J.N. Sarma, J.

1. This First Appeal has been filed against the judgment and decree dated 15-6-95 passed by the learned Asstt. District Judge No. 1, Guwahati in MS No. 144/94. By the aforesaid judgment, the suit was decreed.

2. The case of the parties are as follows:-

The case of the plaintiff in brief is that apart from it being registered under the Companies Act, it is also registered as a small scale industrial unit with the Directorate of Industries, Govt. of Assam. The plaintiff as such company and industrial unit runs business of manufacturing and supplying of prestressed cement concrete poles (PSC Poles) at its factory situated at Amingaon, Guwahati. The defendants placed two orders one on 17-2-92 and another on 17-3-92 with the plaintiff for supply of 3900 Nos. of PSC poles in total. Upon such orders a written contract was entered into between the plaintiff and the defendants in respect of the work of such supply. Out of 3900 Nos of poles ordered by the defendants, the plaintiff supplied 3885 poles. The defendants acknowledged receipt of the poles vide their letter dtd. 7-10-93. The total value of the poles supplied was Rs. 39,70,065.70P excluding sales tax and including sales tax it was Rs. 42,32,072.02 P supplies were made during the period from 23-4-92 to 30-6-92 in 11 instalments and bills for payment of value of the poles were submitted installment wise as follows :-

Bill No.Date of BillsValue claimed

PSC/0323-4-92Rs. 37,8713.00

PSC/0428-5-92Rs. 60,3051.00

PSC/0529-5-92Rs. 41,9268.00

PSC/0630-6-92Rs. 51,4635.00

PSC/0930-7-92Rs. 33,2966.00

PSC/2030-3-92Rs. 74,3289.00

PSC/2130-3-92Rs. 16,2657.00

PSC/2230-3-92Rs. 20,6067.00

PSC/2431-3-92Rs. 43,1140.00

PSC/1024-8-92Rs. 34,5909.70

PSC/1107-9-92Rs. 94821.22





3. The defendants made payments of the amounts of the aforesaid bills in six (6) installments as follows :-

AmountsDate of payment

Rs. 56,000/-23-4-93

Rs. 1,00,000/-7-4-93

Rs. 15,37,683/-28-6-93

Rs. 23,75,732/-16-9-93

Rs. 1,39,787/-23-9-93

Rs. 13,001/-8-10-93





4. The plaintiff completed the work of supply of poles on 30-6-92, but the defendants caused delay in making payment of value thereof. Due to such delayed payment the plaintiff could not repay in time the amount of loan of 23.50 lacs received by it from the Bank of Baroda to run its industry for manufacturing PSC poles. Due to failure of the plaintiff to repay the said loan, its amount with said Bank became sticky and the Bank charged interest and penal interest at the rate of 23.75% per annum. Hence, the defendants are liable to pay interest to the plaintiff on the amount of value of the goods supplied during the period of delay caused in making payment of the same at the rate of 28.75% per annum i.e. 5" points above the floor rate of 23.75% per annum charged by the Bank with effect from 23-9-92 under provision of "The interest on Delayed Payment to Small Scale and Ancillary Industrial undertaking Ordinance, 1992", which was subsequently made an Act as Act of 1993. The plaintiff accordingly assessed its claim for such interest at an amount of Rs. 16,55,623/- for the period from 23-9-92 to 15-9-94 i.e. till filing of the suit. Further case of the plaintiff is that he approached the defendants more than once demanding payment of said amount, but the defendants turned deaf ear to its (plaintiff(s) claim. Hence, this (plaintiffs) suit.

5. The defendants have contested the suit by a written statement filed by them on 7-11-94. Their case inter-alia is that the suit of the plaintiff is not maintainable and that there is no cause of action for the suit. Further case of the defendants is that the delay caused in making payment of the bills submitted by the plaintiff for value of the PSC poles supplied by its was due to paucity i.e. non availability of fund; that the contract for supply of PSC poles was entered into by the plaintiff with the defendants and the supplies of said poles were made prior to coming of the Interest on delayed payments to the small scale and ancillary industrial undertakings ordinance or Act as such the plaintiff is not entitled to claim interest under the provision of the said Act and hence the suit is liable to be dismissed.

6. Following are the issues framed in the suit :-

1. Whether there is cause of action for the suit

2. Whether the suit is maintainable in its present form

3. Whether the suit is barred by law of limitation

4. Whether the amount recoverable was Rs. 42,32,056.70P or Rs. 39,70,065.70P on account of supply of poles made by the plaintiff to the defendants

5. Whether the plaintiff is entitled to realise interest as per provision of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act from 23-9-92 on the principal amount

6. Whether the claim of the plaintiff is inflated

7. To what relief, if any, the plaintiff is entitled

7. The plaintiff examined one witness and exhibited two documents as Ext. 1 and 2. The defendant examined one witness and exhibited three documents marked as Ext. Ka, Kha and Ga. The whole claim made in the suit is for recovery of the amount of interest on the amount of bills pending for payment of the value of goods supplied by the plaintiff and the claim was made under the provision of Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (hereinafter called as Act). It may be stated herein that before the suit was filed all the bills which were submitted were paid and nothing remained due to the plaintiff on account of bills and that is admitted by the parties. This Act had to be enacted for the following purpose :-

"Inadequate working capital in small scale or ancillary industrial undertakings was causing an endemic problem and such undertakings were very much affected. The Small Scale Industries Board, which is an apex advisory body on policies relating to small scale industrial units also expressed its views that prompt payments of money by buyers should be statutorily ensured and mandatory provisions for payment of interest on the outstanding money, in case of default, should be made. In the Parliament, Government made a policy statement on small scale industries that suitable legislation would be brought to ensure prompt payment of money by buyers to the small industrial units.

Accordingly the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Ordinance, 1992 was promulgated by the President on 23rd September, 1992. To replace this Ordinance the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Bill was introduced in the Parliament.

STATEMENT OF OBJECTS AND REASONS :

"A policy statement on small scale industries was made by the Government in Parliament. It was stated at that time that suitable legislation would be brought to ensure prompt payment of money by buyers to the small industrial units.

2. Inadequate working capital in a small scale or an ancillary industrial undertaking causes serious and endemic problems affecting the health of such undertaking. Industries in this sector have also been demanding that adequate measures be taken in this regard. The Small Scale Industries Board, which is an apex advisory body on policies relating to Small Scale industrial units with representatives from all the States, governmental bodies and the industrial sector, also expressed this view. It was, therefore, felt that prompt payments of money by buyers should be statutorily ensured and mandatory provisions for payment of interest on the outstanding money, in case of default, should be made. The buyers, if required under law to pay interest, would refrain from withholding payments to small scale and ancillary industrial undertakings.

3. An Ordinance, namely, the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Ordinance, 1992, was, therefore, promulgated by the President on the 23rd September, 1992."

8. Section 3 of theprovides as follows :

"3. Liability of buyer to make payment.- Where any supplier supplies any goods or renders any services to any buyer shall make payment therefore on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf before the appointed date :

(Provides that in no case the period agreed upon between the supplier and the buyer in writing shall exceed on hundred and twenty days from the day of acceptance or the day of deemed acceptance."

9. It may be stated herein that this provision was inserted w.e.f. 10-8-1998 i.e after the decree. So the benefit of this provision shall not apply to the instant suit. The present Section 4 of thehas been substituted from 10-8-98. It is the earlier section which will apply to the present case. Earlier section reads as follows :

"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 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 such rate which is five per cent, points above the floor rate for comparable lending."

10. The two exhibits exhibited by the plaintiff are - (i) Ext. I - the certificate of registration as Small Scale Industrial Unit; and (ii) Ext. 2 - the certificate issued by the Chief Manager, Bank of Baroda, with regard to issuance of certificate for interest charged on the Debit balance in the cash Credit accounts of the plaintiff.

11. In Ext. ka the terms of payment is as follows :

"5.TERMS OF PAYMENT: Bill for manufacture, supply and carrying of PSC poles supported by necessary challans/documents shall be submitted in triplicate to the concerned Executive Engineer (Elect). Detailed accounts regarding the poles supplied by the various manufacturers will be maintained by the controlling divisions who is also responsible for checking of poles. You will have to give a written undertaking and a declaration covering your consent to adjust any overpayment made by the Board in cash or kind as per the old orders against future bill for the year 1991-92."

12. Ext. kha is an order of supply dated 17-3-92. On 11-6-93 when the demand for interest was made, the Board by Ext. ga gave the following reply :-

"with reference to your letter cited above claiming interest on pending PSC pole bills, this is to inform you that the claim for interest applies only to orders placed after the ordinance came into effect i.e. September 92. Since all our contracts were prior to this date so the question of interest on pending P.S.C. pole bills does not arise."

13. It may be stated herein that before filing of the suit, a writ application was filed before this Court claiming interest and that was rejected by this Court holding that no writ is maintainable for realisation of interest. Thereafter, the suit was filed with the claims as indicated above.

14. We have heard Mr. B.D. Das, learned counsel for appellant and Mr. B. M. Sarma, learned counsel for Caveator. It may be stated herein that in terms of the interim order of this Court already half of the amount has been paid to the plaintiff-respondent.

15. The basic question in this case is that as all the bills were paid and cleared earlier to the commencement of the, whether the plaintiff can have any remedy by way of a suit only for the interest. The second question is whether a claim which has come to an end on receipt of the entire money of the bill can be revived by the present Act.

16. Let us first take up the question whether the right to sue for the interest survives after accepting the payment made for the bills. This aspect of the matter came up for consideration in AIR 1963 SC 250 [LQ/SC/1962/164] (Lala Kapurchand Godha v. Mir Nawab Himayatalikhan Azamjah) wherein the Supreme Court in para 9 has laid down the law as follows :

"(a) When a statute clearly covers a case, it is hardly necessary to refer to decisions. In deference, however, to the arguments advanced on behalf of the appellants, we refer to the two decisions on which learned counsel for the appellants has relied. One is the decision in Day v. Mclea, (1889) 22 QBD 610.

In that case the plaintiffs made a claim against the defendants for a sum of money as damages for breach of contract; the defendants sent a cheque for a less amount stating that it was in full payment of all demands. The plaintiffs kept the cheque stating they did so on account and brought an action for the balance of their claim. It was held that keeping the cheque was not as a matter of law conclusive that there was an accord and satisfaction of the claim; but that it was a question of fact on what terms the cheque was kept. We do not think that that decision is of any help to the appellants. As Lord Justice Bowen said in (1889) 22 QBD 610.

"If a person sends a sum of money on the terms that it is to be taken, if at all, in satisfaction of a larger claim; and if the money is kept, it is a question of fact as to the terms upon which it is so kept. Accord and satisfaction imply an agreement to take the money in satisfaction of the claim in respect of which it is sent. If accord is a question of agreement, there must be either two minds agreeing or one of the two persons acting in such a way as to induce the other to think that the money is taken in satisfaction of the claim, and to cause him to act upon that view. In either case it is a question of fact."

"(b) In Hirachand Punamchand v. Temple (1911) 2 KB 330 the father of a debtor wrote to the creditor offering an amount less than that of the debt in full settlement of the debt and enclosing a draft for that amount. The creditor cashed and retained the proceeds of the draft and afterwards brought an action against the debtor for the balance of the debt.

It was held that the creditor must be taken to have accepted the amount received by him on the terms upon which it was offered and therefore he could not maintain the action. The case was considered under the English law and it was observed that assuming that there was no accord and satisfaction in the strict sense of the law in English, it could still be held that the creditor had ceased really to be holder of the negotiable instrument on which he sued. With the niceties of English law in the matter of accord and satisfaction we are not concerned. The position in the present case is that the appellants must have known that they could receive the second instalment and retain the first instalment by accepting the condition on which the sum of Rs. 20 lacs was offered to them namely, that they must record a full satisfaction of their claim."

17. Here in this case as will be seen from the documents there was no agreement whatsoever to pay interest on delayed payment and the payment was made earlier and having received the principal amount, now they cannot sue only for the interest in view of Section 6 (1) of thewhich is quoted below :

"6. Recovery of amount due.- (1) The amount due from a buyer, together with the amount of interest calculated in accordance with the provisions of Sections 4 and 5, shall be recoverable by the supplier from the buyer by way of a suit or other proceeding under any law for the time being in force."

18. A bare reading of the section itself will show that there must be some amount due from a buyer and along with that amount a claim for interest may be made. No amount being due from the buyer, mere suit only for interest is not maintainable in view of Section 6 (1) of thequoted above.

19. In AIR 1972 All 176 [LQ/AllHC/1971/342] (Messrs Amar Nath Chand Prakash v. Messrs Bharat Heavy Electrical Limited) a Division Bench of the Allahabad High Court pointed out that if the principal amount is received in discharge of the whole claim and at the time of acceptance of the payment, if no reservation was made for interest, that will show full discharge of the claim and thereafter no claim for interest is maintainable. That is the situation in the case in hand. In this particular case also nothing has been shown to us that at the time of acceptance of the principal reservation whatsoever was made and as such, it is clear that the payment was in discharge of the entire amount of the bills.

20. In AIR 1997 Bombay 209 (Union of India v. M/s. Navilakha and Sons) learned single Judge of the Bombay High Court pointed out that if payments are received in full and final settlement of the claim thereafter a person cannot make a further claim of the balance amount.

21. The admitted position in this case is that orders were placed for 3900 poles and the plaintiff supplied 3885 poles. Supplies were made in installments and the supplies were completed on 30-6-92 and it is also admitted that the payments were made for the entire amount. There is not even a whisper in the deposition of PW 1 that he accepted the principal amount with protest or there was some reservation at the time of accepting the principal any payment for interest.

22. Learned counsel for respondent places reliance on (2000) 7 SCC 357 [LQ/SC/2000/1319] : (AIR 2000 SC 2957 [LQ/SC/2000/1319] ) (United Bank of India, Calcutta v. Abhijit Tea Co. Pvt. Ltd. That case is of no help to respondents.

23. The next case relied on in AIR 1999 SC 2963 [LQ/SC/1999/715] (Sovintorg (India) Ltd. v. State Bank of India, New Delhi) and reliance is placed in para 6 where the Supreme Court has pointed out as follows :

i) when there is no contract between the parties regarding payment of interest on delayed deposit or on account of delay on the part of the opposite party to render services, interest cannot be claimed under Section 34 of Civil Procedure Code;

ii) but the general provisions of Section 34 being based upon justice, equity and good conscious (conscience), the Court can grant interest appropriately under the circumstances of each case;

iii) interest may also be awarded on equitable grounds as was held by the Supreme Court in AIR 1961 SC 908 [LQ/SC/1961/44] (Satinder Singh v. Umrao Singh).

In that case the appellant was deprived of a sum of Rs.1 lakh for over a period of 7 years and as such the Supreme Court pointed out that interest should be paid @ 15% p.a. That is not the situation in the case in hand.

24. Great powers are given by the 54 and in exercise of it, the Court must adopt a cautious approach otherwise it would be tyrannous. If a Court is vested with a power to be exercised in the interest of justice, the Court has a duty to exercise it where it ought to be exercised in order to uphold the cause of justice. The Court cannot use that power in order to give some undue benefits or wrongful gain to enable the party to make a wrongful gain. The Court must find out first whether it is a proper case to exercise the power and thereafter it has a duty to prescribe the extent to which this power is to be exercised. Another thing which the trial Court lost sight in this particular case is that the itself is prospective in nature and the claims which were settled or discharged before coming into force of this Act and which were not reserved as indicated above cannot be given a new lease of life by the application of this Act.

25. Even in cases where the buyer is liable to pay interest by virtue of this Act it is the duty of the Court to find out the amount of loss suffered by the delayed payment and only thereafter interest can be paid. This Act cannot be used as an open dagger to stab somebody as and when there is delayed payment. If that interpretation is given this Act instead of being a tool of justice, shall be a weapon of oppression. All these things were not taken into consideration by the trial Court.

26. Accordingly, we hold as follows :

i) Once the principal amount is received by a person without any reservation, thereafter he cannot make a claim for a further sum either by way of principal or interest;

ii) The Act in question did not revive the claims which were satisfied earlier and on account that also the suit is not maintainable.

27. In view of the above, this appeal is allowed. The suit of the plaintiff is dismissed with costs all throughout.

28. As the plaintiff has received half of the decretal amount by the interim order of this Court, the plaintiff either deposit the amount before this Court within a period of 3 (three) months from today failing which the amount can be realised by appellant-ASEB by way of restitution since the appeal has been allowed and the decree has been set aside. In the event the ASEB has to go for execution of the decree by way of restitution, ASEB shall be entitled to interest @ 9% from the date on which the amount was received by the plaintiff.

29. R. GOGOI, J.:-

29. I agree.

Appeal allowed.