MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE ELECTRICITY BOARD & ORS.

The Judgments of the Court were delivered by F V. GOPALA GOWDA, J. I. Leave granted in all the Special Leave Petitions, ·

2Copy pinpoint2. The present appeals were listed together as a common question of law arises in all of them for consideration before this Court. G

3Copy pinpoint3. For the sake of convenience, reference is made to the facts of the appeals arising out ofSLP (C) Nos, 9924-9925 of2Q\ 3, which h11ve been directed against the i1npugned final jucigrnent and orders clat11cl 20.11.2012 and 20.12.20\ 2 passed in RFA No,-66 of2000 a11d MC No. 3472of2012 respectively, by the Gauhati High Court at Guwahati. H

372 SUPREME COURT REPORTS [2016} 6 S.C.R.

A The facts of the case which are required to appreciate the rival legal contentions advanced on behalf of the parties are stated in brief as under: On 31.03. i 992, the respondent-Assam State Electricity Board (hereinafter referred to as the "Electricity Board") placed an order for B supply ofAluminium Electrical Conductors from the appellants-Mis Shanti Conductors Pvt. Ltd. for a total consideration of Rs. I .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 Mis 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 c were to be made between January and February, 1993.

4Copy pinpoint4. On 23 .09.1992, the President oflndia promulgated an ordinance, namely, the Interest on Delayed Payment to Small Scale Ancillary lndustrial Undertakings Ordinance, 1992. Subsequently, on 02.04.1993, the Interest on Delayed Payment to Sma II Scale and Ancillary Industrial D Undertakings Act, 1993 (in short the "Act") was enacted and it was deemed to have come into force with effect from 23.09.1992.

5Copy pinpoint5. Meanwhile, the supply of equipments under the aforesaid purchase orders was completed by Mis Shanti Conductors on 04. l 0.1993. On 05.03.1994, the entire payment of Rs. 2.15 crores against the aforesaid E supply orders was received by Mis Shanti Conductors.

6Copy pinpoint6. Subsequently, on I0.01.1997, Mis 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 Electricity Board filed the written statement on F 16.09.1998, inter-alia, raising the plea of limitation and contending that the Act is not applicable to the case of the appellant- Mis Shanti Conductors as the contract was concluded prior to the enactment of the Act. 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 of23.75% G p.a. with monthly rests from the date of the suit till realizati,)n.

7Copy pinpoint7. Aggrieved of the impugned judgment and order, the Electricity Board filed Regular First Appeal No. 66 of2000 before the I Iigh Court ofGauhati. Vide order dated l 8.10.2001, the Division 13ench of the High Court referred the matter to the Full Bench. The Full 13ench framed the following questions that needed to be answered: H

MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 373 ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA . .I.]

A i) Whether the suit for recovery of mere interest under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 is maintainable'1 B ii) Whether in the present case the suit for recovery of Interest under the Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 would not be maintainable as the contract for supply of goods between the parties was entered into prior to enforcement of the Act, i.e. on 23.09.1992? c iii) Whether the suit for recovery of interest under the Delayed Payments to S111all Scale and Ancillary Industrial Undertakings Act. 1993 would not be maintainable if no reservation is made by the supplier retaining to it the right to recovery interest under the Act when the payment(s) of the principal sum is/are accepted, though these may be 111ade beyond the prescribed period?" The Full Be11ch of the High Court videjudgment and order dated 05.03.2002 answered the reference in affirmative by holding that a suit for interest alone could be filed. It further held that the Act is applicable to contracts entered into prior to 23.09.1992, i.e. the date on which the Act came into force. It was further held that the interest under the Act would be calculated from 23.09.1992 till the payment is 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. F

8Copy pinpoint8. Accordingly. the matter was placed before the Division Bench for its consideration in accordance with the decision of the Full Bench of the High Cou1t in the reference. The Ekctricity Board contended before the Division Bench that this Court in the case of Purba11clwl Cables & Co11d11ctor.1· Pvt. Ltt!. 1'. 1h.rn111 State E/ectrici(l' Board & Anr. 1 has G held that the Act is applicable only to the agreements entered into after 23.09.1992. Accordingly. in k:rms of the judgment of this Court in P11rba11clwl Cables & Co11t!uctors Pvt. Ltd. (supra). the Division Bench of the High Court vi de judgment and order dated 20.11.2012 set aside 1 (2012) 1 sec 462 11

374 SUPREME COURT REPORTS [2016] 6 S.C .R.

A the judgment of the Trial Courrby allowing Regular First Appeal No. 66 of2000.

9Copy pinpoint9. 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· B been entered into prior to the commencement of the Act. Hence the present ~J?peals. I 0. We have heard Mr. M.H. Baig and Mr. Basava Prabhu S. Patil, learned senior counsel appearing on behalf of the appellants in the appeals arising out ofSLP (C) Nos.9924-9925of2013 and SLP (C) No. c 538of2016 and Mr. Ajit Kumar Sinha, learned senior counsel in appeal arising out ofSLP (C) No. 15274of2013. We have also heard Mr. Yijay Hansaria, the learned senior counsel appearing on behalf of the Electricity Board.

11Copy pinpoint11. Mr. M.H. Baig, the learned senior counsel submits that the respondents cannot claim a vested right in procedure, as the same is not a matter of right and can be taken away. The learned senior counsel places reliance on the three Judge Bench decision of this Court in the case of Sil/le of U.P. 1~ A11ll11d Swl/rup 1• The learned senior counsel contends that the Act is applicable in respect of the contracts entered into by the Electricity Board with the appellants herein for supply of goods. Mr. Basava Prabhu Patil and Mr. Ajit Sinha, learned senior counsel appearing on behalf of some of the appellants contend that the usage of the words "transaction" and "supply order" as used by this Court in the case of Assllm Small Scale Industries Developmelll Corporation Ltd. v. J.D. PIU1rmace11ticals-' is not the correct test to be applied to determine whether the provisions of the Act are applicable to the contracts entered into prior to the coming of the Act into force. It is contended that this Court in the aforesaid case has referred to the said words without taking into consideration the Statement of Objects and Reasons of the Act and the parliamentary debates conducted while introducing the Bill before it was enacted. It is further contended that the same words were continued to be used in the case of SIU1kti Tubes v. Stale of Bilutr', wherein it was held as under:

'(1974) 1sec42 ' (2005) u sec J9

H '(2009J 7 sec 673

MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 375 ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA. J.]

"'2 I. We have considered the aforesaid rival submissions. A This Court in Assam Smal I 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 Cou1i used the expression '"transaction'" it only meant a supply order. The Comi made B it explicitly clear in para 37 of the judgment which we have already extracted above. In our considered opinion there is no ambiguity in the aforesaid judgment passed by this Cowi. The intent and the purpose 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 c 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. D

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 ofSection 34 of the CPC.'' E 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.

12Copy pinpoint12. The learned senior counsel appearing on behalf of the appcl Iants place strong rel im1cc upon another judgment of this Cou1i in the case of Modem liulu.1·tries r. Steel A11t/10ri(1' <d'fmlia Ltd. 5, wherein it was held as under: "9. The 1993 Act was sequel to a policy statement on small- scale industries made by the Government in Par! iament that suitable legislation would be brought to ensure prompt payment of money by bu~ c>rs to the small industrial units. It was felt that inadequ<1k 11orking capital in a small-scale and ancillaiy industrial undertaking was causing an endemic

'(20101ssec44 H

376 SUPREME COURT REPORTS [2016] 6 S.C.R.

A problem and such unde11akings were very much affected. The Small Scale Industries Board-an apex advisory body on policies relating to small-scale industrial units-also expressed its views that prompt payments of money by buyers should be statutorily ensured and mandatory provisions for payment of interest on the outstanding money, B in case of default, should be made. It was felt that the buyers, if required under law to pay interest, would refrain from withholding payments to small-scale and ancillary industrial undertakings. With these objects and reasons, initially an ordinance, namely. the Interest on Delayed c Payments to Small Scale and Ancillary Industrial Undertakings Ordinance, 1992 was promulgated by the President on 23-9-1992 and then the Bill was placed before both the Houses of Parliament and the said Bill having been passed, the 1993 Act was enacted. The Preamble to the 1993 Act reads: D "An Act to provide for and regulate the payment of interest on delayed payments to small-scale and ancillary industrial undertakings and for matters connected therewith or incidental thereto.''

E This Court furlher held as under: ''23. The wholesome purpose and object behind the 1993 Act as amended in 1998 is to ensure that the buyer promptly pays the amount due towards the goods supplied or the services rendered by the supplier. It also provides for payment of interest statutorily on the outstanding mom:y in case of default..."

13Copy pinpoint13. Further, reliance is placed on the decision of this Court in the case of P11rha11c//{// Cables & Conductors Pvt. Lttl (supra) wherein the elate of "sale agreement" was considered to be crucial to determine the applicability of the Act as under: ''52 ...... Since the Act envisages that the supplier has an accrued right to claim a higher rate of intcr<:st in terms of the Act, the same can only lx: said to accrue for sale agreements after the date of commcnccn1cnl of the Act i.e. 23-9-1992 and not any time prior." l-1

M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 377 ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA. J.]

It is contended that the term "sale agreement" is not defined in the Act and thus, cannot be a legal test for applicability of the Act.

14Copy pinpoint14. 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 Developmeut 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 Purbaucha/ Cables & Conductors Pvt. Ltd. (supra) is applied, then the sellers in Assam c 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 /11d11stries (supra), wherein aticr consideration of the Aims and Objects of the Act, it was held that interest is payable on ;'outstanding money" due from the buyer in.case of default.

15Copy pinpoint15. The learned senior counsel fu11her draw our attention to the relevant statutory provisions of the Act, which are extracted as under: "2(b )(ii)-tbe day of deemed acceptance" means, where no objection is made in writing by th..: buyer regarding acceptance of goods or services within thirty days from the day of the delive1y of goods or the rendering of services, the day of the actual delivery of goods or the rendering of services; F

3. Liability of buyer to make payment.- Where any supplier supplies any goods or renders any services to any buy..:r, the buyer shall make payment therefore 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 G 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 of deemed acceptance. H

378 SUPREME COURT REPORTS (2016) 6 S.C.R.

A 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 B 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 halftime of prime Lending Rate charged by the State Bank of India. Explanation.- For the purposes of this section, "Prime c Lending Rate" means the Prime Lending Rate of the State Bank oflndia which is available to the best borrowers of the bank. 6.Liability of buyer to pay compound interest.- Notwithstanding anything contained in any agreement between a supplier and a buyer or in any Jaw for the time being in force, the buyer shall be liable to pay compound interest (with monthly interest) at the rate mentioned in section 4 on the amount due to the supplier." Mr. Basava Prabhu Patil, learned senior counsel contends that from a reading of Section 2(b) of the Act, it becomes clear that "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. It is submitted that a careful reading of Section 2(b) along with Sections 3, F 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 G 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.

16Copy pinpoint16. Mr. Ajit Kumar Sinha, learned senior counsel contends that the provisions of the Act are retroactive in nature and places reliance on H

M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 379 ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.]

the decision of the Bombay High Cou11 in the case of Kingfisher Airlines A Ltd. v. CCJ 6 and the decision of this Court in the case of State ofBombay v. Vishnu Ramchandra 7, 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 language B showing retrospective operation, the principle is not applied. As Lord Coleridge, C. J.,observed during the course of arguments in Rex v. Birthwhistle: "Scores of Acts are retrospective, and may without express words be taken to be retrospective, since c they are passed to supply a cure to an existing evil." !ndeed, in that case which arose under the Married Women (Maintenance in Case of Desertion) Act, 1886, the Act was held retrospective without express words. D It was said: "It was intended to cure an existing evil and to afford to married women a remedy for desertion, whether such desertion took place before the passing of the Act or not." E Another principle which also applies is that an Act designed to protect the public against acts of a harmful character may be construed retrospectively, if the language admits such an interpretation, even though it may equally have a prospective meaning." F The said principle was reiterated more recently by this Court in the case of State of Mllhllrttslttra v. Krislmllrao D11d//{/pf1" SltimfeH.

17Copy pinpoint17. The learned senior counsel also places reliance on the meaning of the words "retroactive" and "retroactive inference", which have been defined in Black's Law Dictionary (Sixth Edn.) as under:- G "Retroactive- Process of acting with reference to past occurrences. '' 2011 (100) CLA (Bom.) 7 AIR 1961SC307 '(2009) 4 sec 219 H

380 SUPREME COURT REPORTS [2016] 6 S.C.R.

A Retroactive inference- The inferring of a previous fact from present conditions by trier of facts."

18Copy pinpoint18. The learned senior counsel further contends that the observations made in Purb"nclwl C"bles & Conductors Pvt. Ltd. (supra) are clearly contradictory to the decision of this Court in the case B of Ass"m Sm"ll Sc"le Industries Development Corporation Ltd. (supra). The relevant paragraph of Purb"nclwl Cables (supra) reads as under: "53. On a careful perusal of the judgment of this Court in Assam Small Scale Industries, we find that even the c 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 Assam Small Scale Industries Development Corpn. Ltd. v. J.D. Pharmaceuticals as under: (SCC p. 36, paras 3 7-38)

38. The 1993 Act, thus, will have no application in relation to the transactions entered into between June 1-1

M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 381 ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.]

1991 and 23-9-1992. The trial court as also the High A Court, therefore, committed a manifest error in directing payment of interest at the rate of23% up to June 1991 and 23 .5% thereafter." This Comi in the abovesaid case held that any substantial law can only be applied prospectively unless retrospective operation is clearly 8 made out in the language of the statute. It was further held that only a procedural or declaratory law operates retrospectively when there is no vested right in the procedure. Therefore, the learned senior counsel submits that none of the cases referred to above have actually examined whether the provisions of the Act are retroactive in nature or not. c

19Copy pinpoint19. The learned senior counsel further submits that the suit for interest alone is maintainable, as held by this Court in the case of Modem l11tlustries (supra) as under:

"45. It is true that word "together" ordinarily means D conjointly or simultaneously but this ordinary meaning put upon the said word may not be apt in the context of Section

6. Can it be said that the action contemplated in Section 6 by way of suit or any other legal proceeding under sub- section (I) or by making reference to IFC under sub-section E (2) is maintainable only if it is for recovery of principal sum along with interest as per Sections 4 and 5 and not for . interest alone? The answer has to be in negative.

46. We approve the view ofGauhati High Court in Assam State Electricity Board that word 'together' in Section 6( I) F would mean 'along with' or "as well as". Seen thus; the action under Section 6(2) could be maintained for recovery of principal amount and interest or only for interest where liability is admitted or has been disputed in respect of goods supplied or services rendered .... " G

20Copy pinpoint20. The learned senior counsel further refers to the decision of this Court in the case of Purba11clwl Cables & Co11ductors Pvt. Ltd. (supra) and submits that in the case, the correct factual and legal position as laid down in the case of Assam Smltll Scltle /ll(lutries Development Corporlltio11 (supra) has not been appreciated. Therefore, the suit filed H

382 SUPREME COURT REPORTS [2016) 6 S.C.R.

A by the first appellant in respect of the interest cannot be held as barred by resjudicata. fn support of this contention, the learned senior counsel places strong reliance on the decision of this Court in Sus/ti/ Kumar Mehta v. Gobi11d Ram Bohra 9, wherein it was held as under: " ......... a pure question ofa law unrelated to facts which B are the basis or foundation of a right, cannot be deemed to be a matter in issue. The principle ofres judicata is a facet of procedure but not of substantive law. The decision on an issue of law founded on fact in issue would operate as resjudicata. But when the law has since the earlier decision had been altered by a competent authority or when the earlier c decision declares a transaction to be valid despite prohibition by law it does not operate as resjudicata. Thus a question ofjurisdiction ofa Courtorofa 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 resjudicata in D 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 E Judge Bench decision of this Court in the case of Mat/mra Prasad Bajoo Jaiswal v. Dossibai N.B. Jeejeeblwy 10 , wherein it was held as under: ·· ... But the doctrine ofresjudicata belongs to the domain of procedure: it cannot be exalted to the status of a legislative F direction between the parties so as to detennine the question relating to the interpretation of enactment affecting the jurisdiction of a Court finally between them, even though no question of fact or mixed question of law and fact and relating to the right in dispute between the parties has been determined thereby. A decision of a competent Court on a G matter in issue may be res judicata in another proceeding between the same parties: the "matter in issue" may be an issue of fact, an issue of law, or one of mixed law and fact. An issue of fact or an issue of mixed law and fact decided • (1990J 1sec193 H '"(1970J 1sec613

M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 383 ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.]

by a competent cou11 is finally determined between the parties and cannot be re-opened between them in another proceeding. The previous decision on a matter in issue alone is res judicata: the reasons for the decision are not res judicata. A matter in issue between the parties is the right claimed by one party and denied by the other, and the claim of right from its ve1y nature depends upon proof of facts and application of the relevant law thereto. A pure question oflaw unrelated to facts which give rise to a right, cannot be deemed to be a matter in issue."

21Copy pinpoint21. On the issue of limitation, the learned senior counsel places reliance upon Section 19 and Article 25 of the Limitation Act, 1963 and c also places reliance on the decision of the Bombay High Court in the case of Angel Jnfin Pvt. Ltd. i: Mis Echjay Industries Ltd. 11 , wherein it was held as under: "Applying the above observations of the Apex Court, one has to look to Section 19 of the Act and read the expression D "debt" appearing therein along with the articles in the Schedule to the Limitation Act. The Articles provide for different periods of limitation for different types of debts. They also provide different dates from which the period of limitation begins to run. A glance at the said Schedule would E show that there are large variety of debts as for example, for Seamen's Wages, for price of Goods sold and supplied, for price of Lodging, for hire of Animals or Vehicles or price of Trees or growing Crops, for price of work done, for money lent under an agreement, for money lent without an agreement, for money received by the Defendants for F Plaintiffs use, for interest on monies lent, for amounts due under Bills of Exchange, Promissory Notes etc. This ·will show that Article 25 refers to only the debt ofinterest, while A1ticle 19 refers to the debt of loan. Since there are various types of debts provided under the schedule with different G 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 II 2007 (4) Mh.L.J. 618 H

384 SUPREME COURT REPORTS [2016] 6 S.C.R.

A 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 B suit has been filed within the period oflimitation 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 oflimitation would start running from then only.

22Copy pinpoint22. The learned senior counsel further submits that the present appeal is maintainable even in light of the withdrawal of SLP (C) No. c 12217 of200 I in the case of Mis Trusses & Towers (P) Ltd. v. Ass(lm St"te Electricity Board nnd Anr. on 06.08.200 I. 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 of2001 before the High Court of Gauhati. The High Court on 19.03.2013 passed an order in the said Review Petition allowing only 9% simple interest per annum. D Aggrieved of the said judgment and order, Mis Trusses & Towers Pvt. Ltd. filed SLP (C) No. 15274 of2013 on I 0.04.2013. The learned senior counsel places reliance on the decision of this Court in the case of Sushi/ Kumar Sen 1( St"te of Bilwr12, wherein it was held as under: "2. It is well settled that the effect ofallowing an application for review of a decree is to vacate the decree passed. The decree that is subsequently passed on review, whether it modifies, reverses or confirms the decree originally passed, is a new decree superseding the original one ... " The learned senior counsel further places reliance on the decision of this Couii in the case of DSR Steel (Pvt.) Ltd. v. St(l/e of R"j"stlwn & Ors. 13 , wherein it was held as under: "25. Different situations may arise in relation to review petitions filed before a court or tribunal. 25.1. One of the situations could be where the review application is allowed, the decree or order passed by the court or tribunal is vacated and the appeal/proceedings in which the same is made are reheard and a fresh decree or order passed in the same. It is manifest that in such a situation

" <I 975) 1 sec 774 H "(2012) 6 sec 1s2

MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 385 ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.]

the subsequent decree alone is appealable not because it is A an order in review but because it is a decree that is passed in a proceeding after the earlier decree passed in the very same proceedings has been vacated by the court hearing the review petition. 25.2. The second situation that one can conceive of is where B a court or tribunal makes an order in a review petition by which the review petition is allowed and the decree/order under review is reversed or modified. Such an order shall then be a composite order whereby the court not only vacates the earlier decree or order but simultaneous with such vacation of the earlier decree or order, passes another decree or order or modifies the one made earlier. The decree so vacated reversed or modified is then the decree that is effective for the purposes of a further appeal, if any, maintainable under law."

23Copy pinpoint23. On the other hand, Mr. Vijay Hansaria, learned senior counsel appearing on behalf of the Electricity Board places strong reliance upon the judgment of this Court in the case of Purbanclu1l Cables & Conductors Pvt. Ltd. (supra) and contends that 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.

24Copy pinpoint24. 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 Purbw1clwl 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 Court in the case of Purbw1clwl Cables & Conductors Pvt. Ltd. (supra) operates as res judicata. H

386 SUPREME COURT REPORTS [2016] G S.C.R.

25Copy pinpoint25. We have heard the learned senior counsel appearing on behalf of the parties. With reference to the aforesaid rival legal contentions the following questions oflaw would arise for consideration: i) Whether provisions of the Act are retroactive in nature? ii) Whether non consideration of this aspect of the matter B renders the decisions of this Court in Modem Industries (supra) and Purbanc/wl Cables & Conductors Pvt. Ltd. (supra) as sub silentio? iii) Whether the judgment rendered in Purbanchal Cables & Conductors Pvt. Ltd. (supra) operates as res judicata c in the instant case? iv) Whether the suit filed by the appellants is barred by limitation? v) Whether the appeal against the review in the connected matter in Civil Appeal@ SLP (C) No.15274of2013 (M/s Trusses & Towers Pvt. Ltd.) is maintainable? vi) What order? Answer to Point nos. 1 and 2

26Copy pinpoint26. In my considered view after considering the rival legal submissions and judgments of this Court referred to supra, issue Nos. I and 2 are required to be answered in favour of the appellants for the following reasons: At the outset, it would be necessary to advert to the statement of the objects and reasons of the Act, the relevant parts of which read as under: "A policy statement on small scale industries was made by the Government in Parliament. It was stated at that time that suitable legislation would be brought to ensure prompt payment of money by buyers to the small industrial units. G

2. Inadequate working capital in a small scale or an ancillary industrial undertaking causes serious and endemic problems affecting the health of such undertakings. Industries in this sector have also been demanding that adequate measures by taken in this regard. The Small Scale Industries Board, H

M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 387 ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.]

which is an apex advisory body on polices relating to small scale industrial units with representatives from all the States, governmental bodies and the industrial sector, also expressed this view. It was, therefore, felt that prompt payments of money by buyers should be statutorily ensured and mandatory provisions for payment of interest on the outstanding money, in case of default, should be made. The buyers, if required under law to pay interest, would refrain from withholding payment to small scale and ancillary industrial unde11akings. ,, c Before examining the decisions of this Court in which the provisions of the Act have been interpreted, it would be useful to adve11 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 D 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, - E (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 thirtv days from the day of the de! ivery of goods or the rendering of services, the day of the actual delivery of goods or the rendering of services; (emphasis laid by this Court) H

388 SUPREME COURT REPORTS [2016) 6 S.C.R.

A At this stage, it is also important to examine Sections 3 and 4 of the Act, which provide for liability of the supplier to make payment, and the date from which such interest is payable. They read as under:

3. Liability of buyer to make payment.-Where any supplier supplies any goods or renders an) ,ervit:es tu any B buyer, the buyer sh al I make payment there[ore 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.

4. :Date from which and rate at which interest is c 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 anv 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 day immediately following the date agreed upon, at such rate which is five per cent. points above the floor rate for comparable lending.

Explanation.-For the purposes of this section, 'floor rate for comparable lending' means the highest of the minimum lending rates charged by scheduled banks (not being co-operative banks) on credit limits in accordance with the directions given or issued to banking companies generally by the Reserve Bank of India under the Banking Regulation Act, 1949.(10of1949)." F (emphasis laid by this Court) Section 3 of the Act lays down the liability of the buyer to make payment before the appointed day, which, according to the definition in section 2, is the day after the expiry of 30 days from the delivery of the G goods or the rendering of service. Section 4 of the Act provides the date from which the interest is payable. According to Section 4 of the Act, the liability on the buyer accrues from the appointed day. At the cost of repetition, as Section 2(b) of the Act makes explicitly clear, appointed day is the day following the expiry of thirty days from the date of

MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 389 ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.]

acceptance, which is the day of deliver; of goods or rendering of services. A In my considered view, the language of tht: legislature cou Id not have been more clearer than what has been explicitly made it very ckar. It has clearly stated what the lcgisla1ure had in contemplation at th.:: time of enactment of the Act as the focal date was the date of actual <lei ivery of goods or the rendering of servil:es, and not the date on which the B transaction was entered into.

27Copy pinpoint27. 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 /11d11slries Development Corpomlio11 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 c 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 cone lusion regarding the appl icabi Iity of the Act.

28Copy pinpoint28. 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 positio11 of law laid down by various decisions of this Court that the same can be used lo understand the general context in which the legislation was passed by the Parliament, as well as the evil it sought to remedy. A constitution bench of this Court held in the case of Stale of West Bengal v. Subodh Gopul Bose" as under: "It is well settled by this court that the statement ofobjects and reasons is not admissible as an aid to the construction of a statute (See Aswini Kumar Gl10se v. Arabinda Bose) and I am not, therefore, referring to it for the purpose of construing any part of the Act or of ascertaining the meaning of any word used in the Act but I am referring to it only for the limited purpose ofasce11ainingthe conditions prevailing at the time which actuated the sponsor of the Bill to introduce the same and the extend and urgency of th'~ evil which he sought to remedy."

" AIR 1954 SC 92 H

390 SUPREME COURT REPORTS [2016] 6 S.C.R.

A The said principle of law was reiterated by a Seven-Judge Bench of this Court more recently in the C<~se of State of Gt!iarat v. ftf!rzapur Moti Kureslti Kasab Jamat 15 ao: ti' ~er:

"Reference to the State:m:nt of Objects and Reasons is permissible for understand in~ the background, antecedent B state of affairs in relation to the statute, and the evil which the statute was sought to remedy. (See -Principles of Statutory Interpretation by Justice G.P. Singh, 9th Edition, 2004, at p. 218). In State of West Bengal v. Subodh Gopal Bose and Ors.; the Constitution Bench was testing the constitutional validity of the legislation impugned therein. c The Statement of Objects <'nd Reasons was used by S.R. Das, J. for ascertaining the conditions prevalent at that time which led to the introduction ot'the Bill and the extent and urgency of the evil which was sought to be remedied, in addition to testing the re::isonableness of the restrictions imposed by the impugned prcwision. In his opinion, it was indeed very unfortunate that the Statement of Objects and Reasons was not placed before the High Coult which would have assisted the High Court in arriving at the right conclusion as to the reasonableness of the restriction imposed. State of West Bengal v. Union oflndia approved the use of Statement of Objects and Reasons for the purpose of understanding the background and the antecedent state of affairs leading up to the legislation."

29Copy pinpoint29. Again in the case of Slwkti Tubes (supra) this Court continued to use the words "transaction" and "supply orders" as have been referred to in the case of Assam Sm'ttll Scale Jutlustries Deve/opmeut 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 12\Jipose of the Act cannot be lost sight of and the A£.Li!ulucstion cannot be given a retrospective

" (20U5) s sec 534 H

MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 391 ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.]

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 oayment of outstanding money in cases of default. This Court in the case of Modem Industries (supra), interpreted the scope of the Act as under: "9. The 1993 Act was sequel to a policy statement on c small-scale industries made by the Government in Parliament that suitable legislation would be brought to ensure prompt payment of money by buyers to the small industrial units. It was felt that inadequate working capital in a small-scale and ancillary industrial undertaking was causing an endemic problem and such unde11akings were very much affected. The Small Scale Industries Board- an apex advisory body on policies relating to small-scale . industrial units-also expressed its views that prompt payments of money by buyers should be statutorily ensured and mandatory provisions for payment of interest on the outstanding money, in case of default, should be made. !! was felt that the buyers, ifrequired under law to pay interest, would refrain from withholding payments to small-scale and ancillary industrial undertakings. With these objects and reasons. initially an ordinance, namely, the Interest on Delayed Payments to Small Scale and Ancillaiy Industrial F Unde11akings Ordinance, 1992 was promulgated by the President on 23-9-1992 and then the Bill was placed before both the Houses of Parliament and the said Bill having been Q!!!iSed, the 1993 Act was enacted. The Preamble 111 the 1993 Act reads: G "An Act to provide for and regulate the payment of interest on delayed payments to small-scale and ancillary industrial undertakings and for matters connected therewith or incidental thereto. H

392 SUPREME COURT REPORTS [2016] 6 S.C.R.

A 23. The wholesome purpose and object behind the 1993 Act as amended in 1998 is to ensure that the buyer promptly pays the amount due towards the goods supplied or the services rendered by the supplier. It also provides for payment of interest statutorily on the outstanding money in case of default. Section 3, accordingly, fastens liability upon B the buyer to make payment for goods supplied or services rendered to the buyer on or before the date agreed upon in writing or before the appointed day and when there is no date agreed upon in writing, the appointed day shall not exceed 120 days from the day of acceptance." c (emphasis laid by this Court) In the said case, while it was held that the provisions of the Act are prospective in nature based on the decisions of this Court in the case of Assam Small Scale Industries Development Corporation Ltd. (supra) and Slwkti Tubes (supra), it was observed that the said cases D have no applicability to the facts of the case because while the contract had been entered into on 15.01.1983, there were 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.

30Copy pinpoint30. 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 P11rbm1clwl 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 H

MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 393 ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.)

without noticing that the tenn "sale agreement" has not been defined in A the Act and is not even a legal test for appl icab iIity of the Act. If a "sale agreement" is taken to be the legal test, the 'ame would be inconsistent with the judgment of this Court in the case of Assam Small Scale l11dustries Developme11t Corporatio11 Ltd. (supra), wherein though the "sale agreement" was prior to the date of commencement of the Act, B this Court held that it was the date of"transaction" and "supply order" test whici1 applied as the transaction was entered into after the commencement of the Act, and if the "sale agreement" test is to be applied, then the seller in the said case would not be entitled to higher rate of interest under the Act.

31Copy pinpoint31. Further if"sale agreement" is taken to be the legal test, the c same would also be inconsistent with the decision of this Court in the case of Modem Industries (supra), wherein the test is neither of "transaction" nor "supply order", but that of"contract alteration". In the said case, the Act was deemed to apply even though the "transaction" had been entered into prior to the coming into force of the Act, the D contract had been altered several times, and these alterations had happened after the Act had come into effect.

32Copy pinpoint32. Therefore, there is a need to reconcile the aforesaid inconsistent legal tests for the applicability of the Act as laid down in the decisions of th is Court in the four cases referred to supra. E

33Copy pinpoint33. As I have already discussed above, a cumulative reading of the detin ition clauses of Sections 2, 3 and 4 of the Act as extracted supra leave absolutely no room for doubt that the test for applicability of the Act is not the date of transaction, or supply order, or contract alteration, but quite simply, the date of the delivery of goods or rendering of services. F What is also interesting to note in this case at this stage is point no. 3 of the statement of objects and reasons appended to the Act, which reads as under: "Since Parliament was not in session and circumstances existed which rendered it necessary to take immediate G action, the ln!ercst on Delayed Payments to Small Scale and Ancillar) l 11dustrial Undertakings Ordinance, 1992 ( 15 of 1992) was promulgated by the President on the 23'<l September, 1992." (emphasis laid by this Court) H

394 SUPREME COURT REPORTS [2016] 6 S.C.R.

34Copy pinpoint34. Further, Section 4 did not figure in the Act when it was originally passed. It was introduced by way of an 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 B 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 c consensus emerged from such discussions is that ce11ain 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 D 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.

35Copy pinpoint35. A cumulative reading of the aforesaid Sections of the Act shows that though a catena of cases which have been extensively adverted to in the case of 1'11rbw1clwl Cables & Co11d11ctors Pvt. Ltd. (supra) 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 11011 obstanle clause phrase in Section 4 of the Act which has been extracted supra.

36Copy pinpoint36. The Act was enacted in order to provide a boost to the small scale and ancilla1y industries, which were suffering as a result of irregular and delayed payments. A perusal of the statement of objects and reasons of the Act, the relevant portion of which has been extracted supra, makes it clear that the small scale industries were suffering as a result of lack of working capital, which was affecting the economic health of such industries. Prompt payment on the outstanding money, it was felt, that H

MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 395 ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA. J.]

was the need of the hour. In this context, the provisions of Sections 3, 4, A 5 of the Act, assume significance. More so in light of the fact that in the definition clause of Section 2 of the Act, the legislature has not defined the words 'transaction' or 'supply order'. It chose to only give definition to the terms, inter a/ia, 'appointed day', 'buyer' and ·supplier'. Since the focus of the Act is on delayed payment, which is in consonance with B 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 c 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 D 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 al I. Th is 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 ma~J!yment 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 sumili~_r or in anv 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 halftime of prime Lending Rate charged by the State Bank of India." (~mphasis 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 1-1

396 SUPREME COURT REPORTS [2016] 6 S.C.R.

A supply of the goods and rendering services, the buyer is liable to pay the 5tatutory interest on the delayed payment to the supplier no matter what is contained in the agreement between the buyer and the supplier. 3 7. Further, even on the issue of retrospectivity, what was required to be examined by this Court in the aforesaid cases was whether by B 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 P11rbanc!wl C"bles & Conductors Pvt. Ltd. (supra) and cases mentioned therein, renders the said judgment sub silentio on this question. The contention advanced by Mr. Vijay c Hansaria, learned senior counsel appearing on behalf of the Electricity Board in this regard cannot be accepted. The learned senior counsel places reliance on the decisions of this Cou11 in the case of State of U.P. & Anr. '" Synthetics And Chemicals Ltd. & Anr. 16, as well as Amit Das v. State of Bilwr 17 in suppo11 of the proposition that taking note of the hierarchical characterofjudicial system in India, it is of paramount importance that law declared by this Court be certain, clear and consistent. The said proposition of law cannot be doubted at all. But the question required to be examined in l'urbancha/ .Cables & Conductors P1•t. Ltd. (supra) was non-consideration of the relevant statutory provisions of the Act adverted to above and interpreting the same for the purpose of examining as to whether the provisions of the Act would be retroactive in nature and confer a statutory right on the supplier. Non-consideration of the said provisions in a proper perspective would render the abovesaid judgment per i11curiw11, as held by this Court in St({/e of U.P. & Anr. v. Sy11tlletic.~ Ami CllemiC({ls Ltd. & Anr. (supra), wherein it was held as under: ''39. But the problem has arisen due to the conclusion in the case of Synthetic and Chemicals. The question was ifthe State legislature could levy vend fee or excise duty on industrial alcohol. The bench answered the question in the negative as industrial alcohol beirig unfit for human consumption the State legislation was incompetent to levy any duty of excise either under Entry 51 or Entry 8 of List II of the Seventh Schedule. While doing so the bench

sec 139 "' ( 1991 J 4 H "l20001 s sec ~1ss

MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 397 ELECTRICITY BOARD & ORS. (V. GOPALA GOWDA, J.]

recorded the conclusion extracted earlier. It was not A preceded by any discussion. No reason or rationale could be found in the order. This gives rise to an important question if the conclusion is law declared under A11icle 141 of the Constitution or it is per incuria111 and is liable to be ignored. 40.' lncuria · Iiteral ly means 'carelessness'. In practice per B i11curia111 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 ig11oratiw11 of a statute or other binding authority'. (Young v. Bristol Aeroplane Co. Ltd.). Sarne has been accepted, approved and adopted by this Court c while interpreting Article 141 of the Constitution which embodies the doctrine of precedents as a matter of law. In Jaisri Sahu v. Rajdemm Dubey this Court while pointing out the procedure to be followed when conflicting decisions a1..e placed before a bench extracted a passage from D Ha/sburv :S· Laws of E11g/a11d 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 Purbm1clwl Cables & Conductors P1•t. Ltd. (supra) on the E issue ofprospectivity have no bearing to the facts of the instant case. In one of the decisions cited in Purba11c/wl Cables & Conductors Pvt. Ltd. (supra), which is the decision of this Court in the case of Zi/e Singlt v. State of Harymw 1", a three judge bench of this Court held as under: F "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 rule in general is applicable \vhere the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there G 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 Constitution futuris formam imponere debet non praeteritis' -- a new law ought to regulate what "(2004) s sec 1 H

398 SUPREME COURT REPORTS [2016) 6 S.C.R.

A is to follow, not the past. (See : Principles of Statutory Interpretation by Justice G.P. Singh, Ninth Edition, 2004 at p.438). It is not necessary that an express provision be made to make a statute retrospective and the presumption against retrospectivity mav be rebutted by necessarv implication especial_ly in a case where the new law is made to cure an B acknowledged evil for the benefit of the community as a whole." (emphasis laid by this Court) Since a reading of the statement of objects and reasons of the c Act makes it very clear that the Act has been enacted for the benefit of the small scale and ancillary industries at large, the decision in the case of P11rba11clwl Cables & Conductors Pvt. Ltd. (supra) does not correctly lay down the position of law with respect to the nature of the Act and its effect on its prospectivity as we! I.

D 38. In my considered view, Purba11clwl Cables & Coi[ductors Pvt. Ltd. (supra) 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 suh si/entio on this aspect. E Therefore, point Nos. I and 2 are answered in favour of the appellant-suppliers. Answers to Point Nos. 3,4 and 5:

39. The contention raised by Mr. Vijay Hansaria. the learned senior counsel appearing on behalf of the Electricity Board on the question of res judicata is wholly untenable in law. The substantial question that was in issue in the case of P11rba11c/111/ Cable.~ & Conductors Pvt. Ltd. (supra). th is Cou11 was not concerned with the issues that arose in Assam Small Srn/e industries Development Corporation Ltd. (supra), the findings of which have been extracted supra. This Court was only concerned with maintainability ofa suit with regard to the interest on the basis ufthc :;tatuto1y 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 Purbanclwl H

MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 399 ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.)

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 do~s 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 period c by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when payment was made: Provided that, save in the case of payment of interest made D before the I" day of January, 1928, an acknowledgment of the payment appears in the hand-writing of, or in a writing signed by the person making the payment. Explanation - For the purposes of this section, - E (a) where mortgaged land is in the possession of the mortgagee, the receipt of the rent of produce of such land shall be deemed to be a payment; (b) "debt" does not include money payable under a decree or order of a court. F

25. Acquisition of easement by prescription - (I) Where the access and use of light or air to and for any building have been peaceably enjoyed therewith as an easement, and as of right, without inte1rnption and for twenty years, and where any way or watercourse or the use of G any water or any other casement (whether affirmative or negative) has been peaceably and openly enjoyed by any person claiming title thereto as an casement and as of right without interruption and for twenty years, the right to such access and use of Iight or air, way, watercourse, use of H

400 SUPREME COURT REPORTS (2016) 6 S.C.R.

A other easement shall be absolute and indefeasible. (2) Each of the said periods of twenty years shall be taken to be a period ending within two years next before the institution of the suit wherein the claim to which such period relates is contested. B (3) Where property over which a right is claimed under sub-section (I) belongs to the Government that sub-section shall be read as if for the words "twenty years" the words "thirty years" were substituted. Explanation- Nothing is an interruption within the meaning c of this section, unless where there is an actual discontinuance of the possession or enjoyment by reason of an obstruction by the act of some person other than the claimant and unless such obstruction is submitted to or acquiesced in for one year after the claimant has notice thereof and of the person D making or authorising the same to be made."

41. 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 E 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 F which strong reliance has been placed by Mr. Ajit Sinha, the learned senior counsel, on the question of maintainability of the appeal filed by MIS 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: G

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 .H

MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 401 ELECTRICITY BOARD & ORS.

2013, vi de order dated 17.02.2015, the appellants Mis Shanti Conductors A were directed to pay an amount ofRs.38, 70,0001- back to the respondents. The respondents shall refund the amount to the appellants with 9% interest per (1111111111 within six weeks from the date of receipt of the copy of this Order. ARUN MISHRA, J. 1. Leave granted. B

2. I have gone through the draft judgment written by my learned Brother. However, I find myself respectfully unable to agree with the opinion expressed therein for the reasons mentio1wd hereinafter. 3, Jt is not in dispt1te that the Assam State Electricity 8oard had placed supply orders on 31.3 .1992 and 13 ,5 .1992 and the Act cnlled c "The Interest on Del&yed Payments to Small Scale and Ancillary lnd1.1strial Undert&kings Act, 1993" (hereinafter referred to as "the Act of 1993") cnme into force with effect from 23.9.1992. The supply was completed on 4.10, 1993. On 5.3.1994 last payment had been made. Suit for recovery of interest amounting to Rs.53.68 lacs was filed on I 0.1.1997. D

4. My learned Brother has held that the decisions in Purbanchal Cab/es & Conductors Pvt. Ltd. v, Assam State Electricity Board & Anr. (2012) 7 SCC 462, Assa111 S11mll Scafe Industries Developnumt Corporation Ltd. & Or,v, v. J.D. PharmaceutiP(J/s & Anr. (2005) 13 SCC 19 and Shakrt Tubes v. Stare af JJihqr & Ors. (2009) 7 SCC 673 etc. have not been correctly decicjed, therefore are per i11curia111 anp sub ,vifenrto. The Act has retroactive operation. It has also been opined that the deci§ion in Fwbrmclml Cables (supra) decided along with Shanti ConduPfor.v doe~ not operate as res judicata. ~. Hls nppan~nt from the name of the Act itself that the same is to provide lnten:i~t on delayed payments to small scale and ancillary industrial f underta~lng$, The Act has as many as ] I sections. Section I deals with thll f.lxt1mt of operation and date of its commencement. The Act came into force on 23rd day of September, 1992, 'Appointed day' has been defined in section 2(b) and 'buyer' in section 2(c). Both the definitions are extracted hereunder : G ''2(b) "appointed day" means the day following immediately after the expiry of the p~dod of thirty days fron1 the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier; H

402 SUPREME COURT REPORTS [2016] 6 S.C.R.

A 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 (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;

c (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; D (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 ifthere is no agreement to the contrary in writing between the buyer and supplier. E 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 b.uyer shal I 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 betwpen the supplier and the buyer in writing shall exceed one hundred and twenty days from the day of acceptance or the day of deemed acceptance."

7. Section 4 deals with the date from which and rate at which interest is payable. It is provided in section 4 itself that in case payment is not made in terms of section 3 notwithstanding any agreement to the contrary or any law for the time being in force, the buyer shall be liable H

MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 403 ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]

to pay interest from the appointed day or from the date immediately following the date agreed to, at one-and-half time of Prime Lending Rate charged by the State Bank of India which is available to the best borrowers of the bank. Section 4 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 c upon, at one-and-halftime of Prime Lending Rate charged by the State Bank of India. Explanation.-For the purposes of this section, "Prime Lending Rate" means the Prime Lending Rate of the State Bank of India which is available to the best borrowers of the bank."

8. Section 5 contains a 11011-obstante clause with regard to agreement to the contrary or any law for the time being in force in case buyer fails to pay before the appointed day. The buyer shall be liable to pay compound interest, with monthly interest, at the rate mentioned in section 4. Section 5 is extracted hereunder : "5. Liability of buyer to pay compound interest.- Notwithstanding anything contained in any agreement between a supplier and a buyer or in any law for the tinw being in force, the buyer shall be liable to pay compound interest (with monthly interest) at the rate mentioned in section 4 on the amount due to the supplier."

9. Section 6 deals with recovery of amount payable under sections 4 and 5 which is recoverable by way of a suit or other proceeding under any law for the time being in force. Section 7 of the Act contains the 0 provision with respect to appeal. The buyer-appellant has to deposit 75 per cent of the amount in terms of the decree, award or, other order in the appeal. Same is a condition precedent for entertainment of the appeal. Section 7A and 78 deal with establishmentoflndustry Facilitation Council and its composition. Section 7C requires the State Government to lay H

404 SUPREME COURT REPORTS [2016) 6 S.C.R.

A 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 B fm:ome Tax Act. The Act has the overriding effect over other laws as provided in section I 0. Section 11 contains the provisions with respect to repeal and saving. I0. It is apparent from the provisions of the Act noticed above that none of the provisions in the various sections indicates that the Act c is retrospective in operation in any manner whatsoever. On the contrary, the Act requires payment to be made by a buyer before the appointed duy that is the d11y following immediately after the expiry of 30 days fron1 the date of acceptance or the deemed acceptance of the delive1y of the goods or services. The day of acceptance means day of actual D delivery of goods or rendering of service or where buyer has objected within 30 days, the day on which such objection is removed by the supplier. Where no objection is raised in writing by the buyer regarding acceptance of goods or services within 30 days, the appointed day would be counted from the day on which 11ctual delivery of goods had been made or rendering of services, These provisions are not capable of being put into retrospective operation. The provisions of requirement of making the paynwnt before the appointed day, raising of objection within 30 days anp deemed acceptance are not capable of being put into retrospective operation, Section 3 deals with respect to liability of the buyer to make the pay1m:nt with refere1we to appointed day. The payment has to be F m11de on or before the date agreed upon between the buyer and supplier in writing or where there i~ no agreement, before the appointed day. The proviso furth!lr bars the agreement to extend the payment beyond 120 days from the day of acceptance or the day of deemed acceptance. Thus the provisions contained in section 3 also are prospective in nature. None of the provisions at all speak of the existing liability/agreement as G on the date of commencement of the Act. Section 4 deals with the date from which and the rate at which interest is payable. A bare reading of the same leaves no iota of doubt that the Act is prospective in nature and the higher interest rate is applicable only on failure to make the payment as envisaged by the Act under section 3. If the buyer fails to make the H

MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 405 ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]

payment as required under section 3, the liability to make the payment with interest arises. Section 4 contains non-obstante clause and overrides agreement or any other law to the contrary. A conjoint reading of the provisions of appointed day, sections 3 and 4 makes it clear that the Act is prospective in operation. It has no retrospective operation or retroactive operation. The Act does not contain any provision with respect to the existing agreements as on the date of commencement of the Act that would be governed by the provisions in force at the relevant time. The Act does not have the effect ofinvalidating prior agreements. The liability to make the payment of higher interest cannot operate retrospectively. The provisions ofthe Act are capable of being complied with prospectively that is from the date on which Ordinance initially came into force i.e. c 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. D

11. In' Pri11ciples ofStatutory lnle11Jretalio11' I 41h 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 ofa statute: E "2. RETROSPECTIVE OPERATION (a) General principles (i) xxx xxx xxx (ii) Statutes dealing with substa11/ive rights.- It is cardinal F principle of construction that every statute is prima jucie prospective unless it is expressly or by necessaiy implication made to have retrospective operation. There is a presumption ofprospectivity articulated in the legal maxim 'nova constilulio juturis formam imponere debet 11011 G praeteritis '. i.e. 'a new law ought to regulate what is to fol low, not the past', and this presumption operates unless shown to the contra1y by express provision in the statute or is otherwise discernible by necessary implication. But the rule in general is applicable where the object of the statute H

406 SUPREME COURT REPORTS [2016] 6 S.C.R.

A 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- "110va constilutio futuris formam i111po11ere debet 11011 praeteritis '. In the words of LORD BLANESBURG, B "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." "Every statute, it has been said", observed LOPES, L.J., ·'which takes away or impairs vested rights acquired under c existing laws. or creates a new obligation or imposes a new duty, or attaches a new disability in respect of transactions already past, must be presumed to b.: intended not to have a retrospective effect."

12. The Act of 1993 contains no provision which it can be said to D be expressly or by necessary implication of retrospective operation. The Act has the effect of overriding the laws and the agreements, thus would not affect the law and the agreements which prevailed before coming into force of the Act. As a transaction/agreement is valid when made, it cannot be invalidated by subsequent prohibition or provision.

E 13. This Court in Assam Small Scale Industries Development C017Joratio11 Ltd. (supra) has considered the applicability of the Act of 1993 and has laid down thus : "37. We have held hei-einbefore that clause 8 of the terms and conditions relates to the payments of balance I 0%. It F is not in dispute that the plaintiff had demanded both the principal amount as also the 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, SI. Nos. I to 26 (referred to in the penultimate para of the trial court judgment), that is supply orders between 5-6-1991 to

M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 407 ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]

28-7-1992, were prior to the date of the 1993 Act coming into force. Only the transactions at SI. Nos. 27 to 71 (that is supply orders between 22-10-1992 to 19-6-1993), will attract the provisions of the 1993 Act.