Supreme Court Dismisses Review Petitions in Interest on Delayed Payments Case against Assam State Electricity Board

Court Holds Suit by M/s Shanti Conductors Barred by Limitation, Affirms Overriding Effect of Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993

In a significant ruling dated December 18, 2019, the Supreme Court of India dismissed review petitions filed by M/s Shanti Conductors (P) Ltd., M/s Brahmaputra Concrete Pipe Industries, and M/s Trusses and Towers (P) Ltd. against the judgment delivered earlier on January 23, 2019, which had dismissed their appeals seeking interest on delayed payments from Assam State Electricity Board (ASEB). The case centered on the applicability of limitation laws and the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (hereinafter “Act, 1993”) in recovery suits filed by the petitioners for interest on delayed payments for supplies made to ASEB.

The petitioners had supplied aluminum electrical conductors and other materials to ASEB pursuant to supply orders issued in 1992. The last supply was completed on October 4, 1993, and payments were made by ASEB in installments, with the last payment made on March 5, 1994. The petitioners filed money suits in 1997 seeking interest on the principal amounts already paid.

A pivotal issue was whether the suits were barred by limitation under the Limitation Act, 1963. The Supreme Court upheld the view that the limitation period for filing suits under Article 113 of the Limitation Act was three years from when the right to sue accrued. The Court held that since the last supply was completed on October 4, 1993, the amount became due on November 4, 1993, and the limitation period commenced from that date. The suits filed in 1997 were, therefore, beyond the prescribed limitation period.

The petitioners contended that under Section 19 of the Limitation Act, a fresh period of limitation should be computed from the date of last payment made by ASEB (March 5, 1994), and that the suits were filed within three years of that date. However, the Supreme Court clarified that Section 19 applies only where there is a written acknowledgment of the payment by the debtor. Since the petitioners failed to plead or prove any such written acknowledgment regarding the last payment, they could not claim the benefit of Section 19. The Court also noted that the pleadings specifically stated that the Limitation Act did not apply due to the overriding effect of the Act, 1993.

The Court further rejected the petitioners’ plea for exclusion of limitation period under Section 14 of the Limitation Act based on a writ petition filed by the Assam Conductors Manufacturers Association. It held that the writ petition was filed by a different entity and the suit plaintiff could not claim the benefit of that petition’s pendency. Moreover, the writ petition was dismissed before the suit was filed, and a writ appeal was pending, which negated the diligence requirement under Section 14.

Regarding the applicability of the Act, 1993, the Supreme Court found no merit in the claim that the Act was retroactive or that supplies made before the Act’s commencement date (September 23, 1992) attracted interest under the Act. The Court concluded that the Act applies prospectively and only to dues arising after its commencement.

The Court also dismissed the contention that the appeals were maintainable, affirming that the petitioners’ appeals against the High Court’s review judgment were not maintainable as they did not challenge the grant of 9% interest awarded under other statutes or equitable grounds.

In sum, the Supreme Court upheld the dismissal of suits on limitation grounds, confirmed that the Limitation Act applies unless specifically excluded by the overriding Act, 1993, and declined to reopen issues already considered on merit. The judgment reinforces the principle that limitation laws must be strictly complied with and that statutory provisions for interest on delayed payments have clear temporal scope.

Statutory provisions

Limitation Act, 1963 Sections 3, 4, 14, 19; Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 Sections 3, 4, 6, 10; Civil Procedure Code, 1908 Order 7 Rule 6; Constitution of India Article 137

M/s Shanti Conductors (P) Ltd. v. Assam State Electricity Board (SC) : Law Finder Doc Id # 1647305