TMI Blog2009 (7) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... ed:- 7-7-2009 - Dr. Mukundakam Sharma And B. S. Chauhan,JJ. JUDGMENT 1. This appeal is directed against the judgment and order dated 22.02.2006, passed by the Patna High Court whereby the High Court partly allowed the appeal filed by the State of Bihar and others who are the respondents herein. 2. M/s. Shakti Tubes Ltd.-the appellant as plaintiff filed a suit which was registered as Money Suit No. 153 of 1997 praying for a decree for payment of Rs. 38,13,480/- with pendente lite and future interest compounding at monthly rest at the rate of 24% per annum on the aforesaid decreetal amount till realization with costs of the suit. The trial court decreed the said suit with costs in favour of the appellant-plaintiff and ordered for payment of interest compounding at monthly rest at 24% on the decreetal amount of Rs. 38,13,480/-. 3. Since the aforesaid decree was reversed by the High Court whereby the High Court while mentioning the decree for payment for Rs. 38,13,480/- reversed it to the extent of directing for payment of 9% interest per annum instead of 24% interest per annum, the present appeal is preferred by the appellant-plaintiff. 4. In order to effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... realization. 7. The respondents herein being aggrieved by the aforesaid judgment and decree dated 31.05.1999 passed by the trial court filled an appeal in the High Court of Patna which was registered as First Appeal No. 8 of 2000. The only issue raised in the appeal before the High Court was with regard to the decree for payment of higher interest than what the plaintiff was actually entitled to. The High Court considered the contentions of the parties and by its judgment and order dated 20.02.2006 directed that instead of compound interest with monthly rest at the rate of 24% per annum, the appellant-plaintiff would be entitled to simple interest at the rate of 9% per annum with effect from 01.06.1993 till realization. 8. Being aggrieved by the aforesaid judgment and order passed by the High Court, the appellant-plaintiff filed the present appeal before this Court. The only issue that arises for our consideration in the present appeal is as to whether the appellant-plaintiff is entitled to a direction for payment of interest compounding at monthly rest at the rate of 24% per annum. According to the appellant-plaintff, the said interest has been claimed by the appellant- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Act came into force on 23rd September, 1992. Section 2(b), 3, 4 and 5 are relevant for our purpose to enable us to answer the issue raised herein. Therefore the same are being reproduced hereinbelow : 2.Definitions.- In this Act, unless the context otherwise requires,- (a) "ancillary industrial undertaking" has the meaning assigned to it by clause (aa) of section 3 of the Industries (Development and Regulation) Act, 1951 (65 of 1951); (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 go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement 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 interests) at the rate mentioned in section 4 on the amount due to the supplier 12. The appellant-plaintiff, relying on the aforesaid provisions of the Act, sought a decree for payment of interest at the higher rate as mentioned in Section 4 which, according to the appellant-plaintiff, was payable with compound interest as provided for under Section 5 of the Act. 13. The aforesaid provisions of the Act came to be considered and interpreted by this Court in Assam Small Scale Industries case (supra) wherein the Supreme Court not only considered the ambit and scope of Section 34 of the Civil Procedure Code, 1908 (for short the CPC ) but also the ambit and scope of Sections 1, 3, 4, 5 and 10 of the Act. After discussing the said provisions, the Supreme Court in paragraphs 37 and 38 recorded its findings and conclusions in the following manner: Applicability of the 1993 Act 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 plaint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 26 immediately and before coming into effect of the Act and rest of the supply orders namely, supply orders at Serial Nos. 27 to 71 were placed between 22.10.1992 to 19.06.1993 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, Serial Nos. 1 to 26, i.e. supply orders between 05.06.1991 to 28.07.1992 being prior to 23rd September, 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 Serial Nos. 27 to 71 only i.e. supply orders between 22.10.1992 to 19.06.1993, would attract the provisions of the Act. Therefore, those supply orders which were issued by the Corporation between 22.10.1992 to 19.06.1993 were held to be the transactions which would be entitled to get the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted above. 21. 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 paragraph 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 read with the provisions of the Interest on Delayed Payment to Small Scale Industries Act, 1993. 23. At one stage the learned senior counsel appearing for the appellant plaintiff submitted that the Act in question is a beneficial legislation and, therefore, a liberal interpretation and wider meaning is to be given to such a beneficial and welfare legislation so as to protect the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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 the case of Attorney General v. Pougett (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply with extension of date of supply till 30.04.1993 and supplies were completed within that extended time. In support of his submission he sought to rely upon a judgment of the Bombay High Court in Andheri Bridge View Co-op. Hsg. Society Ltd. v. Krishnakant Anandrao Deo and others reported in 1991 AIR Bombay 129 wherein it was held that a new contract would come in existence in terms of Section 62 of the Contract Act. In the said judgment, the High Court observed as follows in para 13:- 13. Now, even if the parties have referred to an agreement as being not a new one but an old one with certain modifications, that would carry no weight if the law on the point is something contrary to what is understood by the parties. For example, we know that when there is a change in the constitution of a firm then the firm is a new partnership notwithstanding the fact that the parties may refer to it as the old partnership with a changed constitution. So also I would say that where there are material or substantial changes which go to the root of the agreement then this has to be regarded in law as a new agreement. What would be the position if the parties agree to sell property A and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t subsequently the Government thought it fit that the appellant- plaintiff may not be able to supply the prescribed quantity of goods which was earlier required by the Government and, therefore, they curtailed the quantity of the goods from 7 lakh metres of pipes to 4 lakh metres of pipes. In the process, the Government kept the contents of the supply order intact except a variation in the quantity to be supplied with extention of date of supply. However, the Government gave effect to the price escalation clause which was a part of the earlier supply order and also of the agreements which were entered into between the parties prior to the coming into force of the Act. Therefore, in our considered opinion the said contention, as raised by the learned senior counsel appearing for the appellant-plaintiff, has no legal and factual basis. 30. In any event, it is not possible to decide the aforesaid issue in this case as full factual foundation for such an argument was not placed before us so as to enable us to know as to why the quantity to be supplied by the appellant plaintiff was curtailed by the Government and as to why the appellant plaintiff was not supplying the goods despit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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