THE HON'BLE SRI JUSTICE N.V. RAMANA & THE HON'BLE SRI JUSTICE K.S. APPA RAO C.M.A Nos.963 & 998 OF 2008 COMMON JUDGMENT: (Per the Hon’ble Sri Justice N.V. Ramana) Both the appeals are filed against the common order, dated 28.1.2008 passed in A.O.P.Nos.1585 & 1586 of 2003, by the learned District Judge, Visakhapatnam. The facts that are necessary for disposal of the case are as follows: The 1st respondent awarded the petitioner in AOP No.1585 of 2003 the work of fabrication and erection of structural steel and cladding work of slag storage area in Zone-D (BF-1) in Visakhapatnam Steel Plant premises for a total cost of Rs.47,01,955.06 p.s. It is stipulated that the work has to be completed within a period of 15 months from the date of letter of Intent under the Articles of Agreement bearing No.VSP/CON.T/M-84/1986-1987, dated 23.1.1987. The 1st respondent awarded the petitioner in AOP No.1586 of 2003 the work of fabrication and erection of structural steel and cladding works in Blast Furnace-II, Group-A of Visakhapatnam Steel Plant for a total cost of Rs.73,04,350-00 ps. It is stipulated that the work has to be completed within a period of 18 months from the date of letter of intent, under the Articles of Agreement bearing Nos.VSP/CON.T/M-107/1987- 1988, dated 11.11.1987. After execution of the works, the petitioner in both the appeals submitted final bills for payment. In O.P.No.1585 of 2003, the 1st respondent denied the claims of the petitioner for additional works and the time overrun. The claims committee formed by the 1st respondent offered Rs.33 lakhs plus Rs.80 lakhs towards extra payment for items other than Bill of quantity. In O.P.No.1586 of 2003, the claims committee formed by the 1st respondent offered Rs.33 lakhs as final bill plus Rs.80 lakhs towards extra payment for items other than Bill of Quantity. It is the case of the petitioner in both the cases that by the date of constitution of the committee for settlement of the claims of the petitioner, Interest on delayed payment to Small Scale and Ancillary Industrial Undertakings Ordinance was issued on 23.9.1992 and it was made into Act in the year 1993 with retrospective operation from 23.9.1992 and as per Section 3 of the said Act payment has to be made by the date agreed upon between the parties in writing and in the absence of the same, within 30 days from the date of acceptance of the work, otherwise, interest has to be paid as per sections 4 & 5 for the delayed period. When the same was brought to the notice of the committee, it did not consider the claim for interest made by the petitioner in both the cases. Thereafter, the petitioner invoked the clause for appointment of Arbitrator and the 2nd respondent was appointed as Arbitrator to adjudicate upon the claims of the petitioner in both the cases. The learned Arbitrator after hearing both sides passed two awards of even date i.e., 30.7.2003 in respect of two different works under the two different contract agreements. The petitioner in O.P.No.1585 of 2003 before the learned Arbitrator put forth 14 claims for total amount of Rs.73,19,355.59 ps., against which the learned Arbitrator allowed the claims partly for a total sum of Rs.62,02,093/- whereas the petitioner in O.P.No.1586 of 2003, put forth 18 claims for a sum of Rs.2,44,81,369.94 ps.., against which the learned Arbitrator allowed the claims partly for a total sum of Rs.2,06,90,175/-. Assailing both the Awards, the petitioner filed O.Ps seeking to set aside the same in respect of the claims disallowed by the learned Arbitrator-2nd respondent. In the above O.Ps., the 1st respondent had taken a defence that the 2nd respondent was fully justified in disallowing the claims of the petitioner and therefore, the petitioner cannot claim the benefits of the said Act and that under the said Act, if the payment is delayed, it attracts higher interest than the rate of interest prescribed under the Interest Act, 1978 and it being penal in nature, the provisions of the said Act of 1993 cannot have any retrospective effect. The Court below placing reliance on the judgment of the Apex Court in Assam Small Scale Industries Development Corporation Limited Vs. M/s. J.D. Pharmaceuticals and another[1], dismissed the O.Ps. Hence, the present appeals. It is mainly contended by the learned Counsel for the appellant that the arbitrator as well as the Court below is not justified in not granting interest on delayed payments to small scale industries basing on the judgment of the Supreme Court (cited supra) and that the said judgment of the Supreme Court is not based on the judgments of the earlier Constitutional Benches and the Court below erred in not extending the benefit and there is no cut off date as fixed by the legislature and therefore, it has to be presumed that the said Act applies to the present case also. On the other hand, the learned Counsel for the respondents submits that in view of the categorical finding of the Supreme Court in its judgment that the Act has come into effect from 23rd September, 1992 and it applies to the transactions which took place subsequent to that date, it can be said that the statute clearly fixed the cut off date and therefore, there is no reason to interfere with the order passed by the Court below. The order impugned has been passed basing on the judgment of the Supreme Court in Assam Small Scale Industries Development Corporation Limited (1st cited). We have gone through the said judgment. In paragraph No.14, the Apex Court held as follows: “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 with effect from 23.9.1992 and will not apply to transactions, which took place prior to that date.” From the above judgment, it is clear that the 1993 Act will not apply to the transactions that had taken place prior to the 23.9.1992. In view of the principles laid down by the Apex Court in the above judgment, the contention of the learned Counsel for the petitioner that there is no cut off date fixed in the statute has no force. In the instant case, the transactions took place on 23.1.1987 and 11.11.1987 i.e., much prior to the Act coming into force. Therefore, the petitioner in both the cases is not entitled to claim any interest as a statutory right. Under the above circumstances, we have no hesitation to hold that the Court below following the judgment of the Apex Court has rightly dismissed the OPs and there is no reason to interfere with the same. Accordingly, the Civil Miscellaneous Appeals are dismissed. No order as to costs. ___________________ Justice N.V. Ramana _____________________ Justice K.S. Appa Rao Date: 25.7.2011 Nn. THE HON'BLE SRI JUSTICE N.V. RAMANA & THE HON'BLE SRI JUSTICE K.S. APPA RAO C.M.As No.963 & 998 OF 2008 (COMMON Judgment delivered by the Hon’ble Sri Justice N.V. Ramana) 25.7.2011 [1] AIR 2006 SC 131