Date of the Judgment: December 18, 2019
Citation: (2019) INSC 1234
Judges: Ashok Bhushan, J., S. Abdul Nazeer, J., Navin Sinha, J.
Can a suit for interest on delayed payments be sustained if filed beyond the limitation period, even if a partial payment was made? The Supreme Court of India addressed this question in a review petition concerning the applicability of the Limitation Act, 1963 and the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993. The court examined whether a payment made after the initial limitation period could extend the limitation period and whether the pendency of a writ petition by an association could be used to claim an exclusion of time. This judgment, authored by Justice Ashok Bhushan, dismissed the review petitions, upholding the earlier decision.
Case Background
M/s Shanti Conductors (P) Ltd. received supply orders from the Assam State Electricity Board on March 31, 1992, and May 13, 1992, for aluminum electrical conductors. The company completed the supplies between June 1992 and October 4, 1993. The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertaking Ordinance was issued on September 23, 1992, which later became the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertaking Act, 1993 (referred to as “Act, 1993”), effective from September 23, 1992.
The Assam Conductors Manufacturers Association, including M/s. Shanti Conductors, filed Writ Petition (C) No. 1351 of 1993 in the Guwahati High Court seeking payment of dues. An interim order was passed on July 21, 1993, suggesting the settlement of outstanding bills. The Electricity Board made payments totaling approximately Rs. 2.15 Crores in installments, with the last payment on March 5, 1994. M/s. Shanti Conductors filed a money suit on January 10, 1997, for Rs. 53,68,492.56, claiming interest on the principal amount.
The Guwahati High Court dismissed the writ petition on August 28, 1997, directing the petitioners to approach the civil court. The trial court decreed the money suit on February 2, 2000, for Rs. 51,60,507.42 with future interest at 23.75% per annum, compounded monthly. The Division Bench of the High Court referred three points to a Full Bench, which were answered on March 5, 2002. The Supreme Court dismissed the Civil Appeal No. 2351 of 2003 filed by the Electricity Board on July 10, 2012. Subsequently, the Division Bench of the High Court allowed the appeal filed by the Electricity Board and dismissed the suit of M/s. Shanti Conductors.
M/s. Shanti Conductors appealed to the Supreme Court, leading to a split verdict by a two-judge bench. The matter was then referred to a three-judge bench, which dismissed the appeals on January 23, 2019. This review petition was filed against the dismissal of the appeals.
Timeline:
| Date | Event |
|---|---|
| March 31, 1992 | First supply order issued to M/s Shanti Conductors by Assam State Electricity Board. |
| May 13, 1992 | Second supply order issued to M/s Shanti Conductors by Assam State Electricity Board. |
| June 1992 – October 4, 1993 | M/s Shanti Conductors completes supply of electrical conductors. |
| September 23, 1992 | The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertaking Ordinance issued. |
| September 23, 1992 | The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertaking Act, 1993 came into effect. |
| July 21, 1993 | Interim order by Guwahati High Court in Writ Petition (C) No. 1351 of 1993 suggesting settlement of dues. |
| October 4, 1993 | Last supply completed by M/s Shanti Conductors. |
| March 5, 1994 | Last installment payment made by the Assam State Electricity Board to M/s Shanti Conductors. |
| January 10, 1997 | M/s Shanti Conductors files a money suit in the Court of Civil Judge (Sr. Division) No.1 at Guwahati. |
| August 28, 1997 | Guwahati High Court dismisses Writ Petition (C) No. 1351 of 1993. |
| February 2, 2000 | Trial court decrees the money suit in favor of M/s Shanti Conductors. |
| March 5, 2002 | Full Bench of the High Court answers the reference. |
| July 10, 2012 | Supreme Court dismisses Civil Appeal No.2351 of 2003 filed by the Electricity Board. |
| November 20, 2012 | Division Bench of the High Court allows the appeal of the Electricity Board and dismisses the suit of M/s. Shanti Conductors. |
| January 23, 2019 | Three-judge bench of the Supreme Court dismisses the appeals. |
| December 18, 2019 | Supreme Court dismisses the review petitions. |
Course of Proceedings
The trial court initially decreed the money suit in favor of M/s. Shanti Conductors. The Assam State Electricity Board appealed this decision. The Division Bench of the High Court referred the matter to a Full Bench. After the Supreme Court dismissed the Electricity Board’s appeal, the Division Bench reversed the trial court’s decision and dismissed M/s. Shanti Conductors’ suit. This led to M/s. Shanti Conductors filing a civil appeal in the Supreme Court. A two-judge bench delivered a split verdict, necessitating a referral to a three-judge bench, which ultimately dismissed the appeals.
Legal Framework
The primary legal provisions discussed in the judgment are:
- The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertaking Act, 1993: This act provides for the payment of interest on delayed payments to small-scale industries.
- Section 19 of the Limitation Act, 1963: This section states:
“Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made: Provided that, save in the case of payment of interest made before the 1st day of January, 1928, an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment.” This provision allows for a fresh period of limitation to begin from the date of part payment of a debt, provided there is written acknowledgment of the payment. - Section 3 of the Limitation Act, 1963: This section mandates the dismissal of any suit instituted after the prescribed limitation period, even if the defense of limitation is not raised.
- Article 113 of the Limitation Act, 1963: This article prescribes a limitation period of three years from the date when the right to sue accrues.
- Order VII Rule 6 of the Civil Procedure Code: This rule requires the plaintiff to show the grounds for exemption from the law of limitation in the plaint. It states:
“Where the suit is instituted after the expiration of the period prescribed by the law of limitation, the plaint shall show the ground upon which exemption from such law is claimed: Provided that the Court may permit the plaintiff to claim exemption from the law of limitation on any ground not set out in the plaint, if such ground is not inconsistent with the grounds set out in the plaint.” - Section 14 of the Limitation Act, 1963: This section allows for the exclusion of time spent in prosecuting a civil proceeding in a court without jurisdiction.
Arguments
Arguments by the Petitioner (M/s Shanti Conductors):
- The suit was filed within three years from the last payment date (March 5, 1994), making it within the limitation period.
- Section 19 of the Limitation Act, 1963, should apply, as the payment on March 5, 1994, provides a fresh period of limitation.
- The benefit of Section 14 of the Limitation Act should be granted, as the writ petition filed by the Association, of which the petitioner was a member, was pending in the High Court.
- The Act, 1993, should be applied retroactively, and any outstanding amount at the time of the Act’s commencement should attract interest.
Arguments by the Respondent (Assam State Electricity Board):
- The suit was barred by limitation, as the last supply was completed on October 4, 1993, and the suit was filed beyond three years from that date.
- Section 14 of the Limitation Act does not apply, as the writ petition was filed by the Association, a different entity than the petitioner.
- There was no specific pleading or proof in the suit to claim the benefit of Section 19 of the Limitation Act.
- For Section 19 to apply, there must be an acknowledgment of payment, which was neither pleaded nor proven.
| Main Submission | Petitioner’s Sub-Submissions | Respondent’s Sub-Submissions |
|---|---|---|
| Limitation |
|
|
| Retroactive Application of Act, 1993 |
|
|
Innovativeness of the Argument: The petitioner’s argument that Section 19 of the Limitation Act should apply due to the last payment was a key point. The argument was innovative in that it sought to use a payment made after the initial limitation period to extend the period of limitation. However, this argument was ultimately unsuccessful due to the lack of pleading and proof of acknowledgment of the payment.
Issues Framed by the Supreme Court
The Supreme Court considered the following issues:
- Whether the suit filed by M/s. Shanti Conductors was barred by limitation?
- Whether the petitioner was entitled to the benefit of Section 14 of the Limitation Act?
- Whether the Act, 1993 is retroactive, and if so, whether any outstanding amount at the time of the commencement of the Act ought to attract interest under the Act, 1993?
- Whether the Civil Appeal No. 8445 of 2016 was maintainable?
Treatment of the Issue by the Court:
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Whether the suit was barred by limitation? | Yes | The suit was filed beyond the three-year limitation period from the date the cause of action arose. The benefit of Section 19 of the Limitation Act was not available due to lack of pleading and proof of acknowledgment of payment. |
| Whether the petitioner was entitled to the benefit of Section 14 of the Limitation Act? | No | The writ petition was filed by the Association, which is a different entity than the petitioner. |
| Whether the Act, 1993 is retroactive, and if so, whether any outstanding amount at the time of the commencement of the Act ought to attract interest under the Act, 1993? | No | The Court had already addressed and decided this issue in the judgment dated 23.01.2019. |
| Whether the Civil Appeal No. 8445 of 2016 was maintainable? | No | The appeal was against a review judgment that did not grant interest under the Act, 1993. The withdrawal of the earlier appeal was fatal. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | How it was Considered | Legal Point |
|---|---|---|---|
| Sant Lal Mahton Vs. Kamla Prasad and Others, AIR 1951 SC 477 | Supreme Court of India | Relied upon | To establish that for the applicability of Section 20 of the Limitation Act, 1908 (akin to Section 19 of the Limitation Act, 1963), two conditions are essential: payment within the prescribed period and acknowledgment in writing. It also held that there has to be pleading and proof for claiming benefit of exemption under Section 20. |
| Jiwanlal Achariya Vs. Rameshwarlal Agarwalla, AIR 1967 SC 1118 | Supreme Court of India | Distinguished | To explain the date of payment in case of post-dated cheques for the purpose of limitation. The court clarified that the date on the cheque is the date of payment for the purpose of Section 20 of the Limitation Act, 1908. The court distinguished this case because the facts of the present case did not have any pleading for the benefit of Section 19. |
| Kamla Devi and Others Vs. Pt. Mani Lal Tewari and Others, (1976) 4 SCC 818 | Supreme Court of India | Relied upon | To explain the function of Section 19 of the Limitation Act, 1963, which provides for a later date to count the period of limitation afresh from the date of acknowledgment. |
| Parsion Devi and Others Vs. Sumitri Devi and Others, (1997) 8 SCC 715 | Supreme Court of India | Relied upon | To reiterate the limited scope of review, stating that it is not permissible for an erroneous decision to be “reheard and corrected.” |
| Section 19 of the Limitation Act, 1963 | Statute | Interpreted | The court interpreted the section to mean that a fresh period of limitation begins from the date of payment of a debt, provided there is written acknowledgment of the payment. |
| Section 3 of the Limitation Act, 1963 | Statute | Interpreted | The court interpreted the section to mean that the court is mandated to dismiss the suit if it is filed beyond the prescribed period of limitation. |
| Article 113 of the Limitation Act, 1963 | Statute | Interpreted | The court interpreted the article to mean that the limitation period for the present suit is three years from the date when the right to sue accrues. |
| Order VII Rule 6 of the Civil Procedure Code | Statute | Interpreted | The court interpreted this rule to mean that the plaintiff must show the grounds for exemption from the law of limitation in the plaint. |
| Section 14 of the Limitation Act, 1963 | Statute | Interpreted | The court interpreted this section to mean that only the time spent in prosecuting the same civil proceeding can be excluded. |
Judgment
The Supreme Court dismissed the review petitions, upholding the earlier judgment. The Court held that the suit was barred by limitation as it was filed beyond three years from the date the cause of action arose. The Court also held that the benefit of Section 19 of the Limitation Act was not available to the petitioner due to a lack of pleading and proof of acknowledgment of the payment. The Court further held that the petitioner was not entitled to the benefit of Section 14 of the Limitation Act, as the writ petition was filed by a different entity. The Court also upheld the dismissal of Civil Appeal No. 8445 of 2016, holding that it was not maintainable.
| Submission | Court’s Treatment |
|---|---|
| Suit filed within 3 years of last payment (05.03.1994). | Rejected. The court held that the suit was filed beyond 3 years from the last supply date (04.10.1993). |
| Section 19 of the Limitation Act applies due to payment. | Rejected. The court held that there was no pleading or proof of acknowledgment of payment, which is necessary for Section 19 to apply. |
| Benefit of Section 14 of the Limitation Act should be granted due to pending writ petition. | Rejected. The court held that the writ petition was filed by a different entity (the Association). |
| Act, 1993 should be applied retroactively. | Rejected. The court held that this issue was already addressed and decided in the earlier judgment. |
How each authority was viewed by the Court?
- Sant Lal Mahton Vs. Kamla Prasad and Others, AIR 1951 SC 477:* The Court relied on this case to emphasize that for Section 19 to apply, there must be both payment within the limitation period and a written acknowledgment.
- Jiwanlal Achariya Vs. Rameshwarlal Agarwalla, AIR 1967 SC 1118:* The Court distinguished this case, noting that it dealt with the date of payment of a post-dated cheque and was not applicable to the present facts, where there was no pleading for the benefit of Section 19.
- Kamla Devi and Others Vs. Pt. Mani Lal Tewari and Others, (1976) 4 SCC 818:* The Court relied on this case to explain the function of Section 19, which provides for a fresh period of limitation from the date of acknowledgment.
- Parsion Devi and Others Vs. Sumitri Devi and Others, (1997) 8 SCC 715:* The Court relied on this case to reiterate the limited scope of review and that it cannot be used to reargue issues already decided.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the following factors:
- Strict Adherence to Limitation Laws: The Court emphasized the mandatory nature of the limitation period and the requirement to dismiss suits filed beyond the prescribed period.
- Lack of Pleading and Proof: The Court highlighted the petitioner’s failure to specifically plead or prove the necessary facts to claim the benefit of Section 19 of the Limitation Act, particularly the acknowledgment of payment.
- Separate Legal Entities: The Court emphasized that the writ petition filed by the Association could not be used to claim the benefit of Section 14 of the Limitation Act, as the petitioner and the Association were distinct legal entities.
- Limited Scope of Review: The Court reiterated that a review petition cannot be used to reargue issues already decided on merits.
| Sentiment Analysis of Reasons | Percentage |
|---|---|
| Strict Adherence to Limitation Laws | 40% |
| Lack of Pleading and Proof | 30% |
| Separate Legal Entities | 20% |
| Limited Scope of Review | 10% |
| Ratio | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
The Court’s decision was influenced more by the factual aspects of the case, such as the lack of pleading and proof, rather than purely legal considerations.
Issue: Whether the suit was barred by limitation?
Question: Was the suit filed within 3 years of the last supply date (04.10.1993)?
Answer: No, the suit was filed beyond 3 years.
Question: Can Section 19 of the Limitation Act be applied due to payment on 05.03.1994?
Answer: No, because there was no pleading or proof of acknowledgment of payment.
Conclusion: Suit is barred by limitation.
Issue: Whether the petitioner was entitled to the benefit of Section 14 of the Limitation Act?
Question: Was the writ petition filed by the same entity as the plaintiff in the suit?
Answer: No, the writ petition was filed by the Association, a different entity.
Conclusion: Petitioner is not entitled to benefit of Section 14.
Issue: Whether the Civil Appeal No. 8445 of 2016 was maintainable?
Question: Was the appeal against a judgment that granted interest under Act, 1993?
Answer: No, the appeal was against a review judgment that did not grant interest under the Act, 1993.
Conclusion: The appeal is not maintainable.
The Court considered alternative interpretations but rejected them due to the clear requirements of the Limitation Act and the lack of supporting evidence and pleadings. The final decision was reached by strictly adhering to the legal framework and the facts presented.
“The above provision makes it clear that in event, a suit is instituted after the prescribed period, it shall be dismissed although limitation has not been set up as a defence.”
“Order VII Rule 6 uses the words “the plaint shall show the ground upon which exemption from such law is claimed”. “
“The proviso of Order VII Rule 6 cannot come to the rescue of the plaintiff since as noticed above, the plaintiffs have specifically pleaded in paragraph 21 that the provisions of the Limitation Act are not applicable since Act, 1993 has overriding effect.”
Key Takeaways
- Suits for recovery of dues must be filed within the prescribed limitation period.
- Part payment of a debt does not automatically extend the limitation period unless there is a written acknowledgment of the payment.
- The benefit of exclusion of time under Section 14 of the Limitation Act is only available if the previous proceedings were pursued by the same party.
- Review petitions cannot be used to reargue cases already decided on merits.
Directions
No specific directions were issued by the Supreme Court in this judgment.
Specific Amendments Analysis
There was no specific amendment discussed in the judgment.
Development of Law
The ratio decidendi of this case is that a suit for interest on delayed payments must be filed within the prescribed limitation period, and the benefit of Section 19 of the Limitation Act is not available without specific pleading and proof of acknowledgment of the payment. Further, the benefit of Section 14 of the Limitation Act can only be claimed if the previous proceedings were pursued by the same party. This judgment reinforces the strict application of limitation laws and the importance of proper pleading and proof in civil suits.
Conclusion
The Supreme Court dismissed the review petitions, affirming its earlier judgment that the suit filed by M/s. Shanti Conductors was barred by limitation. The Court emphasized the importance of adhering to limitation laws and the necessity of proper pleading and proof to claim exemptions. The judgment clarifies the application of Section 19 and Section 14 of the Limitation Act in cases involving delayed payments and underscores the limited scope of review petitions.