Case: M/S.Purbanchal Cables &amp; Conductors P.Ltd Vs. Assam State Electricity Board

In the case of Purbanchal Cables (C.A. No. 2348 of 2003), the supplier is the manufacturer of Aluminium Conductors Steel Reinforced (for shortfor various specifications. The respondent-Board had placed orders for supply of ACSR of different specifications in three (3) quarterly phases, i.e. in June 1992, September 1992 and December 1992 with the appellant vide supply order dated 31.3.1992. In pursuance to the said supply order, the supplier had initially made delivery of goods with respect to three bills on 16.09.1992, but did not receive payment from the respondent. Subsequently, the supplier had made another delivery of goods with respect to nine other bills in between 25.09.1992 and 30.03.1993. These supplies were made after the expiry of the time stipulated in the agreement/supply order, but after obtaining specific extension of time by the buyer. The supplier had completed the entire supply by 12.10.1993 and received the payment for such supplies from the respondent in the month of September and October, 1993. In pursuance to such supplies, the supplier has raised the demand for interest on delayed payment made by the respondent, vide its letters dated 14.12.1992 and 3.12.1993, however, the same was not acceded to by the buyer.3) The supplier had instituted a Money Suit No.109 of 1996 before Assistant District Judge No.1, Kamrup for the payment of interest to the tune of `24,57,927.28/-, on delayed payment of principal amount by the respondent, under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (for short ‘theThe said suit was decreed by the Civil Judge (Senior Division) No. 1, Kamrup vide his order dated 27.01.2000 in favour of the supplier, who granted the compound interest @ 18.25% per annum plus interest of 5% above the said rate of interest with monthly rest till realization. Being aggrieved by the said order, the respondent had filed a Regular First Appeal No. 80 of 2000 before the High Court of Gauhati. The Division Bench of the High Court has allowed the appeal and dismissed the suit vide its judgment and order dated 18.8.2001 on the ground that suit is not maintainable as no amount was due on the date of institution of the suit and thereby followed its earlier view rendered by the Division Bench of the High Court in Assam State Electricity Board and Another v. M/s Trusses and Towers (P) Ltd. (F.A. NO. 109/95), 2001 (2) GLT 121 , whereby and whereunder a Division Bench of the High Court had held that a suit for interest simpliciter was not maintainable when the principal amount was received without any demur and that the Act did not revive the claims that were already settled. The High Court has also, inter alia, directed the appellant to refund the amount of ` 10 lakhs, paid by the respondents pursuant to thedirection at the time of admission of the appeal to the respondent within a period of two months and failure to pay within such period would entail interest at the rate of 12% per annum. Aggrieved by this decision of the High Court, the supplier has preferred thisIn the case of Shanti Conductors (C.A. No. 2351 of 2003), the Board had placed two supply orders for the manufacture and supply of KM ACSR Penther Conductors, and the supplier completed the supplies in eight parts between 22.03.93 and 04.10.93. In March 1997, about three and a half years of making the supplies, and after the receipt of the entire amount, the supplier filed a suit for interest on delayed payment by the Board in terms of the provisions of the Act, in Money Suit No. 21/1997 before the Court of the Civil Judge (Sr. Divn.) No. 1, Guahati. The same was disputed by the Board in the written statement filed in the suit. However, the suit filed by the supplier was decreed and the Learned Assistant District Judge awarded a sum of `51,60,507.42 by way of interest for the delayed payment. Being aggrieved by the said order, the Board preferred a Regular First Appeal (F.A. No. 66 of 2000) before the Guahati High Court. The Division Bench hearing the appeal of the Board in the case of Shanti Conductors doubted the correctness of the view taken by the Division Bench in the case of Trusses and Towers, and referred the matter to the Full Bench to determine whether a suit is maintainable only for interest and whether the provisions of the Act is applicable to contracts concluded prior to its commencement, where the delayed payment is made after its commencement.5) The Full Bench of the High Court after considering the provisions of the Act, concluded that the findings of the Division Bench in the case of Trusses & Towers that once a principal amount is received without any protest, then no further claim for interest can be made; is not the correct legal position in law. In other words, the Full Bench came to the conclusion that a suit for only interest was also maintainable. Further, the Full Bench also held that the Act is applicable to any contracts entered into prior to the commencement of the Act, and a higher rate of interest could be charged in terms of the provisions of the Act, however, the same was to be done after 23.09.1992, i.e. after the Act came into force. The matter was then remitted back to the Division Bench to decide the other issues in accordance with law and in the light of the observations made therein. Aggrieved by the decision of the Full Bench, the Board is before us in Civil Appeal No.2351 of 2003.

Court's reasoning:
66) We are in full agreement with the view expressed in Keshav Mills case (supra). 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 (supra). In fact, a plea for reconsideration of the same was rejected by a Division Bench of this Court in Shakti Tubes (supra). We are unable to agree with the argument of Shri Dwivedi and Shri Gupta that the provisions of the Act were not considered in its entirety. In fact, the entire scheme of the Act has been considered in the case of Rampur Fertilizers (supra) and specific answer to the issue under consideration wasIn light of this dictum, and the factum that no case has been made out for reconsideration by the learned Senior Counsel appearing for the suppliers, we do not see any reason much or less good reason to doubt the correctness of the decision in Assam Small Scale Industries or Shakti Tubes (supra). When there are four decisions of this Court with regard to the applicability of the Act for contracts entered into prior to the commencement of the Act, and when the plea for reconsideration has been expressly rejected in the past, we are of the view, it would be against the spirit of the doctrine of stare decisis for us to take any view in divergence with same.69) Lastly, learned Senior Counsel for suppliers also contended that the extension of date of supply order, from time to time by Board, amounts to a novation of contract or supply order in terms of Section 62 of the Indian Contracts Act and, therefore, the new contract or supply order would be governed by the Act. In our opinion, the ground or issue of novation of Contract is a mixed question of fact and law and it is being raised, for the first time, at the time of hearing of the case before us which cannot be permitted to be raised. The said fact of novation or alteration of contract is required to be urged evidentially and scrutinised by the courts below. In absence of such factual findings, it is not possible to decide such a mixed question of law and facts. In Shakti Tubes Ltd. (supra), the issue of novation of contract was raised before this Court for the first time at the time of hearing. This Court declined to entertain such ground as being a mixed question of law and fact. This Court further observed that even on the merits of the case the escalation of price, reduction of the quantity of the supply order and extension of date of supply does not amount to novation or alteration in the supply order.