dgm 1 Judgment-app260.06.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO. 260 OF 2006
IN
ARBITRATION PETITION NO. 29 OF 2005
WITH
NOTICE OF MOTION (L) NO. 1368 OF 2013
IN
APPEAL NO. 260 OF 2006
1 Maharashtra State Electricity Board
through its Chairman, having office at
Prakashgad, Bandra (E), Mumbai - 400 051
2
Maharashtra State Distribution Company Ltd.
A Public Limited Company incorporated and
registered under the provisions of the
Companies Act, 1956, (I of 1956) having its
Office at Prakashgad, Bandra (E), Mumbai-51. .... Appellants
Vs
Maharashtra Conductor Association (SSI)
having its office at 45, Ratan Jyoti Industrial
Estate, Irla Lane, Vile Parle (W), Mumbai - 56
through its President, Shri Jitendra Dalal
having address at Kamal Kunj, First Floor,
Block No. 8, Vithalbhai Patel Road,
Andheri (West), Mumbai. .... Respondent
Mr. Prashant Chavan, Mr. Nirav Shah, Ms. Reshma Nathani i/b Little &
Co., for the Appellants.
Mr. S.S. Voditel, for the Respondent.
CORAM: ANOOP V. MOHTA AND
G. S. KULKARNI, JJ.
RESERVED ON : 12 July 2016 PRONOUNCED ON : 14 October 2016 1/10 ::: Uploaded on - 15/10/2016 ::: Downloaded on - 16/10/2016 00:56:56 ::: dgm 2 Judgment-app260.06.odt JUDGMENT (PER - ANOOP V. MOHTA, J.):-
The Appellants being aggrieved by the judgment/order passed by the learned Single Judge, dated 27 September 2005 whereby the Award passed by the learned Arbitrator dated 30 April 2004 is set aside only restricted to Point Nos. 4, 8 and 11, as challenged.
2The important part of the learned Single Judge order is as under :
In my opinion, therefore, it cannot be said that the Award is satisfied and therefore, the petition is not maintainable.
In the result therefore, the present petition succeeds and is allowed. The findings recorded and the Award made by the learned Arbitrator in the impugned Award against point no. 8 is set aside. The Award made by the learned Arbitrator in so far as interest at the rate of 10% per annum for the period subsequent to 26.04.2001, is set aside. Similarly, the Award made against point no. 11 by the learned Arbitrator is set aside. The respondent is directed to pay cost of this petition to the petitioner as incurred by the petitioner.
It is also observed in para 5 as under :
"5 .....The fixation of rate of interest at 10% per annum without disclosing any reason in the aforesaid circumstances, is totally unjustified and therefore, the Award in this regard is liable to be set aside. Section 31 2/10 ::: Uploaded on - 15/10/2016 ::: Downloaded on - 16/10/2016 00:56:56 ::: dgm 3 Judgment-app260.06.odt (7)(b) of the Arbitration & Conciliation Act, 1996 lays down that if no interest is awarded by the Arbitrator then for the period from the date of the award till the date of payment, interest at the rate of 18% per annum can be recovered. Therefore, it is for the petitioner to decide what course of action they want to adopt."
3 The background of this litigation, is as under:
The appellants floated two tenders being Tender No. T-
0901 and Tender No. T-0805 for supply of conductors. The tenders submitted by the members of the Respondent were accepted by the Appellants for various quantities. In the month of March 2001, the four members of Respondent namely, (i) Patrik Conductors Pvt. Ltd.
(ii) Galaxy Cables Industries (iii) Dattatraya Cables Pvt. Ltd. (iv) Reliance Cables and Conductors Private Ltd., who were not in position to complete the orders requested for a termination of contract with no liability on either side. In April/September the Appellant considered the request/offer of the aforesaid four (4) Members of the Respondent and cancel the contract for balance quantity, without any financial liability on either side.
4 On 27 April 2001, the Respondent filed Writ Petition No. 1347 of 2001 claiming an interest on delayed payment against the 3/10 ::: Uploaded on - 15/10/2016 ::: Downloaded on - 16/10/2016 00:56:56 ::: dgm 4 Judgment-app260.06.odt Appellants under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 ("the Act"). On 10 December 2002, consent terms were filed in the Writ Petition referring the claims of the respective Members of the Respondent only on interest issues under the Act, to Arbitration. Between January 2003 to April 2004, the statement of claims - reply were filed by the parties. The impugned award was dated 30.04.2004 passed after the conclusion of arguments. The Award challenged in Arbitration Petition was as set aside by the learned Judge to the extent as set out above - hence this Appeal.
5 The Respondents had also challenged part of the Award on some other issues by filing Arbitration Petition No.328/2004 prior to August 2004, through the same Advocate. The same was dismissed on 30 August 2004 after hearing the parties. The Appellants came to know about Arbitration Petition No.328/2004 only on 20 January 2005. The Appellants filed affidavit dated 5/2/2005 in Arbitration Petition No.29/2005 and opposed the same. The Respondents in rejoinder affidavit admitted the receipt of the amount of the Award without any reservation.
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6 The written submission are filed on behalf of the
Appellants along with judgments and by the Respondent. The judgments relied by the learned counsel appearing for the Respondent are - (i) Snehadeep Structures Private Limited Vs. Maharashtra Small-
Scale Industries Development Corporation Limited 1 (ii) Modern Industries Vs. Steel Authority of India Limited 2 and (iii) R.S. Jiwani (M/s.), Mumbai Vs. Ircon International Ltd., Mumbai 3. The judgments relied by the learned counsel appearing for the appellant are - (i) Commissioner of Customs, Mumbai Vs. Virgo Steels, Bombay and Another 4 (ii) Babulal Badriprasad Varma Vs. Surat Municipal Corporation & Ors.5 7 Both the parties have read and referred Section 4 of the Act.
"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 section 3, the buyer shall notwithstanding anything contained in any 1 (2010) 3 SCC 34 2 (2010) 5 SCC 44 3 2010 (1) Mh.L.J. 547 4 (2002) 4 SCC 316 5 AIR 2008 SC 2919 5/10 ::: Uploaded on - 15/10/2016 ::: Downloaded on - 16/10/2016 00:56:56 ::: dgm 6 Judgment-app260.06.odt 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-a-half time of Prime Lending Rate charged by the State Bank of India."
8 The relevant points determined by the learned Arbitrator and dealt with by the learned Single Judge are as under :
"4 Whether the claimants establish the claim for payment of interest in accordance with the provisions of the Act, if so, the quantum?"
"8 Whether four members of the Claimants, namely,
(i) Patrik Conductors Pvt. Ltd.
(ii) Galaxy Cables Industries,
(iii) Dattatraya Cable Pvt. Ltd.
(iv) Reliance Cables and Conductors Private Ltd.
are entitled to raise the claim for interest in respect of the Contract No. T-0901?"
"11 Whether the claimant is entitled to interest lite and future interest on the amount found due and if so at what rate?"
9 From the reading of Section 4 so reproduced above, the Act and in view of the mandate of the specific wording of the provisions namely, "Notwithstanding anything contained in any 6/10 ::: Uploaded on - 15/10/2016 ::: Downloaded on - 16/10/2016 00:56:56 ::: dgm 7 Judgment-app260.06.odt agreement between the buyer and the supplier or in any law for the time being in force". The buyer, if fails to make payment of the amount to the supplier as required under Section 3, he is liable to pay interest, as per law from the appointed day, at one-and-a-half time of Prime Lending Rate charged by the State Bank of India.
10 With reference to issue no. 4, the learned judge has set aside the award of interest at the rate of 10% per annum from 26 April 2001. We are not in agreement with the view taken by the Arbitrator, in so far as non grant of interest as per Section 4 of the Act merely because of filing of Petition by the Respondent Association.
There was no interim relief in favour of the Appellant. Ultimately, in view of the arbitration clause in agreement, the matter was referred to the Arbitral Tribunal through the consent terms. The interest rate should have been as per the provisions of law. The learned judge has not granted and/or passed order in this regard. It is left to the parties to ascertain the prime lending rate charged by the State Bank of India, at the relevant time. The delay in claiming the rate of interest was an important aspect, which the learned Arbitrator has considered. But the rate cannot be less than the Section 4 requirement.
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11 The Apex Court in "SRI Paravathi Parmeshwar Cables
and Others Vs. Andhra Pradesh Transmission Corporation Limited and Another 6 has maintained, affirmed and applied the Supreme Court judgment in Snehadeep Structures Private Limited Vs. Maharashtra Small-Scale Industries Development Corporation Limited (Supra) and Modern Industries Vs. Steel Authority of India Limited (Supra) with regard to the mandate of the Act in question. The Apex Court in, M/s. Purbanchal Cables & Conductors Pvt. Ltd. Vs. Assam State Electricity Board & Anr. 7 held that the Act is applicable to the transaction enter into after coming in force the amended provision of right of supplier to pay interest at higher rate. The cause of action of this matter arose on 24.11.2005.
12 Therefore, though there exists the agreement between 4 members of the Petitioners and as they agreed to cancel the contract for supply of balance quantity, these members waived their right to receive interest under Section 4 of the Act is unacceptable. There was no question of waiver of any rights to receive interest specifically 6 (2013) 10 SCC 693 7 AIR 2012 SC 3167 8/10 ::: Uploaded on - 15/10/2016 ::: Downloaded on - 16/10/2016 00:56:56 ::: dgm 9 Judgment-app260.06.odt when admittedly there was no payment made in time so fixed. That itself should result into entitlement of interest as per provision of Section 4. The decision so arrived at by the parties and agreed to cancel the contract for supply of balance quantity, that itself, in our view, should not be read to mean that the supplier who admittedly did not receive payment in time and lost their rights or entitlement of statutory interest on the delayed payment. The seller, having once supplied the goods, are entitled for the amount in time and if payment is delayed by the buyer, the interest as per the Act/provisions should follow. The view taken by the learned Single Judge is correct on this point and need no interference.
13 In so far as point nos. 8 and 11 with regard to entitlement of claim of interest rate and future interest on the amount due and if so, at what rate, whereby the learned Arbitrator has directed the payment of interest @ of 10% per annum for the period subsequent to 26 April 2001 from the date of Award till the date of realization is also got set aside. This resulted into setting aside of the Award passed by the learned Arbitrator on interest on all counts i.e. issue no. 8 and 11.
9/10 ::: Uploaded on - 15/10/2016 ::: Downloaded on - 16/10/2016 00:56:56 :::dgm 10 Judgment-app260.06.odt However, the remaining part of the Award on other points remain undisturbed.
14 Taking overall view of the matter, we would have remanded the matter back for reconsideration on limited issue.
However, when inquired and as noted, inspite of the order passed by this Court permitting the parties to approach afresh for the interest part, as observed, no steps whatsoever have been taken by the Appellants and as no course they have adopted till this date on the aspect of interest as per the provisions of the Act. Therefore, in these circumstances, we see no reason to interfere with the order so passed, to avoid further delay to the proceedings. Let the parties, as already ordered, decide the course of action in this regard.
15 The Appeal and Notice of Motion are accordingly dismissed. No costs.
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