Supreme Court of India
M/S PURBANCHAL CABLES & CONDUCTORS PVT. LTDversusASSAM STATE ELECTRICITY BOARD & ANOTHER
- Citation
- 2012 INSC 280
- Decided
- 10 July 2012
- Disposal
- Dismissed
- Bench
- H L DATTU
Holding
A suit for interest alone is maintainable and the 1993 Act is a substantive law that operates prospectively, not applying to pre‑commencement contracts.
Summary
The Supreme Court considered two appeals by suppliers of aluminium conductors against the Assam State Electricity Board concerning claims for interest on delayed payments under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993. The Court held that a suit seeking only interest is maintainable and that the Act creates a substantive vested right for suppliers, operating prospectively from its deemed commencement on 23 September 1992. Consequently, the Act does not apply to contracts concluded before that date, even if supplies were delivered later. The Court also rejected arguments on limitation and novation, emphasizing that those issues were not properly before it. The appeals were dismissed.
Issues considered
- Whether a suit for interest alone is maintainable under the 1993 Act.
- Whether the 1993 Act applies retrospectively to contracts entered into before its commencement but with supplies made after its commencement.
Legislation cited
- Code of Civil Procedure, 1908s. 34
- Indian Contract Act, 1872s. 62
- Interest Act, 1978s. 3
- Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993s. 10, s. 2, s. 3, s. 4, s. 5, s. 6
- Limitation Act, 1963s. 14
- Sale of Goods Act, 1930s. 61
Subjects
interest on delayed paymentsubstantive lawprospective operationmaintainability of suit for interestcontract lawnovationlimitationstare decisisprecedentstatutory interpretation
Judgment
[2012] 6 S.C.R. 905
M/S PURBANCl-IAL CABLES & CONDUCTORS PVT. A
LTD.
v.
ASSAM STATE ELECTRICITY BOARD & ANOTHER
(Civil Appeal No. 2348 of 2003 etc.)
B
JULY 10, 2012
[H.L. DATTU AND ANIL R. DAVE, JJ.]
INTEREST ON DELA YEO PAYMENT TO SMALL
SCALE AND ANCILLIARY INDUSTRIAL UNDERTAKINGS C
ACT, 1973:
Suit for interest on delayed payment - Held: Is
maintainable - Supplier may file a suit only for a higher rate
of interest on delayed payments made by the buyer from the D
commencement of the Act.
Prospective operation of the Act - Held: The Act is a
substantive law, as vested right of entitlement to a higher rate
of interest in case of delayed payment accrues in favour of
the supplier and a cormsponding liability is imposed on the E
buyer - Any substantive law shall operate prospectively unless
retrospective operation is clearly made out in the language
of the statute - In the absence of any express legislative
intendment of the retrospective application of the Act, and by
virtue of the fact that the Act creates a new liability of a high F
rate of interest against the buyer, the Act cannot be construed
to have retrospective effect - The Act, though enacted on
2. 4. 1993, by a legal fiction is deemed to have come into effect
·from the date of promulgation of the Ordinance, i.e. 23. 9. 1992
- Since the Act envisages that the supplier has an accrued G
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 - Interpretation of Statutes - Precedent.
905 H
906 SUPREME COURT REPORTS [2012] 6 S.C.R.
A PRECEDENT:
Reconsideration of a decision - Held: Judicial discipline
demands that a decision of a Division Bench of two Judges
should be followed by another Division Bench of two Judges
8 - No case has been made out for reconsideration of the
decision of the Court in Assam Small Scale Industries -
Doctrine of stare decisis.
In the instant appeals arising out of the claim of the
appellants-suppliers for interest in terms of the Interest
C on Delayed Payments to Small Scale and Ancillary
Industrial Undertakings Act, 1993 (the Act), the questions
for consideration before the Court were: (1) "whether a
suit for interest alone is maintainable under the
provisions of the Act" and (2) "whether the suppliers can
D get the benefit of the provisions of the Act even if the
contract of supply was ..e'i)Cecuted prior to the
commencement of the Act, whereas the supplies are
made after the commencement 'of the Act."
Dismissing the appeals, the Court
E
HELD: 1. Since a Division Bench of this Court in
Modern Industries' case* has already approved the
dictum of the Full Bench of the High Court with regard
to the maintainability of a suit only for interest, that
F question is no longer res integra. Therefore, the suppliers
may file a suit only for a higher rate of interest on delayed
payments made by the buyer from the commencement
of the Act. [para 12] [923-H; 924-A]
G *Modern Industries v. Steel Authority of India Limited
2010 (4) SCR 560 = (2010) 5 sec 44 - relied on
2.1 The fundamental rule of construction is the same
for all statutes whether fiscal or otherwise. The under-
lying principle is that the meaning and intention of a
H
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 907
ASSAM STATE ELECTRICITY BOARD
statute must be ~ollected from the plain and A
unambiguous expression used therein rather from any
notion. To arrive at the real meaning, it is always
necessary to get an exact conception, scope and object
of the whole Act. [para 22] [9"29-B-C]
Zile Singh v. State of Haryana 2004 (5 ) Suppl. SCR 272 B
= (2004) a sec 1 - re.lied on
2'2 The remedy sought to be applied by the Act is
made clear in the Statement of Objects and Reasons, in
which, it is stated that due to the delayed payments by C
buyers to' the small scale ii;idustries, their working capital
was being affected" causing great harm to the small scale
industries ir'f general. The Act was passed by Parliament
to impose a heavy interest on the buyers who delayed
the payments of the small scale industries, in order to D
deter the buyers from delaying the payments after
accepting the supplies made by the suppliers. Keeping
in view the said object, the Act was enacted by
Parliament. Before such enactment, the supplier whose
payment was delayed by the buyer prior to the E
commencement of the Act, could file a suit for payment
of the principal amount along with the interest.. The
. supptier, 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 F
court to award such interest. The court has the discretion
~o award interest along with the principal amount and the
same is clear from the use of the word 'may' in all the
three provisions, namely s.34 of the CPC, s. 61 of the Sale
of Goods Act, 1930 ~nd s. 3 of the Interest Act, 1978. [para G
24-26] [929-F-H; 9(30-C-D, F-G]
2.3 With the cbmmencement of the Act, a new vested
right exists with the supplier, that being, if there is delay
in payment after the acceptance of the goods by the
buyer, the supplier can file a suit for claiming interest at H
908 SUPREME COURT REPORTS [2012] 6 S.C.R.
A a higher rate, as prescribed by the Act. This position has
been approved by this Court in the case of Modern
Industries. Thus, if there is 1a delayed payment by the
buyer, then a right to claim a higher rate of interest as
prescribed by the Act accrues to the supplier. A statute
B creating vested rights is a substantive statute. There is
no doubt about the fact that the Act is a substantive law
as vested right of entitlement to a higher rate of interest
in case of delayed payment accrues in favour of the
supplier and a corresponding liability is imposed on the
c buyer. This Court, time and again, has observed that any
substantive law shall operate prospectively unless
retrospective operation is clearly made out in the
language of the statute. Only a procedural or declaratory
law operates retrospectively as there is no vested right
0 in procedure. [para 27, 29 and 39] [931-A-D; 932-B; 938-
H; 939-A-B]
Bibi Sayeeda Vs. State of Bihar 1996 ( 1 ) Suppl. SCR
799 =(1996) 9 SCC 516; Executive Engineer, Dhenkanal
Minor Irrigation Division Vs. N. C. Budharaj - 2001 ( 1 ) SCR
E 264 = (2001) 2 SCC 721; Thirumalai Chemicals Limited Vs.
Union of India 2011 (4) SCR 838 = (2011) 6 SCC 739;
Shyam Sunder Vs. Ram Kumar 2001 (1 ) Suppl. SCR 115
= (2001) 8 sec 24 - relied on
F Katikara Chintamani Dora Vs. Guntreddi Annamanaidu
1974 (2) SCR 655 = (1974) 1 SCC 567; and Govind Das Vs.
=
/TO 1976 (3) SCR 44 (1976) 1 SCC 906; Jose Da Costa
Vs. Bascora Sadasiva Sinai Narcomium (1976) 2 SCC 917;
K. Kapen Chako Vs. Provident Investment Co. (P) Ltd 1977
G (1) SCR 1026 = (1977) 1 SCC ~93; Dahiben Vs. Vasanji
Keva/bhai 1995 (3) SCR 234 = 1995 Supp. (2) SCC 295; Zi/e
Singh Vs. State of Haryana 2004 (5) Suppl. SCR 272 =
(2004) 8 SCC 1; State of Punjab Vs. Bhajan Kaur - (2008)
12 sec 112 - referred to.
H Black's Law Dictionary (6th Edn.) - referred to.
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 909
ASSAM STATE ELECTRICITY BOARD
2.4 In the absence of any express legislative A
intendment of the retrospective application of the Act, and
by virtue of the fact that the Act creates a new liability of
a high rate of interest against the buyer, the Act cannot be
construed to have retrospective effect. The Act, though
enacted on 2nd April 1993, by a legal fiction is deemed to B
have come into effect from the date of promulgation of the
Ordinance, i.e. 23rd September 1992. Since the Act
envisages that the supplier ha~ 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 c
of commencement of the Act, i.e. 23.9.1992 and not any
time prior. [para 8 and 40) (918-D-E; 939-B-D]
2.5 On a careful perusal of the judgment of this Court
in Assam Small Scale Industries,** even the question
regarding the applicability of the Act to co.ntracts D
concluded prior to coming into force of the Act is no
longer res integra. In the said case the Court has held that
the Act will have no application in relation to the
transacti.ons entered into between June 1991 and 23-9-
1992. [para 40-41] (939-E; 940-C] E
**Assam Small Scale Industries Development Corpn.
Ltd. Vs. J.D. Pharmaceuticals 2005 (4) Suppl. SCR 232 =
(2005) 13 SCC 19; Shakti Tubes Ltd. Vs. State of Bihar 2009
(10) SCR 739 = (2009) 7 SCC 673; Rampur Fertilizers F
Limited v. Vigyan Chemical Industries 2009 (2) SCR 650 =
(2009) 12 SCC 324; and Modern Industries v. Steel Authority
of India Limited 2010 (4) SCR 560 = (2010) 5 SCC 44 - relied
on.
2.6 It cannot be said that this Court in Assam Small G
Scale Industries Development Corporation's case did not
specifically consider and decide the issue of whether the
Act would apply to the contracts executed prior to the
commencement of the Act but the supplies being made
after the commencement of the Act. In that case, the H
910 SUPREME COURT REPORTS [2012] 6 S.C.R.
A question of retrospective operation of the Act or whether
past contracts were governed by the Act, was argued.
Further, in the case of Shakti Tubes Ltd., this issue was
canvassed due to which, this Court referred to the
precedent in the case of Assam Small Scale Industries.
B This Court, in Shakti Tubes Ltd. expressly rejected the
argument that the Act should be given retrospective
effect because it was a beneficial legislation. In the case
of Rampur Fertilizers Limited, this Court again examined
the entire scheme of the Act before following the dicta of
c this Court in the case of Assam Small Scale Industries.
Even in Modern Industries, this Court did not differ from
the dicta of this Court in Assam Small Scale Industries
and Shakti Tubes. [para 43, 51-54] [942-A-B; 947-D-G. 948-
G-H; 951-C-D]
D 3.1 Judicial discipline demands that a decision of a
Division Bench of two Judges should be followed by
another Division Bench of two Judges and this has been
stated time and again by this Court. [para 62] [955-E]
E Waman Rao Vs. Union of India 1981 (2) SCR 1 = (1981)
2 SCC 362; and Union of India Vs. Paras Laminates (P) Ltd.
- 1990 (3) SCR 789 = (1990) 4 sec 453 - relied on
Union of India Vs. Raghubir Singh 1989 (3) SCR 316
F =(1989) 2 SCC 754; Krishena Kumar Vs. Union of India 1990
(3) SCR 352 = (1990) 4 SCC 207; Mishri Lal Vs. Dhirendra
Nath 1999 (2) SCR 453 = (1999) 4 SCC 11; Central Board
of Dawoodi Bohra Community Vs. State of Maharashtra, 2004
(6) Suppl. SCR 1054 = (2005) 2 SCC 673; Shanker Raju Vs.
Union of India 2011 (2) SCR 1 = (2011) 2 SCC 132; Fida
G Hussain Vs. Moradabad Development Authority 2011 (9)
SCR 290 = (2011) 12 sec 615 - referred to.
3.2 No case has been made out for reconsideration
of the decision of this Court in Assam Small Scale
H Industries. In fact, a plea for reconsideration of the same
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 911
ASSAM STATE ELECTRICITY BOARD .
was rejected by a Division Bench of this Court in Shakti A
Tubes. It cannot be said that the provisions of the Act
were not considered in its entirety. In fact, the entire
scheme of the Act has been considered in the case of
Rampur Fertilizers and specific issue under consideration
was answered. In light of the dictum of this Court in B
· Ambika Prasad Mishra and the factum that no case has
been made out for reconsideration, there is no reason
much less good reason to doubt the correctness of the
decision in Assam Small Scale Industries or Shakti Tubes,
and it would be against the spirit of the doctrine of stare c
decisis to take any view in divergence with same. [para
66 and 68] [958-C-D, F-H; 959-A]
Keshav Mills Co. Ltd. Vs. CIT (1965) 2 SCR 908- relied
on
Ambika Prasad Mishra Vs. State of U.P. 1980 (3) SCR D
=
1159 (1980) 3 sec 719 - referred to
4. As regards the plea that the extension of date of
supply order, from time to time by the Board, amounts to
a novation of contract or supply order in terms of s. 62 E
of the Indian Contract Act and, therefore, the new
contract or supply order would be governed by the Act,
suffice it to say that the ground or issue of novation of
contract is a mixed question of fact and law and it is being
raised, for the first time, at the time of hearing of the case F
which cannot be permitted to be raised. The said fact of
novation or alteration of contract is required to be urged
evidentially and scrutinised by the courts below. In
absence of such factual findings, it is not possible to
decide such a mixed question of law and facts. In Shakti
Tubes Ltd., the issue of novation of contract was raised G
before this Court for the first time at the time of hearing.
This Court declined to entertain such ground as being a
mixed question of law and fact. This Court further
observed that even on the merits of the case the
escalation of price, reduction of the quantity of the supply H
912 SUPREME COURT REPORTS [2012] 6 S.C.R.
A order and extension of date of supply does not amount
to novation or alteration in the supply order. [para 69]
[959-B-E]
Assam State Electricity Board and Another v. Mis
Trusses and Towers (P) Ltd. (F.A. NO. 109195) 2001 (2) GLT
8
121; Purbanchal cables & conductors pvt. Ltd. . vs. Assam
state electricity board & anr 2012(6 ) JT 327; Consolidated
Engineering Enterprises v. Municipal Secretary, Irrigation
Department, 2008 (5) SCR 1108 = (2008) 7 sec 169; Mukri
C Gopalan v. Cheppilat Puthanpurayil Aboobacker, 1995 ( 2 )
Suppl. SeR 1 = (1995) 5 SCC 5; Rampur Fertilizers Limited
=
v. Vigyan Chemical Industries 2009 (2) SCR 650 (2009) 12
SCC 324; Municipal Corporation, Delhi Vs. Gurnam Kaur
1988 (2) Suppl. SCR 929 = (1989) 1 sec 101; State of U.P.
Vs. Synthetics and Chemicals Ltd. (1991) 4 sec 139; Amit
D Das Vs. State of Bihar 2000 (1) Suppl. SCR 69 = (2000) 5
SCC 488, Tika Ram Vs. State of Uttar Pradesh (2009) 10
SCC 689; CIT Vs. Saheli Leasing and Industries Limited
2010 (6) SCR 747 = (2010) 6 sec 384 - cited.
E Case Law Reference:
2001 (2) GLT 121 cited para 3
2010 (4) SCR 560 relied on para 11
2012 (6) JT 327 cited para 18
F
2008 (5) SCR 1108 cited para 18
1995 (2) Suppl. SCR 1 cited para 19
2009 (2) SCR 650 cited para 20
G 2004 (5) Suppl. SCR 272 relied on para 23
1996 ( 1 ) Suppl. SCR 799 relied on para 28
2001 ( 1 ) SCR 264 relied on para 29
H 2011 (4) SCR 838 relied on para 30
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 913
ASSAM STATE ELECTRICITY BOARD
2001 (1) Suppl. SCR 115 relied on para31 A
1974 (2) SeR 655 referred to para 32
1976 (3) SeR 44 referred to para 33
1976 (2) sec 917 referred to para 34
B
1977 (1) SCR 1026 referred to para 35
1995 (3) seR 234 referred to para 36
2004 (5) Suppl. SCR 272 referred to para 37
c
2008 (12) sec 112 referred to para 38
2005 (4) Suppl. SeR 232 relied on para 41
2009 (10) SCR !39 relied on para 42
1988 (2) Suppl. SCR 929 cited para 47 D
(1991) 4 sec 139 cited para 48
2000 (1) Suppl. SCR 69 cited para 49
(2009) 10 sec 689 cited para 50 E
1981 (2) SCR 1 relied on para 55
1989 (3) SCR 316 referred to para 56
1990 (3) SeR 352 referred to para 57
F
1999 (2) SCR 453 referred to para 58
2004 (6) Suppl. SCR 1054 referred to para 59
2011 (2) SCR 1 referred to para 60
G
2011 (9) SeR 290 referred to para 61
1990 ( 3) SCR 789 relied on para 63
2010 (6) SCR 747 cited para 64
(1965) 2 SCR 908 relied on para 65 H
914 SUPREME COURT REPORTS [2012] 6 S.C.R.
A 1980 ( 3) SCR 1159 relied on para 67
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
2348 of 2003 etc.
From the Judgment & Order dated 18.08.2001 of the
B Gauhati High Court (The High Court of Assam: Nagaland:
Meghalaya: Manipur: Tripura: Mizoram: and Arunachal
Pradesh) in R.F.A. No. 80 of 2000.
WITH
c C.A. No. 2351 of 2003.
Rakesh Dwivedi, Vijay Hansaria, Sunil Gupta, Ritesh
Agrawal, Rima, Ranjan Mukherjee, Rajiv Mehta, Sneha Kalita
(for Sunil Kumar Jain), Rajiv K. Garg, Ashish Garg, Himanshu
D Shekhar, Avijit Roy, Vartika Sahay Walia (for Corporate Law
Group), Ambhoj Kumar Sinha, Devashish Bharukka for the
appearing parties.
The Judgment of the Court was delivered by
E H.L. DATIU, J. 1. Since the issues in these appeals are
common, they are disposed of by this common judgment and
order.
Factual background of the two appeals
F
2. The facts in brief needs to be stated for answering the
issues raised. They are: In the case of Purbanchal Cables (C.A.
No. 2348 of 2003), the supplier is the manufacturer of Aluminium
Conductors Steel Reinforced (for short "ACSR") for various
specifications. The respondent-Board had placed orders for
G supply of ACSR of different specifications in three (3) quarterly
phases, i.e. in June 1992, September 1992 and December
1992 with the appellant vide supply order dated 31.3.1992. In
pursuance to the said supply order, the supplier had initially
made delivery of goods with respect to three bill-$ on
H
· PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 915
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
16.09.1992, but did not receive payment from the respondent. A
Subsequently, the supplier had made another delivery of goods
with respect to nine other bills in between 25.09.1992 and
30.03.1993. These supplies were made after the expiry of the
time stipulated in the agreement/supply order, but after
obtaining specific extension of time by the buyer. The supplier a
had completed the entire supply by 12.10.1993 and received
the payment for such supplies from the respondent in the month
of September and October, 1993. In pursuance to such
supplies, the supplier has raised the demand for interest on
delayed payment made by the respondent, vide its letters dated c
14.12.1992 arid 3.12.1993, however, the same was not
acceded to by the buyer.
3. The supplier had instituted a Money Suit No.109 of 1996
before Assistant District Judge No.1, Kamrup for the payment
of interest to the tune of Rs. 24,57,927.28/-, on delayed D
payment of principal amount by the respondent, under the
Interest on De1ayed Payments to Small Scale and Ancillary
Industrial Un<:lertakings Act, 1993 (for short 'the Act'). The said
suit was decreed by the Civil Judge (Senior Division) No. 1,
Kamrup vide his order dated 27.01.2000 in favour of the E
supplier, who granted the compound interest @ 18.25% per
annum plus interest of 5% above the said rate of interest with .
monthly rest till realization. Being aggrieved by the said order,
the respondent had filed a Regular First Appeal No. 80 of 2000
before the High Court of Gauhati. The Division Bench of the F
High Court has allowed the appeal and dismissed the suit vide
its judgment and order dated 18.8.2001 on the ground that suit
is not maintainable as no amount was due on the date of
institution of the suit and thereby followed its earlier view
rendered by the Division Bench of the High Court in Assam G
State Electricity Board and Another v. Mis Trusses and
Towers (P) Ltd. (F.A. NO. 109/95), 2001 (2) GLT 121, whereby
and whereunder a Division Bench of the High Court had held
that a suit for interest simpliciter was not maintainable when the
principal amount was received without any demur and that the H
,.
916 SUPREME COURT REPORTS (2012] 6 S.C.R. ·
A Act did not revive the claims that were already settled. The High
Court has also, inter alia, directed the appellant to refund the
amount of · 10 lakhs, paid by the respondents pursuant to the
Court's direction at the time of admission of the appeal to the
respondent within a period of two months and failure to pay
B within such period would entail interest at the rate of 12% per
annum. Aggrieved by this decision of the High Court, the
supplier has preferred this appeal.
4. In the case of Shanti Conductors (C.A. No. 2351 of
2003), the Board had placed two supply orders for the
C manufacture and supply of KM ACSR Penther Conductors, and
the supplier completed the supplies in eight parts between
22.03.93 and 04.10.93. In March 1997, about three and a half
years of making the supplies, and after the receipt of the entire
amount, the supplier filed a suit for interest on delayed payment
D by the Board in terms of the provisions of the Act, in Money
Suit No. 21/1997 before the Court of the Civi.l Judge (Sr. Divn.)
No. 1, Guahati. The same was disputed by the Board in the
written statement filed in the suit. However, the Sl.lit filed by the
supplier was decreed and the Learned Assistant Distri'ct Judge
E awarded a sum of '51,60,507.42 byway of interest for the
delayed payment. Being aggrieved by the said order, the
Board preferred a Regular First Appeal (F.A. No. 66 of 2000)
before the Guahati High Court. The Division Bench hearihg the
appeal of the Board in the case of Shanti Conductors doubted
F the correctness of the view taken by the Division Bench in the
case of Trusses and Towers, and referred the matter to the Full
Bench to determine whether a suit is maintainable only for
interest and whether the provisions of the Act is applicable to
contracts concluded prior to its commencement, where the
G delayed payment is made after its commencement.
5. The Full Be:nch of the High Court after considering the
provisions of the Act, concluded that the findings of the Division
Bench in the case of Trusses & Towers that once a principal
amount is received without any protest, then n0; further claim
H
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 917
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
for interest can be made; is not the correct legal position in law. A
In other words, ttie Full Bench came to the conclusion that a
suit for only interest was also maintainable. Further, the Full
Bench also held that the Act is applicable to any contracts
entered into prior to the commencement of the Act, and a higher
rate of interest could be charged in terms of the provisions of B
the Act, however, the same was to be done after 23.09.1992,
i.e. after the Act came into force. The matter was then remitted
back to the Division Bench to decide the· other issues in
accordance with law and in the light of the observations made
therein. Aggrieved by the decision of the Full Bench, the Board c
is before us in Civil Appeal No.2351 of 2003.
6. The issues that are required to be answered by us in
these appeals are whether a suit for interest alone is
maintainable under the provisions of the Act, and whether the
Act would be applicable to contracts that have been concluded D
prior to the commencement of the Act. In other words, we are
required to examine whether the Act would apply to those
contracts which were entered prior to the commencement of
the Act but supplies were effected after the Act came into force.
E
The Scheme of the Act:
7. The Statement of Objects and Reasons read as under:
"A policy statement on small scale industries was made
by the Government in Parliament. It was stated at that time F
that suitable legislation would be brought to ensure prompt
payment of money by buyers to the small industrial units.
2. Inadequate working capital in a small scale or an
ancillary industrial undertaking causes serious and G
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, which is an
apex advisory body on polices relating to small scale
H
918 SUPREME COURT REPORTS [2012] 6 S.C.R.
A 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
B 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 undertakings.
3. An Ordinance, namely, the Interest on Delayed
c Payments to Small Scale and Ancillary Industrial
Undertakings Ordinance, 1992, was, therefore,
promulgated by the President on 23rd September, 1992."
8. The long title of the Act reads as "An Act to provide for
D and regulate the payment of interest on delayed payments to
small scale and ancillary industrial undertakings and for matters
connected therewith or incidental thereto." The Act though
enacted on 2nd April 1993, by a legal fiction i.s deemed to have
come into effect from the date of promulgation of the Ordinance,
E i.e. 23rd September 1992. The provisions of the Act largely
deal with the liability of the buyer to make payment for supplies,
determination of the date from which and the rate at which
interest is payable to the supplier from the buyer, liability of the
buyer to pay compound interest, recovery of the amount due
F to the supplier from the buyer, and other provisions relating to
appeal, etc.
9. Section 2(b) of the Act defines the meaning of the
expression 'appointed day' to mean the day following
immediately after the expiry of the payment period of thirty days
G from the date of payment, acceptance of any goods or any
services by a buyer from a supplier. Section 3 of the Act
imposes a statutory liability upon the buyer to make payment
for the supplies of any goods either on or before the appeal
date or where there is no agreement, before the appointed day.
H
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 919
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
Section 4 provides for the award of interest where the price has A
not been paid within time. Section 5 provides for the liability of
the buyer to pay compound interest. Section 6 of the Act gives
a right to the buyer to file a civil suit. Section 10 of the Act gives
overriding effect to any other law which are inconsistent with
the provisions of the Act. B
On the question of maintainability of a suit for interest
10. Shri Rakesh Dwivedi and Shri Su nil Gupta, learned
Senior Counsel appear for the suppliers and Shri Vijay
Hansaria, learned Senior Counsel appears for the buyer - C
Assam State Electricity Board (hereinafter referred to as 'the
Board').
11. The learned Senior Counsel appearing for the
suppliers has brought to our notice that the first question that o
has been raised for our consideration has been answered by
this Court in favour of the suppliers, in the case of Modern
Industries v. Steel Authority of India Limited, (2010) 5 SCC.
44, in which this Court has held:
"40. In Assam SEB v. Shanti Conductors (P) Ltd. inter alia E
the ques~jo,n that fell for consideration before the Full
Bench of t~ Gauhati High Court was as to whether the
,,suit fo~ recovery of a mere interest under the 1993 Act is
maintainable. The argument on behalf of the appellant
therein was that no suit merely for the recovery of the F
interest under 'he 1993 Act is maintainable under the
provisions of Section 6. It was contended that both
principal sum and the interest on delayed payment
simultaneously must coexist for maintaining a suit under
Section 6 of the 1993 Act. G
41. The Full Bench held that the suit is maintainable for
recovery of the outstanding principal amount, if any, along
with the interest on delayed payments as calculated under
H
920 SUPREME COURT REPORTS [201'2] :6 S.C.R.
A Sections 4 and 5 of the 1993 Act. It said: (As$ar'n SES
case, Gau LR pp. 559-60, para 12)
"12 .... The opening words of Section 6(1) 'the·
amount due from the b'uyer, together with the
amount of interest .... ' can onliY mean that the
B
principal sum due from tne bu}iler as well as or
along with the amount of interest calculated u11der
the provisions of the Act, are recoverable. The word
'together' here would mean 'as well as' or 'along
with'. This cannot mean that the principal sum must
c be due on the date of the filing of the suits. The suits
are maintainable for recovery of the outstanding,
principal amount, if any, cftong with the amount of
interest on the delayed payments as calculated
under Sections 4 and 5 of the Act. We are unable
D to agree with that if the principal sum is not due, no
suit would lie for the recovery of the interest on the
delayed payments, which might have already
accrued. If such an interpretation is given the very
object of enacting the Act would be frustrated. The
E Act had been enforced to see that small- scale
industries get the payment regarding supply made·
by them within the prescribed period and in case
of delay in payments the interest would be at a
much higher rate (one-and-a-half times of lending
F rate charged by State Bank of India). The obligation
of payment of higher interest under the Act is
mandatory. Sections 4 and 5 of the Act of 1993
contain a non obstante clause i.e. 'Notwithstanding
anything contained in any agreement between the
G buyer and the supplier'. In other words, the parties
to the contract cannot even contract out of the
provisions of the 1993 Act. Even· if such provision
that interest under the Act on delay meant would not
be chargeable is incorporated in the contract,
Sections 4 and 5 of the Act of 1993 would still
H
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 9,1
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
prevail as the very wording of these sections A
indicate. Take for instance that the buyer has not
paid the outstanding amount of the supply by the
due date. After .much delay he offers the
outstand.i11g amount of the supply to the supplier. If
the argument of the learned counsel-f-0r the B
appellant is to be accepted, then, if the supplier
accepts entire amount he would be losing his right
to recover the amount of interest on the delayed
payment under the Act. Therefore, he would have
to refuse to accept the amount of payment and then c
file a suit for recovery of the principal amount and
the interest on the delayed payment under the Act.
The Act does not create any embargo against
supplier not to accept principal amount at any
stage and thereafter file a suit for the recovery or D
realisation of the interest only on the delayed
payments under the Act."
42. The word "due" has a variety of meanings, in different
context it may have different meanings. In its narrowest
meaning, the word "due" may import a fixed and settled E
obligation or liability. In a wider context the amount can be
said to be "due", which may be recovered by action. The
amount that can be claimed as "due" and recoverable by
an action may sometimes be also covered by the
expression "due". The expression "amount due from a F
buyer'' followed by the expression "together with the amount
of interest" under sub-section (1) of Section 6 of the 1993
Act must be interpreted keeping the purpose and object
of the 1993 Act and its provisions, particularly Sections 3,
4 and 5 in mind. This expression does not deserve to be G
given a restricted meaning as that would defeat the whole
purpose and object of the 1993 Act. Sub-section (1) of
Section 6 provides that the amount due from a buyer
together with amount of interest calculated in accordance
with the provisions of Sections 4 and 5 shall be H
962 SUPREME COURT REPORTS [2012] 6 S.C.R.
A recoverable by the supplier from the buyer by way of suit
or other proceeding under any law for the time being in
force.
4~. ltthe-a.rgument of the Senior Coynsel for the buyer is
accepted, that would mean that where the buyer has raised
B
some dispute in respect of goods supplied or services
rendered by the supplier or disputed his liability to make
payment then the supplier shall have to first pursue his
remedy for recovery of amount due towards goods
supplied or services rendered under regular procedure and
c after the amount due is adjudicated, initiate action for
recovery of amount of interest which he may be entitled to
in accordance with Sections 4 and 5 by pursuing remedy
under sub-section (2) of Section 6.
D 44. We are afraid the scheme of Section 6 of the 1993
Act read with Sections 3, 4 and 5 does not envisage
multiple proceedings as canvassed. Rather, whole idea of
Section 6 is to provide a single window to the supplier for
redressal of his grievance where the buyer has not made
E payment for goods supplied or services rendered in its
entirety or part of it or such payment has not been made
within time prescribed in Section 3 for whatever reason
and/or for recovery of interest as per Sections 4 and 5 for
such default. It is for this reason that sub-section ( 1) of
F Section 6 provides that "amount due from a buyer together
with the amount of interest calculated in accordance with
the provisions of Sections 4 and 5" shall be recoverable
by the supplier from buyer by way of a suit or other legal
proceeding. Sub-section (2) of Section 6 talks of a dispute
being referred to IFC in respect of the matters referred to
G
in sub-section (1) i.e. the dispute concerning amount due
from a buyer for goods supplied or services rendered by
the supplier to the buyer and the amount of interest to which
the supplier has become entitled under Sections 4 and 5.
H 45. It is true that word "together" ordinarily means conjointly
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 923
ASSAM STAT.E ELECTRICITY BOARD [H.L. DATTU, J.)
or simultaneously but this ordinary meaning put upon the A
said word may not be apt in the context of Section 6. Can
it be said that the action contemplatetl in Section 6 by way
of suit or any other legal proceeding under sub-section (1)
or by making 1reference to IFC under sub-section (2) is
maintainable. only if it is for recovery of principal sum along B
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 of the Gauhati High Court in
Assam SEB that word "together" in Section 6(1) would
mean "along with" or "as well as". Seen thus, the action C
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. In our opinion, under
Section 6(2) action by way of reference to IFC cannot be D
restricted to a claim for recovery of interest due under
Sections 4 and 5 only in cases of an existing determined,
· settled or admitted liability. IFC has competence to
determine the amount due for goods supplied or services
rendered in cases where the liability is disputed by the E
buyer. Construction put upon Section 6(2) by the learned
Senior Counsel for the buyer does not deserve to be
accepted as it will not be in conformity with the intention,
object and purpose of the 1993 Act. The Preamble to the
1993 Act, upon which strong reliance has been placed by F
the learned Senior Counsel, does not persuade us to hold
otherwise. It is so because the Preamble may not exactly
"correspond with the enactment; the enactment may go
beyond the Preamble."
G
12. The decision of the Full Bench of the Gauhati High
Court which has been approved by. this Court in Modern
Industries (supra) is impugned before us in one of the appeals.
· Since a Division Bench of this Court has already approved the
dictum of the Full Bench of the High Court with regard to the H
924 SUPREME COURT REPORTS [2012) 6 S.C.R.
A maintainability of a suit only for interest, that question is no
longer res integra. Therefore, the suppliers may file a suit only
for a higher rate of interest on delayed payments made by the
buyer from the commencement of the Act.
13. The other question that remains for our consideration
8
is; as to whether the suppliers can get the benefit of the
provisions of the Act even if the contract of supply was executed
prior to the commencement of the Act, whereas the supplies
being made after the commencement of the Act. In other word~.
C the question we are called upon.to answer is with regard to the
status of contracts of supply concluded prior to the
commencement of the Act vis-a-vis the Act.
Arguments on behalf of the suppliers
D 14. Shri Rakesh Dwivedi, learned Senior Counsel, would
submit that the Act is a beneficial legislation and is aimed at
providing relief to suppliers which are small scale industries,
who are not paid on time even after supplies are effected (ind
accepted and hence had to suffer severe'financial crunch. He'
E would submit that the Act is supply oriented ,and the date of the
supply is the critical and crucial date for applying the provisions
of the Act, and not the date on which the 9ontract is entered
into by the parties. Shri. Dwivedi, learned Senior Counsel would
state that Section 1(3) of the Act by way of a deeming fiction,
brought the Act into force from the date of the promulgati9n. of
F the Ordinance i.e. 23rd September 1992. He would then 'draw .
our attention to the text of Section 3, and ~ubmit that the liabiJity
of a buyer to make payment arose on the completion of the
event of supply of the good by the supplier/manufacturer. The
learned Senior Counsel refers to the definition of 'appointed
G day' to mean the day of acceptance of the supply of goods or
the date of deemed supply of goods. He would refer to Sections
4 and 5 and also Section 10 of the Act and ,.submit that the
. liability and payment of higher rate of interest is a result of
delayed payment by the buyer to the supplier at the time of the
H supply. He would also stress on the non-obstante clause that
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 925
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
is found in the text of section 5 and overriding effect given to A
the Act vide section 10 to stress upon the fact that the
provisions of the Act with regard to compound interest would
prevail even if there was an agreement to the contrary that the
Act would override the provisions of any other law. He would
l~y emphasis upon the crucial date for the operation of the Act B
as the date on which the supply is made and not the date on
which the contract of supply was concluded as understood by
the decisions of this Court in Assam Small Scale Industries and
Shakti Tubes. He would also lay emphasis on the expression
"appointed day" as defined in Section 2(b) of the Act to contend· C
that though th~ contract between the parties was prior to the
enactment, it is the date of acceptance of the goods or any
other service by a buyer from the supplier and thus, is the
relevant date for applying the beneficial supply oriented
legislation. In the alternative, it is contended by Shri Dwivedi D
that even if tne contract is entered into prior to the date of
commencement of the Act, and the supply was subsequent,
then the Act would apply in respect of such buyers that made
delayed payments to the suppliers. He would also submit that
the ills of delayed payment was causing great inconvenience E
and hardship to the small scale industries, and that being the
reason for the enactment of the legislation, coupled with the fact
that the event of supply is the core theme of the legislation,
hence all the supplies made after the 23rd September 1992
would attract the provisions of the Act.
F
15. In conclusion, Shri Dwivedi contends: (1) that the Act
is a supply oriented; (2) that on a wholesome reading of
Sections 4 and 5 and Section 10 of the Act, the Act has
overriding effect over any other law which are inconsistent with
the provisions of the Act; (3) the emphasis on the text of Section G
3 on the supply of the goods and the liability of the buyer arose
on the supply of goods; (4) It is a beneficial legislation and a
purposive construction is required to be adopted. He points out
that since these salient features are neither noticed nor
considered in Assam Small Scale Industries, the decision H
926 SUPREME COURT REPORTS [2012] 6 S.C.R.
A needs reconsideration by a larger Bench.
16. Shri Sunil Gupta, learned Senior Counsel while
adopting the principal arguments of Shri Rakesh Dwivedi
would submit, that, on a plain reading of the Statement of
Objects and Reasons of the Act, it is clear that Parliament
B
enacted the legislation in order to assist the small scale
industries to get their payment on time from the buyers. He
would state that there is extrinsic evidence in the Act to show
that the Act would apply even to those contracts, which were
executed prior to 23rd September 1992. Shri Gupta would
C further rely on the long title of the Act to make good his
submission that the scope of the Act was not restricted to·
contracts entered into after the Act came into force. He would
further submit that the Act did not apply to those contracts or
payment disputes that were ceased to exist but are
D maintainable to all those disputes, even if those cases in which
recovery suit was filed and pending after the Act has come into
force. The learned Senior Counsel would further submit that the
Act is prospective and applies to all those contracts which had
been executed earlier but supplies were made after the Act
E came into force. Shri Gupta would state that even if the
agreement and supply was prior to the coming into force of the
Act, it would still apply, if the issue with regard to delayed
payment was still alive. He would submit that the vested right
that has accrued in favour of the supplier should not be
F abrogated. Shri Gupta would also take us through the debates
in Parliament by the various members while the legislation was
being enacted and decisions of this Court in support of his
submissions. Shri Gupta would also submit that the question
to be addressed is not as to who is within the scope of the Act
G but who is necessarily out of the ambit of the Act.
Arguments of behalf of the Board
17. Shri Vijay Hansaria, learned Senior Counsel appearing
H
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 927
ASSAM STATE.ELECTRICITY BOARD [H.L. DATTU, J.)
for the Board, would submit that the suits in both the cases of A
Shanti Conductors and Purbanchal Cables were barred by
limitation.
18. In case of Purbanchal Cables (C.A. No. 2348 of 2003),
the learned Senior Counsel would state that the last supply was
8
made on 12.10.1993 and the suit was filed on 31.08.1996 i.e.
after the expiry of the period of limitation. He would contend
that the only reason assigned in the suit to take the benefit of
Section 14 of the Limitation Act is that a writ petition filed on
behalf of the Assam Conductors Manufacturers Association
was pending and only after the same was disposed of, they C
have filed the suit. He would refer to Section 14 of the Limitation
Act, 1963 and state that writ proceedings which caused the
delay of the filing of the suit was filed by an Association on
behalf of the suppliers. Further, he would submit that when the
suit was filed, a writ appeal was pending. He would rely on the D
case of Consolidated Engineering Enterprises v. Municipal
Secretary, Irrigation Department, (2008) 7 SCC 169, to
contend that for the operation of Section 14, it was required
that a civil proceeding be pending by the same party. Though,
the learned Senior Counsel would state that the writ petition E
would fall within the ambit of a civil proceeding, it had to be filed
by the same party, which is not the case in the present suit. The
writ petition, he would state, was filed by an Association for
differeht relief, than what was sought by the supplier in the suit,
and hence, the benefit of Section 14 of the Limitation Act would F
not be available.
19. In case of Shanti Conductors (C.A. No. 2351 of 2003),
the supply order was completed on 4th October 1993 and the
suit was filed only on 10th January 1997 i.e. after the expiry of G
three year limitation period. The learned Senior Counsel would
submit that there was no specific pleading with regard to
applicability of Section 14 of the Limitation Act, 1963, though
it was raised by the defendant in the suit. He would assail the
trial court's reasoning wherein it is held that in view of the
H
928 SUPREME COURT REPORTS [2012) 6 S.C.R.
A Section 10 of the Act, the Limitation Act does not apply. He .
would submit that in the light of the judgment of this Court in
Mukri Gopalan v. Cheppilat Puthanpurayil Aboobacker,
(1995) 5 SCC 5, this Court while construing Section 29 (2) of
the Limitation Act has held that if the operation of the Limitation
B Act has to be barred, then a time schedule has to be given
under the special law and in the absence of such, the Limitation
Act would apply.
20. On the question of applicability of Act, the learned
Senior Counsel would submit that since 2005, this Court has
C consistently held that the Act was not applicable to the contracts
which were concluded prior to commencement of the Act. In aid
of his submission, the learned Senior Counsel wou.ld draw our
attention to issues raised and arguments canvassed in Assam
Small Scale Industries, which was specifically answered in the
D negative by observing that the Act is not applicable for the
contracts entered into prior to the commencement of the Act.
Shri Hansaria, further submits that this issue was again raised
in the case of Shakti Tubes, wherein this Court was called upon
to reconsider the question of law decided by this Court in
E Assam Small Scale Industries and this Court in Shakti Tubes
categorically refused to refer the matter to a larger Bench for
reconsideration by approving the decision in Assam Small
Scale Industries as correctly decided. He would then submit this
Court had also considered this issue in Rampur Fertilizers
F Limited v. Vigyan Chemical Industries- (2009) 12 SCC 324
and Modem Industries (supra). Therefore, he would submit that
this Court has consistently followed the above view and relying
on several decisions of this Court, he would state that it is
desirable to further uphold the same view as per the doctrine
G of stare decisis and precedents in order to maintain certainty
of the law.
Our Conclusion
21. Though the learned Senior Counsel would state that
H the suits, filed by both the suppliers in the present batch of
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 929
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
appeals, were barred by limitation, we do not intend to express A
our view on the issue, since some of the appeals filed by the
suppliers are still pending before the High Court. Any
observation that we may make would certainly effect the interest
of both the parties since that issue is yet to be decided by the
High Court. B
Retrospective operation of the Act
22. The fundamental rule of construction is the same for
all statutes whether fiscal or otherwise. The under-lying principle
is that the meaning and intention of a statute must be collected C
from the plain and unambiguous expression used therein rather
from any notion. To arrive at the real meaning, it is always
necessary to get an exact conception, scope and object of the
whole Act.
D
23. In the case of Zile Singh v. State of Haryana - (2004)
8 SCC 1, this Court observed that there were four relevant
factors which needed to be considered while considering
whether a statute applied prospectively or retrospectively:
"15 .... Four factors are suggested as relevant: (i) general E
scope and purview of the statute; (ii) the remedy sought
to be applied; (iii) the former state of the law; and (iv) what
it was the legislature contemplated .... "
24. The general scope of the Act has been discussed F
above. The remedy sought to be applied by the Act is made
c.lear in the Statement of Objects and Reasons, in which, it is
stated that due to the delayed payments by buyers to the small
scale industries, their working capital was being affected,
causing great harm to the small scale industries in general. This G
Act was passed by Parliament to impose a heavy interest on
the buyers who delayed the payments of the small scale
industries, in order to deter the buyers from delaying the
payments after accepting the supplies made by the suppliers.
H
930 SUPREME COURT REPORTS [2012] 6 S.C.R.
A The policy statement of the Ministry of Micro, Small and Medium
Enterprises dated 6th August 1991, reads:
"3.4) A beginning has been made towards solving the
problem of delayed payments to small industries setting
B
up of 'factoring' services through Small Industries
Development Bank of India (SIDBI). Network of such
services would be set up throughout the country and
operated through commercial banks. A suitable legislation
will be introduced to ensure prompt payment of small
industries' bills."
c
25. Keeping in view the above object, the Act was enacted
by the 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
D 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 'the CPC'), Section
E 61 of Sale of Goods Act, 1930 and Section 3 of Interest Act,
19.78.
26. 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
F 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. The Court has the discretion to award
interest along with the principal amount and the same is clear
G from the use of the word 'may' in all the three provisions cited
above. Section 34 of the CPC is the main provision under
which interest could be awarded by the.Court and Section 61
of the Sale of Goods Act, 1930 is an offshoot of Section 34 of
the CPC. Section 3 of the Interest Act, 1978 also makes the
H Interest Act subject to the provision of Section 34 of the CPC.
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 931
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
Hence, we can safely deduce that the interest awarded is a A
discretion exercised by the Court, on the principal amount
claimed, in case of a suit for recovery of payment by the supplier
if such payment is delayed by the buyer.
27. With the c6mmencement of the Act, a new vested right
8
exists with the supplier, that being, if there is delay in payment
after the acceptance of the goods by the buyer, the supplier can
file a suit for claiming interest at a higher rate, as prescribed
by the Act. This position has been approved by this Court in
the case of Modern Industries (supra). If a suit for interest
simpliciter is maintainable as held by this Court in Modern C
Industries (supra), then a new liability qua the buyer is created
with the commencement of the Act giving a vested right to the
supplier in case of delayed payment. In other words, if there is
a delayed payment by the buyer, then a right to claim a higher
rate of interest as prescribed by the Act accrues to the supplier. · D
28) The phrase 'vested right' has been defined by this
Court in the case of Bibi Sayeeda Vs. State of Bihar- (1996)
9 sec 516 as:
E
"17. The word 'vested' is defined in Black's Law Dictionary
(6th Edn.) at p. 1563 as:
"Vested; fixed; accrued; settled; absolute; complete.
Having the character or given the rights of absolute
ownership; not contingent; not subject to be F
defeated by a condition precedent."
Rights are 'vested' when right to enjoyment, present or
prospective, has become property of some particular
person or persons as present interest; mere expectancy G
of future benefits, or contingent interest in property founded
on anticipated continuance of existing laws, does not
constitute vested rights. In Webster's Comprehensive
Dictionary, (International Edn.) at p. 1397 'vested' is
defined as:
H
932 SUPREME COURT REPORTS /[2012] 6 S.C.R.
A "[L]aw held by a tenure subject to no contingency;
complete; established by law as a permanent right;
vested interests.""
29. A statute· creating vested rights is a substantive statute.
This Court, in the case of Executive Engineer, Dhenkanal
8
Minor Irrigation Division Vs. N. C. Budharaj - (2001) 2 SCC
721, opined:
"23 .... "Substantive law", is that part of the law which
creates, defines and regulates rights in contrast to what
C is called adjective. or remedial law which provides the
method of enforcing rights. Decisions, including the one
in .Jena case 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
D 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
E substantive law ... "
30. In the case of Thirumalai Chemicals Limited Vs.
Union of India - (2011) 6 SCC 739, this Court comparing
substantial law with procedural law, stated:
F "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
G expressly or by necessary implication. Procedural law
establishes a mechanism for determining those rights and
liabilities and a machinery for enforcing them. Right of
appeal being a substantive right always acts prospectively.
It is trite law that every statute is prospective unless it is
H
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 933
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
expressly or by necessary implication made to have A
retrospective operation."
24. R1ght of appeal may be a substantive right but the
procedure for filing the appeal including the period of
limitation cannot be called a substantive right, and an B
aggrieved person cannot claim any vested right claiming
that he should be governed by the old provision pertaining
to period of limitation. Procedural law is retrospective
meaning thereby that it will apply even to acts or
transactions under the repealed Act."
c
31. In the case of Shyam Sunder Vs. Ram Kumar- (2001)
8 SCC 24, a Constitution Bench of this Court discussing the
scope and ambit of a declaratory law has observed:
"39. Lastly, it was contended on behalf of the appellants D
that the amending Act whereby new Sectioll' 15 of the Act
has been substituted is declaratory and, therefore, has
retroactive operation. Ordinarily when an enactment
declares the previous law, it requires to be given
retroactive effect. The function of a declaratory statute is E
to supply an omission or to explain a previous statute and
when such an Act is passed, it comes into effect when the
previous enactment was passed. The legislative power to
enact law includes the power to declare what was the
previous law and when such a declaratory Act is passed,
F
invariably it has been held to be retrospective. Mere
absence of use of the word "declaration" in an Act
explaining what was the law before may not appear to be
a declaratory Act but if the court finds an Act as declaratory
or explanatory, it has to be construed as retrospective.
Conversely where a statute uses the word "declaratory", G
the words so used may not be sufficient to hold that the
statute is a declaratory Act as words may be used in order
to bring into effect new law."
H
934 SUPREME COURT REPORTS [2012] 6 S.C.R.
A 32. In Katikara Chintamani Dora Vs. Guntreddi
Annamanaidu - (1974) 1 SCC 567, this Court held:
"50. It is well settled that ordinarily, when the substantive
law is altered during the pendency of an action, rights of
the parties are decided according to law, as it existed
B
when the action was begun unless the new statute shows
a clear intention to vary such rights (Maxwell on
Interpretation, 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
c have the effect of altering the law applicable to a claim in
litigation at the time when the Act is passed"."
33. In Govind Das Vs. /TO - (1976) 1 SCC 906, this Court
speaking through P.N. Bhagwati. J., (as he then was) held:
D
"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
E
create a new obligation or impose a new liability otherwise
than as regards matters of procedure. The general rule as
stated by Ha/sbury 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
F
"all statutes other than those which are merely
declaratory or which relate only to matters of
procedure or of evidence are prima facie
prospective"
G
and retrospective operation should not be given to a
statute so as to affect, alter or destroy an existing right or
create a new liability or obligation unless that effect cannot
be avoided without doing violence to the language of the
enactment. If the enactment is expressed in language
H
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 935
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
which is fairly capable of either interpretation, it ought to A
be construed as prospective only."
34. In the case of Jose Da Costa Vs. Bascora Sadasiva
Sinai Narcomium - (1976) 2 SCC 917, this Court held:
31. Before ascertaining the effect of the enactments B
aforesaid passed by the Central Legislature on pending
suits or appeals, it would be appropriate to bear in mind
two well-established principles. The first is that
"while provisions of a statute dealing merely with c
matters of procedure may properly, unless that
construction be textually inadmissible, have
retrospective effect attributed to them, provisions
which touch a right in existence at the passing of
the statute are not to be applied retrospectively in 0
the absence of express enactment or necessary
intendment (see Delhi Cloth and General Mills Co.
Ltd. v. ITC.)
The second is that a right of appeal being a substantive
right the institution of a suit carries with it the implication E
that all successive appeals available under the law then
in force would be preserved to the parties to the suit
throughout the rest of the career of the suit. There are two
exceptions to the application of this rule viz. (1) when by
competent enactment such right of appeal is taken away F
expressly or impliedly with retrospective effect and (2)
when the court to which appeal lay at the commencement
of the suit stands abolished (see Garikapati Veeraya v. N.
Subbiah Choudhury and Colonial Sugar Refining Co. Ltd.
v .. lrvin~. G
35. In K. Kapen Chako Vs. Provident Investment Co. (P)
Ltd - (1977) 1 SCC 593, this Court discussing the dicta of the
English Courts on the aspect of retrospectivity observed:
H
936 SUPREME COURT REPORTS [2012] 6 S.C.R.
A "37. A statute has to be looked into for the general scope
and purview of the statute and at the remedy sought to be
applied. In that connection the former state of the law is to
be considered and also the legislative changes
contemplated by the statute. Words not requiring
B retrospective operation so as to affect an existing statutory
provision pre-judicially 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
c 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).
D 38. In Moon v. Durden 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
E 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:
"It seems a strong thing to hold that the legislature
F 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 his
personal property, should be totally deprived of it
without compensation."
G 39. Again in Smithies v. National Union of Operative
Plasterers Section 4 of the Trade Disputes Act, 1906
which enacted that an action for tort against a trade union
shall riot be entertained by any court was held not to
prevent the courts from hearing and giving judgment in
H actions of that kind begun before the passing of the Act. It
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 937
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
is a general rule that when the legislature alters the rights A
of parties by taking away or conferring any right of action,
its enactments, unless in express terms they apply to
pending actions, do not affect them. But there is an
exception to this rule, namely, where enactments merely
affect procedure and do not extend to rights of action. See B
Re Joseph Suche & Co. Ltd. If the legislature forms a new
procedure alterations in the form of procedure are
retrospective unless there is some good reason or other
why they should not be. In other words, if a statute deals
merely with the procedure in an action, and does not affect c
the rights of the parties it will be held to apply prima facie
to all actions, pending as well as future."
36. In the case of Dahiben Vs. Vasanji Kevalbhai - 1995
Supp. (2) SCC 295, this Court held:
D
"12. As the amendment in question is not to a procedural
law, it may be stated that the settled principle of interpretation,
where substantive law is amended, is that the same does not
operate retrospectively unless it is either expressly provided or
the same follows by necessary implication. Lest it be thought E
that a vested right cannot be taken away at all by retrospective
legislation, reference may be made to Rafiquennessa v. Lal
Bahadur Chetri where it was stated that even where vested
rights are affected, legislature is competent to take away the
same by means of retrospective legislation; and retrospectivity F
can be inferred even by necessary implication."
37. In the case of Zile Singh Vs. State of Haryana - (2004)
8 SCC 1, this Court examined the various authorities on
statutory interpretation and concluded:
G
"13. It is a cardinal principle of construction that every
statute is prima facie prospective unless it is expressly or
by necessary implication made to have a retrospective
operation. But the rule in general is applicable where the
object of the statute is to affect vested rights or to impose H
938 SUPREME COURT REPORTS [2012] 6 S.C.R.
A new burdens or fo 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
B 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
c 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,
D therefore, the nature of the Act, regard must be had to the
substance rather than to the form. If a new Actis "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
E doubts as to the meaning of the previous Act. It is well
settled that if a statute is curative or merely declaratory of
the previous law retrospective operation is generally
intended .... An amending Act may be purely declaratory
to clear a meaning of a provision of the principal Act which
F was already implicit. A clarificatory amendment of this
nature will have retrospective effect (ibid., pp. 468-69)."
38. In the case of State of Punjab Vs. Bhajan Kaur- (2008)
12 SCC 112, this Court held:
G "9. A statute is presumed to be prospective unless held
to be retrospective, either expressly or by necessary
implication. A substantive law is presumed to be
prospective. It is one of the facets of the rule of law."
H 39. There is no doubt about the fact that the Act is a
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 939
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
substantive law as vested rights of entitlement to a higher rate A
of interest in case of delayed payment accrues in favour of the
supplier and a corresponding liability is imposed on the buyer.
This Court, time and again, has observed that any substantive
law shall operate prospectively unless retrospective operation
is clearly made out in the language of the statute. Only a B
procedural or declaratory law operates retrospectively as there
is no vested right in procedure.
40. In the absence of any express legislative intendment
of the retrospective application of the Act, and by virtue of the C
fact that the Act creates a new liability of a high rate of interest
against the buyer, the Act cannot be construed to have
retrospective effect. Since the Act envisages that the supplier
has an accrued right to claim a higher rate of interest in terms
of the Act, the same can only said to accrue for sale
agreements after the date of commencement of the Act, i.e. D
23rd September 1992 and not any time prior.
Earlier Precedents
41. On a careful perusal of the judgment of this Court in
E
Assam Small Scale Industries, we find that even the question
regarding the applicability of the Act to contracts concluded
prior to coming into force of the Act is no longer res integra.
This question is answered by this Court in the case of Assam
Sma//. Scale Industries Development Corpn. Ltd. Vs. J.D.
F
Pharmaceuticals - (2005) 13 SCC 19 as under:
"37. We have held hereinbefore that clause 8 of the terms
and conditions relates to the payments of balance 10%. It
is not in dispute that the plaintiff had demanded both the
principal amount as also the interest from the Corporation. G
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. H
940 SUPREME COURT REPORTS (2012) 6 S.C.R.
A 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. 1 to
26 (referred to in the penultimate para of the trial court
judgment), that is supply orders between 5-6-1991 to 28-
B 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.
38. The 1993 Act, thus, will have no application in relation
c to the transactions entered into 6etween 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."
D 42. In Shakti Tubes Ltd. Vs. State of Bihar - (2009) 7
SCC 673, this Court approved the ratio in Assam Small Scale
Industries, and held:
18. In our considered opinion, the ratio of the aforesaid
decision in Assam Small Scale Industries case is clearly
E
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
F by this Court in the aforesaid judgment. Thus, we
respectfully agree with the aforesaid decision of this Court
which is found to be rightly arrived at after appreciating all
the facts and circumstances of the case.
G 19. Now coming to the facts of the present case we find
that there is no dispute with regard to the fact that the supply
order was placed with the respondents on 16-7-1992 for
supply of the pipes which date is admittedly prior to the
date on which this Act came into effect.
H
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 941
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
20. Being faced with the aforesaid situation, the learned A
Senior Counsel appearing for the appellant-plaintiff sought
to submit before us that the decision of this Court in Assam
Small Scale Industries case refers to the expression
"transactions". According to him, the transactions would be
complete only when the appellant-plaintiff made the supply B
and since the supply was made in the instant case after
coming into force of the Act, the appellant-plaintiff would
be entitled to the benefit of Sections 4 and 5 of the Act.
Refuting the aforesaid submission, the learned Senior
Counsel appearing for the respondents submitted that the c
aforesaid contention is completely misplaced. He pointed
out that if such a meaning, as sought to be given by the
learned Senior Counsel appearing for the appellant-
plaintiff, is accepted that would lead to giving benefit of the
provisions of the Act to unscrupulous suppliers who, in
0
order to get the benefit of the Act, would postpone the
delivery of the goods on one pretext or the other.
21. We have considered the· aforesaid rival submissions.
This Court in Assam Small Scale Industries case has
finally set at rest the issue raised by stating that as to what E
is to be considered relevant is the date of supply order
placed by the respondents and when this Court used the
expression "transaction" it only meant a supply order. The
Court made it explicitly clear in para 37 of the judgment
which we have already extracted above. In our considered F
opinion there is no ambiguity in the aforesaid judgment
passed by this Court. The intent and the purpose of the
Act, as inade 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 G
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.
H
942 SUPREME COURT REPORTS [2012] 6 S.C.R.
A 43. The case of Assam Small Scale Industries has been
followed in Rampur Fertilizers Limited as well as Modem
Industries (supra). Therefore, we cannot agree with the
submission that this Court in Assam Small Scale Industries
Development Corporation's case did not specifically consider
B 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.
Binding precedent or sub-silentio
c
44. However, the learned Senior Counsel appearing for the
suppliers, Shri Rakesh Owivedi, and Shri Sunil Gupta would
contend that the decision of this Court is not a binding
precedent.
D
45. Shri Rakesh Dwivedi, learned Senior Counsel would
submit that the decisions of this Court in the case of Assam
Small Scale Industries and Shakti Tubes (supra) regarding the
prospective operation of the Act were not law declared under
E Article 141, as the point under consideration in those cases
were different from the issues raised in these appeals. He
would further submit that the question about operation of the
Act for contracts concluded prior to 23rd September 1992 was
not even a question, which came up for consideration before
the Court and was not even argued by the learned Counsel
F appearing in that matter, and hence would not form a part of
the ratio of the decision. He would further submit that the
question was answered without adequately considering the
provisions of the beneficial legislation and therefore, it cannot
be treated as a binding precedent.
G
46. Shri Sunil Gupta, learned Senior Counsel while
adopting the argument advanced by Shri Dwivedi on this issue,
would submit that there are two exceptions to the doctrine of
precedent, namely, per incurium and sub silentio. It was on the
H strength of the latter that Shri Gupta would submit that the
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 943
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
decisions of this Court in Assam Small Scale Industries anq A
Shakti Tubes (supra) cannot be considered as precedents. The
learned Senior Counsel would state that a decision would not
apply as a precedent when the Court has failed to consider the
obj'ects and purpose of the Act in question and also certain
previous judgments of this Court. He would further contend that B
the aforesaid judgments suffer from the sub-silentio principle
being rendered without full and adequate arguments on the
issue. The learned Senior Counsel would also state that the
Court dld not look at the issue from the viewpoint canvassed
~~~- c
47. The learned Senior Counsel would rely on the decision
of this Court in Municipal Corporation, Delhi Vs. Gumam Kaur
- (1989} 1 SCC 101. This Court has held:
"11. Pronouncements of la\111.,_Which are not part of the ratio D
decidendi are classed as obiter dicta and are not
authoritative. With all respect to the learned Judge who
passed the order in Jamna Das case and to the learned
Judge who agreed with him, we cannot concede that this
Court is bound to follow it. It was delivered without E
argument, without reference to the relevant provisions of
the Act conferring express power on the Municipal
Corporation to direct removal of encroachments from any
public place like pavements or public streets, and without
any citation of authority. Accordingly, we do not propose F
to uphold the decision 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 G
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 the H
944 SUPREME COURT REPORTS (2012] 6 S.C.R.
A 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
B
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
c 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. In such circumstances,
although point B was logically involved in the facts
and although the case had a specific outcome, the
D decision is not an authority on point B. Point B is
said to pass sub silentio."
12. In Gerard v. Worth of Paris Ltd. (k)., the only point
argued was on the question of priority of the claimant's
E debt, and, on this argument being heard, the court granted
the order. No consideration was given to the question
whether a garnishee order could properly be made on an
account standing in the name of the liquidator. When,
therefore, this very point was argued in a subsequent case
F before the Court of Appeal in Lancaster Motor Co.
(London) Ltd. v. Bremith Ltd., the court held itself not bound
by its previous decision. Sir Wilfrid Greene, M.R., said that
he could not help thinking that the point now raised had
been deliberately passed sub silentio by counsel in order
that the point of substance might be decided. He went on
G
to say that the point had to be decided by the earlier court
before it could make the order which it did; nevertheless,
since it was decided "withol!t argument, without reference
to the crucial words of the rule, and without any citation of
authority", it was not binding and would not be followed.
H
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 945
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
Precedents sub silentio and without argument are of no A
moment. This rule has ever since been followed. One of
the chief reasons for the doctrine of precedent is that a
matter that has once been fully argued and decided should
not be allowed to be reopened. The weight accorded to
dicta varies with the type of dictum. Mere casual B
expressions carry no weight at all. Not every passing
expression of a judge, however eminent, can be treated
as an ex cathedra statement, having the weight of
authority."
48. In the case of State of U.P. Vs. Synthetics and C
Chemicals Ltd. - (1991) 4 SCC 139, His Lordship R.M. Sahai.
J., in his concurring judgment set out the principles of per
incurium and sub silentio has held thus:
"40. 'lncuria' literally means 'carelessness'. In practice per D
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, E
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 F
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 G
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 H
946 SUPREME COURT REPORTS [2012] 6 S.C.R.
A 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 Company (London) Ltd. v. Bremith
Ltd. the Court did not feel bound by earlier decision as it was
B rendered 'without any argument, without reference to the crucial
words of the rule and without any citation of the authority'. It was
approved by this Court in Municipal Corporation of Delhi v.
Gurnam Kaur. The bench held that, 'precedents sub-silentio and
without argument are of no moment'. The courts thus have taken
c recourse to this principle for relieving from injustice perpetrated
by unjust precedents. A decision which is not express and is
not founded on reasons nor it proceeds on consideration of
issue cannot be deemed to be a law declared to have a binding
effect as is contemplated by Article 141. Uniformity and
consistency are core of judicial discipline. But that which
0
escapes in the judgment without any occasion is not ratio
decidendi. In B. Shama Rao v. Union Territory of Pondicherry
it was observed, 'it is trite to say that a decision is binding not
because of its conclusions but in regard to its ratio and the
E principles, laid down therein'. Any declaration or conclusion
arrived without application of mind or preceded without any
reason cannot be deemed to be declaration of law or authority
of a general nature binding as a precedent. Restraint in
dissenting or overruling is for sake of stability and uniformity
but rigidity beyond reasonable limits is inimical to the growth
F of law."
49. In the case of Amit Das Vs. State of Bihar - (2000) 5
SCC 488, this Court held:
G "20. A decision not expressed, not accompanied by
reasons and not proceeding on a conscious consideration of
an issue cannot be deemed to be a law declared to have a
binding effect as is contemplated by Article 141. That which has
escaped in the judgment is not the ratio decidendi. This is the
rule of sub silentio, in the technical sense when a particular point
H
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 94 7
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
of law was not consciously determined. (See State of UP. v. A
Synthetics & Chemicals Ltd. SCC, para 41. )"
50. In the case of Tika Ram'Vs. State of Uttar Pradesh -
(2009) 10 sec 689, it was held:
"104. We do not think that the law laid down in these cases B
would apply to the present situation. In all these cases, it has
been basically held that a Supreme Court decision does not
become a precedent unless a question is directly raised and
considered therein, so also it does not become a law declared
unless the question is actually decided upon. We need not take C
. stock of all these cases and we indeed tiave no quarrel with
the propositions settled therein .... "
51) Though the submissions made by Shri Rakesh
Dwivedi and Shri Sunil Gupta, learned Senior Counsel seems 0
attractive in the first blush, we are of the view, they lack merit.
In the case of Assam Small Scale Industries (supra), 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
E
judgment this Court has observed:
"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
1
effect." F
52. Further, in the case of Shakti Tubes Ltd. (supra), this
issue was canvassed by the learned Counsel, due to which, this
Court referred to the precedent in the case of Assam Small
Scale Industries (supra). The argument on this point has been G
noted thus:
"9. According to the appellant-plaintiff, the said interest has
been claimed by the appellant-plaintiff since it is entitled
to so claim in terms of the provisions of the Interest on
Delayed Payments to Small Scale and Ancillary Industrial H
948 SUPREME COURT REPORTS [2012] 6 S.C.R.
A Undertakings Act, 1993 (hereinafter referred to as "the
Act"). Mr G.C. Bharuka, learned Senior Counsel appearing
for the appellant-plaintiff drew our attention to the
provisions of the Act and to the decision of this Court in
Assam Small Scale Industries Development Corpn. Ltd.
B v. J.D. Pharmaceuticals. In support of his contention that
the transaction in the instant case came to an end with the
appellant-plaintiff supplying the goods after coming into
force of the Act he has taken us through the relevant
sections of the Act as also the Statements of Objects and
c Reasons of the Act. According to him, the appellant-
plaintiff is entitled to be paid in terms of the provisions of
the Act.
10. Mr Bharuka contended that the earlier supply order
which was issued on 16-7-1992 came to be materially
D altered and substituted by a fresh supply order issued on
18-3-1993 by which date the aforesaid Act had already
been enforced and therefore, the appellant-plaintiff was
entitled to claim interest at a higher rate as envisaged in
Sections 4 and 5 of the said Act.
E
11. Mr Dinesh Dwivedi, learned Senior Counsel appearing
for the respondents strongly refuted the aforesaid
submissions made by the learned Senior Counsel
appearing for the appellant-plaintiff on the ground that the
F supply order was issued in the instant case on 16-7- 1992
and therefore, in terms of and in line with the decision of
this Court in Assam Small Scale Industries case the
appellant-plaintiff was entitled to be paid interest only at
the rate of 9% per annum and not at a higher rate as
contended by the appellant-plaintiff."
G
53. This Court, in Shakfi Tubes Ltd. (supra) expressly
rejected the argument of the learned Senior Counsel appearing
for the appellant in that case, that the Act should be given
retrospective effect because it was a beneficial legislation, in
H paragraphs 24 to 26, which have been set out below:
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 949
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
"24. Generally, an Act should always be regarded as A
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 8
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
bu.rdens or to impair existing obligations. Unless C
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 D
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 E
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)."
F
25. In Zi/e Singh Vs. State of Haryana (supra), SCC at p.
9, this Court observed as follows: (SCC pp. 9-10, paras
15-16)
"15. Thoug.'1 retrospectivity is not to be presumed and
rather there is ·pres1,1,mption against retrospectivity, G
according to Craies (Statute Law, 7th Edn.), it is open for
the legislature to enact laws having retrospective operation.
This can be achieved by express enactment or by
necessary implication from the language employed. If it is
a necessary implication from the language employed that H
950 SUPREME COURT REPORTS [2012] 6 S.C.R.
A the legislature intended a particular section to have a
retrospective operation, the courts will give it such an
operation. In the absence of a retrospective operation
having been expressly given, the courts may be called upon
to construe the provisions and answer the question
B whether the legislature had sufficiently expressed that
intention giving the statute retrospectivity. Four factors are
suggested as relevant: (i) general scope and purview of
the statute; (ii) the remedy sought to be applied; (iii) the
former state of the law; and (iv) what it was the legislature
contemplated. (p. 388) The rule against retrospectivity
c does not extend to protect from the effect of a repeal, a
privilege which did not amount to accrued right. (p. 392)
16. Where a statute is passed for the purpose of supplying
an obvious omission in a former statute or to 'explain' a
D former statute, the subsequent statute has relation back to
the time when the prior Act was passed. The rule against
retrospectivity is inapplicable to such legislations as are
explanatory and declaratory in nature. A classic illustration
is Attorney General v. Pougett (Price at p. 392). By a
E Customs Act of 1873 (53 Geo. 3, c. 33) a duty was
imposed upon hides of 9s 4d, but the Act omitted to state
that it was to be 9s 4d per cwt., and to remedy this
omission another Customs Act (53 Geo. 3, c. 105) was
passed later in the same year. Between the passing of
F these two Acts some hides were exported, and it was
contended that they were not liable to pay the duty of 9s
4d per cwt., but Thomson, C.B., in giving judgment for the
Attorney General, said: (ER p. 134)
'The duty in this instance was, in fact, imposed by
G 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
H
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 951
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.)
passed, and they must be taken together as if they A
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 B
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."
c
54. In the CFISe of Rampur Fertilizers Limited (supra), this
Court again examined the entire scheme of the Act before
following the dicta of this Court in the case of Assam Small
Scale Industries (supra). Even in Modern Industries (supra),
this Court did not differ from the dicta of this Court in Assam D
Small Scale Industries and Shakti Tubes (supra).
Binding value of a precedent
55: In the case of Waman Rao Vs. Union of India - (1981)
2 SCC 362, His Lordship Y.V. Chandrachud. C.J., speaking E
for the Constitution Bench, held:
"40. It is also true to say that for the application of the rule
of stare decisis, it is not necessary that the earlier decision
or decisions of longstanding should have considered and F
either accepted or rejected the particular argument whiclJ
is advanced in the case on hand. Were it so, the previous
decisions could more easily be treated as binding by
applying the law of precedent and it will be unnecessary
to take resort to the principle of stare decisis. It is, G
therefore, sufficient for invoking the rule of stare decisis that
a certain decision was arrived at on a question which arose
or was argued, no matter on what reason the decision
rests or what is the basis of the decision. In other words,
for the purpose of applying the rule of stare decisis, it is H
952 SUPREME COURT REPORTS [2012] 6 S.C.R.
A unnecessary to enqµire or determine as to what was the
rationale of the earlier decision which is said to operate
as stare decisis."
56. In Union of India Vs. Raghubir Singh - (1989) 2 SCC
754, this Court held:
8
"8. Taking note of the hierarchical character of the judicial
system in India, it is of paramount importance that the law
declared by this Court should be certain, clear and
consistent. It is commonly known that most decisions of
c 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
D 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
E
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."
F ,57. In Krishena Kumar Vs. Union of India - (1990) 4 SCC
207, this Court observed:
"33. Stare decisis et non quieta movere. To adhere to
precedent and not to unsettle things which are settled. But
G it applies to litigated facts and necessarily decided
questions. Apart from Article 141 of the Constitution of
India, the policy of courts is to stand by precedent and not
to disturb settled point. V\'hen court has once laid down a
principle of law as applicable to certain state of facts, it
will adhere to that principle, and apply it to all future cases
H
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 953
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
where facts are substantially the same. A deliberate and A
solemn decision of court made after argument on question
of law fairly arising in the case, and necessary to its
determination, is an authority, or binding precedent in the
same court, or in other courts of equal or lower rank in
subsequent cases where the very point is again in B
controversy unless there are occasions when departure is
rendered necessary to vindicate plain, obvious principles
of law and remedy continued injustice. It should be
invariably applied and should not ordinarily be departed
from where decision is of long standing and rights have c
been acquired under it, unless considerations of public
policy demand it."
58. In the case of Mishri Lal Vs. Dhirendra Nath - (1999)
4 SCC 11, this Court held:
D
"13 .... It is further to be noted that Meharban Singh case
came to be decided as early as 1970 and has been
followed for the last three decades in the State of Madhya
Pradesh and innumerable number of matters have been
dealt with on the basis thereof and in the event, a different E
view is expressed today, so far as this specific legislation
is concerned, it would unsettle the situation in the State of
Madhya Pradesh and it is on this score also that reliance
on the doctrine of "stare decisis" may be apposite. While
it is true that the doctrine has no statutory sanction .and the F
same is based on a rule of convenience and expediency
and as also on "public policy" but in our view, the doctrine
should and ought always to be strictly adhered to by the
courts of law to subserve the ends of justice."
59. In Central Board of Dawoodi Bohra Community Vs. G
State of Maharashtra, (2005) 2 SCC 673, a Constitution Bench
of this Court held:
"8. In Raghubir Singh case Chief Justice Pathak pointed
out that in order to promote consistency and certainty in the law H
954 SUPREME COURT REPORTS [2012] 6 S.C.R.
A laid down by the superior court the ideal condition would be that
the entire court should sit in all cases to decided questions of
law, as is done by the Supreme Court of United States. Yet,
His Lordship noticed, that having regard to the volume of work
demanding the attention of the Supreme Court of India, it has
B been found necessary as a general rule of practice and
convenience that the Court should sit in divisions of consisting
of Judges whose numbers 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
c 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 been merit of promoting certainty and
consistency in judicial decisions and enables an organic
development of the law, besides providing assurance to the
0
individual as to the consequence of transactions forming part
of his daily affairs."
60. In the case of Shanker Raju Vs. Union of India -
(2011) 2 SCC 132, this Court observed:
E
"10. It is settled principle of law that a judgment, which has
held the field for a long time, should not be unsettled. The
doctrine of stare decisis is expressed in the maxim stare
decisis et non quieta movere, which means "to stand by
F decisions and not to disturb what is settled". Lord Coke
aptly described this in his classic English version as "those
things which have been so often adjudged ought to rest.in
peace". The underlying logic of this doctrine is to maintain
consistency and avoid uncertainty. The guiding philosophy
is that a view which has held the field for a long time should
G
not be disturbed only because another view is possible .... "
61. In the case of Fida Hussain Vs. Moradabad
Development Authority - (2011) 12 SCC 615, this Court held:
H "15. Having carefully considered the submissions of the
RlJR.BANCHAL CABLE'.S & CONDUCTORS PVT. LTD. v. 955
ASSAM STATE ELECTRICITY BOARD [H.L DATTU, J.]
lE;!arned Senior Counsel Shri Varma, we are of the vfew A
that the judgment in Gafar case does not require
reconsideration by this Court. In Gafar case this Court had
meticulously examined all the legal contentions canvassed
by the parties to the lis and had come to the conclusion
that the High Court has not committed any error which B
warrants interference. In the present appeals, the challenge
is for the compensation assessed for the lands notified
and acquired under the same notification pertaining to the
same villages. Therefore, it would not be proper for us to
take a different view, on the ground that what was c
considered by this Court was on a different fact situation.
This view of ours is fortified by the judgment of this Court
in Ballabhadas Mathurdas Lakhani v: Municipal
Committee, Malkapur, wherein it was held that a decision
of this Court is binding when the same question is raised D
again before this Court, and reconsideration cannot be
pleaded dn the ground that relevant provisions, etc., were
not considered by the Court in the former case."
62. Judicial discipline demands that a decision of a
Division Bench of two Judg'es should be followed by another E
9ivision Bench of two Judges and this has been stated time
and again by this Court. In Raghubir Singh (supra), a
~onstitution Bench of this Court speaking through Chief Justice
R.S. Pathak, held:
F
"28. We are of the opinion that a pronouncement of law
by a Division Bench of this Court is binding on a Division
Bench of the same or a smaller number of Judges, and in
order that such decision be binding, it is not necessary that
it should be a decision rendered by the Full Court or a G
Constitution Bench of the Court .... "
63. In Union of India Vs. Paras Laminates (P) Ltd. - (1990)
4 SCC 453 this Court has observed:
"9. It is true that a bench of two members must not lightly H
956 SUPREME COURT REPORTS r20121 6 s.c.R~
A disregard the decision of another bench ot 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
B 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
c disregarded in subsequent decisions, lest such judicial
inconsistency should shake public confidence in the
administration of justice .... "
64. Shri Vijay Hansaria, learned Senior Counsel contends
that a case for referring the matter to a larger Bench though is
D pleaded by the learned Senior Counsel, Shri Rakesh Dwivedi,
this Court ought to test the same by the parameters laid down
by this Court in the case of CIT Vs. Saheli Leasing and
Industries Limited - (2010) 6 SCC 384 to find out whether the
matter deserves to be referred to a larger Bench. In Saheli
E Leasing, this Court held:
"29 ... (x) In order to enable the Court to refer any case to
a larger Bench for reconsideration, it is necessary to point out
that particular provision of law having a bearing over the issue
involved was not taken note of or these is an error apparent
F
on its face or that a particular earlier decision was not noticed,
which has direct bearing or has taken a contrary view ... ."
65. The Constitution Bench of this Court in the case of
Keshav Mills Co. Ltd. Vs. CIT - (1965) 2 SCR 908 crystallized
G the position with regard to what the Court should do when a
plea for consideration of an earlier judgment is made. It was
held:
" ... When it is urged that the view already taken by this
H Court should be reviewed and revised, it may not
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 957
ASSAM STATE ELECTRICITY BOARD [H.L. DATTU, J.]
necessarily be an adequate reason for such review and A
revision to hold that though the earlier view is a reasonably
possible view, the alternative view which is pressed on the
subsequent occasion is more reasonable. In reviving and
revising its earlier decision, this Court should ask itself
whether in the interests of the public good or for any other B
valid and compulsive reasons it is necessary that the
earlier decision should be revised. When this Court
decided questions of law, its decisions are, under Art. 141,
binding on courts within the territory of India, and so, it must
be the constant endeavour and concern of this Court to c
introduce and maintain an element of certainty and
continuity in the interpretation of law in the country.
Frequent exercise by this Court of its power to review its
earlier decisions on the ground that the view pressed
before it later appears to the Court to be more reasonable, 0
may incidentally tend to make law uncertain and introduce
confusion which must be consistently avoided. This is not
to say if on a subsequent occasion, the Court is satisfied
that its earlier decision was clearly erroneous, it should
hesitate the correct the error; but before a previous
decision is pronounced to plainly erroneous the Court must
E
be satisfied with fair amount of unanimity amongst its
members that a revision of the said view is fully justified. It
is not possible or desirable, and in any case it would be
inexpedient to lay down any principles which should govern
the approach of the Court in dealing with the question of F
reviewing and revising its earlier decisions. It would always
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 G
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
there is such an error in the earlier view? What would be H
958 SUPREME COURT REPORTS [2012] 6 S.C.R.
A the impact of the error on the general administration of law
or public good? Has the earlier decision been followed on
subsequent occasions either by this Court or by High
Courts? And, would the reversal of the earlier decision
lead to public inconvenience, hardship or mischief? These
B 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 .... "
I
66. We are in full agreement with the view expressed in
C Keshav Mills case (supra). The learned Senior Counsel Shri
Rakesh Dwivedi has not been able to make out a case for
reconsideration of the decision of this Court in Assam Small
Scale Industries (supra). In fact, a plea for reconsideration of
the same was rejected by a Division Bench of this Court in
Shakti Tubes (supra): We are unable to agree with the
0
argument of Shri Dwivedi and Shri Gupta that the provisions
of the Act were not considered in its entirety. In fact, the entire
scheme of ttie Act has been considered in the case of Rampur
Fertilizers (supra) and specific answer to the issue under
consideration was answered.
E
67. In the case of Ambika Prasad Mishra Vs. State of U.P.
- (1980) 3 SCC 719, His Lordship V.R. Krishna Iyer. J.,
speaking for the Constitution Bench held:
"6. It is wise to remember that fatal flaws silenced by earlier
F
rulings cannot survive after death because a decision does
not lose its authority "merely because it was badly argued, ·
inadequately considered and fallaciously reasoned." ... "
68. In light of this dictum, and the factum that no case has
G been made out for reconsideration by the learned Senior
Counsel appearing for the suppliers, we do not see any reason
much or less good reason to doubt the correctness of the
decision in Assam Small Scale Industries or Shakti Tubes
(supra). When there are four decisions of this Court with regard
H to the applicability of the Act for contracts entered into prior to
PURBANCHAL CABLES & CONDUCTORS PVT. LTD. v. 959
ASSAM STATE.ELECTRICITY BOARD [H.L. DATTU, J.]
the commence)nent of the Act, and when the plea for A
reconsideration has been expressly rejected in the past, we are
of tlie view, i.t would be against the spirit of the doctrine of stare
decisis for us·to take any view in divergence with same.
69. Lastly, learned Senior Counsel for suppliers also B
contended that t_he extension of date of supply order, from time
to time by Board, amounts to a novation of contract or supply
order in terms of Section 62 of the Indian Contracts Act and,
therefor¢, the new contract or supply order would be governed
by the P:ct. In our opinion, the ground or issue of novation of C
Contract is a· mixed question of fact and law and it is being
raised, for tbe first time,. at the time of hearing of the case
before us which cannot be permitted to be raised. The said fact
of novation or alteration of contract is required to be urged
evidentiallY.and scrutinised by the courts below. In absence of
such factual findings, it is not possible to decide such a mixed D
q1Jestion o1 law and facts. In Shakti Tubes Ltd. (supra), the issue
of novatio'R
'•,
of contract was raised before this Court for the first
Jime at the time of hearing. This Court declined to entertain such ·
ground asJ~eing a mixed question of law and fact. This Court
f1Jrther -eqserved that even on the merits of the case the E
escalation of price, reduction of the quantity of the supply order
and ext~nsion of date of supply does not amount to novation
or alteration in the supply order.
Conclusicm F
70. The result is appeals fail and accordingly, they are
dismissed. No order as to costs.
R-P. Appeals dismissed.
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