. 23.9.1992 from which date the Act has been given effect. There is absolutely no indication in the Act that it has retrospective operation or retroactive operation. Taking note of the various provisions of the Act, it is apparent that the Act of 1993 is not retrospective in operation. 11. In 'Principles of Statutory Interpretation' 14th Edn. by Justice G.P. Singh revised by Justice A.K. Patnaik, on the basis of due consideration of catena of judicial decisions, following discussion has been made at page 580, para 2(a)(ii) with respect to retrospectivity of a statute : "2. RETROSPECTIVE OPERATION (a) General principles (i) xxx xxx xxx (ii) Statutes dealing with substantive rights.- It is cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation. There is a presumption of prospectivity articulated in the legal maxim 'nova constitutio futuris formam imponere debet non praeteritis', i.e. 'a new law ought to regulate what is to follow, not the past', and this presumption operates unless shown to the contrary by express provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of the 1993 Act coming into force. Only the transactions at Sl. Nos. 27 to 71 (that is supply orders between 22-10-1992 to 19-6-1993), will attract the provisions of the 1993 Act. 38. The 1993 Act, thus, will have no application in relation to the transactions entered into between June 1991 and 23-9-1992. The trial court as also the High Court, therefore, committed a manifest error in directing payment of interest at the rate of 23% up to June 1991 and 23.5% thereafter. 39. xxx xxx xxx 40. We, therefore, are of the opinion that in relation to the transactions made prior to coming into force of the said Act, simple interest at the rate of 9% per annum, which was the bank rate at the relevant time, shall be payable both prior to date of filing of the suit and pendente lite and as future interest in terms of Section 34 of the Code of Civil Procedure. Interest, however, will be payable in terms of the provisions of the 1993 Act (compound interest at the rate of 23.5% per annum) in relation to the transactions made after coming into force of the Act, both in respect of interest payable up to the date of institution of the suit and pendente lite and till realisation. The judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71 transactions, Sl. Nos. 1 to 26 i.e. supply orders between 5-6-1991 to 28-7-1992 being prior to 23-9-1992 when the Act came into force, higher interest as envisaged under Sections 4 and 5 of the Act cannot be paid and demanded in respect of the said supply orders/transactions. It was also made clear that the transactions at Sl. Nos. 27 to 71 only i.e. supply orders between 22-10-1992 to 19-6-1993, would attract the provisions of the Act. Therefore, those supply orders which were issued by the Corporation between 22-10-1992 to 19-6-1993 were held to be the transactions which would be entitled to get the benefit of the provisions of the Act. 18. In our considered opinion, the ratio of the aforesaid decision in Assam Small Scale Industries case (supra) is clearly applicable and would squarely govern the facts of the present case as well. The said decision was rendered by this Court after appreciating the entire facts as also all the relevant laws on the issue and therefore, we do not find any reason to take a different view than what was taken by this Court in the aforesaid judgment. Thus, we respectfully agree with the aforesaid decision of this Court which is found to be rightl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appearing for the appellant-plaintiff submitted that the Act in question is a beneficial legislation and, therefore, a liberal interpretation and wider meaning is to be given to such a beneficial and welfare legislation so as to protect the interest of the supplier who is being kept on a higher pedestal by giving a higher benefit in the Act. 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 principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have a retrospective operation. [The aforesaid] rule in general is applicable where the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there are words in the statute sufficient to show the intention of the legislature to affect existing rights, it is deemed to be prospective only--nova constitutio futuris formam imponere debet non praeteritis--a new law ought to regulate what is to follow, not the past. (See Principles of Statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 question is a welfare legislation which was enacted to protect the interest of the suppliers especially suppliers of the nature of a small-scale industry. But, at the same time, the intention and the purpose of the Act cannot be lost sight of and the Act in question cannot be given a retrospective effect so long as such an intention is not clearly made out and derived from the Act itself." 15. The case of appellant - M/s. Shanti Conductors Pvt. Ltd. arose out of same lis which was decided along with Purbanchal Cables (supra) in which a Division Bench of this Court has similarly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Keeping in view the above object, the Act was enacted by Parliament. Before such enactment, it is required to examine rights of the supplier qua the buyer prior to the commencement of the Act. In case of delayed payment, the supplier, prior to the commencement of the Act, was required to file a suit for the payment of the principal amount, and could claim interest along with the principal amount. The supplier could avail of the same under Section 34 of the Code of Civil Procedure, 1908 (hereinafter referred to as "CPC"), Section 61 of the Sale of Goods Act, 1930 and Section 3 of the Interest Act, 1978. 37. In other words, the supplier whose payment was delayed by the buyer prior to the commencement of the Act, could file a suit for payment of the principal amount along with the interest. The supplier, thus, had the vested right to claim the principal amount along with interest thereon in case of a delay in payment by the buyer and it was the discretion of the court to award this interest. 38. The court has the discretion to award interest along with the principal amount and the same is clear from the use of the word "may" in all the three provisions cited above. Section 34 CPC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law', is that part of the law which creates, defines and regulates rights in contrast to what is called adjective or remedial law which provides the method of enforcing rights. Decisions, including the one in Jena case13 while adverting to the question of substantive law has chosen to indicate by way of illustration laws such as Sale of Goods Act, 1930 [Section 61(2)], Negotiable Instruments Act, 1881 (Section 80), etc. The provisions of the Interest Act, 1839, which prescribe the general law of interest and become applicable in the absence of any contractual or other statutory provisions specially dealing with the subject, would also answer the description of substantive law." 42. In Thirumalai Chemicals Ltd. v. Union of India (2011) 6 SCC 739 this Court comparing substantial law with procedural law, stated: (SCC pp. 748-49, paras 23-24) "23. Substantive law refers to a body of rules that creates, defines and regulates rights and liabilities. Right conferred on a party to prefer an appeal against an order is a substantive right conferred by a statute which remains unaffected by subsequent changes in law, unless modified expressly or by necessary implication. Procedural law est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts (Maxwell on Interpretation of Statutes, 12th Edn. 220). That is to say, 'in the absence of anything in the Act, to say that it is to have retrospective operation, it cannot be so construed as to have the effect of altering the law applicable to a claim in litigation at the time when the Act is passed'." 45. In Govind Das v. ITO (1976) 1 SCC 906 this Court speaking through P.N. Bhagwati, J. (as he then was) held: (SCC p. 914, para 11) "11. Now it is a well-settled rule of interpretation hallowed by time and sanctified by judicial decisions that, unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. The general rule as stated by Halsbury in Vol. 36 of the Laws of England (3rd Edn.) and reiterated in several decisions of this Court as well as English courts is that all statutes other than those which are merely declaratory or which relate only to matters of procedure or of evidence are prima facie prospective and retrospective operation should not be gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicially ought not be so construed. It is a well-recognised rule that statute should be interpreted if possible so as to respect vested rights. Where the effect would be to alter a transaction already entered into, where it would be to make that valid which was previously invalid, to make an instrument which had no effect at all, and from which the party was at liberty to depart as long as he pleased, binding, the prima facie construction of the Act is that it is not to be retrospective. (See Gardner v. Lucas (1878) 3 AC 582 (HL). 38. In Moon v. Durden (1848) 2 Ex 22 : 154 ER 389 a question arose as to whether Section 18 of the Gaming Act, 1845 which came into effect in August 1845 was retrospective so as to defeat an action which had been commenced in June 1845. The relevant section provided that no suit shall be brought or maintained for recovering any such sum of money alleged to have been won upon a wager. It was held that it was not retrospective. Parke, B. said: (ER p. 398) 'It seems a strong thing to hold, that the legislature could have meant that a party, who, under a contract made prior to the Act, had as perfect a title to recover a sum of money, as he had to any of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there are words in the statute sufficient to show the intention of the legislature to affect existing rights, it is deemed to be prospective only --'nova constitutio futuris formam imponere debet non praeteritis'--a new law ought to regulate what is to follow, not the past. (See Principles of Statutory Interpretation by Justice G.P. Singh, 9th Edn., 2004 at p. 438.) It is not necessary that an express provision be made to make a statute retrospective and the presumption against retrospectivity may be rebutted by necessary implication especially in a case where the new law is made to cure an acknowledged evil for the benefit of the community as a whole (ibid., p. 440). 14. The presumption against retrospective operation is not applicable to declaratory statutes…. In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is 'to explain' an earlier Act, it would be without object unless construed retrospectively. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2010) 5 SCC 44. Therefore, we cannot agree with the submission that this Court in Assam Small Scale Industries Development Corpn. Case (2005) 13 SCC 19 did not specifically consider and decide the issue of whether the Act would apply to such of those contracts executed prior to the commencement of the Act but the supplies being made after the commencement of the Act." 17. This Court in the case of Purbanchal Cables (supra) has also considered the effect of the binding precedent and sub silentio ruling since it was urged that Assam Small Scale Industries case (supra) and Shakti Tubes (supra) did not lay down the law correctly. This Court has rejected the submission thus : "Binding precedent or sub silentio ruling 56. However, the learned Senior Counsel appearing for the suppliers, Shri Rakesh Dwivedi and Shri Sunil Gupta would contend that the decision of this Court is not a binding precedent. 57. Shri Rakesh Dwivedi, learned Senior Counsel would submit that the decisions of this Court in Assam Small Scale Industries (2005) 13 SCC 19 and Shakti Tubes (2009) 7 SCC 673 regarding the prospective operation of the Act were not law declared under Article 141, as the points under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the High Court because, it seems to us that it is wrong in principle and cannot be justified by the terms of the relevant provisions. A decision should be treated as given per incuriam when it is given in ignorance of the terms of a statute or of a rule having the force of a statute. So far as the order shows, no argument was addressed to the court on the question whether or not any direction could properly be made compelling the Municipal Corporation to construct a stall at the pitching site of a pavement squatter. Professor P.J. Fitzgerald, editor of Salmond on Jurisprudence, 12th Edn. explains the concept of sub silentio at p. 153 in these words: A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The court may consciously decide in favour of one party because of Point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided Point B in his favour; but Point B was not argued or considered by the court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1944 KB 718 : (1944) 2 All ER 293 (CA) Same has been accepted, approved and adopted by this Court while interpreting Article 141 of the Constitution which embodies the doctrine of precedents as a matter of law. In Jaisri Sahu v. Rajdewan Dubey AIR 1962 SC 83 this Court while pointing out the procedure to be followed when conflicting decisions are placed before a Bench, extracted a passage from Halsbury's Laws of England incorporating one of the exceptions when the decision of an appellate court is not binding. 41. Does this principle extend and apply to a conclusion of law, which was neither raised nor preceded by any consideration. In other words can such conclusions be considered as declaration of law? Here again the English courts and jurists have carved out an exception to the rule of precedents. It has been explained as rule of sub silentio. 'A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind.' (Salmond on Jurisprudence, 12th Edn., p. 153). In Lancaster Motor Co. (London) Ltd. v. Bremith Ltd. (1941) 1 KB 675 : (1941) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly decided upon. We need not take stock of all these cases and we indeed have no quarrel with the propositions settled therein." 63. Though the submissions made by Shri Rakesh Dwivedi and Shri Sunil Gupta, learned Senior Counsel seem attractive at the first blush, we are of the view, they lack merit. In Assam Small Scale Industries (2005) 13 SCC 19, the question of retrospective operation of the Act or whether past contracts were governed by the Act, was argued by the learned Senior Counsel appearing for the respondent. In the said judgment this Court has observed: (SCC p. 30, para 19) "19. … The 1993 Act, it was submitted, being also a beneficent statute, the same should be construed liberally. The Act, Mr Chowdhury would argue, will thus, have a retrospective effect." 64. Further, in Shakti Tubes Ltd. (2009) 7 SCC 673, this issue was canvassed by the learned counsel, due to which, this Court referred to the precedent in Assam Small Scale Industries (2005) 13 SCC 19. The argument on this point has been noted thus: (Shakti Tubes Ltd. case (2009) 7 SCC 673, SCC pp. 676-77, paras 9-11) "9. According to the appellant-plaintiff, the said interest has been claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less it is expressly or by necessary implication made to have a retrospective operation. [The aforesaid] rule in general is applicable where the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there are words in the statute sufficient to show the intention of the legislature to affect existing rights, it is deemed to be prospective only--nova constitutio futuris formam imponere debet non praeteritis--a new law ought to regulate what is to follow, not the past. (See Principles of Statutory Interpretation by Justice G.P. Singh, 9th Edn., 2004 at p. 438.) It is not necessary that an express provision be made to make a statute retrospective and the presumption against retrospectivity may be rebutted by necessary implication especially in a case where the new law is made to cure an acknowledged evil for the benefit of the community as a whole (ibid., p. 440).' (Zile Singh case (2004) 8 SCC 1, SCC pp. 8-9, para 13) 25. x x x x x 26. x x x x x" 66. In Rampur Fertiliser Ltd. (2009) 12 SCC 324 this Court again examined the entire scheme of the Act before following the dicta of this Court in Assam Small Scale Industrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and consistent. It is commonly known that most decisions of the courts are of significance not merely because they constitute an adjudication on the rights of the parties and resolve the dispute between them, but also because in doing so they embody a declaration of law operating 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." 69. In Krishena Kumar v. Union of India (1990) 4 SCC 207, this Court observed: (SCC p. 233, para 33) "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been found necessary as a general rule of practice and convenience that the court should sit in divisions consisting of Judges whose number may be determined by the exigencies of judicial need, by the nature of the case including any statutory mandate relating thereto and by such other considerations which the Chief Justice, in whom such authority devolves by convention, may find most appropriate. The Constitution Bench reaffirmed the doctrine of binding precedents as it has the 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." 72. In Shanker Raju v. Union of India (2011) 2 SCC 132 this Court observed: (SCC p. 139, para 10) "10. It is a 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 hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s must not lightly disregard the decision of another Bench of the same Tribunal on an identical question. This is particularly true when the earlier decision is rendered by a larger Bench. The rationale of this rule is the need for continuity, certainty and predictability in the administration of justice. Persons affected by decisions of Tribunals or courts have a right to expect that those exercising judicial functions will follow the reason or ground of the judicial decision in the earlier cases 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." 76. 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 CIT v. Saheli Leasing and Industries Ltd. (2010) 6 SCC 384 to find out whether the matter deserves to be referred to a larger Bench. 77. In Saheli Leasing (supra), this Court held: (SCC p. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lways depend on several relevant considerations:--What is the nature of the infirmity or error on which a plea for a review and revision of the earlier view is based? On the earlier occasion, did some patent aspects of the question remain unnoticed, or was the attention of the court not drawn to any relevant and material statutory provision, or was any previous decision of this Court bearing on the point not noticed? Is the court hearing such plea fairly unanimous that there is such an error in the earlier view? What would be the impact of the error on the general administration of law or on public good? Has the earlier decision been followed on subsequent occasions either by this Court or by the 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." 79. We are in full agreement with the view expressed in Keshav Mills case (1965) 2 SCR 908. The learned Senior Counsel Shri Rakesh Dwivedi has not been able to make out a case for reconsideration of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have no application and would not apply to transactions which took place prior to the aforesaid date. In the case in hand the transaction which was the subject-matter of the suit took place prior to 23-9-1992. This position is clear for the suit itself was filed on 31-10-1991 and therefore cause of action for filing the suit has to be prior in point of time." 20. In view of the aforesaid catena of decisions of this Court, it has to be held that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
