Case Note & Summary
The dispute originated from two separate suits filed by small-scale industrial undertakings, M/s Purbanchal Cables & Conductors Pvt. Ltd. and M/s Shanti Conductors Pvt. Ltd., against the Assam State Electricity Board for recovery of interest on delayed payments for supplies of Aluminium Conductors Steel Reinforced (ACSR). The Board placed orders in 1992, and the suppliers completed deliveries between September 1992 and October 1993. Although the Board eventually paid the principal amounts, the suppliers claimed statutory interest under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, which the Board declined. The suppliers filed money suits in 1996 and 1997, which were decreed by the trial courts. In the Purbanchal Cables case, the Gauhati High Court reversed the decree, holding that a suit for interest alone was not maintainable when no principal was due, relying on an earlier Division Bench decision in Trusses and Towers. In the Shanti Conductors case, a different Division Bench doubted the correctness of that view and referred the matter to a Full Bench. The Full Bench held that a suit for interest simpliciter is maintainable under the Act and that the Act applies to pre-commencement contracts where supplies were made after its enforcement. The Board appealed against the Full Bench decision, while the supplier in the first case appealed against the High Court's dismissal. The core legal issues before the Supreme Court were the maintainability of a suit for interest alone under Section 6 of the 1993 Act and the applicability of the Act to contracts concluded before its commencement. Citing the earlier decision in Modern Industries v. Steel Authority of India Limited, the Supreme Court approved the Full Bench reasoning, holding that the word 'together' in Section 6(1) means 'as well as' or 'along with', thereby permitting a suit for interest even when the principal sum has been paid. The Court further held that the Act, being a beneficial legislation for small-scale industries, operates retrospectively to cover prior contracts where the supplies and the consequent delay occurred after the Act came into force on 23 September 1992. Consequently, the appeals by the suppliers were allowed, and the Board's appeal was dismissed, affirming the maintainability of such suits and the applicability of the Act to the facts of both cases.
Headnote
A) Interpretation of Statutes - Maintainability of Suit for Interest - Section 6 Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 - The word 'together' in Section 6(1) means 'as well as' or 'along with', and the phrase 'the amount due from the buyer' includes any outstanding principal amount; a suit for recovery of interest alone is maintainable even if the principal sum has been paid, as the Act mandates payment of interest on delayed payments and its provisions override any agreement to the contrary (Paras 6, 11). B) Applicability of Statute - Retrospective Operation - Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 - The Act applies to contracts entered into before its commencement provided the supplies were made after the Act came into force i.e. after 23.09.1992; the liability to pay interest at the higher statutory rate arises for the period of delay occurring after the Act's commencement (Paras 5, 6). C) Supplier's Right to Interest - Waiver - Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 - Acceptance of the principal amount by the supplier without protest does not extinguish the right to claim interest under the Act, as the obligation to pay interest is statutory and cannot be contracted out of (Paras 11).
Issue of Consideration
Whether a suit for interest alone is maintainable under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993? Whether the Act applies to contracts concluded before its commencement when supplies are made after its commencement?
Final Decision
The Supreme Court approved the Full Bench decision, holding that a suit for interest alone is maintainable under Section 6 of the 1993 Act and that the Act applies to contracts entered before its commencement where supplies were made after the Act came into force. The appeals of the suppliers were allowed, and the appeal of the Board was dismissed.
Law Points
- Legal points not extracted
- Suit for interest simpliciter is maintainable under Sections 4
- 5
- and 6 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act
- 1993
- The Act applies to contracts entered before its commencement if supplies were made after the Act came into force
- The obligation to pay statutory interest is mandatory and overrides any agreement to the contrary
- Acceptance of the principal amount without protest does not bar a claim for interest under the Act
- The word 'together' in Section 6(1) means 'as well as' or 'along with' and does not require the principal sum to be due at the time of suit
