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Reportable

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

          CIVIL APPEAL NOS.8442-8443 OF 2016    (Arising out of SLP (C) Nos.9924-9925 of 2013)

M/S SHANTI CONDUCTORS(P) LTD. ANR.     ………APPELLANTS Vs.

ASSAM STATE ELECTRICITY BOARD & ORS.   ……RESPONDENTS WITH

   CIVIL APPEAL NO.8445 OF 2016          (Arising out of SLP (C) No.15274 of 2013)

   CIVIL APPEAL NO.8448 OF 2016          (Arising out of SLP (C) No. 9898 of 2014)

                 AND     CIVIL APPEAL NO.8450 OF 2016   

      (Arising out of SLP (C) No. 538 of 2016) J U D G M E N T

 V. GOPALA GOWDA, J.  

 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

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consideration before this Court.  

3. For the sake of convenience, reference is made

to the facts of the appeals arising out of SLP

(C)  Nos.  9924-9925  of  2013,  which  have  been

directed against the impugned final judgment and

orders dated 20.11.2012 and 20.12.2012 passed in

RFA  No.  66  of  2000  and  MC  No.  3472  of  2012

respectively,  by  the  Gauhati  High  Court  at

Guwahati.  

  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 31.03.1992, the respondent-Assam State

Electricity Board (hereinafter referred to as the

“Electricity Board”) placed an order for supply

of  Aluminium  Electrical  Conductors  from  the

appellants-M/s Shanti Conductors Pvt. Ltd. for a

total  consideration  of  Rs.  1.22  crores.  The

supplies  were  to  be  made  between  June  and

December, 1992. On 13.05.1992, another order was

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placed  by  the  Electricity  Board  to  M/s  Shanti

Conductors  for  the  supply  of  various  types  of

conductors for a total consideration of Rs. 32.49

lacs. The supplies of the aforesaid goods were to

be made between January and February, 1993.  

4.   On  23.09.1992,  the  President  of  India

promulgated an ordinance, namely, the Interest

on  Delayed  Payment  to  Small  Scale  Ancillary

Industrial  Undertakings  Ordinance,  1992.

Subsequently,  on  02.04.1993,  the  Interest  on

Delayed  Payment  to  Small  Scale  and  Ancillary

Industrial Undertakings Act, 1993 (in short the

“Act”) was enacted and it was deemed to have

come into force with effect from 23.09.1992.   5.   Meanwhile, the supply of equipments under the

aforesaid purchase orders was completed by M/s

Shanti Conductors on 04.10.1993. On 05.03.1994,

the entire payment of Rs. 2.15 crores against

the aforesaid supply orders was received by M/s

Shanti Conductors.    

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6.   Subsequently,  on  10.01.1997,  M/s  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 16.09.1998, inter-alia, raising the plea of

limitation and contending that the Act is not

applicable to the case of the appellant- M/s

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 of 23.75% p.a.

with monthly rests from the date of the suit

till realization.

7.   Aggrieved of the impugned judgment and order,

the  Electricity  Board  filed  Regular  First

Appeal No. 66 of 2000 before the High Court of

Gauhati.  Vide  order  dated  18.10.2001,  the

Division Bench of the High Court referred the

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matter to the Full Bench. The Full Bench framed

the  following  questions  that  needed  to  be

answered: “ 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?  

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?

iii)Whether the suit for recovery of interest  under  the  Delayed Payments  to  Small  Scale  and Ancillary  Industrial Undertakings Act, 1993 would not be  maintainable  if  no reservation  is  made  by  the supplier  retaining  to  it  the right to recovery interest under the Act when the payment(s) of the  principal  sum  is/are accepted,  though  these  may  be made  beyond  the  prescribed period?”

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The Full Bench of the High Court vide judgment

and order dated 05.03.2002 answered the reference

in  affirmative  by  holding  that  a  suit  for

interest alone could be filed. It further held

that the Act is applicable to contracts entered

into prior to 23.09.1992, i.e. the date on which

the Act came into force. It was further held that

the interest under the Act would be calculated

from 23.09.1992 till the payment is made to the

supplier.  Having  answered  the  reference  in  the

above  terms,  the  matter  was  sent  back  to  the

Division Bench for consideration of the appeal on

merits.  

8.  Accordingly, the matter was placed before the

Division  Bench  for  its  consideration  in

accordance with the decision of the Full Bench

of  the  High  Court  in  the  reference.  The

Electricity Board contended before the Division

Bench that this Court in the case of Purbanchal

Cables & Conductors Pvt. Ltd.  v.  Assam State

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Electricity Board & Anr.1 has held that the Act

is  applicable  only  to  the  agreements  entered

into after 23.09.1992. Accordingly, in terms of

the judgment of this Court in Purbanchal Cables

&  Conductors  Pvt.  Ltd.  (supra),  the  Division

Bench of the High Court vide judgment and order

dated 20.11.2012 set aside the judgment of the

Trial  Court  by  allowing  Regular  First  Appeal

No. 66 of 2000.

9.Similarly, in the connected appeals also, the

High Court had held in the impugned judgment

and orders therein that the appellants are not

entitled  for  the  interest  on  the  delayed

payment as the contracts had been entered into

prior to the commencement of the Act. Hence the

present appeals. 10. We have 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 of SLP (C) Nos.9924-9925 of

1  (2012) 7 SCC 462

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2013 and SLP (C) No. 538 of 2016 and Mr. Ajit

Kumar Sinha, learned senior counsel in appeal

arising out of SLP (C) No. 15274 of 2013. We

have also heard Mr. Vijay Hansaria, the learned

senior  counsel  appearing  on  behalf  of  the

Electricity Board.

11. Mr.  M.H.  Baig,  the  learned  senior  counsel

submits  that  the  respondents  cannot  claim  a

vested right in procedure, as the same is not a

matter  of  right  and  can  be  taken  away.  The

learned senior counsel places reliance on the

three Judge Bench decision of this Court in the

case  of  State  of  U.P.  v. Anand  Swarup2.  The

learned senior counsel contends that the Act is

applicable in respect of the contracts entered

into  by  the  Electricity  Board  with  the

appellants  herein  for  supply  of  goods.  Mr.

Basava Prabhu Patil and Mr. Ajit Sinha, learned

senior counsel appearing on behalf of some of

the appellants contend that the usage of the

2 (1974) 1 SCC 42

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words “transaction” and “supply order” as used

by this Court in the case of Assam Small Scale

Industries Development Corporation Ltd. v. J.D.

Pharmaceuticals3  is not the correct test to be

applied to determine whether the provisions of

the Act are applicable to the contracts entered

into prior to the coming of the Act into force.

It  is  contended  that  this  Court  in  the

aforesaid case has referred to the said words

without taking into consideration the Statement

of  Objects  and  Reasons  of  the  Act  and  the

parliamentary  debates  conducted  while

introducing the Bill before it was enacted. It

is further contended that the same words were

continued  to  be  used  in  the  case  of  Shakti

Tubes v. State of Bihar4, wherein it was held as

under: “21. We have considered the aforesaid rival submissions. This Court in Assam Small Scale Industries case has finally set at rest the issue raised by stating that as to what is to be considered

3  (2005) 13 SCC 19 4  (2009) 7 SCC 673

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relevant is the date of supply order placed by the respondents and when this Court used the expression “transaction” it only meant a supply order. The Court made it explicitly clear in para 37 of the  judgment  which  we  have  already extracted  above.  In  our  considered opinion there is no ambiguity in the aforesaid  judgment  passed  by  this Court. 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 i.e. placing of the supply orders and not the completion of the transactions which would be completed only when the payment  is  made.  Therefore,  the submission made by the learned Senior Counsel  appearing  for  the appellant-plaintiff fails.

22.  Consequently,  we  hold  that  the supply order having been placed herein prior to the coming into force of the Act, any supply made pursuant to the said supply orders would be governed not by the provisions of the Act but by the provisions of Section 34 of the CPC.”

In the above case, it was held that an Act cannot

be given retrospective effect. The learned senior

counsel  contend  that  what  was  however,  not

considered by this Court, is that though an Act

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may  not  be  given  retrospective  effect,  it  can

still have retroactive operation.

12. The learned  senior counsel appearing on behalf

of  the  appellants  place  strong  reliance  upon

another judgment of this Court in the case of

Modern Industries  v.  Steel Authority of India

Ltd.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 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  undertakings  were very  much  affected.  The  Small  Scale Industries Board—an apex advisory body on  policies  relating  to  small-scale industrial  units—also  expressed  its views that prompt payments of money by buyers should be statutorily ensured and mandatory provisions for payment of interest on the outstanding money, in case of default, should be made. It was felt that the buyers, if required under  law  to  pay  interest,  would refrain from withholding payments to small-scale  and  ancillary  industrial

5  (2010) 5 SCC 44

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undertakings. With these objects and reasons,  initially  an  ordinance, namely,  the  Interest  on  Delayed 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:

“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.”

This Court further held as under:

“23. The wholesome purpose and object behind the 1993 Act as amended in 1998 is to ensure that the buyer promptly pays the amount due towards the goods supplied or the services rendered by the  supplier.  It  also  provides  for payment of interest statutorily on the outstanding  money  in  case  of default...”

13. Further, reliance is placed on the decision of

this Court in the case of  Purbanchal Cables &

Conductors Pvt. Ltd. (supra) wherein the date

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of  “sale  agreement”  was  considered  to  be

crucial to determine the applicability of the

Act as under:

“52…… Since the Act envisages that the supplier has an accrued right to claim a higher rate of 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.”

It is contended that the term “sale agreement” is

not  defined  in  the  Act  and  thus,  cannot  be  a

legal test for applicability of the Act.

14. It is further contended that if the term “sale

agreement”  is  to  be  the  legal  test  for  the

applicability of the Act, then the same would

be  inconsistent   with  the  judgment  of  this

Court  in  Assam  Small  Scale  Industries

Development Corporation Ltd. (supra) where the

“sale  agreement”  was  prior  to  the  date  of

commencement of the Act yet the Court applied

the “transaction” and “supply order” test and

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applied  the  provisions  of  the  Act  on  such

“transactions” and “supply orders” which were

issued  on  or  after  the  aforesaid  date  of

commencement  of  the  Act.  If  the  “sale

agreement” test as has been held in Purbanchal

Cables  &  Conductors  Pvt.  Ltd. (supra)  is

applied, then the sellers in Assam Small Scale

Industries Development Corporation Ltd. (supra)

would  not  be  entitled  to  higher  rate  of

interest under the Act. It is further contended

that if “sale agreement” is taken to be the

legal test as to the applicability of the Act

then the same would also be inconsistent with

the decision of this Court in Modern Industries

(supra),  wherein  after  consideration  of  the

Aims and Objects of the Act, it was held that

interest is payable on “outstanding money” due

from the buyer in case of default. 15. The learned senior counsel further draw our

attention to the relevant statutory provisions

of the Act, which are extracted as under:

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“2(b)(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;

3. Liability  of  buyer  to  make payment.- Where any supplier supplies any goods or renders any services to any  buyer,  the  buyer  shall  make payment  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 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.

4.Date from which and rate at which interest is payable.- Where any buyer fails to make payment of the amount to the  supplier,  as  required  under section  3,  the  buyer  shall, notwithstanding anything contained in any  agreement  between  the  buyer  and the supplier or in any law for the time being in force, be liable to pay interest  to  the  supplier  on  that amount from the appointed day or, as the  case  may  be,  from  the  date immediately following the date agreed upon, at one and half time of prime

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Lending Rate charged by the State Bank of India.

Explanation.- For the purposes of this section,"  Prime  Lending  Rate"  means the Prime Lending Rate of the State Bank of India which is available to the best borrowers of the bank. 6.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  time  being  in  force,  the  buyer shall  be  liable  to  pay  compound interest  (with  monthly  interest)  at the rate mentioned in section 4 on the amount due to the supplier.”

Mr. Basava Prabhu Patil, learned senior counsel

contends that from a reading of Section 2(b) of

the Act, it becomes clear that “appointed day”

means  the  day  following  immediately  after  the

expiry of the period of thirty days from the day

of acceptance or the day of deemed acceptance of

any  goods  or  any  services  by  a  buyer  from  a

supplier. It is submitted that a careful reading

of Section 2(b) along with Sections 3, 4 and 5 of

the  Act  would  show  that  a  statutory  right  is

conferred  upon  the  suppliers  for  payment  of

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interest on the delayed payments. Therefore, the

provisions of the Act are retroactive in nature.

The learned senior counsel further contends that

the judgments of this Court sought to be relied

upon by the learned senior counsel appearing on

behalf  of  the  Electricity  Board  have  no

application to the facts of the instant case, as

in those cases two Judge Benches of this Court

have  not  correctly  examined  the  aforesaid

statutory  provisions  of  the  Act  while  holding

that the same is prospective in nature.  

16. Mr.  Ajit  Kumar  Sinha,  learned  senior  counsel

contends  that  the  provisions  of  the  Act  are

retroactive  in  nature  and  places  reliance  on

the decision of the Bombay High Court in the

case of Kingfisher Airlines Ltd. v. CCI6 and the

decision of this Court in the case of State of

Bombay  v.  Vishnu  Ramchandra7,  wherein  it  was

held as under:

6  2011 (100) CLA (Bom.) 7  AIR 1961 SC 307

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“There  are,  however,  statutes  which create  Do  new  punishment,  but authorise some action based on past conduct. To such  statutes,  if expressed  in  language  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  they  are  passed  to supply a  cure  to  an existing evil."  

Indeed, in that case  which  arose under the Married Women (Maintenance in Case of Desertion) Act, 1886, the Act  was  held  retrospective  without express words. 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."  

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.”

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The said principle was reiterated more recently

by this Court in the case of State of Maharashtra

v. Krishnarao Dudhappa Shinde8.

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 :- “Retroactive- Process  of acting  with  reference  to past occurrences.

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 Purbanchal Cables

&  Conductors  Pvt.  Ltd.  (supra)  are  clearly

contradictory to the decision of this Court in

the  case  of  Assam  Small  Scale  Industries

Development  Corporation  Ltd. (supra).  The

8  (2009) 4 SCC 219

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relevant paragraph of Purbanchal 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 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 37-38)

“37.  We  have  held  hereinbefore that  clause  8  of  the  terms  and conditions relates to the payments of  balance  10%.  It  is  not  in dispute  that  the  plaintiff  had demanded both the principal amount as  also  the  interest  from  the Corporation. Section 3 of the 1993 Act imposes a statutory liability upon the buyer to make payment for the supplies of any goods either on or before the agreed date or where there is no agreement before the  appointed  day.  Only  when payments are not made in terms of Section 3, Section 4 would apply. The 1993 Act came into effect from 23-9-1992  and  will  not  apply  to transactions  which  took  place prior to that date. We find that out of the 71 suit transactions, Sl. Nos. 1 to 26 (referred to in the penultimate para of the trial court  judgment),  that  is  supply

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orders  between  5-6-1991  to 28-7-1992, were prior to the date of the 1993 Act coming into force. Only the transactions at Sl. Nos. 27 to 71 (that is supply orders between 22-10-1992 to 19-6-1993), will attract the provisions of the 1993 Act.

38. The 1993 Act, thus, will have no application in relation to the transactions entered into between June 1991 and 23-9-1992. The trial court  as  also  the  High  Court, therefore,  committed  a  manifest error  in  directing  payment  of interest at the rate of 23% up to June 1991 and 23.5% thereafter.”

This Court in the abovesaid case held that any

substantial law can only be applied prospectively

unless  retrospective  operation  is  clearly  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

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actually examined whether the provisions of the

Act are retroactive in nature or not.

19. The learned senior counsel further submits that

the suit for interest alone is maintainable, as

held  by  this  Court  in  the  case  of  Modern

Industries (supra) as under:

      “45. It  is  true  that  word  “together” ordinarily  means  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 (1) or by making reference to  IFC  under  sub-section  (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 of Gauhati High Court in Assam State Electricity Board that  word  `together'  in  Section  6(1) 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….”

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20. The  learned  senior  counsel  further  refers  to

the  decision  of  this  Court  in  the  case  of

Purbanchal  Cables  &  Conductors  Pvt.  Ltd.

(supra)  and  submits  that  in  the  case,  the

correct factual and legal position as laid down

in  the  case  of  Assam  Small  Scale  Indutries

Development  Corporation  (supra)  has  not  been

appreciated.  Therefore, the suit filed by the

first  appellant  in  respect  of  the  interest

cannot be held as barred by  res judicata. In

support of this contention, the learned senior

counsel places strong reliance on the decision

of this Court in Sushil Kumar Mehta  v.  Gobind

Ram Bohra9, wherein it was held as under: “………a pure question of a law unrelated to facts which are  the  basis  or foundation of a right, cannot be deemed to be a matter in issue. The principle of res 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 asres  judicata.  But when  the  law  has  since  the  earlier decision had been altered by a competent authority or when the  earlier  decision

9  (1990) 1 SCC 193

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declares  a  transaction  to  be  valid despite prohibition by law it does not operate as res judicata. Thus a question of  jurisdiction  of  a  Court  or  of  a procedure  or  a  pure  question  of  law unrelated  to  the  right  of  the  parties founded  purely  on  question  of  fact  in the previous suit is not res judicata in the subsequent suit. A question relating to  jurisdiction  of  a  Court  or interpretation  of  provisions  of  a statute  cannot  be  deemed  to  have  been finally  determined  by  an  erroneous decision of a Court.”

      The learned senior counsel further places

reliance on the three Judge Bench decision of this

Court in the case of Mathura Prasad Bajoo Jaiswal

v. Dossibai N.B. Jeejeebhoy10, wherein it was held

as under:  “...But  the  doctrine  of  res  judicata belongs to the domain of procedure: it cannot be exalted to the status of a legislative  direction  between  the parties so as to determine the question relating  to  the  interpretation  of enactment affecting the jurisdiction of a  Court  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 matter in issue may be res judicata in another  proceeding  between  the  same

10  (1970) 1 SCC 613

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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 by  a  competent  court  is finally determined between the parties and cannot be re-opened between them in another  proceeding.  The  previous decision on a matter in issue alone is res  judicata:  the  reasons  for  the decision are not res judicata. A  matter in issue between the  parties  is  the right claimed by one partyand  denied by the other, and the claim of right from its very nature depends upon proof of  facts  and  application  of  the relevant law thereto. A pure question of law 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 also

places reliance on the decision of the Bombay

High Court in the case of Angel Infin Pvt. Ltd.

v. M/s 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  "debt"  appearing  therein

11  2007 (4) Mh.L.J. 618

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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 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  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  of  interest,  while  Article  19 refers  to  the  debt  of  loan.  Since there  are  various  types  of  debts provided  under  the  schedule  with different  periods  of  limitation  and different  dates  from  which  the limitation  begins  to  run,  the Parliament in Section 19 of the said Limitation  Act,  1963  has  advisedly used  the  generic  expression  "debt". This  debt  may  be  of  one  type  or another  type,  but  the  payment  on account of one type of debt cannot extend the period of limitation for another type of debt. Debt could be either for principal loan amount or it could be for interest.”

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The learned senior counsel contends that in the

instant case, the suit has been filed within the

period of limitation as the last payment was made

by the buyer on 05.03.1994, and Money Suit 21/97

was filed in March 1997. The period of limitation

would start running from then only.

22. The learned senior counsel further submits that

the  present  appeal  is  maintainable  even  in

light of the withdrawal of SLP (C) No. 12217 of

2001 in the case of  M/s Trusses & Towers (P)

Ltd. v. Assam State Electricity Board and Anr.

on 06.08.2001. It was stated therein that there

was an error in the judgment of the High Court.

Accordingly,  the  petitioner  therein  filed

Review Petition No. 75 of 2001 before the High

Court of Gauhati. The High Court on 19.03.2013

passed  an  order  in  the  said  Review  Petition

allowing  only  9%  simple  interest  per  annum.

Aggrieved of the said judgment and order, M/s

Trusses & Towers Pvt. Ltd. filed SLP (C) No.

15274 of 2013 on 10.04.2013. The learned senior

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counsel places reliance on the decision of this

Court in the case of Sushil Kumar Sen v. State

of Bihar12, wherein it was held as under: “2.  It  is  well  settled  that  the effect  of  allowing  an  application for review of a decree is to vacate the decree passed. The decree that is  subsequently  passed  on  review, whether  it  modifies,  reverses  or confirms  the  decree  originally passed, is a new decree superseding the original one...”

The learned senior counsel further places reliance

on the decision of this Court in the case of  DSR

Steel (Pvt.) Ltd.  v.  State of Rajasthan & Ors.13 ,

wherein it was held as under:

“25. Different situations may arise in  relation  to  review  petitions filed before a court or tribunal. 25.1. One of the situations could be where the review application is allowed, the decree or order passed by the court or tribunal is vacated and the appeal/proceedings in which the same is made are reheard and a fresh decree or order passed in the same. It is manifest that in such a situation  the  subsequent  decree alone is appealable not because it is an order in review but because it is a decree that is passed in a

12  (1975) 1 SCC 774 13  (2012) 6 SCC 782

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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 a court or tribunal makes an order in a review petition  by  which  the  review petition  is  allowed  and  the decree/order  under  review  is reversed or modified. Such an order shall  then  be  a  composite  order whereby the court not only vacates the  earlier  decree  or  order  but simultaneous with such vacation of the earlier decree or order, passes another decree or order or modifies the one made earlier. The decree so vacated  reversed  or  modified  is then the decree that is effective for  the  purposes  of  a  further appeal, if any, maintainable under law.”

23. On the other hand, Mr. Vijay Hansaria, learned

senior  counsel  appearing  on  behalf  of  the

Electricity Board places strong reliance upon

the  judgment  of  this  Court  in  the  case  of

Purbanchal  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

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in the instant case which has been filed for

claiming  interest  alone  is  not  maintainable.

The  learned  senior  counsel  further  contends

that the suit is barred by limitation. It is

submitted  that  the  last  date  of  supply  was

04.10.1993. Thus, the period of limitation for

recovery of amount of Rs.53.68 lakhs, which is

the amount due towards the interest on delayed

payments and the future interest @ 27% expired

on 03.10.1996.  

24. The  learned  senior  counsel  further  contends

that the case of the first appellant is not

maintainable  not  only  on  the  question  of

limitation but also in view of the decision of

this Court in the case of  Purbanchal Cables &

Conductors  Pvt.  Ltd. (supra)  wherein  the

appellant was also a party. In that case, this

Court  while  dismissing  the  appeal  reiterated

the legal principle that the provisions of the

Act  do  not  have  retrospective  effect.  The

learned senior counsel contends that the said

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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 Purbanchal Cables & Conductors Pvt.

Ltd. (supra) operates as res judicata.

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  of  law

would arise for consideration: i) Whether  provisions  of  the  Act  are

retroactive in nature? ii) Whether  non  consideration  of  this

aspect  of  the  matter  renders  the

decisions  of  this  Court  in  Modern

Industries (supra)  and  Purbanchal

Cables & Conductors Pvt. Ltd. (supra)

as sub silentio? iii) Whether  the  judgment  rendered  in

Purbanchal  Cables  &  Conductors  Pvt.

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Ltd. (supra) operates as  res judicata

in the instant case? iv) Whether  the  suit  filed  by  the

appellants is barred by limitation? v) Whether the appeal against the review

in  the  connected  matter  in  Civil

Appeal @ SLP (C) No.15274 of 2013 (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 submissions and judgments of this

Court referred to supra, issue Nos. 1 and 2 are

required  to  be  answered  in  favour  of  the

appellants for the following reasons: At  the  outset,  it  would  be  necessary  to

advert  to  the  statement  of  the  objects  and

reasons of the Act, the relevant parts of which

read as under: “  A policy statement on small scale industries was made by the Government in Parliament. It was stated at that time that suitable legislation would be brought to ensure prompt payment of  money  by  buyers  to  the  small industrial units.

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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, which is an apex  advisory  body  on  polices relating  to  small  scale  industrial units with representatives from all the States, governmental bodies and the industrial sector, also expressed this  view. It  was, therefore,  felt that  prompt  payments  of  money  by buyers should be statutorily ensured and mandatory provisions for payment of interest on the outstanding money, in case of default, should be made. The buyers, if required under law to pay  interest,  would  refrain  from withholding  payment  to  small  scale and  ancillary  industrial undertakings. .......”

Before  examining  the  decisions  of  this  Court  in

which  the  provisions  of  the  Act  have  been

interpreted, it would be useful to advert to the

provisions themselves and understand the scheme of

the Act.

Section 2(b) of the Act defines ‘appointed day’

as under:

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“b) "Appointed  day,  means  the  day following immediately after the expiry of the period of thirty days from the day of acceptance or the day of deemed acceptance  of  any  goods  or  any services by a buyer from a supplier. Explanation- For the purposes of this clause, - (i) 'The day of acceptance' means, - (a) The day of the actual delivery of goods or the rendering of services; or  (b) Where any objection is made in writing  by  the  buyer  regarding acceptance  of  goods  or  services within thirty days from the day of the  delivery  of  goods  or  the rendering  of  services,  the  day  on which  such objection  is removed  by the supplier;

(ii)'The  day  of  deemed  acceptance' means, where no objection is made in writing  by  the  buyer  regarding acceptance  of  goods  or  services within thirty days from the day of the  delivery  of  goods   or  the rendering of services, the day of the actual  delivery  of  goods  or  the rendering of services;

                      (emphasis laid by this Court)

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:

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3. Liability  of  buyer  to  make payment.--Where  any  supplier  supplies any goods or renders any services to any buyer,  the  buyer  shall  make  payment 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  appointed day. 4.  Date  from  which  and  rate  at  which interest  is  payable.--Where  any  buyer fails to make payment of the amount to the supplier, as required under section 3  the  buyer  shall,  notwithstanding anything  contained  in  any  agreement between the buyer and the supplier or in any law for the time being in force,   be liable to pay interest to the supplier on  that  amount  from  the  appointed  day or, as the case may be, from the day immediately  following  the  date  agreed upon,  at  such  rate  which  is  five  per cent.  points  above  the  floor  rate  for comparable lending.      Explanation.--For the purposes of this section, 'floor rate for comparable lending'  means  the  highest  of  the minimum  lending  rates  charged  by scheduled banks (not being co-operative banks)  on  credit  limits  in  accordance with the directions given or issued to banking  companies  generally  by  the Reserve Bank  of India under the Banking Regulation Act, 1949.(10 of 1949).”

                      (emphasis laid by this Court)

Section 3 of the Act lays down the liability of the

buyer  to  make  payment  before  the  appointed  day,

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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. 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 acceptance, which is

the  day  of  delivery  of  goods  or  rendering  of

services. In my considered view, 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 actual delivery

of goods or the rendering of services, and not the

date on which the transaction was entered into.

27. The interpretation of the provisions of the Act

has  been  the  subject  matter  of  four  recent

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decisions of this Court. Starting with the case

of  Assam  Scale  Industries  Development

Corporation  Ltd  (supra),  wherein  it  was

erroneously held that the Act came into force

with effect from 23.09.1992 and therefore the

provisions  of  the  Act  has  no  application  to

“transactions” which took place prior to that

date. This Court in the said case adverted to

the  words  “transaction”  and  “supply  order”

though they are not defined under Section 2 of

the Act. This Court further did not take into

consideration  the  statement  of  objects  and

reasons  of  the  Act  and  the  Parliamentary

debates  before  the  Act  was  enacted  while

arriving at the said conclusion regarding the

applicability of the Act.   28. While the statement of objects and reasons and

Parliamentary  debates  cannot  be  used  to

ascertain the meaning of the specific words of

an enactment, it is well settled position of

law  laid  down  by  various  decisions  of  this

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Court that the same can be used to understand

the  general  context  in  which  the  legislation

was passed by the Parliament, as well as the

evil it sought to remedy. A constitution bench

of this Court held in the case of State of West

Bengal v. Subodh Gopal Bose14 as under:  “It  is  well  settled  by  this  court that  the  statement  of  objects  and reasons is not admissible as an aid to the  construction  of  a  statute  (See Aswini Kumar Ghose 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  of  ascertaining  the conditions  prevailing  at  the  time which actuated the sponsor of the Bill to introduce the same and the extend and  urgency  of  the  evil  which  he sought to remedy.”

The  said  principle  of  law  was  reiterated  by  a

Seven-Judge Bench of this Court more recently in the

case of  State of Gujarat v. Mirzapur Moti Kureshi

Kasab Jamat15 as under: “Reference  to  the  Statement  of

Objects and Reasons is permissible for

14 AIR 1954 SC 92 15 (2005) 8 SCC 534

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understanding  the  background, antecedent  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. The Statement of Objects and Reasons was used by S.R. Das, J. for ascertaining the conditions prevalent at  that  time  which  led  to  the introduction  of  the  Bill  and  the extent and urgency of the evil which was sought to be remedied, in addition to testing the reasonableness of the restrictions  imposed  by  the  impugned provision.  In  his  opinion,  it  was indeed  very  unfortunate  that  the Statement of Objects and Reasons was not placed before the High Court 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 of India approved the use of Statement of Objects and Reasons for the purpose of  understanding  the  background  and the  antecedent  state  of  affairs leading upto the legislation.”

29. Again in the case of Shakti Tubes (supra) this

Court continued to use the words “transaction”

and “supply orders” as have been referred to in

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the  case  of  Assam  Small  Scale  Industries

Development  Corporation  Ltd. (supra).  It  was

held that the Act in question cannot be given

retrospective  effect.  On  this  aspect,  this

Court observed as under: “26. There is no dispute with regard to the fact that the Act in question is a welfare  legislation  which  was  enacted to  protect  the  interest  of  the suppliers  especially  suppliers  of  the nature of a small scale industry. But, at the same time, the intention and the purpose of the Act cannot be lost sight of and the Act in question cannot be given a retrospective effect so long as such an intention is not clearly made out and derived from the Act itself.”

    (emphasis laid by this Court)

While the Court made this observation, it did not

correctly appreciate the intention and purpose of

the Act, which was to ensure that the small scale

and  ancillary  industries  do  not  suffer  as  a

result of delay in payment of outstanding money

in cases of default.

    This Court in the case of Modern Industries

(supra),  interpreted  the  scope  of  the  Act  as

under:

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“9. The  1993  Act  was  sequel  to  a policy  statement  on  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 undertakings were very much  affected. The  Small  Scale Industries Board—an apex advisory body on  policies  relating  to  small-scale industrial  units—also  expressed  its views that prompt payments of money by buyers  should  be  statutorily  ensured and mandatory provisions for payment of interest on the outstanding money, in case of default, should be made. 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  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:

“An  Act  to  provide  for  and regulate  the  payment  of interest on delayed payments to small-scale  and  ancillary industrial undertakings and for

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matters connected therewith or incidental thereto.

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 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.”               (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  Shakti  Tubes

(supra), it was observed that the said cases have

no applicability to the facts of the case because

while  the  contract  had  been  entered  into  on

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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.

30. Thus,  while  the  ‘transaction’,  as  understood

from the meaning sought to be given to them in

the judgments of  Assam Small Scale Industries

Development Corporation Ltd. (supra) and Shakti

Tubes (supra)  was  entered  into  in  that  case

prior to the Act coming into force, the Act was

made applicable to it on the basis that the

contract has been altered after the Act came

into force. Essentially, what the decision in

the  case  of  Modern  Industries ends  up  by

introducing a new test for the applicability of

the Act, that of ‘date of contract alteration’.

This Court in the case of  Purbanchal Cables &

Conductors  Pvt.  Ltd. (supra),  has  held  as

under:

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“52… Since the Act envisages that the supplier has an accrued right to claim a higher rate of interest in terms of the Act, the same can only be said to accrue for sale agreements after the date of commencement of the Act i.e. 23-9-1992 and not any time prior.”

The said conclusion of the two Judge Bench has

been arrived at without noticing that the term

“sale agreement” has not been defined in the Act

and is not even a legal test for applicability of

the Act. If a “sale agreement” is taken to be the

legal test, the same would be inconsistent with

the judgment of this Court in the case of  Assam

Small  Scale  Industries  Development  Corporation

Ltd. (supra), wherein though the “sale agreement”

was prior to the date of commencement of the Act,

this  Court  held  that  it  was  the  date  of

“transaction”  and  “supply  order”  test  which

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

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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 same would also be inconsistent

with the decision of this Court in the case of

Modern 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

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  this  Court  in  the  four  cases

referred to supra.

33. As  I  have  already  discussed  above,  a

cumulative reading of the definition clauses of

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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.  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  action, the  Interest  on Delayed  Payments  to  Small  Scale  and Ancillary  Industrial  Undertakings Ordinance,  1992  (15  of  1992)  was promulgated  by  the  President  on  the 23rd September, 1992.”  

                  (emphasis laid by this Court)

  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:

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“Though the Act has been in operation for  a  period  of  five  years,  the problem of delays in the payment of outstanding dues to the small scale industrial units continues unabated. There  have  been  widespread discussions on the provisions of the Act among the various interest groups including  the  Departments  of  State Governments dealing with industries, banks  and  small  industry associations.  The  general  consensus emerged from such discussions is that certain  amendments  to  the  Act  are necessary in order to make it more effective  so  that  the  aims  and objectives of the Act are achieved.”

It was in the backdrop of this introduction that

Section  4  of  the  Act  was  inserted.  The

phraseology of the Section makes it amply clear

that the liability of the buyer arises after the

supply  of  the  goods  or  rendering  of  services.

Section  4  is  just  a  reiteration  of  the

legislative intent as to the applicability of the

Act, which is in those cases where the supply of

goods or rendering of services took place after

the coming into force of the Act.

35.    A  cumulative  reading  of  the  aforesaid

Sections of the Act shows that though a catena

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of cases which have been extensively adverted

to  in  the  case  of  Purbanchal  Cables  &

Conductors Pvt. Ltd. (supra) have held that the

statutory  provisions  of  the  1993  Act  do  not

have retrospective operation, they have failed

to consider the aforesaid statutory aspects in

a  proper  perspective  keeping  in  view  the

objects and reasons of the Act and the usage of

the non obstante 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  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,

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,

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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 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

alia, ‘appointed day’, ‘buyer’ and ‘supplier’.

Since  the  focus  of  the  Act  is  on  delayed

payment,  which  is  in  consonance  with  the

definition of the term ‘appointed day’ as well,

there  is  no  need  to  consider  when  the

‘transaction’ was entered into or the date of

the  ‘supply  order’.  Section  3  of  the  Act

clearly  provides  that  the  liability  of  the

buyer  to  make  payment  accrues  after  the

supplier supplies goods or renders any services

to the buyer. Thus, what was envisaged by the

legislature as delayed payment was payment of

the outstanding money due to the supplier after

the goods had been supplied, and after the date

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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 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 all. This is further supported by the use of the

non obstante clause in Section 4 of the Act. At

the cost of repetition, Section 4 of the Act is

extracted hereunder: “4.Date from which and rate at which interest is payable.- Where any buyer fails to make payment of the amount to  the supplier,  as required  under section  3,  the  buyer  shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay interest to  the  supplier  on  that amount from the appointed day or, as

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the  case  may  be,  from  the  date immediately following the date agreed upon, at one and half time of prime Lending  Rate  charged  by  the  State Bank of India.”            (emphasis laid by this Court)

The  use of  the non  obstante clause  before the

term “agreement” also makes it clear that once

the money becomes due, which is after the supply

of the goods and rendering services, the buyer is

liable  to  pay  the  statutory  interest  on  the

delayed payment to the supplier no matter what is

contained in the agreement between the buyer and

the supplier.

37. Further, even on the issue of retrospectivity,

what was required to be examined by this Court

in the aforesaid cases was whether by 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  Purbanchal Cables & Conductors Pvt.

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Ltd. (supra)  and  cases  mentioned  therein,

renders the said judgment sub silentio on this

question. The contention advanced by Mr. Vijay

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 Court

in  the  case  of  State  of  U.P.  &  Anr.  v.

Synthetics And Chemicals Ltd. & Anr.16, as well

as Arnit Das v. State of Bihar17 in support of

the  proposition  that  taking  note  of  the

hierarchical  character  of  judicial  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  Purbanchal Cables & Conductors

Pvt. Ltd. (supra) was non-consideration of the

relevant  statutory  provisions  of  the  Act

16  (1991) 4 SCC 139 17  (2000) 5 SCC 488

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adverted to above and interpreting the same for

the  purpose  of  examining  as  to  whether  the

provisions of the  Act would be retroactive in

nature  and  confer  a  statutory  right  on  the

supplier. Non-consideration  of  the  said

provisions in a proper perspective would render

the abovesaid judgment per incuriam, as held by

this  Court  in  State  of  U.P.  &  Anr.  v.

Synthetics And Chemicals Ltd. & Anr. (supra),

wherein it was held as under:

“39. But the problem has arisen due to  the  conclusion  in  the  case  of Synthetic  and  Chemicals.  The question  was  if  the  State legislature could levy vend fee or excise duty on industrial alcohol. The bench answered the question in the negative as industrial alcohol being  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 recorded  the  conclusion  extracted earlier. It was not 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

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under  Article  141  of  the Constitution or it is  per incuriam and is liable to be ignored.

40.‘Incuria’  literally  means ‘carelessness’.  In  practice  per incuriam appears  to  mean  per ignoratium.  English  courts  have developed  this  principle  in relaxation  of  the  rule  of  stare decisis.  The  ‘quotable  in  law’  is avoided  and  ignored  if  it  is rendered, ‘in ignoratium of a statute or other binding authority’. (Young v. Bristol Aeroplane Co. Ltd.). Same has  been  accepted,  approved  and adopted  by  this  Court  while interpreting  Article  141  of  the Constitution  which  embodies  the doctrine of precedents as a matter of law.  In  Jaisri  Sahu v.  Rajdewan Dubey this Court while pointing out the  procedure  to  be  followed  when conflicting  decisions  are  placed before  a bench  extracted a  passage from  Halsbury’s  Laws  of  England incorporating one of the exceptions when  the  decision  of  an  appellate court is not binding.”

Further, the cases referred to in the decision of

this Court in the case of  Purbanchal Cables &

Conductors  Pvt.  Ltd. (supra)  on  the  issue  of

prospectivity have no bearing to the facts of the

instant case. In one of the decisions cited in

Purbanchal Cables & Conductors Pvt. Ltd. (supra),

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which is the decision of this Court in the case

of Zile Singh v. State of Haryana18, a three judge

bench of this Court held as under: “It  is  a  cardinal  principle  of construction  that  every  statute  is prima facie prospective unless it is expressly or by necessary implication made  to  have  a  retrospective operation. But the rule in general is applicable  where  the  object  of  the statute is to affect vested rights or to impose new burdens or to impair existing  obligations.  Unless  there are words in the statute sufficient to  show  the  intention  of  the Legislature  to  affect  existing rights,  it  is  deemed  to  be prospective  only  'nova  Constitution 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, 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  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.”            (emphasis laid by this Court)

18 (2004) 8 SCC 1

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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

decision  in  the  case  of  Purbanchal  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 well.         

38. In  my  considered  view,  Purbanchal  Cables  &

Conductors  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

sub silentio on this aspect.  Therefore,  point Nos.  1 and  2 are  answered in

favour of the appellant-suppliers. Answers to Point Nos. 3,4 and 5:

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39. The  contention  raised  by  Mr.  Vijay  Hansaria,

the learned senior counsel appearing on behalf

of the Electricity Board on the question of res

judicata  is  wholly  untenable  in  law.  The

substantial question that was in issue in the

case  of  Purbanchal  Cables  &  Conductors  Pvt.

Ltd. (supra), this Court was not concerned with

the  issues  that  arose  in  Assam  Small  Scale

Industries  Development  Corporation  Ltd.

(supra),  the  findings  of  which  have  been

extracted supra. This Court was only concerned

with maintainability of a suit with regard to

the  interest  on  the  basis  of  the  statutory

provisions  of  the  Act,  in  relation  to  those

agreements which had been entered into prior to

coming  into  force  of  the  Act.  The  issue  of

whether an appellant is entitled to prefer a

claim on the interest as provided under Section

4  was  not  the  issue  decided  in  Purbanchal

Cables  &  Conductors  Pvt.  Ltd. (supra).

Therefore, the decision in the same cannot be

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said to operate as  res judicata. The material

and  substantial  issue  with  regard  to  legal

contention  was  not  framed  and  answered,

therefore, it does not operate as res judicata.

40. On the question of limitation, I answer the

same  in  favour  of  the  appellants  by  placing

reliance on Section 19 read with Article 25 of

the  Limitation  Act,  1963,  which  have  been

extracted as hereunder:

“19. Effect of payment on account of debt or of interest on legacy –

Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period 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  before  the 1st 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.

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Explanation - For the purposes of this section, -

(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.

25.  Acquisition  of  easement  by prescription –

(1) 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 interruption and for twenty years, and where any way or watercourse or the use of  any  water  or  any  other  easement (whether affirmative or negative) has been  peaceably  and  openly  enjoyed  by any person claiming title thereto as an easement  and  as  of  right  without interruption and for twenty years, the right to such access and use of light or air, way, watercourse, use of 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

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claim to which such period relates is contested.

(3) Where property over which a right is  claimed  under  sub-section  (1) 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 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 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

10.01.1997, the suit has been filed within the

period  of  limitation  as  prescribed  in  the

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Limitation Act. Though on this aspect of the

matter no finding has been recorded either by

the Trial Court or by the High Court, I answer

the question in favour of the appellants. 42. In  view  of  the  judgments  of  this  Court

referred to supra, upon which strong reliance

has been placed by Mr. Ajit Sinha, the learned

senior  counsel,  on  the  question  of

maintainability  of  the  appeal  filed  by  M/S

Trussees  &  Towers  Pvt.  Ltd  questioning  the

correctness of the judgment and order passed in

the Review Petition, we hold the same to be

maintainable in law. Answer to Point no. 6:   43. For the reasons stated supra, I answer the

points framed in these appeals in favour of the

appellants  as  stated  above.  The  appeals  are

accordingly  allowed.  All  pending  applications

are disposed of.

  In the Civil Appeals arising out of SLP (C)

Nos.  9924-9925  of  2013,vide  order  dated

17.02.2015, the appellants M/s Shanti Conductors

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were directed to pay an amount of Rs.38,70,000/-

back to the respondents. The respondents shall

refund  the  amount  to  the  appellants  with  9%

interest per annum within six weeks from the date

of receipt of the copy of this Order.

……………………………………………J.                                    [V. GOPALA GOWDA]

New Delhi,                        August 31, 2016  

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Reportable IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 8442-8443 OF 2016 [Arising out of SLP [C] Nos.9924-25 of 2013]

M/s. Shanti Conductors (P) Ltd. & Anr. … Appellants

Vs.

Assam State Electricity Board & Ors. … Respondents

With CIVIL APPEAL NO.8445 OF 2016

[Arising out of SLP [C] No.15274 of 2013] With

CIVIL APPEAL NO.8448 OF 2016 [Arising out of SLP [C] No.9898 of 2014]

And CIVIL APPEAL NO.8450 OF 2016

[Arising out of SLP [C] No.538 of 2016]

J U D G M E N T

ARUN MISHRA, J.

1. Leave granted.

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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 mentioned hereinafter.  

3. It  is  not  in  dispute  that  the  Assam State  Electricity  Board  had  placed

supply orders on 31.3.1992 and 13.5.1992 and the Act called “The Interest on

Delayed Payments to  Small  Scale  and Ancillary Industrial  Undertakings Act,

1993” (hereinafter referred to as “the Act of 1993”) came 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 10.1.1997.  

4. My learned Brother has held that the decisions in  Purbanchal Cables &

Conductors Pvt. Ltd. v. Assam State Electricity Board & Anr. (2012) 7 SCC 462,

Assam Small  Scale  Industries  Development  Corporation  Ltd.  & Ors.  v. J.D.

Pharmaceuticals & Anr. (2005) 13 SCC 19 and Shakti Tubes v. State of Bihar &

Ors. (2009) 7 SCC 673 etc. have not been correctly decided, therefore are  per

incuriam and  sub silentio.  The Act has retroactive operation. It has also been

opined that the decision in Purbanchal Cables (supra) decided along with Shanti

Conductors does not operate as res judicata.   

5. It is apparent from the name of the Act itself that the same is to provide

interest on delayed payments to small scale and ancillary industrial undertakings.

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The Act has as many as 11 sections. Section 1 deals with the extent of operation

and  date  of  its  commencement.  The  Act  came  into  force  on  23 rd 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 :

“2(b) "appointed day” means the day following immediately after the expiry of the period of thirty days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier;

    Explanation,- For the purposes of this clause, -   (i) ‘the day of acceptance’ means, - (a) the day of the actual delivery of goods or the rendering

of services; or  (b) where any objection is made in writing by the buyer

regarding acceptance of goods or services within thirty days  from  the  day  of  the  delivery  of  goods  or  the rendering of services, the day on which such objection is removed by the supplier;

(ii) “the  day  of  deemed  acceptance”  means,  where  no objection  is  made  in  writing  by  the  buyer  regarding acceptance of goods or services within thirty days from the day of the delivery of goods  or the rendering of services, the day of the actual delivery of goods or the rendering of services;

(c) “buyer” means whoever buys any goods or receives any services from a supplier for consideration;”

6. Section 3 deals with the liability of buyer to make payment. Payment has

to be made by the buyer before the appointed day if there is no agreement to the

contrary  in  writing  between  the  buyer  and  supplier.  Section  3  is  extracted

hereunder :

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“3.  Liability  of  buyer  to  make  payment.-- Where  any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where  there  is  no  agreement  in  this  behalf,  before  the appointed day:

Provided  that  in  no  case  the  period  agreed  upon between the supplier and the buyer in writing shall  exceed one hundred and twenty days from the day of acceptance or the day 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  to  pay  interest  from  the

appointed day or  from the date immediately following the date agreed to,  at

one-and-half time of Prime Lending Rate charged by the State Bank of India

which is  available  to  the  best  borrowers  of  the  bank.  Section  4  is  extracted

hereunder :

“4. Date from which and rate at which interest is payable.—Where  any buyer  fails  to  make payment  of  the amount to the supplier, as required under section 3, the buyer shall,  notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay interest to the supplier on that amount from the appointed day or, as the case may be, from the  date  immediately  following  the  date  agreed  upon,  at one-and-half  time  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

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Bank of India which is available to the best borrowers of the bank.”     

8. Section 5 contains a non-obstante clause with regard to agreement to the

contrary or any law for the time being in force in case buyer fails to pay before

the appointed day. The buyer  shall  be liable  to  pay compound interest,  with

monthly  interest,  at  the  rate  mentioned  in  section  4.  Section  5  is  extracted

hereunder :

“5.  Liability  of  buyer  to  pay  compound  interest.— Notwithstanding  anything  contained  in  any  agreement between a supplier and a buyer or in any law for the 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.”

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 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 7B deal  with  establishment  of

Industry Facilitation Council and its composition. Section 7C requires the State

Government to lay before the State Legislature every notification and rule made

by the State Government after it is issued or made. Section 8 requires a buyer in

case  of  audit  to  specify  the  amount  together  with  the  interest  in  his  annual

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statement  of  accounts  as  remains  unpaid  to  any  supplier  at  the  end of  each

accounting year. Section 9 provides that interest not to be allowed as deduction

from income of a buyer under the provisions of Income Tax Act. The Act has the

overriding effect over other laws as provided in section 10. Section 11 contains

the provisions with respect to repeal and saving.  

10. It is apparent from the provisions of the Act noticed above that none of the

provisions  in  the  various  sections  indicates  that  the  Act  is  retrospective  in

operation in any manner whatsoever. On the contrary, the Act requires payment

to  be  made  by  a  buyer  before  the  appointed  day  that  is  the  day  following

immediately  after  the  expiry  of  30  days  from the  date  of  acceptance  or  the

deemed  acceptance  of  the  delivery  of  the  goods  or  services.  The  day  of

acceptance means day of  actual  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 actual  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 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

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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 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 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 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  has  no  retrospective  operation  or  retroactive

operation. The Act does not contain any provision with respect to the existing

agreements as on the date of commencement of the Act that would be governed

by the provisions in force at the relevant time. The Act does not have the effect

of invalidating prior agreements. The liability to make the payment of higher

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interest cannot operate retrospectively. The provisions of the Act are 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

operation or  retroactive operation.  

Taking note of the various provisions of the Act, it is apparent that the Act

of 1993 is not retrospective in operation.  

11. In ‘Principles of Statutory Interpretation’ 14th Edn. by Justice G.P. Singh

revised by Justice A.K. Patnaik, on the basis of due consideration of catena of

judicial decisions, following discussion has been made at page 580, para 2(a)(ii)

with respect to retrospectivity of a statute :         

“2.  RETROSPECTIVE OPERATION

(a)General principles

(i) xxx xxx xxx (ii) Statutes  dealing  with  substantive  rights.-  It  is

cardinal  principle  of  construction  that  every statute  is  prima  facie prospective  unless  it  is expressly or  by necessary implication made to have  retrospective  operation.   There  is  a presumption  of  prospectivity  articulated  in  the legal  maxim  ‘nova  constitutio  futuris  formam imponere debet non praeteritis’,  i.e. ‘a new law ought to regulate what is to follow, not the past’, and this presumption operates unless shown to the contrary by express provision in the statute or  is  otherwise  discernible  by  necessary implication.  But the rule in general is applicable

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where the object of the statute is to affect vested rights  or  to  impose  new burdens  or  to  impair existing obligations.  Unless there are words in the statute sufficient to show the intention of the Legislature  to  affect  existing  rights,  it  is “deemed  to  be  prospective  only  –  “nova constitutio  futuris  formam imponere debet  non praeteritis’.   In  the  words  of  LORD BLANESBURG,  “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  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 be intended not to have a retrospective effect.”

12. The Act of 1993 contains no provision which it can be 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  by

subsequent prohibition or provision.

13. This  Court  in  Assam Small  Scale  Industries  Development  Corporation

Ltd. (supra)  has considered the applicability of  the Act of  1993 and has laid

down thus :

“37. We have held hereinbefore that clause 8 of the

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terms and conditions relates to the payments of balance 10%. It is not in dispute that the plaintiff had demanded both the principal amount as also the interest from the Corporation. Section 3 of the 1993 Act imposes a statutory liability upon the  buyer  to  make payment  for  the supplies  of  any goods either  on  or  before  the  agreed  date  or  where  there  is  no agreement before the appointed day. Only when payments are not made in terms of Section 3, Section 4 would apply. The 1993 Act came into effect from 23-9-1992 and will not apply to transactions which took place prior to that date. We find that out of the 71 suit transactions, Sl. Nos. 1 to 26 (referred to in the penultimate para of the trial court judgment), that is supply orders between 5-6-1991 to       28-7-1992, were prior to  the  date  of  the  1993  Act  coming  into  force.  Only  the transactions  at  Sl.  Nos.  27  to  71  (that  is  supply  orders between 22-10-1992 to 19-6-1993), will attract the provisions of the 1993 Act.

38. The  1993 Act,  thus,  will  have  no application  in relation to the transactions entered into between June 1991 and  23-9-1992.  The  trial  court  as  also  the  High  Court, therefore, committed a manifest error in directing payment of interest  at  the  rate  of  23%  up  to  June  1991  and  23.5% thereafter.

39. xxx xxx xxx 40. We, therefore, are of the opinion that in relation to

the transactions made prior to coming into force of the said Act, simple interest at the rate of 9% per annum, which was the bank rate at the relevant time, shall be payable both prior to date of filing of the suit and pendente lite and as future interest  in  terms  of  Section  34  of  the  Code  of  Civil Procedure. Interest, however, will be payable in terms of the provisions of the 1993 Act (compound interest at the rate of 23.5% per annum) in relation to the transactions made after coming  into  force  of  the  Act,  both  in  respect  of  interest payable up to the date of institution of the suit and pendente lite  and  till  realisation.  The  judgment  and  decree  to  that extent requires to be modified. It is directed accordingly.”

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This Court has clearly 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 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  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  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’ 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 Industries’s case

(supra) and has laid down in Shakti Tubes (supra) thus :

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“17. In the light of the said facts in Assam Small Scale 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 Sl. Nos. 1 to 26 immediately and before coming into effect of the Act and rest of the supply orders, namely, supply orders at Sl.  Nos.  27  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 the judgment  that  the  Act  will  have  no  application  to  the transactions that took place prior to the commencement of the Act. In the next sentence the court made it clear as to what is referred  to  and understood by the  expression “transaction” when it clearly stated that out of 71 transactions, Sl. Nos. 1 to 26 i.e. supply orders between      5-6-1991 to 28-7-1992 being prior  to  23-9-1992  when  the  Act  came  into  force,  higher interest as envisaged under Sections 4 and 5 of the Act cannot be  paid  and  demanded  in  respect  of  the  said  supply orders/transactions.  It  was  also  made  clear  that  the transactions  at  Sl.  Nos.  27  to  71  only  i.e.  supply  orders between 22-10-1992 to            19-6-1993, would attract the provisions of the Act. Therefore, those supply orders which were  issued  by  the  Corporation  between  22-10-1992  to 19-6-1993 were held to be the transactions which would be entitled to get the benefit of the provisions of the Act.

18. In our considered opinion, the ratio of the aforesaid decision  in  Assam  Small  Scale  Industries  case  (supra) is clearly applicable and would squarely govern the facts of the present case as well. The said decision was rendered by this Court  after  appreciating  the  entire  facts  as  also  all  the relevant laws on the issue and therefore, we do not find any reason to take a different view than what was taken by this Court in the aforesaid judgment. Thus, we respectfully agree with the aforesaid decision of this Court which is found to be rightly  arrived  at  after  appreciating  all  the  facts  and circumstances of the case.

x x x x x 20. Being  faced  with  the  aforesaid  situation,  the

learned Senior Counsel appearing for the appellant-plaintiff sought to submit before us that the decision of this Court in

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Assam  Small  Scale  Industries  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 case after  coming  into  force  of  the  Act,  the  appellant-plaintiff would be entitled to the benefit of Sections 4 and 5 of the Act.  Refuting  the  aforesaid  submission,  the learned Senior Counsel  appearing  for  the  respondents  submitted  that  the aforesaid contention is completely misplaced. He pointed out that if such a meaning, as sought to be given by the learned Senior  Counsel  appearing  for  the  appellant-plaintiff,  is accepted that would lead to giving benefit of the provisions of the Act to unscrupulous suppliers who, in order to get the benefit of the Act, would postpone the delivery of the goods on one pretext or the other.

21. We  have  considered  the  aforesaid  rival submissions.  This  Court  in  Assam  Small  Scale  Industries case (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  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 Act, as made in para 37 of the judgment, are quite clear and apparent.  When this  Court  said  “transaction”  it  meant initiation of the transaction i.e. placing of the supply orders and not the completion of the transactions which would be completed only when the payment is  made.  Therefore,  the submission made by the learned Senior  Counsel  appearing for the appellant-plaintiff fails.

22. Consequently, we hold that the supply order having been placed herein prior to the coming into force of the Act, any supply made pursuant to the said supply orders would be governed  not  by  the  provisions  of  the  Act  but  by  the provisions of Section 34 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

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and wider meaning is to be given to such a beneficial and welfare legislation so as to protect the interest of the supplier who is being kept on a higher pedestal  by giving a higher benefit in the Act.

24. Generally, an  Act  should  always  be  regarded  as prospective  in  nature  unless  the  legislature  has  clearly intended the provisions of the said Act to be made applicable with retrospective effect.

“13. It is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have a retrospective operation. [The aforesaid] rule in general is applicable where the object of  the  statute  is  to  affect  vested  rights  or  to  impose  new burdens  or  to  impair  existing obligations.  Unless there are words in the statute sufficient to show the intention of the legislature  to  affect  existing  rights,  it  is  deemed  to  be prospective only—nova constitutio futuris formam imponere debet non praeteritis—a new law ought to regulate what is to follow,  not  the  past.  (See  Principles  of  Statutory Interpretation by  Justice  G.P. Singh,  9th  Edn.,  2004  at  p. 438.) It is not necessary that an express provision be made to make  a  statute  retrospective  and  the  presumption  against retrospectivity  may  be  rebutted  by  necessary  implication especially in a case where the new law is made to cure an acknowledged  evil  for  the  benefit  of  the  community  as  a whole (ibid., p. 440).”*

25. In Zile Singh v. State of Haryana (2004) 8 SCC 1 at p. 9, this Court observed as follows: (SCC pp. 9-10, paras 15-16)

“15. Though retrospectivity is not to be presumed and rather there is presumption against retrospectivity, according to Craies (Statute Law, 7th Edn.), it is open for the legislature to  enact  laws  having  retrospective  operation.  This  can  be achieved by express enactment or by necessary implication from the language employed. If it is a necessary implication from the language employed that the legislature intended a particular section to have a retrospective operation, the courts will  give  it  such  an  operation.  In  the  absence  of  a

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retrospective  operation  having  been  expressly  given,  the courts  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 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)

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  explanatory  and  declaratory  in  nature.  A  classic illustration  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 of 9s 4d, but the Act omitted to state that it was to be 9s 4d per cwt., and to remedy this omission another Customs Act (53 Geo. 3, c. 105) was passed later in the same year. Between the passing of these two Acts some hides were exported, and it was contended that they were not liable to pay the duty of 9s 4d per cwt., but Thomson, C.B., in giving judgment for the Attorney General, said: (ER p. 134)

‘The duty in this instance was, in fact, imposed by the first Act; but the gross mistake of the omission of the weight, for  which  the  sum  expressed  was  to  have  been  payable, occasioned the amendment made by the subsequent Act: but that had reference to the former statute as soon as it passed, and they must be taken together as if they were one and the same Act;’ (Price at p. 392)”

26. There is no dispute with regard to the fact that the Act in question is a welfare legislation which was enacted to protect the interest of the suppliers especially suppliers of the nature of a small-scale industry. But, at the same time, the intention and the purpose of the Act cannot be lost sight of and the Act in question cannot be given a retrospective effect

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so  long  as  such  an  intention  is  not  clearly  made  out  and derived from the Act itself.”

15. The case of appellant - M/s. Shanti Conductors Pvt. Ltd. arose out of same

lis which was decided along with Purbanchal Cables (supra) in which a Division

Bench of this Court has similarly answered the questions involved conclusively

before remanding the matter to High Court for deciding the appeals. The factual

background of M/s. Shanti Conductors (P) Ltd. case has been duly considered by

this Court. It is 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 construction is the same

for all  statutes whether fiscal  or otherwise.  The underlying principle is that the meaning and intention of a 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.

33. In Zile Singh v. State of Haryana (2004) 8 SCC 1 this  Court  observed  that  there  were  four  relevant  factors which needed to be considered while considering whether a statute  applied prospectively or  retrospectively:  (SCC p.  9, para 15)

“15.  …  Four  factors  are  suggested  as  relevant:  (i) general  scope  and  purview  of  the  statute;  (ii)  the  remedy sought to be applied; (iii) the former state of the law; and (iv) what it was the legislature contemplated.”

34. The general scope of the Act has been discussed above. The remedy sought to be applied by the Act is made clear in the Statement of Objects and Reasons, in which, it is

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stated  that  due  to  the  delayed  payments  by  buyers  to  the small-scale  industries,  their  working  capital  was  being affected, causing great harm to the small-scale industries in general.  This  Act  was  passed  by  Parliament  to  impose  a heavy interest on the buyers who delayed the payments of the small-scale  industries,  in  order  to  deter  the  buyers  from delaying the payments after accepting the supplies made by the suppliers.

35. The  policy  statement  of  the  Ministry  of  Micro, Small and Medium Enterprises dated 6-8-1991, reads:

“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 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 examine rights of the supplier qua the buyer prior to the commencement of the Act. In case of delayed payment, the supplier, prior to the commencement of the Act, was required to file a suit  for the payment of the principal  amount, and could  claim interest  along  with  the  principal  amount.  The supplier could avail of the same under Section 34 of the Code of Civil Procedure, 1908 (hereinafter referred to as “CPC”), Section 61 of the Sale of Goods Act, 1930 and Section 3 of the Interest Act, 1978.

37. In other words, the supplier whose payment was delayed by the buyer prior to the commencement of the Act, could file a suit for payment of the principal amount along with the interest. The supplier, thus, had the vested right to claim the principal amount along with interest thereon in case of a delay in payment by the buyer and it was the discretion of the court to award this interest.

38. The court has the discretion to award interest along with the principal amount and the same is clear from the use of the word “may” in all  the three provisions cited above.

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Section 34 CPC is the main provision under which interest could be awarded by the court and Section 61 of the Sale of Goods Act, 1930 is an offshoot of Section 34 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 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, 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 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 Court in Bibi Sayeeda v. State of Bihar (1996) 9 SCC 516 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 ownership;  not  contingent;  not  subject  to be defeated by a condition precedent.’

Rights are ‘vested’ when right to enjoyment, present or prospective, has become property of some particular person or  persons  as  present  interest;  mere  expectancy  of  future benefits,  or  contingent  interest  in  property  founded  on anticipated continuance of existing laws, does not constitute vested  rights.  In  Webster’s  Comprehensive  Dictionary (International Edn.) at p. 1397 ‘vested’ is defined as:

‘[L]aw held  by  a  tenure  subject  to  no  contingency;

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complete;  established by law as  a  permanent  right;  vested interests.’”

41. A statute  creating  vested  rights  is  a  substantive statute. This Court, in  Dhenkanal Minor Irrigation Division v.  N.C. Budharaj  (2001) 2 SCC 721, opined: (SCC p. 742, 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 case13 while adverting to the question of substantive law has chosen to indicate by way of illustration laws such as Sale of Goods  Act,  1930  [Section  61(2)],  Negotiable  Instruments Act,  1881 (Section 80),  etc.  The provisions of  the Interest Act,  1839, which prescribe the general  law of interest  and become applicable in the absence of any contractual or other statutory provisions specially dealing with the subject, would also answer the description of substantive law.”

42. In  Thirumalai  Chemicals  Ltd. v.  Union  of  India (2011) 6 SCC 739 this Court comparing substantial law with procedural law, stated: (SCC pp. 748-49, paras 23-24)

“23.  Substantive  law  refers  to  a  body  of  rules  that creates,  defines  and  regulates  rights  and  liabilities.  Right conferred on a party to prefer an appeal against an order is a substantive  right  conferred  by  a  statute  which  remains unaffected  by  subsequent  changes  in  law, unless  modified expressly  or  by  necessary  implication.  Procedural  law establishes  a  mechanism  for  determining  those  rights  and liabilities  and  a  machinery  for  enforcing  them.  Right  of appeal being a substantive right always acts prospectively. It is  trite  law  that  every  statute  is  prospective  unless  it  is expressly  or  by  necessary  implication  made  to  have retrospective operation.

24. Right of appeal may be a substantive right but the procedure  for  filing  the  appeal  including  the  period  of limitation  cannot  be  called  a  substantive  right,  and  an 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

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thereby that it will apply even to acts or transactions under the repealed Act.”

43. In Shyam Sunder v. Ram Kumar (2001) 8 SCC 24, a Constitution Bench of this Court discussing the scope and ambit of a declaratory law has observed: (SCC p. 49, para 39)

“39.  Lastly,  it  was  contended  on  behalf  of  the appellants that the amending Act whereby new Section 15 of the Act has been substituted is declaratory and, therefore, has retroactive operation. Ordinarily when an enactment declares the previous law, it  requires to be given retroactive effect. The function of a declaratory statute is to supply an omission or  to  explain  a  previous  statute  and  when  such  an  Act  is passed, it comes into effect when the previous enactment was passed. The legislative power to enact law includes the power to  declare  what  was  the  previous  law  and  when  such  a declaratory Act is passed, invariably it has been held to be retrospective. Mere absence of use of the word ‘declaration’ in an Act explaining what was the law before may not appear to  be  a  declaratory  Act  but  if  the  court  finds  an  Act  as declaratory  or  explanatory,  it  has  to  be  construed  as retrospective.  Conversely  where  a  statute  uses  the  word ‘declaratory’, the words so used may not be sufficient to hold that the statute is a declaratory Act as words may be used in order to bring into effect new law.”

44. In  Katikara  Chintamani  Dora v.  Guntreddi Annamanaidu  (1974) 1 SCC 567 this  Court  held:  (SCC p. 582, para 50)

“50.  It  is  well  settled  that  ordinarily,  when  the substantive law is altered during the pendency of an action, rights of the parties are decided according to law, as it existed when the action was begun unless the new statute shows a clear intention to vary such rights (Maxwell on Interpretation of Statutes, 12th Edn. 220). That is to say, ‘in the absence of anything in  the Act,  to  say  that  it  is  to  have  retrospective operation, it cannot be so construed as to have the effect of altering the law applicable to a claim in litigation at the time when the Act is passed’.”

45. In Govind Das v. ITO (1976) 1 SCC 906 this Court speaking through P.N. Bhagwati,  J.  (as  he then was) held:

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(SCC p. 914, para 11) “11.  Now  it  is  a  well-settled  rule  of  interpretation

hallowed by time and sanctified by judicial  decisions that, unless  the  terms  of  a  statute  expressly  so  provide  or necessarily require it,  retrospective operation should not be given to a statute so as to take away or impair an existing right  or  create  a  new obligation or  impose  a  new liability otherwise than as regards matters of procedure. The general rule as stated by Halsbury in Vol. 36 of the Laws of England (3rd Edn.) and reiterated in several decisions of this Court as well  as  English  courts  is  that  all  statutes  other  than those which are merely declaratory or which relate only to matters of procedure or of evidence are prima facie prospective and retrospective operation should not be given to a statute so as to affect,  alter or destroy an existing right or create a new liability  or  obligation  unless  that  effect  cannot  be  avoided without doing violence to the language of the enactment. If the  enactment  is  expressed  in  language  which  is  fairly capable of either interpretation, it  ought to be construed as prospective only.”

46. In  Jose  Da  Costa v.  Bascora  Sadasiva  Sinai Narcornim (1976) 2 SCC 917 this Court held: (SCC p. 925, para 31)

“31.  Before ascertaining the effect  of the enactments 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 which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or  necessary intendment.’ (See  Delhi Cloth and General Mills Co. Ltd. v. CIT (1926-27) 54 IA 421, IA p. 425.)

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

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the rest of the career of the suit. There are two exceptions to the  application  of  this  rule  viz.  (1)  when  by  competent enactment  such right  of  appeal  is  taken away expressly or impliedly with retrospective effect and (2) when the court to which  appeal  lay  at  the  commencement  of  the  suit  stands abolished (see  Garikapati Veeraya v.  N. Subbiah Choudhry AIR 1957 SC 540 and  Colonial Sugar Refining Co. Ltd. v. Irving 1905 AC 369 : (1904-07) All ER Rep Ext 1620 [PC]).”

47. In K. Kapen Chako v. Provident Investment Co. (P) Ltd. (1977) 1 SCC 593 this Court discussing the dicta of the English  courts  on  the  aspect  of  retrospectivity  observed: (SCC pp. 602-03, paras 37-39)

“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 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 instrument which had no effect at all, and from which the party was at liberty to depart as long as he pleased, binding, the prima facie construction of the Act is that it is not to be retrospective. (See  Gardner v. Lucas (1878) 3 AC 582 (HL).

38. In Moon v. Durden (1848) 2 Ex 22 : 154 ER 389 a question arose as to whether Section 18 of the Gaming Act, 1845  which  came  into  effect  in  August  1845  was retrospective  so  as  to  defeat  an  action  which  had  been commenced in June 1845. The relevant section provided that no  suit  shall  be  brought  or  maintained  for  recovering  any such sum of money alleged to have been won upon a wager. It was held that it was not retrospective. Parke, B. said: (ER p. 398)

‘It  seems a  strong thing to  hold,  that  the  legislature could have meant that a party, who, under a contract made prior to the Act,  had as perfect a title to recover a sum of

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money, as he had to any of his personal property, should be totally deprived of it without compensation.’

39.  Again in  Smithies v.  National Assn. of Operative Plasterers (1909) 1 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. 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) & Co. Ltd., In re (1875) 1 Ch D 48. If the legislature forms a new procedure  alterations  in  the  form  of  procedure  are retrospective unless there is some good reason or other why they should not be. In other words, if a statute deals merely with the procedure in an action, and does not affect the rights of  the  parties  it  will  be  held  to  apply  prima  facie  to  all actions, pending as well as future.”

48. In  Dahiben v.  Vasanji  Kevalbha  1995  Supp  (2) SCC 295 this Court held: (SCC pp. 299-300, para 12)

“12.  As  the  amendment  in  question  is  not  to  a procedural law, it may be stated that the settled principle of interpretation, where substantive law is amended, is that the same  does  not  operate  retrospectively  unless  it  is  either expressly  provided  or  the  same  follows  by  necessary implication. Lest it be thought that a vested right cannot be taken away at all by retrospective legislation, reference may be made to  Rafiquennessa v.  Lal Bahadur  Chetri AIR 1964 SC 1511 where it was stated that even where vested rights are affected, legislature is competent to take away the same by means of retrospective legislation; and retrospectivity can be inferred even by necessary implication.”

49. In Zile Singh v. State of Haryana (2004) 8 SCC 1 this  Court  examined  the  various  authorities  on  statutory interpretation and concluded: (SCC pp. 8-9, paras 13-14)

“13. It is a cardinal principle of construction that every

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statute is prima facie prospective unless it is expressly or by necessary implication made to have a retrospective operation. But the rule in general is applicable where the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there are words in the statute sufficient to show the intention of the legislature to affect  existing  rights,  it  is  deemed  to  be  prospective  only —‘nova  constitutio  futuris  formam  imponere  debet  non praeteritis’—a new law ought to regulate what is to follow, not  the past.  (See  Principles of  Statutory Interpretation by Justice  G.P.  Singh,  9th  Edn.,  2004  at  p.  438.)  It  is  not necessary that an express provision be made to make a statute retrospective and the presumption against retrospectivity may be  rebutted  by  necessary  implication  especially  in  a  case where the new law is made to cure an acknowledged evil for the benefit of the community as a whole (ibid., p. 440).

14. The presumption against retrospective operation is not  applicable  to  declaratory  statutes….  In  determining, therefore, the nature of the Act,  regard must be had to the substance rather than to the form. If a new Act is ‘to explain’ an earlier Act,  it  would be without object unless construed retrospectively.  An  explanatory  Act  is  generally  passed  to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a statute is  curative  or  merely  declaratory  of  the  previous  law retrospective operation is generally intended…. An amending Act  may  be  purely  declaratory  to  clear  a  meaning  of  a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect (ibid., pp. 468-69).”

50. In State of Punjab v. Bhajan Kaur (2008) 12 SCC 112 this Court held: (SCC p. 116, para 9)

“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.”

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

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the supplier and a corresponding liability is imposed on the buyer.  This  Court,  time  and  again,  has  observed  that  any substantive  law  shall  operate  prospectively  unless retrospective operation is clearly made out in the language of the  statute.  Only  a  procedural  or  declaratory  law  operates retrospectively as there is no vested right in procedure.

52. In  the  absence  of  any  express  legislative intendment of the retrospective application of the Act, and by virtue of the fact that the Act creates a new liability of a high rate of interest against the buyer, the Act cannot be construed to have retrospective effect. Since the Act envisages that the supplier has an accrued right to claim a higher rate of interest in terms of the Act, the same can only 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.”

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 submission that the Court in Assam

Small 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 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  this Court in  Assam Small Scale Industries Development Corpn. Case  (2005)  13  SCC 19 did  not  specifically  consider  and decide the issue of whether the Act would apply to such of those contracts executed prior to the commencement of the

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Act but the supplies being made after the commencement of the Act.”

17. This Court in the case of  Purbanchal Cables (supra) has also considered

the effect of the binding precedent and sub silentio ruling since it was urged that

Assam Small Scale Industries case (supra) and Shakti Tubes (supra) did not lay

down the law correctly. This Court has rejected the submission thus :  

“Binding precedent or sub silentio ruling 56. However, the learned Senior Counsel appearing for

the  suppliers,  Shri  Rakesh  Dwivedi  and  Shri  Sunil  Gupta would contend that the decision of this Court is not a binding precedent.

57. Shri  Rakesh  Dwivedi,  learned  Senior  Counsel would submit that the decisions of this Court in Assam Small Scale Industries (2005) 13 SCC 19 and Shakti Tubes (2009) 7 SCC 673 regarding the prospective operation of the Act were not  law  declared  under  Article  141,  as  the  points  under consideration in those cases were different  from the issues raised  in  these  appeals.  He  would  further  submit  that  the question about operation of the Act for contracts concluded prior to 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 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  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 Assam Small Scale

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Industries (2005) 13 SCC 19 and Shakti Tubes (2009) 7 SCC 673 cannot be considered as precedents. The learned Senior Counsel  would  state  that  a  decision  would  not  apply  as  a precedent when the court has failed to consider the objects and purpose of the Act in question and also certain previous judgments of this Court. He would further contend that the aforesaid  judgments  suffer  from  the  sub  silentio  principle being rendered without full and adequate arguments on the issue. The learned Senior Counsel would also state that the Court did not look at the issue from the viewpoint canvassed presently.

59. The  learned  Senior  Counsel  would  rely  on  the decision of this Court in MCD v. Gurnam Kaur (1989) 1 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 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 Court 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 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 the relevant provisions. A decision should be treated as given per incuriam when  it  is  given  in  ignorance  of  the  terms  of  a statute or of a rule having the force of a statute. So far as the order shows, no argument was addressed to the court on the question whether or not any direction could properly be made compelling the Municipal Corporation to construct a stall at the  pitching  site  of  a  pavement  squatter.  Professor  P.J. Fitzgerald,  editor  of  Salmond on Jurisprudence,  12th Edn. explains the concept of sub silentio at p. 153 in these words:

A decision passes sub silentio, in the technical sense that  has  come  to  be  attached  to  that  phrase,  when  the particular  point  of  law  involved  in  the  decision  is  not

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perceived by the court or present to its mind. The court may consciously decide in favour of one party because of Point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided Point B in his favour; but Point B was not argued or considered by the court. 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 B. Point B is said to pass sub silentio.

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  court  granted  the  order.  No  consideration  was given  to  the  question  whether  a  garnishee  order  could properly be made on an account standing in the name of the liquidator. When, therefore, this very point was argued in a subsequent  case  before  the  Court  of  Appeal  in  Lancaster Motor Co. (London) Ltd. v. Bremith Ltd.  (1941) 1 KB 675 : (1941) 2 All ER 11 (CA), the Court held itself not bound by its previous decision. Sir Wilfrid Greene, M.R., said that he could not help thinking that the point now raised had been deliberately passed sub silentio by counsel in order that the point of substance might be decided. He went on to say that the point had to be decided by the earlier court before it could make  the  order  which  it  did;  nevertheless,  since  it  was decided ‘without argument, without reference to the crucial words of the rule, and without any citation of authority’, it was not binding and would not be followed. Precedents sub silentio and without argument are of no moment. This rule has ever since been followed. One of the chief reasons for the doctrine of precedent is that a matter that has once been fully argued and decided should not be allowed to be reopened. The weight accorded to dicta varies with the type of dictum. Mere  casual  expressions  carry no weight  at  all.  Not  every passing  expression  of  a  Judge,  however  eminent,  can  be treated  as  an  ex  cathedra  statement,  having  the  weight  of authority.”

60. In  State of U.P. v.  Synthetics and Chemicals Ltd. (1991)  4  SCC  139,  His  Lordship  R.M.  Sahai,  J.,  in  his

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concurring judgment set  out  the principles of  per  incuriam and sub silentio and has held thus: (SCC pp. 162-63, paras 40-41)

“40. ‘Incuria’ literally means ‘carelessness’. In practice per incuriam appears to mean per ignoratium. English courts have developed this principle in relaxation of the rule of stare decisis. The ‘quotable in law’ is avoided and ignored if it is rendered,  ‘in  ignoratium  of  a  statute  or  other  binding authority’. (Young v. Bristol Aeroplane Co. Ltd. 1944 KB 718 :  (1944)  2  All  ER  293  (CA) Same  has  been  accepted, approved and adopted by this Court while interpreting Article 141  of  the  Constitution  which  embodies  the  doctrine  of precedents  as  a matter  of  law. In  Jaisri  Sahu v.  Rajdewan Dubey  AIR 1962 SC 83 this  Court  while  pointing out  the procedure  to  be  followed  when  conflicting  decisions  are placed before a Bench, extracted a passage from Halsbury’s Laws of England incorporating one of the exceptions when the decision of an appellate court is not binding.

41.  Does  this  principle  extend  and  apply  to  a conclusion of law, which was neither raised nor preceded by any consideration.  In other  words can such conclusions be considered  as  declaration  of  law?  Here  again  the  English courts and jurists have carved out an exception to the rule of precedents. It has been explained as rule of sub silentio. ‘A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or  present  to  its  mind.’  (Salmond  on  Jurisprudence,  12th Edn.,  p.  153).  In  Lancaster  Motor  Co.  (London)  Ltd. v. Bremith Ltd. (1941) 1 KB 675 : (1941) 2 All ER 11 (CA) the Court  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 authority’. It was approved by this Court in MCD v. Gurnam Kaur  (1989) 1 SCC 101. The Bench held that, ‘precedents sub silentio 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 proceeds on consideration of issue cannot be deemed to be a

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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 decidendi. In B. Shama Rao v. UT of Pondicherry AIR 1967 SC 1480 it was observed, ‘it is trite to say that a decision is binding not because of its conclusions but  in  regard  to  its  ratio  and  the  principles,  laid  down therein’.  Any  declaration  or  conclusion  arrived  without application of mind or preceded without any reason cannot be deemed to be declaration of  law or  authority  of  a  general nature  binding  as  a  precedent.  Restraint  in  dissenting  or overruling is for sake of stability and uniformity but rigidity beyond reasonable limits is inimical to the growth of law.”

61. In Arnit Das (1) v. State of Bihar (2000) 5 SCC 488 this Court held: (SCC p. 498, para 20)

“20.  A decision  not  expressed,  not  accompanied  by reasons and not proceeding on a conscious consideration of an issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. That which has escaped in the judgment is not the ratio decidendi. This is the  rule  of  sub  silentio,  in  the  technical  sense  when  a particular point of law was not consciously determined. (See State of U.P. v.  Synthetics & Chemicals Ltd.  (1991) 4 SCC 139, SCC para 41.)”

62. In Tika Ram v. State of U.P. (2009) 10 SCC 689 it 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 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 and Shri Sunil Gupta, learned Senior Counsel seem attractive  at  the  first  blush,  we are  of  the  view, they lack merit. In Assam Small Scale Industries (2005) 13 SCC 19, the question of retrospective operation of the Act or whether past

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contracts  were  governed  by  the  Act,  was  argued  by  the learned Senior Counsel appearing for the respondent. In the said judgment this Court has observed: (SCC p. 30, para 19)

“19. … The 1993 Act, it was submitted, being also a beneficent  statute,  the  same  should  be  construed  liberally. The  Act,  Mr  Chowdhury  would  argue,  will  thus,  have  a retrospective effect.”

64. Further, in  Shakti Tubes Ltd.  (2009) 7 SCC 673, this  issue  was  canvassed  by  the  learned  counsel,  due  to which, this Court referred to the precedent in  Assam Small Scale  Industries  (2005)  13 SCC 19. The argument  on this point has been noted thus: (Shakti Tubes Ltd. case  (2009) 7 SCC 673, SCC pp. 676-77, paras 9-11)

“9.  According  to  the  appellant-plaintiff,  the  said interest has been claimed by the appellant-plaintiff since it is entitled to so claim in terms of the provisions of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (hereinafter referred to as ‘the Act’). Mr G.C. Bharuka, learned Senior Counsel appearing for the appellant-plaintiff drew our attention to the provisions of the Act and to the decision of this Court in  Assam Small Scale Industries Development Corpn. Ltd. 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 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 terms of the provisions of the Act.

10. Mr Bharuka contended that the earlier supply order which was issued on 16-7-1992 came to be materially 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.

11.  Mr  Dinesh  Dwivedi,  learned  Senior  Counsel appearing for the respondents strongly refuted the aforesaid submissions made by the learned Senior Counsel appearing

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for the appellant-plaintiff on the ground that the supply order was issued in the instant case on 16-7-1992 and therefore, in terms of and in line with the decision of this Court in Assam Small Scale Industries case (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 appellant-plaintiff.”

65. This Court in Shakti Tubes Ltd. (2009) 7 SCC 673 expressly rejected the argument of the learned Senior Counsel appearing for the appellant in that case, that the Act should be given  retrospective  effect  because  it  was  a  beneficial legislation, in paras 24 to 26, which have been set out below: (SCC pp. 681-83)

“24.  Generally, an Act should always be regarded as prospective  in  nature  unless  the  legislature  has  clearly intended the provisions of the said Act to be made applicable with retrospective effect.

‘13. It is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have a retrospective operation. [The aforesaid] rule in general is applicable where the object of  the  statute  is  to  affect  vested  rights  or  to  impose  new burdens  or  to  impair  existing obligations.  Unless there are words in the statute sufficient to show the intention of the legislature  to  affect  existing  rights,  it  is  deemed  to  be prospective only—nova constitutio futuris formam imponere debet non praeteritis—a new law ought to regulate what is to follow,  not  the  past.  (See  Principles  of  Statutory Interpretation by  Justice  G.P. Singh,  9th  Edn.,  2004  at  p. 438.) It is not necessary that an express provision be made to make  a  statute  retrospective  and  the  presumption  against retrospectivity  may  be  rebutted  by  necessary  implication especially in a case where the new law is made to cure an acknowledged  evil  for  the  benefit  of  the  community  as  a whole (ibid., p. 440).’ (Zile Singh case (2004) 8 SCC 1, SCC pp. 8-9, para 13)

25.  x x x x x  26.  x x x x x” 66. In Rampur Fertiliser Ltd.  (2009) 12 SCC 324 this

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Court  again examined the entire  scheme of  the Act  before following  the  dicta  of  this  Court  in  Assam  Small  Scale Industries  (2005)  13  SCC 19.  Even  in  Modern  Industries (2010) 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.”

It has been held in Shakti Tubes (supra) that in Rampur Fertiliser Ltd. v.

Vigyan Chemicals Industries (2009) 12 SCC 324, this Court has examined the

entire scheme of the Act and has followed the decision in  Assam Small Scale

Industries’ case (supra).  In  Modern Industries v. Steel Authority of India Ltd.

(2010) 5 SCC 44, this Court has also not differed from the same. This Court 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 Development Corporation Ltd. (supra)  was also rejected by a

Division Bench of this Court in Shakti Tubes (supra).

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  Waman Rao v.  Union of  India  (1981) 2 SCC

362, His Lordship Y.V. Chandrachud, C.J., speaking for the Constitution Bench, held: (SCC p. 393, para 40)

“40. It is also true to say that for the application of the rule  of  stare  decisis,  it  is  not  necessary  that  the  earlier

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decision or decisions of long standing should have considered and either accepted or rejected the particular 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, sufficient for invoking the rule of stare decisis that a certain decision was arrived at on a question which arose or was argued, no matter on what reason the decision rests or what is the basis of the decision. In other words, for the purpose of applying the rule of stare decisis, it is unnecessary to enquire or determine as to what was the rationale of the earlier decision which is said to operate as stare decisis.”

68. In Union of India v. Raghubir Singh (1989) 2 SCC 754, this Court held: (SCC p. 766, paras 8-9)

“8.  Taking  note  of  the  hierarchical  character  of  the judicial system in India, it is of paramount importance that the law declared by this Court should be certain, clear and consistent. It is commonly known that most decisions of the courts are of significance not merely because they constitute an adjudication on the rights of the parties and resolve the dispute  between  them,  but  also  because  in  doing  so  they embody a declaration of law operating as a binding principle in future cases. In this latter aspect lies their particular value in developing the jurisprudence of the law.

9. The doctrine of binding precedent has the merit of promoting a certainty and consistency in judicial decisions, and  enables  an  organic  development  of  the  law,  besides providing assurance to the individual as to the consequence of  transactions  forming  part  of  his  daily  affairs.  And, therefore, the need for a clear and consistent enunciation of legal principle in the decisions of a court.”

69. In Krishena Kumar v. Union of India (1990) 4 SCC 207, this Court observed: (SCC p. 233, para 33)

“33. Stare decisis et non quieta movere. To adhere to precedent and not to unsettle things which are settled. But it applies to litigated facts and necessarily decided questions. Apart from Article 141 of the Constitution of India, the policy of courts is to stand by precedent and not to disturb settled

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point. When court has once laid down a principle of law as applicable  to  certain  state  of  facts,  it  will  adhere  to  that principle,  and  apply  it  to  all  future  cases  where  facts  are substantially the same. A deliberate and solemn decision of court made after argument on question of law fairly arising in the case, and necessary to its determination, is an authority, or binding precedent  in  the  same court,  or  in  other  courts  of equal or lower rank in subsequent cases where the very point is  again  in  controversy  unless  there  are  occasions  when departure is  rendered necessary to  vindicate  plain,  obvious principles of law and remedy continued injustice. It should be invariably applied and should not ordinarily be departed from where  decision  is  of  long  standing  and  rights  have  been acquired  under  it,  unless  considerations  of  public  policy demand it.”

70. In Mishri Lal v. Dhirendra Nath (1999) 4 SCC 11 this Court held: (SCC p. 18, para 13)

“13. … It is further to be noted that  Meharban Singh case (1969) 3 SCC 542 came to be decided as early as 1970 and has been followed for the last three decades in the State of Madhya Pradesh and innumerable number of matters have been  dealt  with  on  the  basis  thereof  and  in  the  event,  a different  view  is  expressed  today,  so  far  as  this  specific legislation is concerned, it would unsettle the situation in the State  of  Madhya  Pradesh  and  it  is  on  this  score  also  that reliance on the doctrine of ‘stare decisis’ may be apposite. While it is true that the doctrine has no statutory sanction and the same is based on a rule of convenience and expediency and as also on ‘public policy’ but in our view, the doctrine should  and  ought  always  to  be  strictly  adhered  to  by  the courts of law to subserve the ends of justice.”

71. In Central Board of Dawoodi Bohra Community v. State  of  Maharashtra  (2005)  2  SCC  673,  a  Constitution Bench of this Court held: (SCC p. 680, para 8)

“8. In Raghubir Singh case (1989) 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 of law, as is done by the Supreme Court

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of the United States. Yet, His Lordship noticed, that having regard to the volume of work demanding the attention of the Supreme Court  of  India,  it  has  been found necessary as  a general rule of practice and convenience that the court should sit in divisions consisting of Judges whose number may be determined by the exigencies of judicial need, by the nature of the case including any statutory mandate relating thereto and by such other considerations which the Chief Justice, in whom such authority devolves by convention, may find most appropriate. The Constitution Bench reaffirmed the doctrine of  binding  precedents  as  it  has  the  merit  of  promoting certainty and consistency in judicial decisions, and enables an organic development of the law, besides providing assurance to  the  individual  as  to  the  consequence  of  transactions forming part of his daily affairs.”

72. In  Shanker Raju v.  Union of  India (2011) 2 SCC 132 this Court observed: (SCC p. 139, para 10)

“10.  It  is  a settled principle of  law that  a judgment, which  has  held  the  field  for  a  long  time,  should  not  be unsettled.  The doctrine of  stare  decisis  is  expressed in  the maxim stare decisis et non quieta movere, which means ‘to stand by decisions and not to disturb what is settled’. Lord Coke aptly described this in his  classic English version as ‘those things which 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.” (emphasis in original)

73. In  Fida  Hussain v.  Moradabad  Development Authority  (2011) 12 SCC 615 this Court held: (SCC p. 622, para 15)

“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 contentions canvassed by the parties to the lis and had come to the conclusion that the High Court has not committed any

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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 pertaining to the same villages. Therefore, it would not be 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 of ours is fortified by the judgment of this Court in Ballabhadas  Mathurdas  Lakhani v.  Municipal  Committee, Malkapur  (1970)  2  SCC  267,  wherein  it  was  held  that  a decision of this Court is binding when the same question is raised again before this Court, and reconsideration cannot be pleaded on the ground that relevant provisions, etc. were not considered by the Court in the former case.”

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  Court  speaking  through R.S. Pathak, C.J. held: (SCC p. 778, para 28)

“28.  We are of  the opinion that  a pronouncement of law  by  a  Division  Bench  of  this  Court  is  binding  on  a Division Bench of the same or a smaller number of Judges, and in order that such decision be binding, it is not necessary that it should be a decision rendered by the Full Court or a Constitution Bench of the Court.”

75. In  Union  of  India v.  Paras  Laminates  (P)  Ltd. (1990) 4 SCC 453 this Court has observed: (SCC pp. 457-58, para 9)

“9.  It is true that a Bench of two members must not lightly disregard the decision of another Bench of the same Tribunal  on  an  identical  question.  This  is  particularly  true when the earlier decision is rendered by a larger Bench. The rationale of this rule is the need for continuity, certainty and predictability  in  the  administration  of  justice.  Persons affected by decisions of Tribunals or courts have a right to expect that those exercising judicial functions will follow the reason or ground of the judicial decision in the earlier cases on  identical  matters.  Classification  of  particular  goods adopted in earlier decisions must not be lightly disregarded in

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subsequent decisions, lest such judicial inconsistency should shake public confidence in the administration of justice.”

76. Shri  Vijay  Hansaria,  learned  Senior  Counsel contends that a case for referring the matter to a larger Bench though is pleaded by the learned Senior Counsel, Shri Rakesh Dwivedi, this Court ought to test the same by the parameters laid  down  by  this  Court  in  CIT v.  Saheli  Leasing  and Industries  Ltd.  (2010)  6 SCC 384  to find out  whether  the matter deserves to be referred to a larger Bench.

77. In Saheli Leasing (supra), this Court held: (SCC p. 393, para 29)

“29. (x) In order to enable the court to refer any case to a larger Bench for reconsideration, it is necessary to point out that  particular  provision  of  law having  a  bearing  over  the issue  involved  was  not  taken  note  of  or  there  is  an  error apparent on its face or that a particular earlier decision was not  noticed,  which  has  a  direct  bearing  or  has  taken  a contrary view.”

78. The Constitution Bench of  this  Court  in  Keshav Mills Co. Ltd. v.  CIT,  AIR 1965 SC 1636 crystallised the position with regard to what the Court should do when a plea for consideration of an earlier judgment is made. It was held: (AIR p. 1644, para 23)

“23. … When it is urged that the view already taken by this  Court  should  be  reviewed  and  revised  it  may  not necessarily  be  an  adequate  reason  for  such  review  and revision to hold that though the earlier view is a reasonably possible view, the alternative view which is pressed on the subsequent  occasion  is  more  reasonable.  In  reviewing  and revising  its  earlier  decision,  this  Court  should  ask  itself whether in the interests of the public good or for any other valid 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  certainty and continuity in the interpretation of law in the country. Frequent exercise by this Court  of  its  power  to  review  its  earlier  decisions  on  the

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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  be consistently  avoided.  That  is  not  to  say  that  if  on  a subsequent  occasion,  the  court  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 of the said view is fully justified. It is not possible or desirable, and in  any case  it  would be  inexpedient  to  lay  down any principles which should govern the approach of the court in dealing with the question of reviewing and revising its earlier decisions.  It  would  always  depend  on  several  relevant considerations:—What is the nature of the infirmity or error on which a plea for a review and revision of the earlier view is based? On the earlier occasion, did some patent aspects of the question remain unnoticed,  or  was the attention of  the court  not  drawn  to  any  relevant  and  material  statutory provision, or was any previous decision of this Court bearing on the point not noticed? Is the court hearing such plea fairly unanimous that  there  is  such an error  in  the earlier  view? What  would  be  the  impact  of  the  error  on  the  general administration  of  law  or  on  public  good?  Has  the  earlier decision  been  followed  on  subsequent  occasions  either  by this Court or by the High Courts? And, would the reversal of the earlier decision lead to public inconvenience, hardship or mischief?  These and other  relevant  considerations must  be carefully borne in mind whenever this Court is called upon to exercise  its  jurisdiction  to  review  and  revise  its  earlier decisions.”

79. We are in full agreement with the view expressed in Keshav Mills case (1965) 2 SCR 908. The learned Senior Counsel Shri Rakesh Dwivedi has not been able to make out a  case  for  reconsideration of  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  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

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not considered in its entirety. In fact, the entire scheme of the Act has been considered in Rampur Fertiliser (2009) 12 SCC 324 and specific answer to the issue under 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 decision of the Division Bench of

this Court should be followed by another Bench of two Judges.

19. In Modern Industries (supra), a Division Bench of this Court has also held

that the Act of 1993 is prospective in operation is settled by two decisions of this

Court in  Assam Small Scale Industries’ case (supra) and  Shakti Tubes (supra).

This Court has observed that since the earlier contract got altered from time to

time, it was last altered on 29.4.1995. By that time Act of 1993 had already come

into force. Hence the date of alteration in the agreement was held to be material

for  the  applicability  of  the  provisions  of  the  Act.  In  Rampur  Fertiliser  Ltd.

(supra), a Division Bench of this Court has held that the provisions of the Act of

1993  are  prospective.  The  Court  considered  various  provisions  contained  in

sections 1, 3, 4, 5 and 10 of the Act. This Court followed the decision in Assam

Small Scale Industries’ case and has laid down thus :

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“14. It  was  held  in  Assam  Small  Scale  Industries Development  Corpn.  Ltd.  (1987)  3  SCC  80  that  the 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)  

“37.  x x x x x    38.   x x x x 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  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 was the subject-matter of the suit took place prior to 23-9-1992. This  position  is  clear  for  the  suit  itself  was  filed  on 31-10-1991 and therefore cause of action for filing the suit has to be prior in point of time.”     

20. In view of the aforesaid catena of decisions of this Court, it has to be held

that the Act of 1993 cannot be said to be retrospective in operation or having

retroactive operation. The question stands answered affirmatively beyond pale of

doubt and the decisions are binding on a Co-ordinate Bench. It cannot be said

that the decisions are sub silentio or per incuriam in any manner whatsoever and,

in my opinion, it is not open to the Co-ordinate Bench to take a different opinion.

There is no confusion with respect to meaning of transaction, supply order and

agreement.  This Court while deciding aforesaid cases was not in oblivion of

aims  and  objects  of  beneficial  legislation,  considered  same  and  it  has

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affirmatively pronounced on all the aspects.  Hence, I find no scope to dwell

further into the same arena to declare the various judgments to be  sub silentio,

per incuriam  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,  that  is  before  23.9.1992,  the

beneficial  provisions  of  the  Act  regarding  higher  interest  would  not  be

applicable.

22. In the case of appellant  M/s.  Shanti  Conductors (P) Ltd. itself  decided

along with Purbanchal Cables (supra) 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 before the High Court and the High

Court has rightly followed the decisions in  Purbanchal Cables & Conductors

(supra) decided along with M/s. Shanti Conductors (P) Ltd. The finding recorded

by this Court in the remand order is final and binding on the appellant- M/s.

Shanti Conductors (P) Ltd. They cannot question the same again in the instant

appeals.

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23. In view of the aforesaid discussion,  the appeals have no merit  and the

same deserve dismissal and are hereby dismissed. No costs.

New Delhi; ……………………………J. August  31, 2016. (Arun Mishra)

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ITEM NO.1B-For JUDGMENT       COURT NO.8           SECTION XIV                S U P R E M E  C O U R T  O F  I N D I A                        RECORD OF PROCEEDINGS C.A.  Nos.8442-8443/2016  @  Petition(s)  for  Special  Leave  to Appeal (C)  No(s).  9924-9925/2013 M/S SHANTI CONDUCTORS(P) LTD. & ANR.              Petitioner(s)                                 VERSUS ASSAM STATE ELECTRICITY BOARD & ORS.           Respondent(s) WITH C.A. No.8445/2016 @ SLP(C) No. 15274/2013 C.A. No.8448/2016 @ SLP(C) No. 9898/2014 C.A. No.8450/2016 @ SLP(C) No. 538/2016 Date  :  31/08/2016  These  matters  were  called  on  for pronouncement of JUDGMENTS today. For Petitioner(s)                      Mr. Devashish Bharuka,Adv.                                            Ms. Sneha Kalita,Adv. For Respondent(s)                      Ms. Sneha Kalita,Adv.                      Mr. P. I. Jose,Adv.                       

Hon'ble  Mr.  Justice  V.Gopala  Gowda  and Hon'ble  Mr.  Justice  Arun  Mishra  pronounced separate  judgments  of  the  Bench  comprising Hon'ble  Mr.  Justice  V.  Gopala  Gowda  and Hon'ble Mr. Justice Arun Mishra.

Leave granted.

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Since  there  is  divergent  opinion judgments in these appeals and disagreement on all the questions formulated, place the appeals before the Hon'ble the Chief Justice for appropriate orders.

Applications  for  intervention  are  kept pending for consideration of larger Bench.

 (VINOD KUMAR JHA)

AR-CUM-PS (SUMAN JAIN) COURT MASTER

(Two Signed Reportable judgments  are placed on  the file)