Punjab-Haryana High Court
Punjab State Power Corp.Ltd vs M/S Punjab Transformers & Electronics ... on 29 June, 2015
Author: Kuldip Singh
Bench: Kuldip Singh
FAO No.517 of 2014 (O&M) 1
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
FAO No.517 of 2014 (O&M)
Date of decision: 29.06.2015
PUNJAB STATE POWER CORPORATION LIMITED
+.. Appellant
versus
M/S PUNJAB TRANSFORMERS & ELECTRONICS LTD. AND
ANOTHER
++Respondents
FAO No.518 of 2014 (O&M)
PUNJAB STATE POWER CORPORATION LIMITED
+.. Appellant
versus
M/S SARAF ELECTRICALS PVT. LTD & ANR
++Respondents
FAO No.521 of 2014 (O&M)
PUNJAB STATE POWER CORPORATION LIMITED
+.. Appellant
versus
M/S PUNJAB TRANSFORMERS AND ELECTRONICS LTD.& ANR.
++Respondents
FAO No.522 of 2014 (O&M)
PUNJAB STATE POWER CORPORATION LIMITED
+.. Appellant
versus
M/S SANGRUR INDUSTRIAL CORP. LTD. AND ANR.
GOPAL KRISHAN
++Respondents
2015.06.30 15:46
I attest to the accuracy and
authenticity of this document
High Court Chandigarh
FAO No.517 of 2014 (O&M) 2
FAO No.528 of 2014 (O&M)
PUNJAB STATE POWER CORPORATION LIMITED
+.. Appellant
versus
M/S P.P. INDUSTRIES AND ANR.
++Respondents
FAO No.530 of 2014 (O&M)
PUNJAB STATE POWER CORPORATION LIMITED
+.. Appellant
versus
M/S J.R. INDUSTRIES AND ANR.
++Respondents
FAO No.539 of 2014 (O&M)
PUNJAB STATE POWER CORPORATION LIMITED
+.. Appellant
versus
M/S SANGRUR INDUSTRIAL CORP. LTD. AND ANR.
++Respondents
FAO No.540 of 2014 (O&M)
PUNJAB STATE POWER CORPORATION LIMITED
+.. Appellant
versus
M/S SANGRUR INDUSTRIAL CORP. LTD. AND ANR.
++Respondents
FAO No.543 of 2014 (O&M)
PUNJAB STATE POWER CORPORATION LIMITED
+.. Appellant
versus
M/S SHIV SHAKTI ELECTRICALS AND ANR.
GOPAL KRISHAN
++Respondents
2015.06.30 15:46
I attest to the accuracy and
authenticity of this document
High Court Chandigarh
FAO No.517 of 2014 (O&M) 3
FAO No.551 of 2014 (O&M)
PUNJAB STATE POWER CORPORATION LIMITED
+.. Appellant
versus
M/S ANDERSONS ASSOCIATES & ANR
++Respondents
FAO No.756 of 2014 (O&M)
PUNJAB STATE POWER CORPORATION LIMITED
+.. Appellant
versus
M/S SARAF INDUSTRIES PVT LTD & ANR
++Respondents
FAO No.773 of 2014 (O&M)
PUNJAB STATE POWER CORPORATION LIMITED
+.. Appellant
versus
M/S SARAF INDUSTRIES PVT LTD & ANR
++Respondents
FAO No.775 of 2014 (O&M)
PUNJAB STATE POWER CORPORATION LIMITED
+.. Appellant
versus
M/S SANJAY CONDUCTORS & CABLES & ANR
++Respondents
CORAM: Hon'ble Mr.Justice Kuldip Singh
Present: Mr.Ashok Aggarwal, Senior Advocate with
Mr.Sapan Dhir and Mr.Vinod S. Bhardwaj, Advocates
for the appellant in all the cases
Mr. Arun Jain, Senior Advocate, with,
Mr.Tribhawan Singla, Advocate, for the respondent
in FAO Nos.517, 521, 522, 539, 540 of 2014.
GOPAL KRISHAN
2015.06.30 15:46
I attest to the accuracy and
authenticity of this document
High Court Chandigarh
FAO No.517 of 2014 (O&M) 4
Mr. Puneet Bali, Senior Advocate, with,
Mr. Vibhav Jain and Ms. Monika Thakur, Advocates,
for the respondent in FAO No. 551 of 2014.
Mr. Akshay Bhan, Senior Advocate, with,
Mr. Amandeep Singh Talwar, Advocate,
for the respondent in FAO Nos. 528 and 530 of 2014.
Mr. Ashok Singla and Aakash Singla, Advocates,
for the respondent(s)
in FAO Nos. 518, 756 and 773 of 2014.
Ms. Jatinder Jit Kaur and Mr. Ish Puneet Singh,
Advocates, for respondent
in FAO No. 775 of 2014.
1. Whether Reporters of Local Newspapers may be allowed to see
the judgment ?
2. To be referred to the Reporters or not ?
3. Whether the judgment should be reported in the Digest?
Kuldip Singh, J.
This judgment shall dispose of FAO Nos.517-2014, FAO- 518-2014, FAO-521-2014, FAO-522-2014, FAO-528-2014, FAO-530- 2014, FAO-539-2014, FAO-540-2014, FAO-543-2014, FAO-551- 2014, FAO-756-2014, FAO-773-2014 and FAO-775-2014, involving similar controversy. However, for facility of reference, facts are being taken from FAO No.517 of 2014.
Punjab State Power Corporation Limited has filed this appeal against judgment dated 28.9.2013, passed by the learned Additional District Judge, Patiala, whereby its objections, filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, 'the Arbitration Act'), praying for setting aside the award dated 16.11.2010, passed by respondent No.2, were dismissed.
The brief controversy between the parties is that the claimant-respondent filed a claim petition before the Micro and Small Enterprises Facilitation Council (for short, 'the Council') for recovery GOPAL KRISHAN 2015.06.30 15:46 I attest to the accuracy and authenticity of this document High Court Chandigarh FAO No.517 of 2014 (O&M) 5 of Rs.50,43,160/- along with future interest under the provisions of Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (for short the Act of 1993'). It was pleaded that the claimant company is registered as Small Scale Industrial Undertaking with Director of Industries, Punjab vide registration No.16/13/14549 dated 5.10.1994. Various purchase orders were placed by the respondent (appellant herein- Board) for purchase of the material mentioned in the purchase orders. 100% payment was agreed to be made when the bills are submitted along with. However, the payments were delayed. The details of the supply of the material and making material were submitted with the claim.
The predecessor-in-interest of the appellant, namely, Punjab State Electricity Board contested the claim and challenged the vires of the Act. It was also claimed that the claim is time bared. Claim of the claimant was denied. Later on the Punjab State Electricity Board was succeeded by the present appellant, namely, Punjab State Power Corporation Limited.
For the disposal of the claim, the following three issues were framed:-
"1. Whether the claimant is a small scale industry or not?
2. Whether the claim is time barred?
3. After determination of above said issues, then it has to be decided as to what amount the claimant is entitled?"
Issue No.1 and 2 were determined in favour of the claimant-respondent. Issue No.3 was also decided in favour of the claimant-respondent. The Facilitation Council took a view that it was GOPAL KRISHAN 2015.06.30 15:46 I attest to the accuracy and authenticity of this document High Court Chandigarh FAO No.517 of 2014 (O&M) 6 not competent to decide on the vires of the Small Scale and Ancillary Industrial Undertakings Act, 1993. It was held that the claimant- respondent is a Small Scale Industry. It was also held that the payments were delayed and accordingly, interest, in terms of the Act of 1993 was ordered @ 1 ½ % times of the Prime Lending Rate of State Bank of India was ordered to paid on the delayed payment.
The objections filed by the present appellant under Section 34 of the Arbitration Act before the learned Additional District Judge, Patiala were dismissed by the impugned order dated 28.9.2013.
I have heard learned counsel for the parties and have also carefully gone through the file.
The vires of the Act of 1993 was not pressed during arguments. In this case, the Council asked both the parties to submit their calculations, which were submitted. Before the Council, no evidence was led by the respondent and only arguments were submitted. Before the Council, claimant admitted the calculations of the respondent to be correct. Admittedly, the payment was delayed and therefore, under the Act of 1993, interest has to be awarded.
Learned counsel for the appellant has vehemently argued that in this case under the Act of 1993, the Council was not competent to decide the matter. It has been stated that there was an arbitration clause in the agreement. It has been argued that the entire payment was accepted by the respondent and at that time, no objection, regarding interest on the delayed payment was raised. It has been argued that the respondent undertook not to make any GOPAL KRISHAN 2015.06.30 15:46 I attest to the accuracy and authenticity of this document High Court Chandigarh FAO No.517 of 2014 (O&M) 7 claim.
A look at the Section 3 of the Act of 1993 shows that there was a statutory liability to make the payment of interest to the supplier in case of delayed payment. Section 4 lays down the liability to pay the interest It provides as under:-
"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 section3, 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 Bank of India which is available to the best borrowers of bank"
Section 6(2) of the said Act provides that notwithstanding anything contained in sub-section (1), the party to a dispute may make a reference to the Industry Facilitation Council for acting as an arbitrator or conciliator in respect of the matters referred to in that sub-section and the provisions of Arbitration and Conciliation Act, 1996 shall apply to such disputes as if the arbitration or conciliation were pursuant to the arbitration agreement referred to in sub-section GOPAL KRISHAN 2015.06.30 15:46 I attest to the accuracy and authenticity of this document High Court Chandigarh FAO No.517 of 2014 (O&M) 8 (1) of Section 7 of that Act. In this way, Act of 1993 provided a statutory right to a supplier to make a reference to the Industrial Facilitation Council for claiming interest on the delayed payment. There is no estoppel against the law. Once the Act vested right in a party, it could claim the same by making reference before Industrial Facilitation Council. Contention of learned counsel for the appellant is without any force that Industrial Facilitation Council had no jurisdiction to enter into the question of grant of interest on delayed payment.
Subsequently Act of 2006 repealed the earlier Act of 1993 and under Section 32(2) of the Act of 2006, anything done or action taken under the Act so repealed under sub-section (1) shall be deemed to have been taken under the corresponding provisions of this Act. It is to be noted that in new Act of 2006, provided for higher rate of interest. Under Section 16 of the Act of 2006, the interest payable is 3 times of the bank rate notified by the Reserve Bank. Therefore, as far as the jurisdiction of the Council is concerned, it was there to decide the matter.
Learned counsel for the appellant has argued that Act of 1993 has prospective application. When the supply order is made prior to the effective date of the Act, the Act of 1993 has no application. To support his contention, he has relied upon the authority of the Supreme Court in Shakti Tubes Ltd. v. State of Bihar and others, (2009) 7 Supreme Court Cases 673. I am of the view that the matter whether the Council has jurisdiction or not has already been discussed above and it is held that the Council had the GOPAL KRISHAN 2015.06.30 15:46 I attest to the accuracy and authenticity of this document High Court Chandigarh FAO No.517 of 2014 (O&M) 9 jurisdiction. Moreover the interim award has already become become final between the parties and cannot be re-opened particularly, when the same is not under challenge in the present appeal.
Learned counsel for the appellant has further argued that no effort was made by the Council to effect the conciliation between the parties. It was held by the Gauhati High Court in Oil and Natural Gas Corporation Ltd. and another v. Government of Assam and others, 2010 (8) RCR (Civil) 2452 that where the Council had not made any effort for conciliation, the proceedings conducted by the Council and consequential award is infraction of law. I am of the view that the provisions for making efforts for conciliation are directory in nature and if the efforts for re-conciliation were not made or proper efforts for re-conciliation were not made and the same was not objected to by any of the parties, the proceedings of the Council will not be vitiated.
The authority in the case of Purbanchal Cables and Conductors Private Limited v. Assam State Electricity Board and another, (2012) 7 Supreme Court Cases 462 has no application in the present case, as in the said case the suit was filed claiming the higher rate of interest under the Act of 1993, whereas in the present case, it is award passed by the Council constituted under the Act of 1993.
On the other hand, learned counsel for the respondent has argued that this Court has a very limited jurisdiction for interfering in the arbitration award. Learned counsel for the GOPAL KRISHAN 2015.06.30 15:46 I attest to the accuracy and authenticity of this document High Court Chandigarh FAO No.517 of 2014 (O&M) 10 respondent has relied upon the authority of the Supreme Court titled as Associate Builders v. Delhi Development Authority, (2015) 3 Supreme Court Cases 49, in which the Supreme Court has laid down the principles, violation of which will justify interference by the Court in the arbitration award. In the said authority, the Apex Court has also defined the heads of the public policy of India, wherein (i) compliance of the statute and judicial precedents, (ii) need for judicial approach, (iii) natural justice compliance, (iv) reasonableness, (v) interest of India, (vi) Justice or Morality and patent illegality i.e. the contravention of substantive law of India, (vii) contravention of arbitration and conciliation Act 1996 and (viii) contravention of the terms of contract were held to be the grounds on which the Court can interfere in the award. It has been argued that none of the said clauses are attracted in the present case, wherein in the present case, in which the interim award has become final. In the final award, only the calculations submitted by the parties were to be examined and the amount was to be determined and there is no illegality in determining the amount which was determined after getting it cross- checked from Punjab Financial Corporation.
Learned counsel for the respondent has also relied upon Single Bench authority in the case of M/s Singhania Industries and another v. Punjab State Electricity Board and others, 2012 (5) RCR (Civil) 735, wherein in a similar case, higher rate of interest under the Act of 1993 was allowed.
Learned counsel for the respondent has also relied upon the observations of the Supreme Court in Snehadeep Structures GOPAL KRISHAN 2015.06.30 15:46 I attest to the accuracy and authenticity of this document High Court Chandigarh FAO No.517 of 2014 (O&M) 11 Private Limited v. Maharashtra Small Scale Industries Development Corporation Limited, 2010 (1) RCR (Civil) 705, wherein the Apex Court has observed as under:-
"34. The preamble of Interest Act shows that the very objective of the Act was "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." Thus, as far as interest on delayed payment to Small Scale Industries as well as connected matters are concerned, the Act is a special legislation with respect to any other legislation, including the Arbitration Act. The contention of the respondent that the matter of interest payment will be governed by Section 31(7) of the Arbitration Act, hence, is erroneous. Section 4 of the Interest Act endorses the same which sets out the liability of the buyer to pay interest to the supplier 'notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force'. Thus, Interest Act is a special legislation as far as the liability to pay interest, or to make a deposit thereof, while challenging an award/ decree/ order granting interest."
Learned counsel for the appellant has further argued that the Arbitration and Conciliation Act, 1996 will override the provisions of Act of 1993 and Act 2006. It has been argued that the Arbitration Act is later in time and therefore, it will have overriding effect on the GOPAL KRISHAN 2015.06.30 15:46 I attest to the accuracy and authenticity of this document High Court Chandigarh FAO No.517 of 2014 (O&M) 12 earlier Act of 1993. I am of the view that the said argument is without any force. Act of 1993 is the special Act, whereas the Arbitration Act is the general Act covering the arbitration matters. Act of 1993 covers only the limited aspect of interest on the delayed payments to the Small Scale and Ancillary Industrial Undertakings and later on Micro, Small and Medium Enterprises. Therefore, the special Act will override the general Act. It does not matter in which year the Act was passed. The Section 6(2) of Act of 1993 starts with non- obstante clause regarding reference to the Industry Facilitation Council which could act as arbitrator. It is not a disputed fact that the payments were delayed by the present appellant and therefore, under the Act of 1993, which is succeeded by subsequent Act of 2006, the interest on the delayed payment could be awarded by the Council.
Learned counsel for the appellant has further argued that some of the respondents had filed a Civil Suit but the perusal of the same shows that it was not filed by the respondent but it was one of the defendants with the present appellant. It was filed by NSIC. Learned counsel for the appellant has referred to the letter dated 12.4.2008 in which payment in principle was accepted without making any objection. However, mere acceptance of payment in principle does not mean that the payment of interest was waived by the respondent.
The grounds on which this Court can interfere in the award are very limited. From its face, there is no illegality or infirmity in the impugned award dated 27.10.2010 and the order dated 28.9.2013 passed by the learned Additional District Judge, Patiala. GOPAL KRISHAN 2015.06.30 15:46 I attest to the accuracy and authenticity of this document High Court Chandigarh FAO No.517 of 2014 (O&M) 13 Consequently, I do not find any merit in the present appeals and the same are accordingly dismissed.
29.06.2015 (Kuldip Singh)
gk Judge
GOPAL KRISHAN
2015.06.30 15:46
I attest to the accuracy and
authenticity of this document
High Court Chandigarh