Supreme Court of India
M/S SHANTI CONDUCTORS (P) LTD. ANR.versusASSAM STATE ELECTRICITY BOARD & ORS.
- Citation
- 2019 INSC 81
- Decided
- 31 August 2016
- Disposal
- Matter referred to larger bench
- Bench
- V GOPALA GOWDA
Holding
The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 is prospective, not retrospective, and its provisions apply only to supplies made after its commencement, rendering the appeals untenable.
Summary
The Supreme Court examined whether the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (the 1993 Act) applies retrospectively to supply orders placed before its commencement on 23‑09‑1992. The Court held that the Act is prospective, its liability arising only after the buyer receives goods or services and the appointed day passes, and therefore it cannot be applied to contracts entered into before the Act came into force. The Court also rejected the contention that earlier decisions (e.g., Purbanchal Cables) were per incuriam or sub silentio, and clarified that those judgments are binding precedent. It further found that the suit for interest was filed within the limitation period and that the earlier High Court rulings were correctly followed. Consequently, the appeals were dismissed.
Issues considered
- Whether the 1993 Act has retrospective or retroactive effect on contracts/supply orders entered into before 23‑09‑1992.
- Whether the provisions of the Act are prospective in nature.
- Whether the earlier judgments in Purbanchal Cables & Conductors and related cases are sub silentio or per incuriam.
- Whether the judgment in Purbanchal Cables operates as res judicata in the present appeals.
- Whether a suit for interest alone under the Act is maintainable.
- Whether the suit is barred by limitation.
- Whether the appeal against the review in the related Trusses & Towers case is maintainable.
Legislation cited
- Code of Civil Procedure, 1908s. 34
- Interest Act, 1978s. 3
- Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993s. 10, s. 11, s. 2(b), s. 2(c), s. 3, s. 4, s. 5, s. 6
- Limitation Act, 1963s. 19, s. Article 25
- Sale of Goods Act, 1930s. 61
Subjects
interest on delayed paymentsretrospective legislationprospective operationres judicatalimitation periodsmall scale industriesstatutory interpretationnon obstante clausesupply ordercontract alteration
Judgment
[2016) 6 S.C.R. 362
A MIS SHANTI CONDUCTORS (P) LTD. ANR.
v.
ASSAM STATE ELECTRICITY BOARD & ORS.
(Civil Appeal Nos. 8442-8443of2016)
B AUGUST31,2016
[V. GOPALA GOWDA AND ARUN MISHRA, JJ.)
Interest on Delayed Payments to Small Scale and Ancillary
Industrial U11dertakings Act. 1993 - Suit for recovery of illferest
under - Mai11tai11ability r~f - On facts, Stale Electricity Board placed
c supp~y orders on 31.3.1992 and 13.5.1992 - Supply completed by
appellll11t on ../.10.1993 and last payment made on 5.3.199../ -
Meanwhile. Act <~( 1993 came inlo jorce with effect ji·om 23. 9.1992
- On 1O. I.1997. appellalll filing suil for recm•e1:y of Rs.53. 68 lacs
on account of inlerest on delayed payments and fi1ture interest -
D Afaintllinllbility of the sui/ - Held: D[fference <!f opinion between
the judges - Per V. Gop(l/a Gowda, J: Proi·isions of !he Act are
retroactire in nature: and non consideration of !he said w.pect
renders the Modern Industries case and Purbanchal Cables &
Conductors Pvt. Ltd. case as sub silentio - Per Aru11 Mishra, J: Act of
1993 cannot be said to bi: retrospective in operation or having
E
retroactive opera1io11 - SuppZv order having been placed before
the date of co111111e11ce111ent £!/'the Act, that is he/iire 23. 9.1992. the
beneficial provisions of the Act regarding higher i111ere.1·t would not
be applicable.
Per V. Gopala Gowda, J.
F
Allowing the appeals, the Court
HELD: 1.1 Section 3 of the Interest on Delayed Payments
to Small Scale and Ancillary Industrial Undertakings Act, 1993
lays down the liability of the buyer to make payment before the
G appointed day, which, according to the definition in section 2, is
the day after the expiry of 30 days from the delivery of the goods
or the rendering of service. Section 4 of the Act provides the
date from which the interest is payable. According to Section 4 of
the Act, the liability on the buyer accrues from the appointed day.
Section 2(b) of the Act makes explicitly clear, appointed clay is
H
362
M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 363
ELECTRICITY BOARD & ORS.
the clay following the expiry of thirty clays from the date of A
acceptance, which is the clay of delivery of goods or rendering of
services. The language of the legislature could not have been
more clearer than what has been explicitly made it very clear. It
has clearly stated what the legislature had in contemplation at
the time of enactment of the Act as the focal date was the date of
B
actual delivery of goods or the rendering of services, and not the
date on which the transaction was entered into. [Para 26] [388-
G-H; 389-A-B]
1.2 While the statement of ob.iccts and reasons and
Parliamentary debates cannot be used tu ascertain the meaning
of the specific words of an enactment, the same can be used to c
understand the general context in which the legislation was passed
by the Parliament, as well as the evil it sought to remedy. [Para
281 (389-E)
Stale 4 Wes/ Bengal i: Subodh Gopal Bose AIR 1954
SC 92 : 1954 SCR 587; S1a1e of Gujarnt r. /1'1ir;apur D
Moti Kureshi Kasab .Jamal (2005) 8 SCC 534 : 2005
(4) Suppl. SCR 582 - referred to.
1.3 There is a need to reconcile the inconsistent legal tests
for the applicability of the Act as laid clown in the decisions of this
Court, 'date of contract altenition' in Modem Iudustries case; 'sale E
agreement' in P11rb1111clu1/ ease; date of 'transaction' and 'supply
order' in 1h"sam Small Scale /11dustries case amt Slwkti Tubes case.
[Para 32) [393-E]
Modern Industries I'. Steel Aulhorily of l11dia Ltd. (2010)
5 SCC 44 : 2010 (4) SCR 560; Purbanc/wl Cables & F
Conductors I'l'I. Lid. v. Assam Slate Electricily Board &
Anr. (2012) 7 SCC 462 : 2012 (6) SCR 905; Assum
Small Scale industries Develop111e11t Corporation Ltd
& Ors. v. .J.D. Plwr111aceuticals & Am: (2005) 13 SCC
l 1) : 2005 (4) Suppl. SCR 232; Slwk1i Tubes v. State <d
Bihm· & Ors. (2009) 7 SCC 673 : 2009 (10) SCR 739 G
- referred to.
1.4 A cumulative reading of the definition clauses of Sections
2, 3 and 4 of the Act leave absolutely no room for doubt that the
test for applicability of the Act is uot the date of transaction, or
supply order, or contract alteration, but quite simply, the date of H
364 SUPREME COURT REPORTS [2016) 6 S.C.R.
A the delivery of goods or rendering of services.[Para 33) (393-E-
FI
1.5 The phraseology of the Section 4 makes it amply clear
that the liability of the buyer arises after the supply of the goods
or rendering of services. Section 4 is just a reiteration of the
B legislative intent as to the applicability of the Act, which is in
those cases where the supply of goods or rendering of services
took place after the coming into force of the Act. [Para 34] [394-
D-EJ
1.6 A cumulative reading of Sections 2, 3 amd 4 of the Act
c shows that though a catena of cases which have been extensively
adverted to in the case of 1'11rba11clwl Cables & Co11d11ctors Pvt.
Ltd. have held that the statutory provisions of the 1993 Act do
not have retrospective operation, they have failed to consider
the said statutory aspects in a proper perspective keeping in
view the objects and reasons of the Act and the usage of the 11011
D obstante clause phrase in Section 4 of the Act. [Para 35) [394-FJ
1. 7 The Act was enacted in order to provide a boost to the
small scale and ancillary industries, which were suffering as a
result of irregular and delayed payments. A perusal of the
statement of objects and reasons of the Act, makes it clear that
E the small scale industries were suffering as a result of lack of
working capital, which was affecting the economic health of such
industries. Prompt payment on the outstanding money, it wits felt,
that was the need of the hour. In this context, the provisions of
Sections 3, 4, 5 of the Act, assume significance. More so in light
F of the fact that in the definition clause of Section 2 of the Act, the
legislature has not defined the words 'transaction' or 'supply
order'. It chose to only give definition to the terms, infer 11/ia,
'appointed day', 'buyer' and 'supplier'. Since the focus of the Act
is on delayed payment, ll'hich is in consonance with the definition
of the term 'appointed day' as well, there is no need to consider
G when the 'transaction' was entered into or the date of the 'supply
order'. Section 3 of the Act clearly provides that the liability of
the buyer to make payment accrues after the supplier supplies
goods or renders any services to the buyer. Thus, what was
envisaged by the legislature as delayed payment was payment of
H the outstanding money dne to the supplier after the goods had
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 365
ELECTRICITY BOARD & ORS.
been supplied, and after the date agreed upon or the date of A
deemed acceptance. A bare reading of the Section makes it clear
that the date of entering into the agreement or the date of supply
order were not in contemplation of the legislature at all. Thus, it
is amply clear from a bare reading ofSection 3 that for the purpose
of the Act, it docs not matter when the contract was entered into,
B
as long as the supply of the goods was after the Act came into
force on 23.09.1992. It is in that sense that the question of
retrospective application of the Act does not arise at all. This is
further supported by the use of the 11011 obsta11te clause in Section
4. [Para 36] [394-G-H; 395-A-E]
1.8 The use of the non obstante clause before the term
c
"agreement" also makes it clear that once the money becomes
due, which is after the supply of the goods and rendering services,
the buyer is liable to pay the statutory interest on the delayed
payment to the supplier no matter what is contained in the
agreement between the buyer and the supplier. [Para 36) (395- D
H; 396-A]
1.9 The question required to be examined in P11rba11clwl
Cables & Conductors Pvt. ltd. case was non-consideration of the
relevant statutory provisions of the Act adverted to and
interpreting the same for the purpose of examining as to whether E
the provisions of the Act would be retroactive in nature and confer
a statutory right on the supplier. Non-consideration of the said
provisions in a proper perspective would render the judgment
ver i11c11riam. [Para 37] (396-E-F)
Purbanchal Cables & Conductors Pvt. Ltd. v. Assam F
State Electricity Board & Anr. (2012) 7 SCC 462 : 2012
(6) SCR 905 - per incuriam.
1.10 Since a reading of the .statement of objects and reasons
of the Act makes it very clear that the Act has been enacted for
the benefit of the small scale and ancillary industries at large, the G
decision in the case of P11rba11clwl Cables & Conductors case docs
not correctly lay down the position of law with respect to the
nature of the Act and its effect on its prospectivity as well. [Para
37) (398-C-D]
1.11 Sections 3, 4, 5 and 6 of the Act are retroactive in
H
366 SUPREME COURT REPORTS (2016] 6 S.C.R.
A nature. Purbanclwl Cables & Conductors Pvt. Ltd. 's case and other
decisions of this Court referred did not consider the important
aspect of the matter namely as to whether the provisions of the
Act are retroactive or not. They merely held that the provisions
of the Act have no retrospective effect. Thus, the judgments have
been rendered sub silentio on this aspect. !Paras 37, 38) [396-B;
B
398-D-EJ
2.1 The submission of the counsel for the Electricity Board
on the question of res judicata is wholly untenable in law. The
issue of whether an appellant is entitled to prefer a claim on the
interest as provided under Section 4 was not the issue decided
c in P11rba11c/111/ Cables & Conductors Pl't. Lid. 's case. Therefore,
the decision in the same cannot be said to operate as res judicata.
The material and substantial issue with regard to legal contention
was not framed and answered, therefore, it docs not operate as
res judicata. !Para 39) !398-F-H; 399-A)
D 2.2 Taking into consideration the supply order against the
actual supply of the goods with payment made, the last payment
was made on 05.03.1994. Thus, time began to run from that date.
Taking into consideration the fact that the date of the institution
of the suit is 10.01.1997, the suit has been filed within the period
E of limitation as prescribed in the Limitation Act. The question of
limitation is answered in favour of the appellants by placing
reliance on Section 19 read with Article 25 of the Limitation Act,
1963. [Paras 41, 40) [400-E; 399-Bj
2.4 The appeal filed by M/s Trussees & Towers Pvt. Ltd
F questioning the correctness of the order passed in Review
Petition, is maintainablc.!Para 42) [400-f-G]
3. The points framed in the a1>peals are answered in favour
of the appellants. In the Civil Appeals arising out of SLP (C) Nos.
9924-9925 of 2013 vide order dated 17.02.2015, the appellants
G were directed to pay Rs.38,70,000/- back to the respondents.
The respondents shall refund the amount to the appellants with
9% interest pa within the stipulated period. [Para 43) [400-G-H;
401-A-B)
State of UP v. Anand Swarup (1974) 1 SCC 42 : 1974 .
(2) SCR 188; Kingfisher Airlines Ltd. v. CCI 2011 (100)
I-I
MIS SHANTI CONDUCTORS IP) LTD. ANR. v. ASSAM STATE 367
ELECTRICITY BOARD & ORS.
CLA (Bom.); State of Bombay v. Vishnu Ra111chandra A
AIR 1961 SC 307; State of Maharashtra v. Krishnarao
Dudhappa Shinde (2009) 4 SCC 219 : 2009 (1) SCR
756 ; Sushi! Ku111ar Mehta i: Gobind Ram Bohra (1990)
I SCC 193 : 1989 (2) Suppl. SCR 149; Mathura
Prasad Bajoo Jaiswal v. Dossibai N.B. Jeejeebhoy
B
(1970) 1 SCC 613 : 1970 (3) SeR 830 ; Angel lnj/11
Pvt. Ltd. v. Mis Echjay Industries Ltd. 2007 (4) Mh.L.J.
618; Mis Trusses & To1l'ers (P) Ltd. v. Assam State
Electricity Board and Am'. CA@ SLP (C) No. 15274 of
2013 on 06.08.2001; Sushi! Kumar Sen v. State of Bihar
(1975) 1 sec 774 : 1975 (3) SCR 942; DSR Steel (P1·t.) c
Ltd. v. State 1~( Rajasthan & Ors. (2012) 6 SCC 782 :
2012 (5) SeR 583; State of UP & Anr. v. Synthetics
And Chemicals Ltd. & A111: (1991) 4 sec 139' Amit
Das 1: Stale ofBilwr (2000) 5 sec 488: 2000 (1) Suppl.
SCR 69; life Singh 1: Stale of Hmyana (2004) 8 SCC
D
1 : 2004 (5) Suppl. SCR 272 - referred to.
Black's Lm1· Dictionary (Sixth Ed11.) - referred to.
Per Arun Mishra, J. (Dissenting)
Dismissing the appeals, the Court
E
HELD: 1.1 It is apparent from the provisions of the Interest
on Delayed Payments to Small Scale and Ancillary lndustl'ial
Undertakings Act, 1993 that none of the provisions indicates that
the Act is retrospective in operation in any manner whatsoever.
On the contrary, the Act requires payment to be made by a buyer
before the appointed day that is the day following immediately F
after the expiry of 30 days from the date of acceptance or the
deemed acceptance of the delivery of the goods or services. The
day of acceptance means day of actual delivery of goods or
rendering of service or where buyer has objected within 30 days,
the day on which such objection is removed by the supplier. Where G
no objection is raised in writing by the buyer regarding acceptance
of goods or services within 30 days, the appointed day would be
counted from the day on which actual delivery of goods had been
made or rendering of services. These provisions arc not capable
of being put into retrospective operation. The provisions of
H
368 SUPREME COURT REPORTS [2016] 6 S.C.R.
A ref!uirement of making the payment before the appointed day,
raising of objection within 30 days and deemed acceptance are
not capable of being put into retrospective operation. Section 3
deals with respect to liability of the buyer to make the payment
with reference to appointed day. The payment has to be made on
or before the date agreed upon between the buyer and supplier
B in writing or where there is no agreement, before the appointed
day. The proviso further bars the agreement to extend the payment
beyond 120 days from the day of acceptance or the day of deemed
acceptance. Thus, the provisions contained in section 3 also are
prospective in nature. None of the provisions at all speak of the
c existing liability/agreement as on the date of commencement of
the Act. Section 4 deals with the date from which and the rate at
which interest is payable. A bare reading of the same leaves no
iota of doubt that the Act is prospective in nature and the higher
interest rate is applicable only on failure to make the payment as
envisaged by the Act under section 3. If the buyer fails to make
D
the payment as required under section 3, the liability to make
the payment with interest arises. Section 4 contains non-obstante
clause and overrides agreement or any other law to the contrary.
A conjoint reading of the provisions of appointed day, sections 3
and 4 makes it clear that the Act is prospective in operation. It
E has no retrospective operation or retroactive operation. The Act
does not contain any provision with respect to the existing
agreements as on the date of commencement of the Act that would
be governed by the provisions in force at the relevant time. The
Act docs not have the effect of invalidating prior agreements.
The liability to make the payment of higher interest cannot operate
F
retrospectively. The provisions of the Act arc capable of being
complied with prospectively that is from the date on which
Ordinance initially came into force i.e. 23.9.1992 from which date
the Act has been given effect. There is absolutely no indication
in the Act that it has retrospective operntion or rctrouctive
G operation. Taking note of the various provisions of the Act, it is
apparent that the Act of 1993 is not retrospective in operation.
[Para 10] [404-C-ll; 405-A-D]
'Principles c!f Statu/OJ'.Y J11terpretatio11' by Justice G.P.
Singh 14' 11 Edn. - referred to.
H
M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 369
ELECTRICITY BOARD & ORS.
1.2 The Act of 1993 contains no provision which it can be A
said to be expressly or by necessary implication of retrospective
operation. The Act has the effect of overriding the laws and the
agreements, thus, would not affect the law and the agreements
which prevailed before coming into force of the Act. As a
transaction/agreement is valid when made, it cannot be invalidated
B
by subsequent prohibition or provision. (Para 121 (406-D-El
1.3 The decision of a Co-ordinate Bench is binding and there
has to be consistency and settled principle should not be unsettled.
Judicial discipline demands that a decision of the Division Bench
of this Court should be followed by another Bench of two Judges.
(Para 18) (437-C-DJ
c
1.4 The Act of 1993 cannot be said to be retrospective in
operation or having retroactive operation. The question stands
answered affirmatively beyond pale of doubt and the decisions
arc binding on a Co-ordinate Bench. It cannot be said that the
decisions are sub silentio or per i11c11ria111 in any manner whatsoever D
and, it is not open to the Co-ordinate Bench to take a different
opinion. There is no confusion with respect to meaning of
transaction, supply order and agreement. This Court while
deciding the said cases was not in oblivion of aims and objects of
beneficial legislation, considered same and it has aflirmatively E
pronounced on all the aspects. Hence, there is no scope to dwell
further into the same arena tu declare the various judgments to
be s11b silenlio, per i11c11rla111 or not laying down the law correctly.
[Para 20] [438-D-F]
1.5 Even otherwise, on merits, considering the scheme of F
the Act, various provisions of the Act it cannot be said to have
retrospective operation or retroactive operation and where a
supply order has been placed before the date of commencement
of the Act, that is before 23.9.1992, the beneficial provisions of
the Act regarding higher interest would not be applicable. [Para
21] [438-F-G] G
1.6 In the case of appellant itself decided along with
Purhw1c/111/ Cables 's case aforesaid findings have been recorded
by this Court while remanding the case to the High Court for
decision on merits as an appeal arising of same lis was pending
H
370 SUPREME COURT REPORTS (2016] 6 S.C.R.
A before the High Court and the High Court rightly followed the
decisions in Purbw1clwl Cables & Co11ductors's case decided along
with the instant case. The finding recorded by this Court in the
remand order is final and binding on the appellant. They cannot
question the same again in the instant appeals. [Para 22) [438-G-
H; 439-A-B)
8
Purbanchal Cables & Conductors Pvt. Ltd. v. Assam
State Electricity Board & Anr. (2012) 7 SCC 462 : 2012
(6) SCR 905; Assam Small Scale Industries
Development Corporation Ltd. & Ors. v. J. D.
Pharmaceuticals & Am: (2005) 13 SCC 19 : 2005 (4)
c Suppl. SCR 232; Shakti Tubes v. Stale of Bihar & Ors.
(2009) 7 SCC 673 : 2009 (10) SCR 739;Rampur
Fer1iliser Lui. v. Vigyan Chemicals Industries (2009) 12
SCC 324: 2009 (2) SCR 650; Modem I11dus1ries v. Steel
All/hority of India Ltd. (2010) 5 SCC 44: 2010 (4) SCR
D 560 - referred to.
Case Law Reference
Judu;rnent ofV, Gonala Gowda 1 J:
1974 (2) SCR 188 referred to Para 11
E 2005 (4) Suppl. SCR 232 referred to Para 11
(2009) 7 sec 673 referred to Para 11
2010 (4) SCR 560 referred to Para 12
2011 (100) CLA (Born.) referred to Para 16
AIR 1961 SC ,307 referred to Para 16
F
2009 (1) SCR 756 referred to Para 16
1989 (2) Suppl. SCR 149 referred to Para 20
1970 (3) SCR 830 referred to Para 20
2007 (4) Mh.L,J. 618 referred to Para 21
G
1975 (3) SCR 942 referred to Para 22
2P12 (5) SCR 583 referred to Para 22
1954 SCR 587 referred to Para 28 ·
2005 (4) Suppl. SCR 582 referred to Para 28
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 371
ELECTRICITY BOARD & ORS.
(1991) 4 sec 139 referred to Para 37 A
2000 (1) Suppl. SCR 69 referred to Para 37
2012 (6) SCR 905 per incuriam Para 37
2004 (5) Suppl. SCR 2n referred to Para 37
Judgment of Arnn Mishra, J; B
2012 (6) SCR 905 referred to Para4
200~ (4) Suppl. SCR 232 referred to Para4
2009 (10) SCR 739 referred to Para4
2009 (2) SCR 650 referred to Para 17
c
2010 (4) SCR 560 referred to Para 17
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 8442-
8443 of20\6.
From the Judgment and Order dated 20. 11.2012 and 20.12.2012
.of the High Court ofGauhati in RFA No. 66 of2000 and MC 3472 of D
2012.
WITH
C. A. Nos. 8445, 8448 and 8450 of 2016.
Basava Prabhu S. Patil, Ajit Kr. Sinha, Vijay Hansaria, Sr. Advs., E
Naren<lra Sharma, Devashish Bharuka, Ravi Barukha, Ankur Sood, Ms.
Prachi Gupta, Ms, Prachi Jauhti, Ms. Sakshi Mehley, Ms. Arpita Bishnoi,
Ms. Sneh11 Kalita, P, I. Jose, Avnish Pandey, Abhinav Hansaria, Advs.
for the appearing parties.
The Judgments of the Court were delivered by F
V. GOPALA GOWDA, J. I. Leave granted in all the Special
Leave Petitions, ·
2. The present appeals were listed together as a common question
of law arises in all of them for consideration before this Court.
G
3. For the sake of convenience, reference is made to the facts of
the appeals arising out ofSLP (C) Nos, 9924-9925 of2Q\ 3, which h11ve
been directed against the i1npugned final jucigrnent and orders clat11cl
20.11.2012 and 20.12.20\ 2 passed in RFA No,-66 of2000 a11d MC No.
3472of2012 respectively, by the Gauhati High Court at Guwahati.
H
372 SUPREME COURT REPORTS [2016} 6 S.C.R.
A The facts of the case which are required to appreciate the rival
legal contentions advanced on behalf of the parties are stated in brief as
under:
On 31.03. i 992, the respondent-Assam State Electricity Board
(hereinafter referred to as the "Electricity Board") placed an order for
B supply ofAluminium Electrical Conductors from the appellants-Mis Shanti
Conductors Pvt. Ltd. for a total consideration of Rs. I .22 crores. The
supplies were to be made between June and December, 1992. On
13.05.1992, another order was placed by the Electricity Board to Mis
Shanti Conductors for the supply of various types of conductors for a
total consideration of Rs. 32.49 lacs. The supplies of the aforesaid goods
c were to be made between January and February, 1993.
4. On 23 .09.1992, the President oflndia promulgated an ordinance,
namely, the Interest on Delayed Payment to Small Scale Ancillary
lndustrial Undertakings Ordinance, 1992. Subsequently, on 02.04.1993,
the Interest on Delayed Payment to Sma II Scale and Ancillary Industrial
D Undertakings Act, 1993 (in short the "Act") was enacted and it was
deemed to have come into force with effect from 23.09.1992.
5. Meanwhile, the supply of equipments under the aforesaid
purchase orders was completed by Mis Shanti Conductors on 04. l 0.1993.
On 05.03.1994, the entire payment of Rs. 2.15 crores against the aforesaid
E supply orders was received by Mis Shanti Conductors.
6. Subsequently, on I0.01.1997, Mis Shanti Conductors filed a
suit for recovery of Rs.53.68 lacs on account of interest on delayed
payments and future interest at the rate of 27% per annum on the
decreetal amount. The Electricity Board filed the written statement on
F 16.09.1998, inter-alia, raising the plea of limitation and contending that
the Act is not applicable to the case of the appellant- Mis Shanti
Conductors as the contract was concluded prior to the enactment of the
Act. The Trial Court decreed the suit on 02.02.2000 for recovery of the
amount of Rs. 51,60,507.42 with compound interest at the rate of23.75%
G p.a. with monthly rests from the date of the suit till realizati,)n.
7. Aggrieved of the impugned judgment and order, the Electricity
Board filed Regular First Appeal No. 66 of2000 before the I Iigh Court
ofGauhati. Vide order dated l 8.10.2001, the Division 13ench of the High
Court referred the matter to the Full Bench. The Full 13ench framed the
following questions that needed to be answered:
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 373
ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA . .I.]
A
i) Whether the suit for recovery of mere interest under the
Interest on Delayed Payments to Small Scale and
Ancillary Industrial Undertakings Act, 1993 is
maintainable'1
B
ii) Whether in the present case the suit for recovery of
Interest under the Delayed Payments to Small Scale and
Ancillary Industrial Undertakings Act, 1993 would not
be maintainable as the contract for supply of goods
between the parties was entered into prior to enforcement
of the Act, i.e. on 23.09.1992? c
iii) Whether the suit for recovery of interest under the
Delayed Payments to S111all Scale and Ancillary Industrial
Undertakings Act. 1993 would not be maintainable if no
reservation is made by the supplier retaining to it the
right to recovery interest under the Act when the D
payment(s) of the principal sum is/are accepted, though
these may be 111ade beyond the prescribed period?"
The Full Be11ch of the High Court videjudgment and order dated
05.03.2002 answered the reference in affirmative by holding that a suit
for interest alone could be filed. It further held that the Act is applicable E
to contracts entered into prior to 23.09.1992, i.e. the date on which the
Act came into force. It was further held that the interest under the Act
would be calculated from 23.09.1992 till the payment is made to the
supplier. Having answered the reference in the above terms. the matter
was sent back to the Division Bench for consideration of the appeal on
merits. F
8. Accordingly. the matter was placed before the Division Bench
for its consideration in accordance with the decision of the Full Bench of
the High Cou1t in the reference. The Ekctricity Board contended before
the Division Bench that this Court in the case of Purba11clwl Cables &
Co11d11ctor.1· Pvt. Ltt!. 1'. 1h.rn111 State E/ectrici(l' Board & Anr. 1 has G
held that the Act is applicable only to the agreements entered into after
23.09.1992. Accordingly. in k:rms of the judgment of this Court in
P11rba11clwl Cables & Co11t!uctors Pvt. Ltd. (supra). the Division Bench
of the High Court vi de judgment and order dated 20.11.2012 set aside
1
(2012) 1 sec 462 11
374 SUPREME COURT REPORTS [2016] 6 S.C .R.
A the judgment of the Trial Courrby allowing Regular First Appeal No. 66
of2000.
9. Similarly, in the connected appeals also, the High Court had
held in the impugned judgment and orders therein that the appellants are
not entitled for the interest on the delayed payment as the contracts had·
B been entered into prior to the commencement of the Act. Hence the
present ~J?peals.
I 0. We have heard Mr. M.H. Baig and Mr. Basava Prabhu S.
Patil, learned senior counsel appearing on behalf of the appellants in the
appeals arising out ofSLP (C) Nos.9924-9925of2013 and SLP (C) No.
c 538of2016 and Mr. Ajit Kumar Sinha, learned senior counsel in appeal
arising out ofSLP (C) No. 15274of2013. We have also heard Mr. Yijay
Hansaria, the learned senior counsel appearing on behalf of the Electricity
Board.
11. Mr. M.H. Baig, the learned senior counsel submits that the
D respondents cannot claim a vested right in procedure, as the same is not
a matter of right and can be taken away. The learned senior counsel
places reliance on the three Judge Bench decision of this Court in the
case of Sil/le of U.P. 1~ A11ll11d Swl/rup 1• The learned senior counsel
contends that the Act is applicable in respect of the contracts entered
into by the Electricity Board with the appellants herein for supply of
E goods. Mr. Basava Prabhu Patil and Mr. Ajit Sinha, learned senior counsel
appearing on behalf of some of the appellants contend that the usage of
the words "transaction" and "supply order" as used by this Court in the
case of Assllm Small Scale Industries Developmelll Corporation Ltd.
v. J.D. PIU1rmace11ticals-' is not the correct test to be applied to
F determine whether the provisions of the Act are applicable to the contracts
entered into prior to the coming of the Act into force. It is contended that
this Court in the aforesaid case has referred to the said words without
taking into consideration the Statement of Objects and Reasons of the
Act and the parliamentary debates conducted while introducing the Bill
before it was enacted. It is further contended that the same words were
G continued to be used in the case of SIU1kti Tubes v. Stale of Bilutr',
wherein it was held as under:
'(1974) 1sec42
' (2005) u sec J 9
H '(2009J 7 sec 673
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 375
ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA. J.]
"'2 I. We have considered the aforesaid rival submissions. A
This Court in Assam Smal I Scale Industries case has finally
set at rest the issue raised by stating that as to what is to be
considered relevant is the date of supply order placed by
the respondents and when this Cou1i used the expression
'"transaction'" it only meant a supply order. The Comi made
B
it explicitly clear in para 37 of the judgment which we have
already extracted above. In our considered opinion there is
no ambiguity in the aforesaid judgment passed by this Cowi.
The intent and the purpose of the Act. as made in para 37
of the judgment, are quite clear and apparent. When this
Court said "transaction" it meant initiation of the transaction c
i.e. placing of the supply orders and not the completion of
the transactions which would be completed only when the
payment is made. Therefore, the submission made by the
learned Senior Counsel appearing for the appellant-plaintiff
fails.
D
22. Consequently. we hold that the supply order having been
placed herein prior to the coming into force of the Act. any
supply made pursuant to the said supply orders would be
governed not by the provisions of the Act but by the
provisions ofSection 34 of the CPC.''
E
In the above case, it was held that an Act cannot be given
retrospective effect. The learned senior counsel contend that what was
however, not considered by this Court, is that though an Act may not be
given retrospective effect, it can still have retroactive operation.
12. The learned senior counsel appearing on behalf of the F
appcl Iants place strong rel im1cc upon another judgment of this Cou1i in
the case of Modem liulu.1·tries r. Steel A11t/10ri(1' <d'fmlia Ltd. 5, wherein
it was held as under:
"9. The 1993 Act was sequel to a policy statement on small-
scale industries made by the Government in Par! iament that G
suitable legislation would be brought to ensure prompt
payment of money by bu~ c>rs to the small industrial units. It
was felt that inadequ<1k 11orking capital in a small-scale
and ancillaiy industrial undertaking was causing an endemic
'(20101ssec44 H
376 SUPREME COURT REPORTS [2016] 6 S.C.R.
A problem and such unde11akings were very much affected.
The Small Scale Industries Board-an apex advisory body
on policies relating to small-scale industrial units-also
expressed its views that prompt payments of money by
buyers should be statutorily ensured and mandatory
provisions for payment of interest on the outstanding money,
B
in case of default, should be made. It was felt that the
buyers, if required under law to pay interest, would refrain
from withholding payments to small-scale and ancillary
industrial undertakings. With these objects and reasons,
initially an ordinance, namely. the Interest on Delayed
c Payments to Small Scale and Ancillary Industrial
Undertakings Ordinance, 1992 was promulgated by the
President on 23-9-1992 and then the Bill was placed before
both the Houses of Parliament and the said Bill having been
passed, the 1993 Act was enacted. The Preamble to the
1993 Act reads:
D
"An Act to provide for and regulate the payment of interest
on delayed payments to small-scale and ancillary industrial
undertakings and for matters connected therewith or
incidental thereto.''
E This Court furlher held as under:
''23. The wholesome purpose and object behind the 1993
Act as amended in 1998 is to ensure that the buyer promptly
pays the amount due towards the goods supplied or the
services rendered by the supplier. It also provides for
F payment of interest statutorily on the outstanding mom:y in
case of default..."
13. Further, reliance is placed on the decision of this Court in the
case of P11rha11c//{// Cables & Conductors Pvt. Lttl (supra) wherein
the elate of "sale agreement" was considered to be crucial to determine
G the applicability of the Act as under:
''52 ...... Since the Act envisages that the supplier has an
accrued right to claim a higher rate of intcr<:st in terms of
the Act, the same can only lx: said to accrue for sale
agreements after the date of commcnccn1cnl of the Act
i.e. 23-9-1992 and not any time prior."
l-1
M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 377
ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA. J.]
It is contended that the term "sale agreement" is not defined in A
the Act and thus, cannot be a legal test for applicability of the Act.
14. It is further contended that if the term "sale agreement" is to
be the legal test for the applicability of the Act, then the same would be
inconsistent with the judgment of this Court in Assam Small Scale
Industries Developmeut Corporation Ltd. (supra) where the "sale B
agreement" was prior to the date of commencement of the Act yet the
Court applied the "transaction" and ''supply order" test and applied the
provisions of the Act on such "transactions" and "supply orders" which
were issued on or after the aforesaid date of commencement of the
Act. If the "sale agreement" test as has been held in Purbaucha/ Cables
& Conductors Pvt. Ltd. (supra) is applied, then the sellers in Assam
c
Small Scale Industries Development Corporation Ltd. (supra) would
not be entitled to higher rate of interest under the Act. It is further
contended that if"sale agreement" is taken to be the legal test as to the
applicability of the Act then the same would also be inconsistent with the
decision of this Court in Modern /11d11stries (supra), wherein aticr D
consideration of the Aims and Objects of the Act, it was held that interest
is payable on ;'outstanding money" due from the buyer in.case of default.
15. The learned senior counsel fu11her draw our attention to the
relevant statutory provisions of the Act, which are extracted as under:
"2(b )(ii)-tbe day of deemed acceptance" means, where E
no objection is made in writing by th..: buyer regarding
acceptance of goods or services within thirty days from
the day of the delive1y of goods or the rendering of services,
the day of the actual delivery of goods or the rendering of
services; F
3. Liability of buyer to make payment.- Where any
supplier supplies any goods or renders any services to any
buy..:r, the buyer shall make payment therefore on or before
the date agreed upon between him and the supplier in writing
or, where there is no agreement in this behalf, before the
G
appointed day:
Provided that in no case the period agreed upon between
the supplier and the buyer in writing shall exceed one
hundred and twenty days from the day of acceptance or
the day of deemed acceptance.
H
378 SUPREME COURT REPORTS (2016) 6 S.C.R.
A 4.Date from which and rate at which interest is
payable.- Where any buyer fails to make payment of the
amount to the supplier, as required under section 3, the buyer
shall, notwithstanding anything contained in any agreement
between the buyer and the supplier or in any law for the
time being in force, be liable to pay interest to the supplier
B
on that amount from the appointed day or, as the case may
be, from the date immediately following the date agreed
upon, at one and halftime of prime Lending Rate charged
by the State Bank of India.
Explanation.- For the purposes of this section, "Prime
c Lending Rate" means the Prime Lending Rate of the State
Bank oflndia which is available to the best borrowers of
the bank.
6.Liability of buyer to pay compound interest.-
Notwithstanding anything contained in any agreement
D between a supplier and a buyer or in any Jaw for the time
being in force, the buyer shall be liable to pay compound
interest (with monthly interest) at the rate mentioned in
section 4 on the amount due to the supplier."
Mr. Basava Prabhu Patil, learned senior counsel contends that
E from a reading of Section 2(b) of the Act, it becomes clear that "appointed
day" means the day following immediately after the expiry of the period
of thirty days from the day of acceptance or the day of deemed
acceptance of any goods or any services by a buyer from a supplier. It
is submitted that a careful reading of Section 2(b) along with Sections 3,
F 4 and 5 of the Act would show that a statutory right is conferred upon
the suppliers for payment of interest on the delayed payments. Therefore,
the provisions of the Act are retroactive in nature. The learned senior
counsel further contends that the judgments of this Court sought to be
relied upon by the learned senior counsel appearing on behalf of the
Electricity Board have no application to the facts of the instant case, as
G in those cases two Judge Benches of this Court have not correctly
examined the aforesaid statutory provisions of the Act while holding that
the same is prospective in nature.
16. Mr. Ajit Kumar Sinha, learned senior counsel contends that
the provisions of the Act are retroactive in nature and places reliance on
H
M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 379
ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.]
the decision of the Bombay High Cou11 in the case of Kingfisher Airlines A
Ltd. v. CCJ 6 and the decision of this Court in the case of State ofBombay
v. Vishnu Ramchandra 7, wherein it was held as under:
"There are, however, statutes which create Do new
punishment, but authorise some action based on past
conduct. To such statutes, if expressed in language B
showing retrospective operation, the principle is not applied.
As Lord Coleridge, C. J.,observed during the course of
arguments in Rex v. Birthwhistle:
"Scores of Acts are retrospective, and may without
express words be taken to be retrospective, since c
they are passed to supply a cure to an existing
evil."
!ndeed, in that case which arose under the Married
Women (Maintenance in Case of Desertion) Act, 1886, the
Act was held retrospective without express words. D
It was said:
"It was intended to cure an existing evil and to afford
to married women a remedy for desertion, whether
such desertion took place before the passing of the
Act or not." E
Another principle which also applies is that an Act designed
to protect the public against acts of a harmful character
may be construed retrospectively, if the language admits
such an interpretation, even though it may equally have a
prospective meaning."
F
The said principle was reiterated more recently by this Court in
the case of State of Mllhllrttslttra v. Krislmllrao D11d//{/pf1" SltimfeH.
17. The learned senior counsel also places reliance on the meaning
of the words "retroactive" and "retroactive inference", which have
been defined in Black's Law Dictionary (Sixth Edn.) as under:- G
"Retroactive- Process of acting with reference to past
occurrences.
'' 2011 (100) CLA (Bom.)
7
AIR 1961SC307
'(2009) 4 sec 219
H
380 SUPREME COURT REPORTS [2016] 6 S.C.R.
A Retroactive inference- The inferring of a previous fact
from present conditions by trier of facts."
18. The learned senior counsel further contends that the
observations made in Purb"nclwl C"bles & Conductors Pvt. Ltd.
(supra) are clearly contradictory to the decision of this Court in the case
B of Ass"m Sm"ll Sc"le Industries Development Corporation Ltd.
(supra). The relevant paragraph of Purb"nclwl Cables (supra) reads
as under:
"53. On a careful perusal of the judgment of this Court in
Assam Small Scale Industries, we find that even the
c question regarding the applicability of the Act to contracts
concluded prior to coming into force of the Act is no longer
res integra. This question is answered by this Court in Assam
Small Scale Industries Development Corpn. Ltd. v. J.D.
Pharmaceuticals as under: (SCC p. 36, paras 3 7-38)
D "37. We have held hereinbefore that clause 8 of the
tenns and conditions relates to the payments of balance
I 0%. It is not in dispute that the plaintiff had demanded
both the principal amount as also the interest from the
Corporation. Section 3 of the 1993 Act imposes a
statutory liability upon the buyer to make payment for
E the supplies of any goods either on or before the agreed
date or where there is no agreement before the
appointed clay. Only when payments are not made in
terms of Section 3, Section 4 would apply. The 1993
Act came into effect from 23-9-1992 and will not apply
F 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 28-7-1992, were prior to the date of the 1993
Act coming into force. Only the transactions at SI.
G Nos. 27 to 71 (that is supply orders between 22-10-
1992 to 19-6-1993 ), wi 11 attract the provisions of the
1993 Act.
38. The 1993 Act, thus, will have no application in
relation to the transactions entered into between June
1-1
M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 381
ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.]
1991 and 23-9-1992. The trial court as also the High A
Court, therefore, committed a manifest error in
directing payment of interest at the rate of23% up to
June 1991 and 23 .5% thereafter."
This Comi in the abovesaid case held that any substantial law can
only be applied prospectively unless retrospective operation is clearly 8
made out in the language of the statute. It was further held that only a
procedural or declaratory law operates retrospectively when there is no
vested right in the procedure. Therefore, the learned senior counsel
submits that none of the cases referred to above have actually examined
whether the provisions of the Act are retroactive in nature or not.
c
19. The learned senior counsel further submits that the suit for
interest alone is maintainable, as held by this Court in the case of Modem
l11tlustries (supra) as under:
"45. It is true that word "together" ordinarily means D
conjointly or simultaneously but this ordinary meaning put
upon the said word may not be apt in the context of Section
6. Can it be said that the action contemplated in Section 6
by way of suit or any other legal proceeding under sub-
section (I) or by making reference to IFC under sub-section E
(2) is maintainable only if it is for recovery of principal sum
along with interest as per Sections 4 and 5 and not for .
interest alone? The answer has to be in negative.
46. We approve the view ofGauhati High Court in Assam
State Electricity Board that word 'together' in Section 6( I)
F
would mean 'along with' or "as well as". Seen thus; the
action under Section 6(2) could be maintained for recovery
of principal amount and interest or only for interest where
liability is admitted or has been disputed in respect of goods
supplied or services rendered .... "
G
20. The learned senior counsel further refers to the decision of
this Court in the case of Purba11clwl Cables & Co11ductors Pvt. Ltd.
(supra) and submits that in the case, the correct factual and legal position
as laid down in the case of Assam Smltll Scltle /ll(lutries Development
Corporlltio11 (supra) has not been appreciated. Therefore, the suit filed
H
382 SUPREME COURT REPORTS [2016) 6 S.C.R.
A by the first appellant in respect of the interest cannot be held as barred
by resjudicata. fn support of this contention, the learned senior counsel
places strong reliance on the decision of this Court in Sus/ti/ Kumar
Mehta v. Gobi11d Ram Bohra 9, wherein it was held as under:
" ......... a pure question ofa law unrelated to facts which
B are the basis or foundation of a right, cannot be deemed to
be a matter in issue. The principle ofres judicata is a facet
of procedure but not of substantive law. The decision on an
issue of law founded on fact in issue would operate as
resjudicata. But when the law has since the earlier decision
had been altered by a competent authority or when the earlier
c decision declares a transaction to be valid despite prohibition
by law it does not operate as resjudicata. Thus a question
ofjurisdiction ofa Courtorofa procedure or a pure question
of law unrelated to the right of the parties founded purely
on question of fact in the previous suit is not resjudicata in
D the subsequent suit. A question relating to jurisdiction of a
Court or interpretation of provisions of a statute cannot be
deemed to have been finally determined by an erroneous
decision of a Court."
The learned senior counsel further places reliance on the three
E Judge Bench decision of this Court in the case of Mat/mra Prasad
Bajoo Jaiswal v. Dossibai N.B. Jeejeeblwy 10 , wherein it was held as
under:
·· ... But the doctrine ofresjudicata belongs to the domain of
procedure: it cannot be exalted to the status of a legislative
F direction between the parties so as to detennine the question
relating to the interpretation of enactment affecting the
jurisdiction of a Court finally between them, even though
no question of fact or mixed question of law and fact and
relating to the right in dispute between the parties has been
determined thereby. A decision of a competent Court on a
G matter in issue may be res judicata in another proceeding
between the same parties: the "matter in issue" may be an
issue of fact, an issue of law, or one of mixed law and fact.
An issue of fact or an issue of mixed law and fact decided
• (1990J 1sec193
H '"(1970J 1sec613
M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 383
ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.]
by a competent cou11 is finally determined between the A
parties and cannot be re-opened between them in another
proceeding. The previous decision on a matter in issue alone
is res judicata: the reasons for the decision are not res
judicata. A matter in issue between the parties is the right
claimed by one party and denied by the other, and the
B
claim of right from its ve1y nature depends upon proof of
facts and application of the relevant law thereto. A pure
question oflaw unrelated to facts which give rise to a right,
cannot be deemed to be a matter in issue."
21. On the issue of limitation, the learned senior counsel places
reliance upon Section 19 and Article 25 of the Limitation Act, 1963 and
c
also places reliance on the decision of the Bombay High Court in the
case of Angel Jnfin Pvt. Ltd. i: Mis Echjay Industries Ltd. 11 , wherein
it was held as under:
"Applying the above observations of the Apex Court, one
has to look to Section 19 of the Act and read the expression D
"debt" appearing therein along with the articles in the
Schedule to the Limitation Act. The Articles provide for
different periods of limitation for different types of debts.
They also provide different dates from which the period of
limitation begins to run. A glance at the said Schedule would E
show that there are large variety of debts as for example,
for Seamen's Wages, for price of Goods sold and supplied,
for price of Lodging, for hire of Animals or Vehicles or
price of Trees or growing Crops, for price of work done,
for money lent under an agreement, for money lent without
an agreement, for money received by the Defendants for F
Plaintiffs use, for interest on monies lent, for amounts due
under Bills of Exchange, Promissory Notes etc. This ·will
show that Article 25 refers to only the debt ofinterest, while
A1ticle 19 refers to the debt of loan. Since there are various
types of debts provided under the schedule with different G
periods of limitation and different dates from which the
limitation begins to run, the Parliament in Section 19 of the
said Limitation Act; 1963 has advisedly used the generic
expression "debt". This debt may be of one type or another
II 2007 (4) Mh.L.J. 618
H
384 SUPREME COURT REPORTS [2016] 6 S.C.R.
A type, but the payment on account of one type of debt cannot
extend the period of limitation for another type of debt.
Debt could be either for principal loan amount or it could be
for interest."
The learned senior counsel contends that in the instant case, the
B suit has been filed within the period oflimitation as the last payment was
made by the buyer on 05.03 .1994, and Money Suit 21 /97 was filed in
March 1997. The period oflimitation would start running from then only.
22. The learned senior counsel further submits that the present
appeal is maintainable even in light of the withdrawal of SLP (C) No.
c 12217 of200 I in the case of Mis Trusses & Towers (P) Ltd. v. Ass(lm
St"te Electricity Board nnd Anr. on 06.08.200 I. It was stated therein
that there was an error in the judgment of the High Court. Accordingly,
the petitioner therein filed Review Petition No. 75 of2001 before the
High Court of Gauhati. The High Court on 19.03.2013 passed an order
in the said Review Petition allowing only 9% simple interest per annum.
D Aggrieved of the said judgment and order, Mis Trusses & Towers Pvt.
Ltd. filed SLP (C) No. 15274 of2013 on I 0.04.2013. The learned senior
counsel places reliance on the decision of this Court in the case of Sushi/
Kumar Sen 1( St"te of Bilwr12, wherein it was held as under:
"2. It is well settled that the effect ofallowing an application
E for review of a decree is to vacate the decree passed. The
decree that is subsequently passed on review, whether it
modifies, reverses or confirms the decree originally passed,
is a new decree superseding the original one ... "
The learned senior counsel further places reliance on the decision
F of this Couii in the case of DSR Steel (Pvt.) Ltd. v. St(l/e of R"j"stlwn
& Ors. 13 , wherein it was held as under:
"25. Different situations may arise in relation to review
petitions filed before a court or tribunal.
25.1. One of the situations could be where the review
G application is allowed, the decree or order passed by the
court or tribunal is vacated and the appeal/proceedings in
which the same is made are reheard and a fresh decree or
order passed in the same. It is manifest that in such a situation
" <I 975) 1 sec 774
H "(2012) 6 sec 1s2
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 385
ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.]
the subsequent decree alone is appealable not because it is A
an order in review but because it is a decree that is passed
in a proceeding after the earlier decree passed in the very
same proceedings has been vacated by the court hearing
the review petition.
25.2. The second situation that one can conceive of is where
B
a court or tribunal makes an order in a review petition by
which the review petition is allowed and the decree/order
under review is reversed or modified. Such an order shall
then be a composite order whereby the court not only
vacates the earlier decree or order but simultaneous with
such vacation of the earlier decree or order, passes another C
decree or order or modifies the one made earlier. The decree
so vacated reversed or modified is then the decree that is
effective for the purposes of a further appeal, if any,
maintainable under law."
23. On the other hand, Mr. Vijay Hansaria, learned senior counsel D
appearing on behalf of the Electricity Board places strong reliance upon
the judgment of this Court in the case of Purbanclu1l Cables &
Conductors Pvt. Ltd. (supra) and contends that it is well settled position
of law that the Act has no retrospective application. Therefore, the suit
in the instant case which has been filed for claiming interest alone is not
maintainable. The learned senior counsel further contends that the suit E
is barred by limitation. It is submitted that the last date of supply was
04.10.1993. Thus, the period of limitation for recovery of amount of
Rs.53.68 lakhs, which is the amount due towards the interest on delayed
payments and the future interest@ 27% expired on 03.10.1996.
24. The learned senior counsel further contends that the case of F
the first appellant is not maintainable not only on the question of limitation
but also in view of the decision of this Court in the case of Purbw1clwl
Cables & Conductors Pvt. Ltd. (supra) wherein the appellant was also
a party. In that case, this Court while dismissing the appeal reiterated
the legal principle that the provisions of the Act do not have retrospective
G
effect. The learned senior counsel contends that the said judgment
between the appellant and the respondent-Board is binding on the
appellant. Therefore, the same issue cannot be re-agitated in this appeal
as the decision of this Court in the case of Purbw1clwl Cables &
Conductors Pvt. Ltd. (supra) operates as res judicata.
H
386 SUPREME COURT REPORTS [2016] G S.C.R.
A 25. We have heard the learned senior counsel appearing on behalf
of the parties. With reference to the aforesaid rival legal contentions the
following questions oflaw would arise for consideration:
i) Whether provisions of the Act are retroactive in nature?
ii) Whether non consideration of this aspect of the matter
B renders the decisions of this Court in Modem Industries
(supra) and Purbanc/wl Cables & Conductors Pvt. Ltd.
(supra) as sub silentio?
iii) Whether the judgment rendered in Purbanchal Cables
& Conductors Pvt. Ltd. (supra) operates as res judicata
c in the instant case?
iv) Whether the suit filed by the appellants is barred by
limitation?
v) Whether the appeal against the review in the connected
D matter in Civil Appeal@ SLP (C) No.15274of2013 (M/s
Trusses & Towers Pvt. Ltd.) is maintainable?
vi) What order?
Answer to Point nos. 1 and 2
26. In my considered view after considering the rival legal
E submissions and judgments of this Court referred to supra, issue Nos. I
and 2 are required to be answered in favour of the appellants for the
following reasons:
At the outset, it would be necessary to advert to the statement of
the objects and reasons of the Act, the relevant parts of which read as
F under:
"A policy statement on small scale industries was made by
the Government in Parliament. It was stated at that time
that suitable legislation would be brought to ensure prompt
payment of money by buyers to the small industrial units.
G
2. Inadequate working capital in a small scale or an ancillary
industrial undertaking causes serious and endemic problems
affecting the health of such undertakings. Industries in this
sector have also been demanding that adequate measures
by taken in this regard. The Small Scale Industries Board,
H
M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 387
ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.]
which is an apex advisory body on polices relating to small A
scale industrial units with representatives from all the States,
governmental bodies and the industrial sector, also expressed
this view. It was, therefore, felt that prompt payments of
money by buyers should be statutorily ensured and
mandatory provisions for payment of interest on the
B
outstanding money, in case of default, should be made. The
buyers, if required under law to pay interest, would refrain
from withholding payment to small scale and ancillary
industrial unde11akings.
,,
c
Before examining the decisions of this Court in which the provisions
of the Act have been interpreted, it would be useful to adve11 to the
provisions themselves and understand the scheme of the Act.
Section 2(b) of the Act defines 'appointed day' as under:
''b) "Appointed day, means the day following immediately D
after the expiry of the period of thirty days from the day of
acceptance or the day of deemed acceptance of any goods
or any services by a buyer from a supplier.
Explanation- For the purposes of this clause, -
E
(i) 'The day of acceptance' means, -
(a) The day of the actual delivery of goods or the
rendering of services; or
(b) Where any objection is made in writing by the buyer
regarding acceptance of goods or services within thirty days F
from the day of the delivery of goods or the rendering of
services, the day on which such objection is removed by
the supplier;
(ii) 'The day of deemed acceptance' means, where no
objection is made in writing by the buyer regarding
G
acceptance of goods or services within thirtv days from
the day of the de! ivery of goods or the rendering of services,
the day of the actual delivery of goods or the rendering of
services;
(emphasis laid by this Court)
H
388 SUPREME COURT REPORTS [2016) 6 S.C.R.
A At this stage, it is also important to examine Sections 3 and 4 of
the Act, which provide for liability of the supplier to make payment, and
the date from which such interest is payable. They read as under:
3. Liability of buyer to make payment.-Where any
supplier supplies any goods or renders an) ,ervit:es tu any
B buyer, the buyer sh al I make payment there[ore on or before
the date agreed upon between him and the supplier in writing
or, where there is no agreement in this behalf. before the
appointed day.
4. :Date from which and rate at which interest is
c payable.-Where any buyer fails to make payment of the
amount to the supplier, as required under section 3 the buyer
shall, notwithstanding anything contained in any agreement
between the buyer and the supplier or in anv law for the
time being in force. be liable to pay interest to the
D supplier on that amount from the appointed day or, as
the case may be, from the day immediately following the
date agreed upon, at such rate which is five per cent. points
above the floor rate for comparable lending.
Explanation.-For the purposes of this section, 'floor
E rate for comparable lending' means the highest of the
minimum lending rates charged by scheduled banks (not
being co-operative banks) on credit limits in accordance
with the directions given or issued to banking companies
generally by the Reserve Bank of India under the Banking
Regulation Act, 1949.(10of1949)."
F
(emphasis laid by this Court)
Section 3 of the Act lays down the liability of the buyer to make
payment before the appointed day, which, according to the definition in
section 2, is the day after the expiry of 30 days from the delivery of the
G goods or the rendering of service. Section 4 of the Act provides the date
from which the interest is payable. According to Section 4 of the Act,
the liability on the buyer accrues from the appointed day. At the cost of
repetition, as Section 2(b) of the Act makes explicitly clear, appointed
day is the day following the expiry of thirty days from the date of
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 389
ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.]
acceptance, which is the day of deliver; of goods or rendering of services. A
In my considered view, the language of tht: legislature cou Id not have
been more clearer than what has been explicitly made it very ckar. It
has clearly stated what the lcgisla1ure had in contemplation at th.:: time
of enactment of the Act as the focal date was the date of actual <lei ivery
of goods or the rendering of servil:es, and not the date on which the
B
transaction was entered into.
27. The interpretation of the provisions of the Act has been the
subject matter of four recent decisions of this Court. Starting with the
case of Assam Scale /11d11slries Development Corpomlio11 Ltd (supra),
wherein it was erroneously held that the Act came into force with effect
from 23.09.1992 and therefore the provisions of the Act has no application
c
to "transactions" which took place prior to that date. This Court in the
said case adverted to the words "transaction" and "supply order" though
they are not defined under Section 2 of the Act. This Court further did
not take into consideration the statement of objects and reasons of the
Act and the Parliamentary debates before the Act was enacted while D
arriving at the said cone lusion regarding the appl icabi Iity of the Act.
28. While the statement of objects and reasons and Parliamentary
debates cannot be used to ascertain the meaning of the specific words
of an enactment, it is well settled positio11 of law laid down by various
decisions of this Court that the same can be used lo understand the E
general context in which the legislation was passed by the Parliament,
as well as the evil it sought to remedy. A constitution bench of this Court
held in the case of Stale of West Bengal v. Subodh Gopul Bose" as
under:
"It is well settled by this court that the statement ofobjects F
and reasons is not admissible as an aid to the construction
of a statute (See Aswini Kumar Gl10se v. Arabinda Bose)
and I am not, therefore, referring to it for the purpose of
construing any part of the Act or of ascertaining the meaning
of any word used in the Act but I am referring to it only for
the limited purpose ofasce11ainingthe conditions prevailing G
at the time which actuated the sponsor of the Bill to introduce
the same and the extend and urgency of th'~ evil which he
sought to remedy."
" AIR 1954 SC 92
H
390 SUPREME COURT REPORTS [2016] 6 S.C.R.
A The said principle of law was reiterated by a Seven-Judge Bench
of this Court more recently in the C<~se of State of Gt!iarat v. ftf!rzapur
Moti Kureslti Kasab Jamat 15 ao: ti' ~er:
"Reference to the State:m:nt of Objects and Reasons is
permissible for understand in~ the background, antecedent
B state of affairs in relation to the statute, and the evil which
the statute was sought to remedy. (See -Principles of
Statutory Interpretation by Justice G.P. Singh, 9th Edition,
2004, at p. 218). In State of West Bengal v. Subodh Gopal
Bose and Ors.; the Constitution Bench was testing the
constitutional validity of the legislation impugned therein.
c The Statement of Objects <'nd Reasons was used by S.R.
Das, J. for ascertaining the conditions prevalent at that time
which led to the introduction ot'the Bill and the extent and
urgency of the evil which was sought to be remedied, in
addition to testing the re::isonableness of the restrictions
D imposed by the impugned prcwision. In his opinion, it was
indeed very unfortunate that the Statement of Objects and
Reasons was not placed before the High Coult which would
have assisted the High Court in arriving at the right
conclusion as to the reasonableness of the restriction
imposed. State of West Bengal v. Union oflndia approved
E
the use of Statement of Objects and Reasons for the purpose
of understanding the background and the antecedent state
of affairs leading up to the legislation."
29. Again in the case of Slwkti Tubes (supra) this Court continued
to use the words "transaction" and "supply orders" as have been referred
F to in the case of Assam Sm'ttll Scale Jutlustries Deve/opmeut
Corporation Ltd. (supra). It was held that the Act in question cannot be
given retrospective effect. On this aspect, this Court observed as under:
''26. There is no dispute with regard to the fact that the Act
in question is a welfare legislation which was enacted to
G protect the interest of the suppliers especially suppliers of
the nature of a small scale industry. But, at the same time,
the intention and the 12\Jipose of the Act cannot be lost sight
of and the A£.Li!ulucstion cannot be given a retrospective
" (20U5) s sec 534
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 391
ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.]
effect so long as such an intention is not clearly made out A
and derived from the Act itself."
(emphasis laid by this Court)
While the Court made this observation, it did not correctly
appreciate the intention and purpose of the Act, which was to ensure
B
that the small scale and ancillary industries do not suffer as a result of
delay in oayment of outstanding money in cases of default.
This Court in the case of Modem Industries (supra), interpreted
the scope of the Act as under:
"9. The 1993 Act was sequel to a policy statement on c
small-scale industries made by the Government in
Parliament that suitable legislation would be brought to
ensure prompt payment of money by buyers to the small
industrial units. It was felt that inadequate working capital
in a small-scale and ancillary industrial undertaking was
causing an endemic problem and such unde11akings were D
very much affected. The Small Scale Industries Board-
an apex advisory body on policies relating to small-scale
. industrial units-also expressed its views that prompt
payments of money by buyers should be statutorily ensured
and mandatory provisions for payment of interest on the E
outstanding money, in case of default, should be made. !!
was felt that the buyers, ifrequired under law to pay interest,
would refrain from withholding payments to small-scale and
ancillary industrial undertakings. With these objects and
reasons. initially an ordinance, namely, the Interest on
Delayed Payments to Small Scale and Ancillaiy Industrial F
Unde11akings Ordinance, 1992 was promulgated by the
President on 23-9-1992 and then the Bill was placed before
both the Houses of Parliament and the said Bill having been
Q!!!iSed, the 1993 Act was enacted. The Preamble 111 the
1993 Act reads: G
"An Act to provide for and regulate the payment of
interest on delayed payments to small-scale and
ancillary industrial undertakings and for matters
connected therewith or incidental thereto.
H
392 SUPREME COURT REPORTS [2016] 6 S.C.R.
A 23. The wholesome purpose and object behind the 1993
Act as amended in 1998 is to ensure that the buyer promptly
pays the amount due towards the goods supplied or the
services rendered by the supplier. It also provides for
payment of interest statutorily on the outstanding money in
case of default. Section 3, accordingly, fastens liability upon
B
the buyer to make payment for goods supplied or services
rendered to the buyer on or before the date agreed upon in
writing or before the appointed day and when there is no
date agreed upon in writing, the appointed day shall not
exceed 120 days from the day of acceptance."
c (emphasis laid by this Court)
In the said case, while it was held that the provisions of the Act
are prospective in nature based on the decisions of this Court in the case
of Assam Small Scale Industries Development Corporation Ltd.
(supra) and Slwkti Tubes (supra), it was observed that the said cases
D have no applicability to the facts of the case because while the contract
had been entered into on 15.01.1983, there were alterations to it through
the years, with the last alteration on 29.04.1995. Since the contract was
last altered in 29.04.1995, the Act would be applicable to the facts of the
case.
E 30. Thus, while the 'transaction', as understood from the meaning
sought to be given to them in the judgments of Assam Small Scale
Industries Development Corporation Ltd. (supra) and Shakti Tubes
(supra) was entered into in that case prior to the Act coming into force,
the Act was made applicable to it on the basis that the contract has been
F altered after the Act came into force. Essentially, what the decision in
the case of Modern Industries ends up by introducing a new test for
the applicability of the Act, that of 'date of contract alteration'. This
Court in the case of P11rbm1clwl Cables & Conductors Pvt. Ltd.
(supra), has held as under:
"52 ... Since the Act envisages that the supplier has an
G
accrued right to claim a higher rate of interest in terms of
the Act, the same can only be said to accrue for sale
agreements after the date of commencement of the Act
i.e. 23-9-1992 and not any time prior."
The said conclusion of the two Judge Bench has been arrived at
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 393
ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.)
without noticing that the tenn "sale agreement" has not been defined in A
the Act and is not even a legal test for appl icab iIity of the Act. If a "sale
agreement" is taken to be the legal test, the 'ame would be inconsistent
with the judgment of this Court in the case of Assam Small Scale
l11dustries Developme11t Corporatio11 Ltd. (supra), wherein though the
"sale agreement" was prior to the date of commencement of the Act,
B
this Court held that it was the date of"transaction" and "supply order"
test whici1 applied as the transaction was entered into after the
commencement of the Act, and if the "sale agreement" test is to be
applied, then the seller in the said case would not be entitled to higher
rate of interest under the Act.
31. Further if"sale agreement" is taken to be the legal test, the
c
same would also be inconsistent with the decision of this Court in the
case of Modem Industries (supra), wherein the test is neither of
"transaction" nor "supply order", but that of"contract alteration". In the
said case, the Act was deemed to apply even though the "transaction"
had been entered into prior to the coming into force of the Act, the D
contract had been altered several times, and these alterations had
happened after the Act had come into effect.
32. Therefore, there is a need to reconcile the aforesaid inconsistent
legal tests for the applicability of the Act as laid down in the decisions of
th is Court in the four cases referred to supra. E
33. As I have already discussed above, a cumulative reading of
the detin ition clauses of Sections 2, 3 and 4 of the Act as extracted
supra leave absolutely no room for doubt that the test for applicability of
the Act is not the date of transaction, or supply order, or contract alteration,
but quite simply, the date of the delivery of goods or rendering of services. F
What is also interesting to note in this case at this stage is point no. 3 of
the statement of objects and reasons appended to the Act, which reads
as under:
"Since Parliament was not in session and circumstances
existed which rendered it necessary to take immediate G
action, the ln!ercst on Delayed Payments to Small Scale
and Ancillar) l 11dustrial Undertakings Ordinance, 1992 ( 15
of 1992) was promulgated by the President on the 23'<l
September, 1992."
(emphasis laid by this Court)
H
394 SUPREME COURT REPORTS [2016] 6 S.C.R.
A 34. Further, Section 4 did not figure in the Act when it was originally
passed. It was introduced by way of an amendment (Act 23 of 1998).
The statement of objects and reasons of the Amendment Act reads as
under:
"Though the Act has been in operation for a period of five
B years, the problem of delays in the payment of outstanding
dues to the small scale industrial units continues unabated.
There have been widespread discussions on the provisions
of the Act among the various interest groups including the
Departments of State Governments dealing with industries,
banks and small industry associations. The general
c consensus emerged from such discussions is that ce11ain
amendments to the Act are necessary in order to make it
more effective so that the aims and objectives of the Act
are achieved."
It was in the backdrop of this introduction that Section 4 of the
D Act was inserted. The phraseology of the Section makes it amply clear
that the liability of the buyer arises after the supply of the goods or
rendering of services. Section 4 is just a reiteration of the legislative
intent as to the applicability of the Act. which is in those cases where the
supply of goods or rendering of services took place after the coming into
E force of the Act.
35. A cumulative reading of the aforesaid Sections of the Act
shows that though a catena of cases which have been extensively
adverted to in the case of 1'11rbw1clwl Cables & Co11d11ctors Pvt. Ltd.
(supra) have held that the statutory provisions of the 1993 Act do not
F have retrospective operation, they have failed to consider the aforesaid
statutory aspects in a proper perspective keeping in view the objects
and reasons of the Act and the usage of the 11011 obstanle clause phrase
in Section 4 of the Act which has been extracted supra.
36. The Act was enacted in order to provide a boost to the small
G scale and ancilla1y industries, which were suffering as a result of irregular
and delayed payments. A perusal of the statement of objects and reasons
of the Act, the relevant portion of which has been extracted supra, makes
it clear that the small scale industries were suffering as a result of lack
of working capital, which was affecting the economic health of such
industries. Prompt payment on the outstanding money, it was felt, that
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 395
ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA. J.]
was the need of the hour. In this context, the provisions of Sections 3, 4, A
5 of the Act, assume significance. More so in light of the fact that in the
definition clause of Section 2 of the Act, the legislature has not defined
the words 'transaction' or 'supply order'. It chose to only give definition
to the terms, inter a/ia, 'appointed day', 'buyer' and ·supplier'. Since
the focus of the Act is on delayed payment, which is in consonance with
B
the definition of the term 'appointed day' as well, there is no need to
consider when the 'transaction' was entered into or the date of the 'supply
order'. Section 3 of the Act clearly provides that the liability of the buyer
to make payment accrues after the supplier supplies goods or renders
any services to the buyer. Thus, what was envisaged by the legislature
as delayed payment was payment of the outstanding money due to the c
supplier after the goods had been supplied. and after the date agreed
upon or the date of deemed acceptance. A bare reading of the Section
makes it clear that the date of entering into the agreement or the date of
supply order were not in contemplation of the legislature at all. Thus, it is
amply clear from a bare reading of Section 3 that for the purpose of the
D
Act, it does not matter when the contract was entered into, as long as
the supply of the goods was after the Act came into force on 23.09.1992.
It is in that sense that the question of retrospective application of the Act
does not arise at al I.
Th is is further supported by the use of the non obstante clause in
Section 4 of the Act. At the cost of repetition, Section 4 of the Act is
E
extracted hereunder:
''4.Date from which and rate at which interest is payable.-
Where any buyer fails to ma~J!yment of the amount to
the supplier. as required under section 3, the buyer shall,
notwithstanding anything contained in any agreement F
between the buyer and the sumili~_r or in anv law for the
time being in force, be liable to pay interest to the supplier
on that amount from the appointed day or, as the case may
be, from the date immediately following the date agreed
upon, at one and halftime of prime Lending Rate charged G
by the State Bank of India."
(~mphasis laid by this Court)
The use of the non obstante clause before the term ·'agreement"
also makes it clear that once the money becomes due, which is after the
1-1
396 SUPREME COURT REPORTS [2016] 6 S.C.R.
A supply of the goods and rendering services, the buyer is liable to pay the
5tatutory interest on the delayed payment to the supplier no matter what
is contained in the agreement between the buyer and the supplier.
3 7. Further, even on the issue of retrospectivity, what was required
to be examined by this Court in the aforesaid cases was whether by
B reading the relevant statutory provisions Sections 3, 4, 5 and 6 of the
Act, a vested statutory right is conferred. As I have already held that
aforesaid provisions of the Act are retroactive in nature therefore, non-
consideration of this aspect in P11rbanc!wl C"bles & Conductors Pvt.
Ltd. (supra) and cases mentioned therein, renders the said judgment
sub silentio on this question. The contention advanced by Mr. Vijay
c Hansaria, learned senior counsel appearing on behalf of the Electricity
Board in this regard cannot be accepted. The learned senior counsel
places reliance on the decisions of this Cou11 in the case of State of U.P.
& Anr. '" Synthetics And Chemicals Ltd. & Anr. 16, as well as Amit
Das v. State of Bilwr 17 in suppo11 of the proposition that taking note of
D the hierarchical characterofjudicial system in India, it is of paramount
importance that law declared by this Court be certain, clear and consistent.
The said proposition of law cannot be doubted at all. But the question
required to be examined in l'urbancha/ .Cables & Conductors P1•t.
Ltd. (supra) was non-consideration of the relevant statutory provisions
of the Act adverted to above and interpreting the same for the purpose
E of examining as to whether the provisions of the Act would be retroactive
in nature and confer a statutory right on the supplier. Non-consideration
of the said provisions in a proper perspective would render the abovesaid
judgment per i11curiw11, as held by this Court in St({/e of U.P. & Anr. v.
Sy11tlletic.~ Ami CllemiC({ls Ltd. & Anr. (supra), wherein it was held as
F under:
''39. But the problem has arisen due to the conclusion in the
case of Synthetic and Chemicals. The question was ifthe
State legislature could levy vend fee or excise duty on
industrial alcohol. The bench answered the question in the
G negative as industrial alcohol beirig unfit for human
consumption the State legislation was incompetent to levy
any duty of excise either under Entry 51 or Entry 8 of List
II of the Seventh Schedule. While doing so the bench
"' ( 1991 J 4 sec 139
H "l20001 s sec ~1ss
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 397
ELECTRICITY BOARD & ORS. (V. GOPALA GOWDA, J.]
recorded the conclusion extracted earlier. It was not A
preceded by any discussion. No reason or rationale could
be found in the order. This gives rise to an important question
if the conclusion is law declared under A11icle 141 of the
Constitution or it is per incuria111 and is liable to be ignored.
40.' lncuria · Iiteral ly means 'carelessness'. In practice per B
i11curia111 appears to mean per ignoratium. English courts
have developed this principle in relaxation of the rule of
stare decisis. The ·quotable in law' is avoided and ignored
if it is rendered, 'in ig11oratiw11 of a statute or other binding
authority'. (Young v. Bristol Aeroplane Co. Ltd.). Sarne
has been accepted, approved and adopted by this Court
c
while interpreting Article 141 of the Constitution which
embodies the doctrine of precedents as a matter of law. In
Jaisri Sahu v. Rajdemm Dubey this Court while pointing
out the procedure to be followed when conflicting decisions
a1..e placed before a bench extracted a passage from D
Ha/sburv :S· Laws of E11g/a11d incorporating one of the
exceptions when the decision of an appellate court is not
binding."
Further, the cases referred to in the decision of this Court in the
case of Purbm1clwl Cables & Conductors P1•t. Ltd. (supra) on the E
issue ofprospectivity have no bearing to the facts of the instant case. In
one of the decisions cited in Purba11c/wl Cables & Conductors Pvt.
Ltd. (supra), which is the decision of this Court in the case of Zi/e
Singlt v. State of Harymw 1", a three judge bench of this Court held as
under:
F
"It is a cardinal principle of construction that every statute
is prima facie prospective unless it is expressly or by
necessary implication made to have a retrospective
operation. But the rule in general is applicable \vhere the
object of the statute is to affect vested rights or to impose
new burdens or to impair existing obligations. Unless there G
are words in the statute sufficient to show the intention of
the Legislature to affect existing rights, it is deemed to be
prospective only 'nova Constitution futuris formam imponere
debet non praeteritis' -- a new law ought to regulate what
"(2004) s sec 1 H
398 SUPREME COURT REPORTS [2016) 6 S.C.R.
A is to follow, not the past. (See : Principles of Statutory
Interpretation by Justice G.P. Singh, Ninth Edition, 2004 at
p.438). It is not necessary that an express provision be made
to make a statute retrospective and the presumption against
retrospectivity mav be rebutted by necessarv implication
especial_ly in a case where the new law is made to cure an
B
acknowledged evil for the benefit of the community as a
whole."
(emphasis laid by this Court)
Since a reading of the statement of objects and reasons of the
c Act makes it very clear that the Act has been enacted for the benefit of
the small scale and ancillary industries at large, the decision in the case
of P11rba11clwl Cables & Conductors Pvt. Ltd. (supra) does not
correctly lay down the position of law with respect to the nature of the
Act and its effect on its prospectivity as we! I.
D 38. In my considered view, Purba11clwl Cables & Coi[ductors
Pvt. Ltd. (supra) and other decisions of this Court referred to supra did
not consider the important aspect of the matter namely as to whether
the provisions of the Act are retroactive or not? They merely held that
the provisions of the Act have no retrospective effect. Thus, the judgments
have been rendered suh si/entio on this aspect.
E
Therefore, point Nos. I and 2 are answered in favour of the
appellant-suppliers.
Answers to Point Nos. 3,4 and 5:
39. The contention raised by Mr. Vijay Hansaria. the learned senior
F counsel appearing on behalf of the Electricity Board on the question of
res judicata is wholly untenable in law. The substantial question that
was in issue in the case of P11rba11c/111/ Cable.~ & Conductors Pvt.
Ltd. (supra). th is Cou11 was not concerned with the issues that arose in
Assam Small Srn/e industries Development Corporation Ltd. (supra),
the findings of which have been extracted supra. This Court was only
G
concerned with maintainability ofa suit with regard to the interest on the
basis ufthc :;tatuto1y provisions of the Act, in relation to those agreements
which had been entered into prior to coming into force of the Act. The
issue of whether an appellant is entitled to prefer a claim on the interest
as provided under Section 4 was not the issue decided in Purbanclwl
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 399
ELECTRICITY BOARD & ORS. [V. GOPALA GOWDA, J.)
Cables & Conductors Pvt. Ltd. (supra). Therefore, the decision in the A
same cannot be said to operate as res judicata. The material and
substantial issue with regard to legal contention was not framed and
answered, therefore, it do~s not operate as res judicata.
40. On the question of limitation, I answer the same in favour of
the appellants by placing reliance on Section 19 read with Article 25 of B
the Limitation Act, 1963, which have been extracted as hereunder:
"19. Effect of payment on account of debt or of interest
on legacy -
Where payment on account of a debt or of interest on a
legacy is made before the expiration of the prescribed period c
by the person liable to pay the debt or legacy or by his
agent duly authorised in this behalf, a fresh period of
limitation shall be computed from the time when payment
was made:
Provided that, save in the case of payment of interest made D
before the I" day of January, 1928, an acknowledgment of
the payment appears in the hand-writing of, or in a writing
signed by the person making the payment.
Explanation - For the purposes of this section, -
E
(a) where mortgaged land is in the possession of the
mortgagee, the receipt of the rent of produce of such land
shall be deemed to be a payment;
(b) "debt" does not include money payable under a decree
or order of a court.
F
25. Acquisition of easement by prescription -
(I) Where the access and use of light or air to and for any
building have been peaceably enjoyed therewith as an
easement, and as of right, without inte1rnption and for twenty
years, and where any way or watercourse or the use of G
any water or any other casement (whether affirmative or
negative) has been peaceably and openly enjoyed by any
person claiming title thereto as an casement and as of right
without interruption and for twenty years, the right to such
access and use of Iight or air, way, watercourse, use of
H
400 SUPREME COURT REPORTS (2016) 6 S.C.R.
A other easement shall be absolute and indefeasible.
(2) Each of the said periods of twenty years shall be taken
to be a period ending within two years next before the
institution of the suit wherein the claim to which such period
relates is contested.
B (3) Where property over which a right is claimed under
sub-section (I) belongs to the Government that sub-section
shall be read as if for the words "twenty years" the words
"thirty years" were substituted.
Explanation- Nothing is an interruption within the meaning
c of this section, unless where there is an actual discontinuance
of the possession or enjoyment by reason of an obstruction
by the act of some person other than the claimant and unless
such obstruction is submitted to or acquiesced in for one
year after the claimant has notice thereof and of the person
D making or authorising the same to be made."
41. Taking into consideration the supply order against the actual
supply of the goods with payment made, the last payment was made on
05.03.1994. Thus, time began to run from that date. Taking into
consideration the fact that the date of the institution of the suit is
E 10.01.1997, the suit has been filed within the period of limitation as
prescribed in the Limitation Act. Though on this aspect of the matter no
finding has been recorded either by the Trial Court or by the High Court,
I answer the question in favour of the appellants.
42. In view of the judgments of this Court referred to supra, upon
F which strong reliance has been placed by Mr. Ajit Sinha, the learned
senior counsel, on the question of maintainability of the appeal filed by
MIS Trussees & Towers Pvt. Ltd questioning the correctness of the
judgment and order passed in the Review Petition, we hold the same to
be maintainable in law.
Answer to Point no. 6:
G
43. For the reasons stated supra, I answer the points framed in
these appeals in favour of the appellants as stated above. The appeals
are accordingly allowed. All pending applications are disposed of.
In the Civil Appeals arising out of SLP (C) Nos. 9924-9925 of
.H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 401
ELECTRICITY BOARD & ORS.
2013, vi de order dated 17.02.2015, the appellants Mis Shanti Conductors A
were directed to pay an amount ofRs.38, 70,0001- back to the respondents.
The respondents shall refund the amount to the appellants with 9%
interest per (1111111111 within six weeks from the date of receipt of the
copy of this Order.
ARUN MISHRA, J. 1. Leave granted. B
2. I have gone through the draft judgment written by my learned
Brother. However, I find myself respectfully unable to agree with the
opinion expressed therein for the reasons mentio1wd hereinafter.
3, Jt is not in dispt1te that the Assam State Electricity 8oard had
placed supply orders on 31.3 .1992 and 13 ,5 .1992 and the Act cnlled c
"The Interest on Del&yed Payments to Small Scale and Ancillary lnd1.1strial
Undert&kings Act, 1993" (hereinafter referred to as "the Act of 1993")
cnme into force with effect from 23.9.1992. The supply was completed
on 4.10, 1993. On 5.3.1994 last payment had been made. Suit for recovery
of interest amounting to Rs.53.68 lacs was filed on I 0.1.1997. D
4. My learned Brother has held that the decisions in Purbanchal
Cab/es & Conductors Pvt. Ltd. v, Assam State Electricity Board &
Anr. (2012) 7 SCC 462, Assa111 S11mll Scafe Industries Developnumt
Corporation Ltd. & Or,v, v. J.D. PharmaceutiP(J/s & Anr. (2005) 13
SCC 19 and Shakrt Tubes v. Stare af JJihqr & Ors. (2009) 7 SCC 673
etc. have not been correctly decicjed, therefore are per i11curia111 anp
sub ,vifenrto. The Act has retroactive operation. It has also been opined
that the deci§ion in Fwbrmclml Cables (supra) decided along with
Shanti ConduPfor.v doe~ not operate as res judicata.
~. Hls nppan~nt from the name of the Act itself that the same is to
provide lnten:i~t on delayed payments to small scale and ancillary industrial
f
underta~lng$, The Act has as many as ] I sections. Section I deals with
thll f.lxt1mt of operation and date of its commencement. The Act came
into force on 23rd day of September, 1992, 'Appointed day' has been
defined in section 2(b) and 'buyer' in section 2(c). Both the definitions
are extracted hereunder : G
''2(b) "appointed day" means the day following immediately
after the expiry of the p~dod of thirty days fron1 the day of
acceptance or the day of deemed acceptance of any goods
or any services by a buyer from a supplier;
H
402 SUPREME COURT REPORTS [2016] 6 S.C.R.
A Explanation,- For the purposes of this clause, -
(i) 'the day of acceptance' means, -
(a) the day of the actual delivery of goods or the rendering
of services; or
B (b )where any objection is made in writing by the buyer
regarding acceptance of goods or services within thirty
days from the day of the delivery of goods or the
rendering of services, the day on which such objection
is removed by the supplier;
c (ii)"the day of deemed acceptance" means, where no
objection is made in writing by the buyer regarding
acceptance of goods or services within thirty days from
the day of the delivery of goods or the rendering of
services, the day of the actual delivery of goods or the
rendering of services;
D
(c)"buyer·· means whoever buys any goods or receives any
services from a supplier for consideration;"
6. Section 3 deals with the liability of buyer to make payment.
Payment has to be made by the buyer before the appointed day ifthere
is no agreement to the contrary in writing between the buyer and supplier.
E
Section 3 is extracted hereunder :
"3. Liability of buyer to make payment.- Where any
supplier supplies any goods or renders any services to any
buyer, the b.uyer shal I make payment therefor on or before
the date agreed upon between him and the supplier in writing
F
or, where there is no agreement in this behalf, before the
appointed day:
Provided that in no case the period agreed upon
betwpen the supplier and the buyer in writing shall exceed
one hundred and twenty days from the day of acceptance
G or the day of deemed acceptance."
7. Section 4 deals with the date from which and rate at which
interest is payable. It is provided in section 4 itself that in case payment
is not made in terms of section 3 notwithstanding any agreement to the
contrary or any law for the time being in force, the buyer shall be liable
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 403
ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]
to pay interest from the appointed day or from the date immediately A
following the date agreed to, at one-and-half time of Prime Lending
Rate charged by the State Bank of India which is available to the best
borrowers of the bank. Section 4 is extracted hereunder:
''4. Date from which and rate at which interest is
payable.-Where any buyer fails to make payment of the B
amount to the supplier, as required under section 3, the buyer
shall, notwithstanding anything contained in any agreement
between the buyer and the supplier or in any law for the
time being in force, be liable to pay interest to the supplier
on that amount from the appointed day or, as the case may
be, from the date immediately following the date agreed c
upon, at one-and-halftime of Prime Lending Rate charged
by the State Bank of India.
Explanation.-For the purposes of this section, "Prime
Lending Rate" means the Prime Lending Rate of the State
Bank of India which is available to the best borrowers of D
the bank."
8. Section 5 contains a 11011-obstante clause with regard to
agreement to the contrary or any law for the time being in force in case
buyer fails to pay before the appointed day. The buyer shall be liable to
pay compound interest, with monthly interest, at the rate mentioned in E
section 4. Section 5 is extracted hereunder :
"5. Liability of buyer to pay compound interest.-
Notwithstanding anything contained in any agreement
between a supplier and a buyer or in any law for the tinw
being in force, the buyer shall be liable to pay compound F
interest (with monthly interest) at the rate mentioned in
section 4 on the amount due to the supplier."
9. Section 6 deals with recovery of amount payable under sections
4 and 5 which is recoverable by way of a suit or other proceeding under
any law for the time being in force. Section 7 of the Act contains the 0
provision with respect to appeal. The buyer-appellant has to deposit 75
per cent of the amount in terms of the decree, award or, other order in
the appeal. Same is a condition precedent for entertainment of the appeal.
Section 7A and 78 deal with establishmentoflndustry Facilitation Council
and its composition. Section 7C requires the State Government to lay
H
404 SUPREME COURT REPORTS [2016) 6 S.C.R.
A before the State Legislature every notification and rule made by the
State Government after it is issued or made. Section 8 requires a buyer
in case of audit to specify the amount together with the interest in his
annual statement of accounts as remains unpaid to any supplier at the
end of each accounting year. Section 9 provides that interest not to be
allowed as deduction from income of a buyer under the provisions of
B
fm:ome Tax Act. The Act has the overriding effect over other laws as
provided in section I 0. Section 11 contains the provisions with respect to
repeal and saving.
I0. It is apparent from the provisions of the Act noticed above
that none of the provisions in the various sections indicates that the Act
c is retrospective in operation in any manner whatsoever. On the contrary,
the Act requires payment to be made by a buyer before the appointed
duy that is the d11y following immediately after the expiry of 30 days
fron1 the date of acceptance or the deemed acceptance of the delive1y
of the goods or services. The day of acceptance means day of actual
D delivery of goods or rendering of service or where buyer has objected
within 30 days, the day on which such objection is removed by the supplier.
Where no objection is raised in writing by the buyer regarding acceptance
of goods or services within 30 days, the appointed day would be counted
from the day on which 11ctual delivery of goods had been made or
rendering of services, These provisions are not capable of being put into
retrospective operation. The provisions of requirement of making the
paynwnt before the appointed day, raising of objection within 30 days
anp deemed acceptance are not capable of being put into retrospective
operation, Section 3 deals with respect to liability of the buyer to make
the pay1m:nt with refere1we to appointed day. The payment has to be
F m11de on or before the date agreed upon between the buyer and supplier
in writing or where there i~ no agreement, before the appointed day. The
proviso furth!lr bars the agreement to extend the payment beyond 120
days from the day of acceptance or the day of deemed acceptance.
Thus the provisions contained in section 3 also are prospective in nature.
None of the provisions at all speak of the existing liability/agreement as
G on the date of commencement of the Act. Section 4 deals with the date
from which and the rate at which interest is payable. A bare reading of
the same leaves no iota of doubt that the Act is prospective in nature and
the higher interest rate is applicable only on failure to make the payment
as envisaged by the Act under section 3. If the buyer fails to make the
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 405
ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]
payment as required under section 3, the liability to make the payment A
with interest arises. Section 4 contains non-obstante clause and overrides
agreement or any other law to the contrary. A conjoint reading of the
provisions of appointed day, sections 3 and 4 makes it clear that the Act
is prospective in operation. It has no retrospective operation or retroactive
operation. The Act does not contain any provision with respect to the
B
existing agreements as on the date of commencement of the Act that
would be governed by the provisions in force at the relevant time. The
Act does not have the effect ofinvalidating prior agreements. The liability
to make the payment of higher interest cannot operate retrospectively.
The provisions ofthe Act are capable of being complied with prospectively
that is from the date on which Ordinance initially came into force i.e. c
23.9.1992 from which date the Act has been given effect. There is
absolutely no indication in the Act that it has retrospective operation or
retroactive operation.
Taking note of the various provisions of the Act, it is apparent that
the Act of 1993 is not retrospective in operation. D
11. In' Pri11ciples ofStatutory lnle11Jretalio11' I 41h Edn. by Justice
G.P. Singh revised by Justice A.K. Patnaik, on the basis of due
consideration of catena of judicial decisions, following discussion has
been made at page 580, para 2(a)(ii) with respect to retrospectivity ofa
statute: E
"2. RETROSPECTIVE OPERATION
(a) General principles
(i) xxx xxx xxx
(ii) Statutes dealing with substa11/ive rights.- It is cardinal F
principle of construction that every statute is prima jucie
prospective unless it is expressly or by necessaiy implication
made to have retrospective operation. There is a
presumption ofprospectivity articulated in the legal maxim
'nova constilulio juturis formam imponere debet 11011
G
praeteritis '. i.e. 'a new law ought to regulate what is to
fol low, not the past', and this presumption operates unless
shown to the contra1y by express provision in the statute or
is otherwise discernible by necessary implication. But the
rule in general is applicable where the object of the statute
H
406 SUPREME COURT REPORTS [2016] 6 S.C.R.
A is to affect vested rights or to impose new burdens or to
impair existing obligations. Unless there are words in the
statute sufficient to show the intention of the Legislature to
affect existing rights, it is "'deemed to be prospective only-
"110va constilutio futuris formam i111po11ere debet 11011
praeteritis '. In the words of LORD BLANESBURG,
B
"provisions which touch a right in existence at the passing
of the statute are not to be applied retrospectively in the
absence of express enactment or necessary intendment."
"Every statute, it has been said", observed LOPES, L.J.,
·'which takes away or impairs vested rights acquired under
c existing laws. or creates a new obligation or imposes a new
duty, or attaches a new disability in respect of transactions
already past, must be presumed to b.: intended not to have
a retrospective effect."
12. The Act of 1993 contains no provision which it can be said to
D be expressly or by necessary implication of retrospective operation. The
Act has the effect of overriding the laws and the agreements, thus would
not affect the law and the agreements which prevailed before coming
into force of the Act. As a transaction/agreement is valid when made, it
cannot be invalidated by subsequent prohibition or provision.
E 13. This Court in Assam Small Scale Industries Development
C017Joratio11 Ltd. (supra) has considered the applicability of the Act of
1993 and has laid down thus :
"37. We have held hei-einbefore that clause 8 of the terms
and conditions relates to the payments of balance I 0%. It
F is not in dispute that the plaintiff had demanded both the
principal amount as also the interest from the Corporation.
Section 3 of the 1993 Act imposes a statutory liability upon
the buyer to make payment for the supplies of any goods
either on or before the agreed date or where there is no
agreement before the appointed day. Only when payments
G are not made in terms of Section 3, Section 4 would apply.
The 1993 Act came into effect from 23-9-1992 and will not
apply to transactions which took place prior to that date.
We find that out of the 71 suit transactions, SI. Nos. I to
26 (referred to in the penultimate para of the trial
H court judgment), that is supply orders between 5-6-1991 to
M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 407
ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]
28-7-1992, were prior to the date of the 1993 Act coming A
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
to the transactions entered into between June 1991 and 23- B
9-1992. The trial court as also the High Court, therefore,
committed a manifest error in directing payment ofinterest
at the rate of23% up to June 1991 and 23.5% thereafter.
39. xxx xxx xxx
40. We, therefore, are of the opinion that in relation to the c
transactions made prior to coming into force of the said
Act, simple interest at the rate of 9% per annum, which
was the bank rate at the relevant time. shall be payable
both prior to date of filing of the suit and pendente lite and
as future interest in terms of Section 34 of the Code of D
Civil Procedure. Interest, however, will be payable in terms
of the provisions of the 1993 Act (compound interest at the
rate of 23 .5% per annum) in relation to the transactions
made after corning into force of the Act, both in respect of
interest payable up to the date of institution of the suit and
pcndente lite and till realisation. The judgment and decree E
to that extent requires to be modified. It is directed
accordingly."
Th is Cou11 has c Iearly laid down that when payments are not
made in terms of section 3, section 4 would apply. The Act came into
force w.e.f. 23.9.1992 and would not apply to transactions which took F
place prior to that date and interest at the rate of 23 per cent was
disallowed on the transactions 'entered' into between June, 1991 and
23.9.1992.
14. In Shakti Tubes (supra) again, the question whether the Act
is prospective or retrospective, came up for consideration before a G
Division Bench of this Court. Supply orders were made on 16.7.1992.
Decree for payment of interest was passed at the rate of 24 per cent in
terms of the Act of 1993. This Court held that the Act is prospective and
is not applicable to cases where supply orders were placed before the
date of commencement of the Act. Therefore, it was held that the
H
408 SUPREME COURT REPORTS [2016] 6 S.C.R.
A provisions of section 34 CPC would be applicable. The Court has
consciously held after elaborate consideration of the provisions that the
Act is applicable with reference from the date of initiation of the
transaction, that is when the supply order was made and not with
reference to date of completion of the transaction. This Court has also
explained the term 'transaction' used in Assam Small Scale Industries'
B
case (supra) to mean date of supply order. This Court has also considered
retrospective applicability of'welfare legislation'. This Court has followed
the decision in Assam Small Scale lndustries's case (supra) and has
laid down in Shakti Tubes (supra) thus :
"17. In the light of the said facts in Assam Small Scale
c Industries case (2005) 13 SCC 19, it was recorded in para
37 of the judgment that while the Act came into effect from
23-9-1992, the supply orders were placed only in respect
of SI. Nos. I to 26 immediately and before coming into
effect of the Act and rest of the supply orders, namely,
D supply orders at SI. Nos. 2 7 to 71 were placed between 22-
10-1992 to 19-6-1993 which were subsequent to the date
when the Act came into force. In that context, it was clearly
recorded in thejudgmentthatthe Act will have no application
to the transactions that took place prior to the
commencement of the Act. In the next sentence the court
E
made it clear as to what is referred to and understood by
the expression "transaction" when it clearly stated that out
of7 I transactions, SI. Nos. 1 to26 i.e. supply orders between
5-6-1991 to 28-7-1992 being prior to 23-9-1992 when the
Act came into force, higher interest as envisaged under
F Sections 4 and 5 of the Act cannot be paid and demanded
in respect of the said supply orders/transactions. It was
also made clear that the transactions at SI. Nos. 27 to 71
only i.e. supply orders between 22-10-1992 to 19-6-1993.
would attract the provisions of the Act. Therefore, those
supply orders which were issued by the Corporation between
G
22-10-1992 to 19-6-1993 were held to be the transactions
which would be entitled to get the benefit of the provisions
of the Act.
18. In our considered opinion, the ratio of the aforesaid
decision in Assam Small Scale Industries case (supra) is
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 409
ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]
clearly applicable and would squarely govern the facts of A
the present case as well. The said decision was rendered
by this Court after appreciating the entire facts as also all
the relevant laws on the issue and therefore, we do not find
any reason to take a different view than what was taken
by this Court in the aforesaid judgment. Thus, we
B
respectfully agree with the aforesaid decision of this Cowt
which is found to be rightly arrived at after appreciating all
the facts and circumstances of the case.
xxxxx
20. Being faced with the aforesaid situation, the learned c
Senior Counsel appearing for the appel !ant-plaintiff sought
to submit before us that the decision of this Court in Assam
Small Scale fodustries case (supra) refers to the
expression "transactions". According to him, the transactions
would be complete only when the appellant-plaintiff made
the supply and since the supply was made in the instant D
case after coming into force of the Act, the appellant-plaintiff
would be entitled to the benefit of Sections 4 and S of the
Act. Refuting the aforesaid submission. the learned Senior
Counsel appearing for the respondents submitted that the
aforesaid contention is completely misplaced. He pointed E
out that if such a meaning, as sought to be given by the
learned Senior Counsel appearing for the appellant-plainti rt:
is accepted that would lead to giving benefit of the provisions
of the Act to unscrupulous suppliers who, in order to get
the benefit of the Act, would postpone the delivery of the
goods on one pretext or the other. F
21. We have considered the aforesaid rival submissions.
This Court in Assam Small Scale Industries case (supra)
has finally set at rest the issue raised by stating that as to
what is to be considered relevant is the date of supply order
placed by the respondents and when this Court used the G
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
opinion there is no ambiguity in the aforesaid judgment
passed by this Court. The intent and the purpose of the I-I
410 SUPREME COURT REPORTS [2016] 6 S.C.R.
A Act, as made in para 3 7 of the judgment. are quite clear
and apparent. When this Court said "transaction'' it meant
initiation of the transaction i.e. placing of the supply orders
and not the completion of the transactions which would be
completed only when the payment is made. Therefore, the
submission made by the learned Senior Counsel appearing
8
for the appellant-plaintiff fails.
22. Consequently, we hold that the supply order having
been placed herein prior to the coming into force of the
Act, any supply made pursuant to the said supply orders
would be governed not by the provisions of the Act but by
c the provisions of Section 34 CPC.
23. At one stage, the learned Senior Counsel appearing
for the appellant-plaintiff submitted that the Act in question
is a beneficial legislation and, therefore, a liberal
interpretation and wider meaning is to be given to such a
D beneficial and welfare legislation so as to protect the interest
of the supplier who is being kept on a higher pedestal by
giving a higher benefit in the Act.
24. Generally. an Act should always be regarded as
prospective in nature unless the legislature has clearly
E intended the provisions of the said Act to be made applicable
with retrospective effect.
•· 13. It is a cardinal principle of construction that every
statute is prima facie prospective unless it is expressly or
by necessary implication made to have a retrospective
F operation. [The aforesaid) rule in general is applicable where
the object of the statute is to affect vested rights or to impose
new burdens or to impair existing obligations. Unless there
are words in the statute sufficient to show the intention of
the legislature to affect existing rights, it is deemed to be
pro~pective only-1111va c1111s1i1111i11 .fz1111ris ji1r111a111
G
impo11ere debet 11011 praeteritis-a new law ought to
regulate what is to follow, not the past. (See Principles of
!itatutory lnterpretati1111 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
H
M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 411
ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]
presumption against retrospectivity may be rebutted by A
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).''*
25. In Zile Singh v. State of Haryana (2004) 8 SCC I at
p. 9, this Court observed as follows: (SCC pp. 9-10, paras B
15-16)
"15. Though retrospectivity is not to be presumed and
ratherthere is presumption against retrospectivity, according
to Craies (Statute Lmt', 7th Edn.), it is open for the legislature
to enact laws having retrospective operation. This can be c
achieved by express enactment or by necessary implication
from the language employed. !fit is a necessary implication
from the language employed that 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 D
cou11s may be called upon to construe the provisions and
answer the question 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 E
applied; (iii) the former state of the law: and (iv) what it
was the legislature contemplated. (p. 388) The rule against
retrospectivity does not extend to protect from the effect
of a repeal, a privilege which did not amount to accrued
right. (p. 392)
r
16. Where a statute is passed for the purpose of supplying
an obvious omission in a former statute or to 'explain' a
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
explanato1y and declaratory in nature. A classic illustration G
is Attorney General v. Pougett ( 1816) 2 Price 381 : 146
ER 130 (Price at p. 392). By a Customs Act of 1873 (53
Geo. 3. c. 33) a duty was imposed upon hides of9s 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,
H
412 SUPREME COURT REPORTS [2016] 6 S.C.R.
A c. 105) was passed later in the same year. Between the
passing of these two Acts some hides were exported, and
it was co.ntended that they were not liable to pay the duty
of9s 4d per cwt., but Thomson, C.B., in giving judgment
for the Attorney General, said: (ER p. I34)
B 'The duty in this instance was, in fact, imposed by the
first Act; but the gross mistake of the omission of the weight,
for which the sum expressed was to have been payable,
occasioned the amendment made by the subsequent Act:
but that had reference to the former statute as soon as it
passed, and they must be taken together as if they were
c one and the same Act;' (Price at p. 392)"
26. There is no dispute with regard to the fact that the
Act in question is a welfare legislation which was enacted
to protect the interest of the suppliers especially suppliers
of the nature of a small-scale industry. But. at the same
D time. the intention and the purpose of the Act cannot be lost
sight of and the Act in question cannot be given a
retrospective effect so long as such an intention is not clearly
made out and derived from the Act itself."
15. The case of appellant - Mis. Shanti Conductors Pvt. Ltd.
E arose out of same lis which was decided along with Purbu11chal Cables
(supra) in which a Division Bench of this Court has similarly answered
the questions involved conclusively before remanding the matter to High
Court for deciding the appeals. The factual background of Mis. Shanti
Co11duc1ors (P) Ltd. case has been duly considered by this Cou11. It is
F apparent from the judgment that this Court has dealt with appeals filed
by both the appellants and with respect to retrospective operation of the
Act has laid down thus :
"Retrospective operation of the Act
32. The fundamental rule of Jnstruction is the same for
G all statutes whether fiscal or otherwise. The underlying
principle is thatthe meaning and intention ofa statute must
be collected 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.
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 413
ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]
33. In Zile Singh v. State of Haryana (2004) 8 SCC I A
this CoUJ1 observed that there were four relevant factors
which needed to be considered while considering whether
a statute applied prospectively or retrospectively: (SCC p.
9, para 15)
"I 5 . ... Four factors are suggested as relevant: (i) general B
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."
34. The general scope of the Act has been discussed
above. The remedy sought to be applied by the Act is made c
clear in the Statement of Objects and Reasons, in which, it
is stated that due to the delayed payments by buyers to the
small-scale industries, their working capital was being
affected, causing great harm to the small-scale industries
in general. This Act was passed by Parliament to impose a
heavy interest on the buyers who delayed the payments of D
the small-scale industries, in order to deter the buyers from
delaying the payments after accepting the supplies made
by the suppliers.
35. The policy statement of the Ministry of Micro, Small
and Medium Enterprises dated 6-8-1991, reads: E
·"3. (3.4) A beginning has been made towards solving the
problem of delayed payments to small industries by setting
up of 'factoring' services through Small Industries
Development Bank of India (SIDBI). Network of such ·
services would be set up throughout the country and F
operated through commercial banks. A suitable legislation
will be introduced to ensure prompt payment of small
industries' bills."
36. Keeping in view the above object. the Act was enacted
by Parliament. Before such enactment, it is required to G
examine rights of the supplier qua the buyer prior to the
commencement of the Act. In case of delayed payment,
the supplier, prior to the commencement of the Act, was
required to file a suit forthe payment of the principal amount,
an~ could claim interest along with the principal amount.
H
414 SUPREME COURT REPORTS [2016) 6 S.C.R.
A The supplier could avail of the same under Section 34 of
the Code of Civil Procedure, 1908 (hereinafter referred to
·as "CPC"). Section 61 of the Sale of Goods Act, 1930 and
Section 3 of the Interest Act, 1978.
37. In other words, the supplier whose payment was
B delayed by the buyer prior to the commencement of the
Act, could file a suit for payment of the principal amount
along with the interest. The supplier, thus, had the vested
right to claim the principal amount along with interestthereon
in case of a delay in payment by the buyer and it was the
discretion of the court to award this interest.
c
38. The comt has the discretion to award interest along
with the principal amount and the same is clear from the
use of the word "may" in all the three provisions cited above.
Section 34 CPC is the main provision under which interest
could be awarded by the court and Section 61 of the Sale
D of Goods Act, 1930 is an offshoot of Section 34 CPC. Section
3 of the Interest Act, 1978 also makes the Interest Act
subject to the provision of Section 34 CPC. Hence, we can
safely deduce that the interest awarded is a discretion
exercised by the court, on the principal amount claimed, in
E case of a suit for recovery of payment by the supplier if
such payment is delayed by the buyer.
39. With the commencement 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,
F 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 Modern Industries (2010) 5 SCC
44. If a suit for interest simpliciter is maintainable as held
by this Court in Modern Industries (supra), then a new
liability qua the buyer is created with the commencement
(j
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.
40. The phrase "vested right" has been defined by this
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 415
ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]
Court in Bibi Sayeeda v. State of Bihar ( 1996) 9 SCC 516 A
as: (SCC p. 527, para 17)
"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 B
ownership; not contingent; not subject to be defeated by a
condition precedent.'
Rights are 'vested' when right to enjoyment, present or
prospective, has become prope11Y of some particular person
or persons as present interest; mere expectancy of future c
benefits, or contingent interest in prope11y founded on
anticipated continuance of existing laws, does not constitute
vested rights .. In Websters Comprehensive Dictionary
(International Edn.) at p. 1397 'vested' is defined as:
'[L ]aw held by a tenure subject to no contingency; D
complete; established by law as a permanent right; vested
interests."'
41. A statute creating vested rights is a substantive statute.
This Court, in Dhe11ka11al Minor Irrigation Division v.
N. C. Budharaj (200 I) 2 SCC 721, opined: (SCC p. 742, E
para 23)
"23 . ... 'Substantive law', is that part of the law which
creates, defines and regulates rights in contrast to what is
called adjective or remedial law which provides the method
of enforcing rights. Decisions, including the one in Jena F
case 13 while adverting to the question of substantive law
has chosen to indicate by way of illustration laws such as
Sale of Goods Act, 1930 [Section 61(2)], Negotiable
Instruments Act, 1881 (Section 80), etc. The provisions of
the Interest Act, 1839, which prescribe the general law of
G
interest and become applicable in the absence of any
contractual or other statutory provisions specially dealing
with the subject, would also answer the description of
substantive law."
42. In Thirwnalai Chemicals Lf(/. v. Union of India (2011)
H
416 SUPREME COURT REPORTS [2016] 6 S.C.R.
A 6 SCC 739 this Court comparing substantial law with
procedural Jaw, stated: (SCC pp. 748-49, paras 23-24)
"23. Substantive law refers to a body of rules that creates,
defines and regulates rights and liabilities. Right conferred
on a party to prefer an appeal against an order is a
B substantive right conferred by a statute which remains
unaffected by subsequent changes in law, unless modified
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.
c It is trite law that every statute is prospective unless it is
expressly or by necessary implication made to have
retrospective operation.
2./. Right of appeal may be a substantive right but the
procedure for filing the appeal including the period of
D limitation cannot be called a substantive right, and an
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
E under the repealed Act."
43. In Shyam Sunder v. Ram Kumar (200 I) 8 SCC 24, a
Constitution Bench of this Court discussing the scope and
ambit of a declaratory law has observed: (SCC p. 49, para
39)
F "39. Lastly, it was contended on behalf of the appellants
that the amending Act whereby new Section 15 of the Act
has been substituted is declaratory and, therefore, has
retroactive operation. Ordinarily when an enactment
declares the previous law, it requires to be given retroactive
<i effect. The function of a declaratory statute is to supply an
omission or to explain a previous statute and when such an
Act is passed, it comes into effect when the previous
enactment was passed. The legislative power to enact law
includes the power to declare what was the previous law
and when such a declaratory Act is passed, invariably it
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 417
ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]
has been held to be retrospective. Mere absence of use of A
the word 'declaration' in an Act explaining what was the
law before may not appear to be a declaratory Act but if
the court finds an Act as declaratory or explanatory, it has
to be construed as retrospective. Conversely where a statute
uses the word 'declaratory', the words so used may not be
B
sufficient to hold that the statute is a declaratory Act as
words may be used in order to bring into effect new law."
44. In Katikara Chintamani Dora v. Guntreddi
Annamanaidu ( 1974) I SCC 567 this Court held: (SCC p.
582, para 50)
c
"50. It is well settled that ordinarily, when the s1.1bstantive
law is altered during the pcndcrn:y of an 11ction, rights of
the parties are decided according to law, <IS it existed when
the action was begun unless the new st11tute shows a clear
intention to vary such rights (Ma.\11•ell 011 l111erpretatio11
<~f Stalutes, 12th Edn. 220). That is to say, 'in the 11bsencc
D
of anything in the Act, to say that it is to have retrospective
operation, it cannot be so c9nstrued as to have the effoct of
altering the law applicable to a clahn in litigation 11t the time
when the Act is pas~ed' ."
4S, In Gov ind /Jm; y, !TO ( 1976) 1 SCC 906 this Court E
speaking through P.N, Bhagwati, J. (as he then was) held:
(SCC p, 914, p11rn 11)
''11. Now it is a well-settled rule ofinterpretation hallowed
by time 1md s1mctified by judicial decisions that, unless the
tenns of 11 statute expres~ly so provide or necessarily require F
it. riitrospective operation should not be given to a statute
~o as to take 11w11y or impair Ill! f;lxisting right or create a
new obligation or impose a new liability otherwise than as
regards matters of procedure. The general rule as stated
by Halsbury in VoL 36 of the Lml's ofE11gla1ui (3rd Ecln.) q
and reiteratecl in several decisions of this Co1.1rt as well as
English courts is that all i;tatutes other thiin those which are
merely declaratory or which relate only to matters of
procedure or of evidence are prima facie prospective and
retrospective operation should not be given to a statute so
H
418 SUPREME COURT REPORTS [2016] 6 S.C.R.
A as to affect, alter or destroy an existing right or create a
new liability orobligation unless that effect cannot be avoided
without doing violence to the language of the enactment. If
the enactment is expressed in language which is fairly
capable of either interpretation, it ought to be construed as
prospective only."
B
46. In Jose Da Costa v. Bascora Sadasiva Sinai
Narcornim ( 1976) 2 SCC 917 this Court held: (SCC p. 925,
para31)
"31. Before asce11aining the effect of the enactments
c 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 matters of procedure may
properly, unless that construction be textually inadmissible,
have retrospective effect attributed to them. provisions
D which touch a right in existence atthe passing of the statute
are not to be applied retrospectively in the absence of
express enactment or necessary intendment.' (See Delhi
Cloth and General Mills Co. Ltd. v. CIT (I 926-27) 54 IA
421, IA p. 425.)
E The second is that a right of appeal being a substantive
right the institution of a suit carries with it the implication
that all successive appeals available under the law then in
force would be preserved to the parties to the suit throughout ·
the rest of the career of the suit. There are two exceptions
f to the application of this rule viz. (1) when by competent
enactment such right of appeal is taken away expressly or
impliedly with retrospective effect and (2) when the court
to which appeal lay at the commencement of the suit stands
abolished (see Garikapati Veeraya v. N. Subbiah
Choudhry AIR 1957 SC 540 and Colonial Sugar Refining
G Co. Ltd. v. Irving 1905 AC 369: (I 904-07)All ER Rep Ext
1620 [PC])."
47. In K. Kapen Chako v. Provident l11vestme11t Co.
(P) Ltd. ( 1977) I SCC 593 this Court discussing the dicta
of the English courts on the aspect of retrospectivity
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 419
ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]
observed: (SCC pp. 602-03, paras 37-39) 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 retrospective operation 8
so as to affect an existing statutory provision prejudicially
ought not be so construed. It is a well-recognised rule that
statute should be interpreted if possible so as to respect
vested rights. ·Where the effect would be to alter a
transaction already entered into, where it would be to make
that valid which was previously invalid, to make an c
instrument which had no effect at all, and from which the
party was at liberty to depart as long as he pleased, binding,
the prima facie construction of the Act is that it is not to be
retrospective. (See Gardner v. Lucas ( 1878) 3 AC 582
(HL). D
38. In Moon v. Durden ( 1848) 2 Ex 22 : 154 ER 389 a
question arose as to whether Section 18 of the Gaming Act,
1845 which came into effect in August 1845 was
retrospective so as to defeat an action which had been
commenced in June 1845. The relevant section provided E
that no suit shall be brought or maintained for recovering
any such sum of money alleged to have been won upon a
wager. It was held that it was not retrospective. Parke, 8.
said: (ER p. 398)
'It seems a strong thing to hold, that the legislature could F
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.'
39. Again in S1i1ithies v. National Assn. of Operative G
Plasterers (1909) I KB 310, Section 4 of the Trade Disputes
Act, 1906 which enacted that an action for tort against a
trade union shall not be entertained by any court was held
not to prevent the courts from hearing and giving judgment
in actions of that kind begun before the passing of the Act.
H
420 SUPREME COURT REPORTS (2016] 6 S.C.R.
A It is a general rule that when the legislature alters the rights
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 Suche (Joseph)
B & Co. Lid.. In re ( 1875) I Ch D 48. If the legislature forms
!I 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 pat1ies it will be held to apply prima facie
to all actions, pending as well as future."
48. In Dahibe11 v. Vi1sw1ji Keva!bha 1995 Sup·p (2) SCC
295 this Co1111 held: (SCC pp. 299-300, para 12)
'' 12. As the amendment in question is not to a procedural
D law, it may be stated that the settled principle of
inte1•pretation, where substirntive law is amended, is that
the same does not opernte retrospectively unless it is either
expressly provided or the same follows by necessary
Implication. Lest it be thought that a vested right cannot be
taken away at all by retrospective legislation, reference may
be made to Raftq11!!1111fssa v, Lal Bahadur Chetri AIR
1964 SC 1511 where it was stated that even where vested
rights are affected, legislature is competent to take away
the same by mc11ns of retrospective legislation: and
retrospectivity can \le inferr11d even by necessary
F implicafa1n,"
49, In life Si11gl1 y. StC/fi: qf Harycma (2004) 8 sec I
this C9i1rt 1ix11mined the vnrlous authorities on statutory
interpretation and concluded: (SCC pp. 8-9, paras 13-14)
;, ! 3. It is a cardinal principle of construction that every
0
statute is prlnia f!lcie prospective unless it is expressly or
by 11ecess111-y irnpllcation made to have a retrospective
operation. But the rule in general is applicable where the
object of the stat11te Is to affect vested rights or to impose
new burd11ns or to impair existing obligations. Unless there
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 421
ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.)
are words in the statute sufficient to show the intention of A
the legislature to affect existing rights, it is deemed to be
prospective only-'11ova constitutio futuris formam
i111po11ere debet 11011 praeteriti.1"-a new law ought to
regulate what is to follow. not the past. (See Principles of
Statutory Interpretation by Justice G.P. Singh, 9th Edn.,
B
2004 at p. 438.) It is not necessary that an express provision
be made to make a statute retrospective and the
presumption against retrospectivity may be rebutted by
necessary implication especially in a case where the new
law is made to cure an acknowledged evil for the benefit of
the community as a whole (ibid.. p. 440). c
14. The presumption against retrospective operation is
not applicable to declaratory statutes .... In determining,
therefore, the nature of the Act. regard must be had to the
substance rather than to the form. If a new Act is •to explain'
an earlier Act. it would be without o~ject unless construed D
retrospectively. An explanatory Act is gem:rally passed to
supply an obvious omission or to clear up doubts as to the
meaning of the previous Act. It is well settled that ifa 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 E
ofa provision of the principal Act which was already implicit.
A clarificatory amendment of this nature will have
retrospective effect (ihid.. pp. 468-69).''
50. In State of' Pu11iah v. Bhqju11 Kaur (2008) 12 SCC
112 this Court held: (SCC p. 116. para 9) F
"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."
G
51. There is no doubt about the fact that the Act is a
substantive law as vested rights 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 buyer. This Court. time and again. has observed that
H
422 SUPREME COURT REPORTS [2016] 6 S.C.R.
A 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 in procedure.
52. In the absence of any express legislative intendment
B of the retrospective application of the Act, and by virtue of
the factthat 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 rightto claim a higher rate of interest
in terms of the Act. the same can only be said to accrue for
c sale agreements after the date of commence1rn:nt of the
Act i.e. 23-9-1992 and not any time prior."
16. This Court in Purbanchal Cables (supra) has also taken note
of earlier decisions of Assam Small Scale Industries' case (supra) and
Shakti Tubes (supra) and after referring to them has rejected the
D submission that the Court in Assam S111all Scale Industries (supra) did
not consider and decide the issue whether the Act would apply to those
supply orders placed prior to commencement of the Act and the supply
being made after commencement of the Act. This Court has held that :
"55. Assam Small Scale Industries (2005) 13 SCC 19
E has been followed in Rampur Fertiliser Ltd. (2009) 12 SCC
324 as well as Modern Industries (2010) 5 SCC 44.
Therefore, we cannot agree with the submission that th is
Court in Assam Small Scale Industries Develop111ent
Cmp11. Case (2005) 13 SCC 19 did not specifically consider
F and decide the issue of whether the Act would apply to
such of those contracts executed prior to the commencement
of the Act but the supplies being made after the
commencement of the Act.''
17. This Court in the case of Purbanc/wl Cahles (supra) has
G also considered the effect of the binding precedent and sub silelllio
ruling since it was urged that Assam Small Scale industries case (supra)
and SllLlkti Tubes (supra) did not lay down the law correctly. This Cou11
has rejected the submission thus:
"Binding precedent or sub si/eutio ruling
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 423
ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]
56. However. the learned Senior Counsel appearing for A
the suppliers, Shri Rakesh Dwivedi and Shri Sunil Gupta
would contend that the decision of this Court is not a binding
precedent.
57. Shri Rakesh Dwivedi, learned Senior Counsel would
submit that the decisions of this Court in Assam Small Scale B
Industries (2005) 13 SCC 19 and Shakti Tubes (2009) 7
SCC 673 regarding the prospective operation of the Act
were not law declared under Article 141, as the points under
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
c
prior to 23-9-1992 was not even a question, which came up
for consideration before the Court and was not even argued
by the learned counsel 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 D
adequately considering the provisions of the beneficial
legislation and therefore, it cannot be treated as a binding
precedent.
58. Shri Sunil Gupta, learned Senior Counsel while adopting
the argument advanced by Shri Dwivedi on this issue, would E
submit that there are two exceptions to the doctrine of
precedent, namely. per incuriam and sub silentio. It was on
the strength of the latter that Shri Gupta would submit that
the decisions of this Court in As ..11111 Small Scale lndus1rie.1·
(2005) 13 sec 19 and Shakti Tubes (2009) 7 sec 673
cannot be considered as precedents. The learned Senior F
Counsel would state that a decision would not apply as a
precedent when the court has failed to consider the objects
and purpose of the Act in question and also ce11ain previous
judgments of this Court. He would further contend that the
aforesaid judgments suffer from the sub silentio principle G
being rendered without full and adequate arguments on the
issue. The learned Senior Counsel would als_o state that the
Court did not look at the issue from the viewpoint canvassed
presently.
59. The learned Senior Counsel would rely on the decision H
424 SUPREME COURT REPORTS [2016] 6 S.C.R.
A of this Court in MCD v. Gurnam Kaur ( 1989) I SCC 101.
This Court has held: (SCC pp. 110-11, paras 11-12)
"11. Pronouncements of law, which are not part of the
ratio decidendi are classed as obiter dicta and are not
authoritative. With all respect to the learned Judge who
B passed the order in Jamna Das case [WPs Nos. 981-82 of
1984 decided on 29.3.1985 (SC)] and to the learned Judge
who agreed with him, we cannot concede that this Cou11 is
bound to follow it. It was delivered without argument,
without reference to the relevant provisions of the Act
conferring express power on the Municipal Corporation to
c direct removal of encroachments from any public place like
pavements or public streets. and without any citation of
authority. Accordingly. we do not propose 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
D the relevant provisions. A decision should be treated as given
per incuriam when it is given in ignorance of the terms ofa
statute or of a rule having thi:: force of a statute. So far as
the order shows. no argument was addressed to the cou11
on the question whether or not any direction could properly
be made compelling the Municipal Corporation to construct
E a stal I at the µitching site of a pavement squatter. Professor
P.J. Fitzgerald. editor or Salmond on Juri.lprudence. 12th
fain. explains the concept ofs11b silentio at p. 153 in these
words:
A decision passes sub silcntio. in the technical sense that
F has come to be attached to that phrase. when tht: particular
point of law involved in the decision is not perceived by the
1:011rt or present to its mind. The court may consciously
decide in fov11ur ofo111:: party be..:aus.: of Point A. which it
considers and µronoum:i.:s upon. lt may be shown. however.
Ci that logically the court should not have decided in favour of
the µarticular party unkss it also decided Point 13 in his
favour: but Point 13 was not argued or considered by the .
cow1. In such circumstances. although Point B was logically
involved in the facts and although the case had a specific
outcome, the decision is not an authority on Point 13. Point
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 425
ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]
B is said to pass sub silentio. A
12. In Gerard v. Worth of Paris Ltd. ( 1936) 2 All ER
905 (CA), the only point argued was on the question of
priority of the claimant's debt, and, on this argument being
heard, the cou1t granted the order. No consideration was
given to the question whether a garnishee order could B
properly be made on an account standing in the name of
the liquidator. When, therefore, this very point was argued
in a subsequent case before the Court of Appeal in
Lancaster Motor Co. (London) Ltd. v. Bremith Ltd. ( 1941)
I KB 675 : (1941) 2 All ER 11 (CA), the Court held itself
not bound by its previous decision. Sir Wilfrid Greene, M.R., c
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
to say that the point had to be decided by the earlier court
before it could make the order which it did; neve1theless, D
since it was decided 'without argument, without reference
to the crucial words of the rule, and without any citation of
authority', it was not binding and would not be followed.
Precedents sub silentio and without argument are of no
moment. This rule has ever since been followed. One of
the chief reasons for the doctrine of precedent is that a E
matter that has once been fully argued and decided should
not be allowed to be reopened. The weight accorded to
dicta varies with the type of dictum. Mere casual
expressions carry no weight at all. Not every passing
expression ofa Judge, however eminent. can be treated as F
an ex cathedra statement, having the weight of authority."
60. In State of U.P. v. Synthetics and Chemicals Ltd.
(1991) 4 SCC 139, His Lordship R.M. Sahai, J., in his
concurringjudgment set out the principles of per incuriam
and sub silcntio and has held thus: (SCC pp. 162-63, paras G
40-41)
"./O. ·Jncuria' literally means 'carelessness·. In practice
per incurimn 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 H
426 SUPREME COURT REPORTS [2016] 6 S.C.R.
A if it is rendered. •in ignoratium of a statute or other binding
authority'. (Young v. Bristol Aeroplane Co. Ltd. 1944 KB
718: ( 1944) 2 All ER 293 (CA) Same has been accepted,
approved and adopted by this Court while interpretingA1ticle
141 of the Constitution which embodies the doctrine of
precedents as a matter of law. In Jaisri Sahu v. Rajdewan
B
Dubey AIR 1962 SC 83 this Court while pointing out the
procedure to be followed when conflicting decisions are
placed before a Bench, extracted a passage from
Hals bury '.5 Laws of England incorporating one of the
exceptions when the decision of an appellate court is not
c binding.
./J. Does this principle extend and apply to a conclusion
of law, which was neither raised nor preceded by any
consideration. In other words can such conclusions be
considered as declaration of law? Here again the English
D courts and jurists have carved out an exception to the rule
of precedents. It has been explained as rule of sub silentio.
•A decision passes sub silentio. in the technical sense that
has come to be attached to that phrase, when the particular
point of law involved in the decision is not perceived by the
cou1t or present to its mind.' (Salmond on Jurisprudence,
E 12th Edn., p. 153). In Lancaster Motor Co. (London) Ltd.
v. Bremith Ltd. (1941) I KB 675: (1941) 2 All ER 11 (CA)
the Cou1t did not feel bound by earlier decision as it was
rendered •without any argument. without reference to the
crucial words of the rule and without any citation of the
F authority'. It was approved by this Court in MCD v. Gumam
Kaur ( 1989) I SCC I0 I. The Bench held that. ·precedents
sub si lentio and without argument are of no moment'. The
courts thus have taken 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
G 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 escapes in the judgment
without any occasion is not ratio dccidendi. In B. Shama
H
M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 427
ELECTRICITY BOARD & ORS. [ARUN MISHRA. J.]
Rao v. UT of Pondicherry AIR 1967 SC 1480 it was A
observed, 'it is trite to say that a decision is binding not
because of its conclusions but in regard to its ratio and the
principles, laid down therein'. Any declaration or conclusion
arrived without application of mind or preceded without any
reason cannot be deemed to be declaration of law or
B
authority of a general nature binding as a precedent.
Restrnint in dissenting or overruling is for sake of stability
and uniformity but rigidity beyond reasonable limits is inimical
to the growth of law."
61. In Amit Das (1) v. State of Bihar (2000) 5 SCC 488
this Cou11 held: (SCC p. 498, para 20) c
"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 A11icle 141. That
which has escaped in the judgment is not the ratio decidendi. D
This is the rule of sub silentio. in the technical sense when
a particular point of law was not consciously determined.
(See State of U.P. v. Sy111hetics & Chemicals Ltd. ( 1991)
4 sec 139, sec para 41.)"
62. In Tika Ram v. Slate of U.P. (2009) 10 SCC 689 it E
was held: (SCC pp. 740-41, para 104)
"104. We do not think that the law laid down in these
cases would apply to the present situation. In all these cases,
it has been basically held that a Supreme Court decision
does not become a precedent unless a question is directly F
raised and considered therein. so also it does not become a
law declared unless the question is actually decided upon.
We need not take stock of all these cases and we indeed
have no quarrel with the propositions settled therein."
63. Though the submissions made by Shri Rakesh Dwivedi G
and Shri Sunil Gupta, learned Senior Counsel seem attractive
at the first blush, we are of the view, they lack merit. In
Assam Small Scale !nduslries (2005) 13 SCC 19, the
question of retrospective operation of the Act or whether
past contracts were governed by the Act, was argued by
H
428 SUPREME COURT REPORTS [2016] 6 S.C.R.
A the learned Senior Counsel appearing for the respondent.
In the said judgment this Court has observed: (SCC p. 30,
para 19)
"19 . ... The 1993 Act, it was submitted, being also a
beneficent statute, the same should be construed liberally.
B The Act, Mr Chow.dhury would argue, will thus, have a
retrospective effect."
64. Further, in Shakti Tubes Ltd. (2009) 7 SCC 673, this
issue was canvassed by the learned counsel, due to which,
this Cout1 referred to the precedent in Assam Small Scale
c !11dustries (2005) 13 SCC 19. The argument on this point
has been noted thus: (Shakti Tubes Ltd. case (2009) 7
sec 673, sec pp. 676-77, paras 9-1 I)
"9. According to the appellant-plaintiff, the said interest
has been claimed by the appel !ant-plaintiffsince it is entitled
D to so claim in terms of the provisions of the Interest on
Delayed Payments to Small Scale and Ancillary Industrial
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 Cout1 in Assam Small
E Scale Industries Development Corpn. Ltd. v. J.D.
Pharmaceuticals (2005) 13 SCC 19. 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
F relevant sections of the Act as also the Statements of
Objects and Reasons of the Act. According to him. the
appellant-plaintiff is entitled to be paid in h.:rms of the
provisions of the Act.
JO. Mr Bharuka contended that the earlier supply order
G which was issued on 16-7-1992 came to be materially
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.
H
M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 429
ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]
11. Mr Dinesh Dwivedi, learned Senior Counsel appearing A
for the respondents strongly refuted the aforesaid
submissions made by the learned Senior Counsel appearing
for the appellant-plaintiff on the ground that the supply order
was issued in the instant case on 16-7-1992 and therefore,
in terms of and in line with the decision of this Cou11 in
B
Assam Small Scale Industries case (supra) 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
appel )ant-plaintiff."
65. This Court in Shakti Tubes Ltd. (2009) 7 SCC 673
expressly rejected the argument of the learned Senior c
Counsel appearing for the appellant in that case, that the
Act should be given retrospective effect because it was a
beneficial legislation, in paras 24 to 26, which have been
set out below: (SCC pp. 681-83)
"24. Generally, an Act should always be regarded as D
prospective in nature unless the legislature has clearly
intended the provisions of the said Act to be made applicable
with retrospective effect.
'13. It is a cardinal principle of construction that every
statute is prima facie prospective unless it is expressly or E
by necessary implication made to have a retrospective
operation. [The aforesaid] rule in general is applicable where
the object of the statute is to affect vested rights or to impose
new burdens or to impair existing obligations. Unless there
are words in the statute sufficient to show the intention of F
the legislature to affect existing rights, it is deemed to be
prospective only-nova constilulio futuris formam
imponere debet non praeteritis-a new law ought to
regulate what is to follow, not the past. (See Principles of
Statutory Interpretation by Justice G.P. Singh, 9th Edn.,
2004 at p. 438.) It is not necessary that an express provision G
be made to make a statute retrospective and the
presumption against retrospectivity may be rebutted by
necessary implication especially in a case where the new
law is made to cure an acknowledged evil for the benefit of
the community as a whole (ibid., p. 440).' (Zile Singh case H
430 SUPREME COURT REPORTS [2016) 6 S.C.R.
A (2004) 8 sec 1, sec pp. 8-9, para 13)
25. xxxxx
26. xx xx x"
66. In Rampur Feriiliser Lid. (2009) 12 SCC 324 this
B Court again examined the entire scheme of the Act before
Jollowing the dicta of this Court in Assam Small Scale
Induslries (2005) 13 SCC 19. Even in Modem lnduslries
(20 I0) 5 SCC 44 this Court did not differ from the dicta of
this Court in Assam Small Scale Industries (supra) and
Shakti Tubes (2009) 7 SCC 673."
c
It has been held in Shakli Tubes (supra) that in Ra111pur Fertiliser
Lid. v. Vigyan Che111icals Industries (2009) 12 SCC 324, this Cou11
has examined the entire scheme of the Act and has followed the decision
in Assa111 Small Scale industries' case (supra). In Modem Induslries
V. Steel Authorily of India Lid. (20 I0) 5 sec 44, this Court has also
D not differed from the same. This Cou11 has also considered the binding
value of the precedent on Co-ordinate Bench and made elaborate
discussion. Plea for reconsideration of decision in Assam Small Scale
Industries Dere/op111e111 Corporation Lid. (supra) was also rejected
by a Division Bench of this Court in Shakli Tubes (supra).
E 18. The Court in Purbanchal Cables (supra) has referred
to large number of decisions and made the following discussion with
respect to binding value of the precedent:
"Binding value of a precedent
67. In T¥i11nm1 Rao v. Union of India ( 1981) 2 SCC 362,
F
His Lordship Y.V. Chandrachud, C.J ., speaking for the
Constitution Bench, held: (SCC p. 393, para40)
"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 oflong standing should have considered
G and either accepted or rejected the pai1icular argument
which 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, therefore,
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 431
ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]
sufficient for invoking the rule of stare decisis that a certain A
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 unnecessary to
enquire or determine as to what was the rationale of the
B
earlier decision which is said to operate as stare decisis."
68. In Union of India v. Raghubir Si11gh (1989) 2 SCC
754, this Court held: (SCC p. 766, paras 8-9)
"'S. Taking note of the hierarchical character of the judicial
system in India, it is of paramount importance that the law c
declared by this Court should be certain, clear and
consistent. It is commonly known that most decisions of
the courts are of significance not merely because they
constitute an adjudication on the rights of the parties and
resolve the dispute between them, but also because in doing
so they embody a declaration of law operating as a binding D
principle in future cases. In this latter aspect lies their
particular value in developing the jurisprudence of the law.
9. The doctrine of binding precedent has the merit of
promoting a certainty and consistency in judicial decisions,
and enables an organic development of the law, besides 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 cou11."
69. In Krishena Kumar v. Union of J11dia ( 1990) 4 SCC F
207, this Court observed: (SCC p. 233, para 33)
"33. Stare decisis et non quieta movere. To adhere to
precedent and not to unsettle things which are settled. But
it applies to litigated facts and necessarily decided questions.
Apart from Article 141 of the Constitution oflndia, the policy G
of courts is to stand by precedent and not to disturb settled
point. When court has once laid down a principle oflaw as
applicable to certain state of facts, it will adhere to that
principle, and apply it to all future cases where facts are
substantially the same. A deliberate and solemn decision of
H
432 SUPREME COURT REPORTS [20 I 6] 6 S.C.R.
A com1 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 com1s of
equal or lower rank in subsequent cases where the veiy
point is again in controversy unless there are occasions when
departure is rendered necessary to vindicate plain, obvious
B
principles of law and remedy continued injustice. It should
be invariably applied and should not ordinarily be depa11ed
from where decision is of long standing and rights have
been acquired under it, unless considerations of public policy
demand it."
c 70. In Mishri Lal v. Dhirendra Nath (I 999) 4 SCC I I
this Cou11 held: (SCC p. I 8, para I 3)
"13. .. . It is further to be noted that Meharban Singh
case (I 969) 3 SCC 542 came to be decided as early as
I 970 and has bee1J followed for the last three decades in
D the State of Madhya Pradesh and innumerable number of
matters have been dealt with on the basis thereof and in
the event, a different 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
E 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 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 cou11s of Jaw to subserve the
F ends of justice."
71. In Central Board of Dawoodi Bohra Communizy
v. State ofMaharashtra (2005) 2 SCC 673, a Constitution
Bench of this Court held: (SCC p. 680, para 8)
G "8. In Raghubir Singh case (I 989) 2 SCC 754 Pathak,
C .J. pointed out that in order to promote consistency and
certainty in the law laid down by the superior court the
ideal condition would be that the entire court should sit in all
cases to decide questions oflaw, as is done by the Supreme
Com1 of the United States. Yet, His Lordship noticed, that
H
M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 433
ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]
having regard to the volume of work demanding the attention A
of the Supreme Court oflndia, it has been found necessary
as a general rule of practice and convenience that the court
should sit in divisions consisting of Judges whose number
may be determined by the exigencies of judicial need, by
the nature of the case including any statutory mandate
B
relating thereto and by such other considerations which the
Chief Justice, in whom such authority devolves by
convention, may find most appropriate. The Constitution
Bench reaffirmed the doctrine of binding precedents as it
has the merit of promoting certainty and consistency in
judicial decisions, and enables an organic development of c
the law, besides providing assurance to the individual as to
the consequence of transactions forming part of his daily
affairs."
72. In Shanker Raju v. U11io11 of India (2011) 2 SCC
132 this Court observed: (SCC p. 139, para I 0) D
"JO. It is a settled principle of law that a judgment, which
has held the field for a long time, should not be unsettled.
The doctrine of stare decisis is expressed in the maxim
stare decisis et 11011 quieta movere, which means 'to stand
by decisions and not to disturb what is settled'. Lord Coke E
aptly described this in his classic English version as' those
things which have been so often adjudged ought to rest
in peace'. The underlying logic of this doctrine is to maintain
consistency and avoid uncertainty. The guiding philosophy
is that a view which has held the field for a long time should
not be disturbed only because another view is possible." F
(emphasis in original)
73. In Fida Hussain v. Moradabad Development
Authority (2011) 12 SCC 615 this Cou11 held: (SCC p. 622,
para 15)
G
"15. Having carefully considered the submissions of the
learned Senior Counsel Shri Varma, we are of the view
that the judgment in Gafar case (2007) 7 SCC 614 does
not require reconsideration by this Court. In Gafar case
(supra) this Court had meticulously examined all the legal
H
434 SUPREME COURT REPORTS [2016] 6 S.C.R.
A contentions canvassed by the parties to the !is and had come
to the conclusion that the High Cou11 has not committed
any error which warrants interference. In the present
appeals. the challenge is for the compensation assessed for
the lands notified and acquired under the same notification
pe11aining to the same villages. Therefore. it would not be
8
proper for us to take a different view, on the ground that
what was considered by this Court was on a different fact
situation. This view ofours is fortified by the judgment of
this Court in Ballahhadas Marhurdas Lakhani v.
kfunicipal Commiflee, Malkapur ( 1970) 2 SCC 267.
c wherein it was held that a decision of this Court is binding
when the same question is raised again before this Cou11,
and reconsideration cannot be pleaded on the ground that
relevant provisions. etc. were not considered by the Cou11
in the former case."
D 74. 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. In Raghubir Singh ( 1989) 2 SCC 754,
a Constitution Bench of this Cou11 speaking through R.S.
Pathak. C.J. held: (SCC p. 778, para 28)
E
"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 ~!lme 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
F Constitution Bench of the Court."
75. In Union ofIndia v. Parcis Laminates (f) Ltd. ( 1990)
4 SCC 453 this Court has observed: (SCC pp. 457·58, para
9)
q "9. It is true that 11 Bench of two members must not lightly
disregard the deci~ion of another Bench of the same Tribunal
on an identic11I question. This is particularly true when the
earlier decision is rendered by a larger Bench. The rationale
of this rule ls the need for continuity, certainty and
predictability in the administration of justice. Persons
H
MIS SHANTI CONDUCTORS {P) LTD. ANR. v. ASSAM STATE 435
ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]
affected by decisions of Tribunals or courts have a right to A
expect that those exercising judicial functions will follow
the reason or ground of the judicial decision in the earlier
cases on identical matters. Classification of particular goods
adopted in earlier decisions must not be lightly disregarded
in subsequent decisions, lest such judicial inconsistency
B
should shake public confidence in the administration of
justice."
76, Shri Vijay Hansaria, learned Senior Counsel contends
that a case for referring the matter to a larger Bench though
is pleaded by the learned Senior Counsel. Shri Rakesh
Dwivedi, this Court ought to test the same by the parameters c
laid down by this Court in CIT v. Saheli Leasing and
Industries Ltd. (20 I 0) 6 SCC 384 to find out whether the
matter deserves to be referred to a larger Bench,
77. Jn Sahr.di leasing (supra), this Court held: (SCC p.
393, para 29) D
"29. (x) In order to enable the court to refer 11ny case to
a larger Bench for reconsideration, it is necessary to point
out that particular provision of law hoving a bearing over
the issue involved was not token not!l of or there is an error
apparent on its face or that a partilrnlar earlillr decision E
was not noticlld, which has a diregt bearing or has t11ken a
contrary view."
78. The Constitution Bench of this Court in Kf;!shc11• Mills
Co. Ltd. v. CIT. AIR\ 965 SC 1636 crystallised the position
with regard to what the Col!rt should <lo when a plea for F
consideration of an earlier j11dgment is made. It was held:
(AIR p. 1644, para 23)
"2J . ... When it is 11rged thilt thll view already taken by
this Court sho11ld be reviewed and revised it m<!y not
necessarily be an adequate reason for such review and G
revision to hold that though the e11rlier vil'lw is a re11sonably
possible view, the alternative view which is prl'lssed on th~
subsequent occasion i~ more reasom1bhi. In reviewinl!i 11mf
revising its earlier decision, thi~ Co11rt sho11h:I 11sk itself
whether in the interest~ of the public ~wod or for any other
H
436 SUPREME COURT REPORTS [2016] 6 S.C.R.
A val id and compulsive reasons, it is necessary that the earlier
decision should be revised. When this Court decides
questions of law, its decisions are, under Article 141, binding
on all courts within the territory of India, and so, it must be
the constant endeavour and concern of this Court to
introduce and maintain an element of ce1tainty and continuity
B
in the interpretation of law in the country. Frequent exercise
by th is Cou1t of its power to review its earlier dee isions on
the ground that the view pressed before it later appears to
the court to be more reasonable, may incidentally tend to
make law uncertain and introduce confusion which must
c be consistently avoided. That is not to say that if on a
subsequent occasion, the cou1t is satisfied that its earlier
decision was clearly erroneous, it should hesitate to correct
the error; but before a previous decision is pronounced to
be plainly erroneous, the court must be satisfied with a fair
amount of unanimity amongst its members that a revision
D
ofthe 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 reviewing and revising its earlier
decisions. It would always depend on several relevant
E considerations:-What is the nature of the infirmity or error
on which a plea for a review and revision of the earlier
view is based? On the earlier occasion, did some patent
aspects of the question remain unnoticed, or was the
attention of the court not drawn to any relevant and material
statutory provision, or was any previous decision of this
F
Comt bearing on the point not noticed? Is the couit hearing
such plea fairly unanimous that there is such an error in the
earlier view? What would be the impact of the error on the
general administration of law or on public good? Has the
earlier decision been followed on subsequent occasions
G either by this Court or by the High Cou1ts? And, would the
reversal of the earlier decision lead to public inconvenience,
hardship or mischief? These and other relevant
considerations must be carefully borne in mind whenever
this Court is called upon to exercise its jurisdiction to review
and revise its earlier decisions."
H
M/S SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 437
ELECTRICITY BOARD & ORS. [ARUN MISHRA. J.]
79. We are in full agreement with the view expressed in A
Keshav Mills case ( 1965) 2 SCR 908. The learned Senior
Counsel Shri Rakesh Dwivedi has not been able to make
out a case for reconsideration of the decision of this Court
in Assam Small Scale industries (2005) 13 SCC 19. In
fact, a plea for reconsideration of the same was rejected
B
by a Division Bench of this Court in Shakti Tubes (2009) 7
SCC 673. We are unable to agree with the argument of
Shri Dwivedi and Shri Gupta that the provisions of the Act
were not considered in its entirety. In fact, the entire scheme
of the Act has been considered in Rampur Fertiliser (2009)
12 sec 324 and specific answer to the issue under c
consideration was answered."
It is apparent from aforesaid discussion that the decision of a Co-
ordinate Bench is binding and there has to be consistency and settled
principle should not be unsettled as laid down in Raghubir Singh (supra)
and other decisions referred to above. Judicial discipline demands that a D
decision of the Division Bench of this Court should be followed by another
Bench of two Judges.
19. Jn Modem Industries (supra), a Division Bench of this Com1
has also held that the Act of 1993 is prospective in operation is settled by
two decisions of this Court in Assam Small Scale industries' case (supra) E
and Shakti Tubes (supra). This Cou11 has observed that since the earlier
contract got altered from time to time, it was last altered on 29.4.1995.
By that time Act of 1993 had already come into force. Hence the date
of alteration in the agreement was held to be material for the applicabi Iity
of the provisions of the Act. In Rampur Fertiliser Ltd. (supra), a Division
Bench of this Cou11 has held that the provisions of the Act of 1993 are F
prospective. The Court considered various provisions contained in
sections 1, 3, 4, 5 and I 0 of the Act. This COL1rt followed the decision in
Assam Small Scale Industries' case and has laid down thus :
"14. It was held in Assam Smafl Scale Industries
Development Corpn. Ltd. ( 1987) 3 SCC 80 that the G
provisions of the Act are applicable only with prospective
effect. Paras 37 and 38 of the said case which deal with
the scope of the applicability of the Act are reproduced
hereunder : (SCC p. 36)
H
438 SUPREME COURT REPORTS [2016] 6 S.C.R.
A "37. xx xx x
38. xx xx x ..
In view of the ratio of the aforesaid decision the scope of
the present appeal is very limited for it is already laid down
by this Court that the Act, namely, the Interest on Delayed
B Payments to Small Scale and Ancillary Industrial
Undertakings Act, 1993 came into effect from 23-9-1992.
Therefore, the said Act would have no application and would
not apply to transactions which took place prior to the
aforesaid date. In the case in hand the transaction which
c was the subject-matter of the suit took place prior to 23-9-
1992. This position is clear for the suit itself was filed on
3 1-10-1991 and therefore cause of action for fi Iing the suit
has Lo be prior in point of time."
20. In view of the aforesaid catena of decisions of this Court, it
D has to be held that the Act of 1993 cannot be said to be retrospective in
operation or having retroactive operation. The question stands answered
affirmatively beyond pale of doubt and the decisions are binding on a
Co-ordinate Bench. It cannot be said that the decisions are sub sile11tio
or per i11curia111 in any manner whatsoever and. in my opinion. it is not
open to the Co-ordinate Bench to take a different opinion. There is no
E confusion with respect to meaning of transaction, supply order and
agreement. This Cou11 while deciding aforesaid cases was not in oblivion
of aims and objects of beneficial legislation. considered same and it has
affirmatively pronounced 011 all the aspects. Hence, I find no scope to
dwell further into the same arena to declare the various judgments to be
F sub silentio, per i11c11ria111 or not laying down the law correctly.
21. Even otherwise, on merits. in my opinion, considering the
scheme of the Act, various provisions of the Act it cannot be said to
have retrospective operation or retroactive operation and where a supply
order has been placed before the date of commencement of the Act,
G that is before 23 .9.1992, the beneficial provisions of the Act regarding
higher interest would not be applicable.
22. In the case ofappellant Mis. Shanti Conductors (P) Ltd. itself
decided along with PurbG11chal Cah/es (rnpraJ aforesaid findings have
been recorded by this Court while remanding the case to the High Court
for decision on merits as an appeal arising of same lis was pending
H
MIS SHANTI CONDUCTORS (P) LTD. ANR. v. ASSAM STATE 439
ELECTRICITY BOARD & ORS. [ARUN MISHRA, J.]
before the High Court and the High Court has rightly followed the A
decisions in Purba11chal Cables & Conductors (supra) decided along
with Mis. Shanti Conductors fP) Ltd. The finding recorded by this
Court in the remand order is final and binding on the appellant- Mis.
Shanti Conductors (P) Ltd. They cannot question the same again in the
instll;n.t appeals.
B
23. In view of the aforesaid discussion, the appeals have no merit
and the same deserve dismissal and are hereby dismissed. No costs.
Nidhi Jain *Matter referred to larger Bench.
c
*In vie" of separate diwrgcntjudgmcnts of the tlro Judge Bench.
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