IN THE GAUHATI HIGH COURT (THE HIGH COURT OF ASSAM: NAGALAND: MIZORAM & ARUNACHAL PRADESH) RFA 27 of 2004 1. M/s Humanoid Laboratories, Represented by its proprietor Shri Bipul Baruah, S/o Shri Bhaben Baruah, having its office and Principal Place of business at Hatigaon, Guwahati-6, 2. On the death of late Bipul Baruah, appellant /plaintiff no.2, his legal heirs- (a) Smti Chandramila Baruah, (b) Shri Chinmoy Baruah, (c) Shri Himangshu Baruah, (d) Miss Sneha Baruah, No.(a) is the wife, no.(b) & (c) are the sons and no.(d) is the daughter of late Bipul Baruah, all are residents of Pubarun Path, Hatigaon, Guwahati-6..Appellants/ Plaintiffs -Vs- 1. The State of Assam, represented by the Secretary to the Govt. of Assam, Department of Animal Husbandry and Veterinary Department, Dispur, Guwahati-6. 2. The Director, Animal Husbandry and Veterinary Department, Chenikuthi, Guwahati-3. 3. The Additional Director, Animal Husbandry and Veterinary Department, Govt. of Assam, N.C. Hills, Haflong. 4. The North Cachar Hills Autonomous District Council, RFA 27 of 2004 1
represented by its Executive Member, N.C. Hills, Haflong. BEFORE.Respondents/Defendants HON BLE MRS. JUSTICE RUMI KUMARI PHUKAN For the appellants : Mr. S.P.Roy, Advocate For the respondents : Mr. G.Sarma, Govt. Advocate Date of hearing & judgment: 04.08.2016 JUDGMENT & ORDER(ORAL) Heard Mr. S.P.Roy, learned counsel for the appellants and Mr. G.Sarma, learned Government Advocate, appearing for the respondents. 2. This appeal has been directed against the judgment and decree dated 4.11.2003 passed the learned Civil Judge (Senior Division),No.3 Guwahati in M.S. No.95 of 2000, whereby the learned Court has dismissed the claim of the Plaintiffs/Appellants. 3. The Appellant No.1 is a proprietorship firm and the Appellant No.2 is proprietor of the Appellant No.1. The said Firm has been registered as a SSI Unit with the Directorate of Industries, Government of Assam and also registered under the provisions of Assam Preferential Store Purchase Act. 4. The appellant received supply order on 25.2.1991 from the Respondent No.3. Pursuant to the aforesaid supply order various medicines like paracetamol syrup of 450 ml- 2186 bottles and 2000 bottles of pyperazine citrates Elixir of 450 ml through delivery challan No. 764 dated 25.3.1991 were supplied to the Respondent No.3. Another supply order dated 3.7.1991 was received from the same Respondent No.3 for 1009 bottles of paracetamol syrup, 2000 bottles of suspension co trimoxazyle, 1000 bottles of pyperzine citras, butrizines tablets 400 boxes etc. and accordingly same were supplied to the respondent no.3 and the appellants submitted their bills on 24.7.1991. Thereafter appellants received other supply orders of medicines on 22.3.93 and accordingly supplied the medicines vide delivery challan no. 1763 dated 24.3.93. They also submitted their bills. Thus the Appellants had supplied medicines to the RFA 27 of 2004 2
Defendants amounting to Rs.9,49,987/- but the said amount has not been paid to the Appellants. According to the appellants despite their repeated reminders the Respondents did not pay their hard earned money, which will accrue interest of Rs.49,38,523.24 under the provisions of The interest on delayed payment to Small Scale and Ancillary Industrial Undertaking Act, 1993 and thus the total claims of the Appellants/Plaintiffs is Rs.58,88,510.24. 5. Although the defendant no. 3 acknowledged the due to be paid to the appellants and issued a certificate to this effect as on 24.3.1999 but despite all above they failed to pay the due amount to the appellants. The Appellants as such issued a notice under Section 80 C.P.C. to the Respondents by claiming all such amount along with interest as on 4.5.1999 but they failed to respond to the same nor paid the amount for which the appellants instituted the suit for realisation of amount which was registered as M.S. 95/2000. The appellants also claimed interest of Rs.49,38,523.24 under the provisions of interest of delayed to Small Scale & Ancilliary Industrial Undertaking Act, 1992 and thus made a total claim for Rs.58,88,510.24. 6. All the respondents in their written statement have denied the allegations so made by the plaintiffs and they have made a categorical submission that notice U/S 80 CPC was not properly served upon them. Admitting the issuance of certificate to the appellants as regards the amount due to the appellants to the tune of Rs.9,49,987/-, it has been submitted that the same was issued by the respondent no.3 at the request of the appellants so as to enable him to file sale tax return and not for any other purpose. The said certificate cannot be treated as acknowledgement of liability within the meaning of Section of the Limitation Act. The answering defendants/respondents also denied their liability to pay the principal amount of Rs.9,49,987/-and also the interest of Rs.49,38,523.24 as claimed by the appellants and prayed to dismiss the suit. 7. The learned trial Court framed the following issues: 1. Whether the suit is barred by limitation? 2. Whether the suit is bad for non joinder of necessary parties? 3. Whether the notice U/S 80 CPC was properly served upon the defendants.? 4. Whether the plaintiff supplied the goods to the defendants as per supply RFA 27 of 2004 3
order placed by the defendants? 5. Whether the defendants have failed to make payment to the plaintiffs against the supply orders? 6. Whether the plaintiffs are entitled to recover Rs.58,88,510.24 from the defendants? 7. Whether the plaintiff is entitled to get decree as prayed for? 8. What other relief or reliefs the parties are entitled to? and subsequently the learned Court strike out the issue no.2 made above and framed the new issue instead of earlier issues as under: 2. Whether suit is bad for mis-joinder of parties.? During the course of trial the appellants examined himself as an witness and exhibited bunch of documents and defendants/respondents side adduced no evidence. The learned Court answered almost all the issues in affirmative in favour of the appellants, but while deciding the issue no.1 the Court arrived at a finding that the suit is barred by limitation as because the acknowledgement so made by the respondent no.3 vide Ext. 15 there appears nothing that defendants promised to pay the debt. The learned Court held that there is neither any acknowledgment of liability prior to the expiration period of limitation as required U/S 18 of the Limitation Act nor there is any promise to pay the time barred debt as required by Section 25(3) of the Contract Act and as such suit is barred by limitation and accordingly it was dismissed. 8. The impugned judgment has been assailed by way of this appeal on the ground that the findings so arrived at by the learned trial Court is erroneous and the learned Court has failed to appreciate the provisions of law in the given background of the case. In course of his argument, learned counsel for the appellants Mr. S. P. Roy has submitted that the learned trial Court has decided all the issues in their favour but the crucial issue has been decided against them and such finding has no force of law. It has also been contended that the learned trial Court has not appreciated the relevant document Ext.15 i.e. the Certificate issued by the Respondent No.3 and in view of the expressions so made by the respondent/authorities admitting their due to the appellants it is enough to hold that they have acknowledged their liability and it will be treated as promise and new contract in terms of Section 25 (3) of the Contract Act. RFA 27 of 2004 4
9. In this context the learned counsel for the appellants has relied upon the following case laws: (1) AIR 1975 Madras 333 N.Ethirajulu Naidu vs- K.R. Chinnikrishan Chettiar. (2) AIR 1938 Lahur 757 2002 (1) GLT 115 Gurdinajiwatram Kukreja & ors vs- Eastern Mining & Allied Industries Ltd. (3) 2002 (1) GLT 547 Assam Electricity Board & ors-vs- M/s Shanti Conductors (P) Ltd. & another. (4) AIR 1991 (Bom) 44 M/s R. Sureshchandra and Company vs- M/s Vadnere Chemical Works and others. On the basis of legal pronouncements made in the above decisions it has been contended that the acknowledgment by the respondent no.3 (vide Ext.15) is one of the usual form which can be treated in the province as a promise to pay within the meaning of Section 25(3) of the Contract Act and when such a promise falls under the Section and it constitutes valid agreement for the purpose of suing. The argument has been advanced that from the evidence and pleadings between the parties it is evident that the debt was due and it was confirmed by the subsequent conduct by the defendants. In such context the defendants cannot take shelter of Limitation, in view of their own acknowledgment with a submission that the said Ext. 15 was issued to the appellants only for submission before the Sales Tax Authority. 10. Also heard argument of Mr. G. Sarma, learned Govt. Advocate for and on behalf of the respondents, who made a submission that the appellant cannot rely upon such document issued by the respondent which was not issued acknowledging the liability as has been assailed. Further, it has also been contended that the appellant cannot charge higher amount of interest of their own and the claim for higher interest for delayed payment is also not maintainable. 11. I have given due consideration to the submissions so made by the learned counsel for the parties and also gone through the records as well as the impugned judgment. As there is no dispute as regards finding of other issues so let us confine our discussion to the issue no.1 whereby the learned trial Court has held that the suit is barred by limitation under Section 18 of the Limitation Act and the provisions of Section 25(3) of the Contract Act is not attracted, there being no promise to pay the time barred debt. RFA 27 of 2004 5
12. On appreciation of the Ext.15 it is abundantly clear that it is an acknowledgement about the due to the appellants for the supply of medicines to the respondent authorities and there is a categorical declaration that the bill could not be made due to non drawal of fund, and it was dated 24.3.1999. Though there is no express promise but the same can be treated as implied promise to pay the same within the meaning of Section 25(3) of the Indian Contract Act. The above provisions create a new agreement between the parties and made liable the other parties/buyers to pay the amount due. The aforesaid aspects have been answered in the aforesaid decisions of M/s R. Sureshchandra (supra) wherein it has been held that the promise could be expressed or implied. The balance sheet signed by the partners has stated that the firm was liable to pay certain sum and accordingly it was held that it was a promise under Section 25(3) of the Contract Act, 1872. The same findings were endorsed by the subsequent decisions that have been referred above. 13. After due consideration it is found that the respondent authorities admittedly utilised the medicines so supplied by the appellants and it was their plea that due to fund constraint they could not pay the bill amount. Obviously the respondent authorities being the Government Authority was under an obligation to pay the appellants against their bill whenever their fund was made and they should also pursue such matter for realisation of fund if it was not received at times but instead of doing so they took the shelter of limitation which is not a healthy atmosphere. The appellants who are a small scale industry should not be deprived of their dues by such irresponsible conduct by the respondent authorities. 14. Regarding the status of such small scale industry and their entitlement for interest for delayed payment has been elaborately discussed in the full Bench decision of this Court in the Assam State Electricity Board vs- M/s Shanti Conductor (supra), wherein it has been held that the interest on delayed payment under Small Scale & Ancillary Industrial Undertakings Act, 1993 would be applicable even to the contract entered into prior to the enforcement to the Act. The Act creates a statutory liability against the buyers to pay interest under the Act on delayed payments. The liability cannot be waived by the buyers, however the suppliers can waive his right to recover interest. Further it has been held that the Act has been enforced to ensure that the Small Scale Industries get the payment regarding supply made by them within RFA 27 of 2004 6
prescribed period and in case of delayed in payment the interest would be at a much higher rate (1 time of lending rate charged by the State Bank of India). The obligation of payment of higher interest under the Act is mandatory. Section 4 and 5 of the Act contain a non-obstinate clause i.e. notwithstanding anything contained in any agreement between the buyer and suppliers buyers liable to pay interest. In other words the parties to the contract cannot even contract out of the provisions of 1993 Act. 15. In view of enunciation of law by the full Bench as aforesaid, the buyer is under obligation to pay the interest at higher rate against the delayed payment and the aforesaid Act has been applicable to the contract even prior to the enforcement of the Act. The learned counsel has drawn the attention of this Court to the different documents so exhibited in course of trial and has submitted that no such documents has been rebutted by the other side rather all are admitted. That apart the respondents side neither adduced any evidence in support of their written statement nor challenged any of the documents. They have admitted the issuance of Ext. 15 whereby they had acknowledged about the due towards the appellants and as such contents of such documents are proved. The contention that it was issued to the appellants only to submit the same before the Sale Tax Authority cannot at all be accepted. In view of the admitted position that no such payment was made to the appellants, now the respondent authorities are under obligation to pay the higher interest in the prevailing rate at the relevant time. 16. It is to be noted that a notice U/S 80 CPC was issued by the appellants to the respondent authorities raising all their claims vide Ext.16 prior to fixing of the case but the respondents side made no reply to the same and a vague plea has been taken that notice was not served properly. The appellants side produced the documents as Ext.22 onwards showing calculation of interest @ prevailing rate as circulated by the SBI and the rate of interest to be shown at 20% as on 9.10.1991, 10% as on 2.3. 1992, 18% as on 9.10.1992, 17% as on 1.3.1993 etc. as has been annexed as Annexure-3 page 113. In the given case the appellants supplied the articles from 26.3.1991 to 25.3.1993 and the interest on delayed payment under the Small Scale & Ancillary Industrial Undertakings Act, 1993 came into force on 23.9.1992. Accordingly, the appellants are entitled for interest on delayed payment in terms of the aforesaid Act. The appellants herein is a firm under the Small Scale Industry registered under the SSI Unit, with the RFA 27 of 2004 7
Directorate of Industries, Govt. of Assam and they have supplied the articles to the respondent authorities by taking loan etc. and the respondent authorities has shown no any attitude to make any payment even after utilisation of same. The appellants made a prayer for interest @22% and 23.5 % to the amount of Rs.49,19,659.22, which is on much higher than the prevailing rate at the relevant time. 17. Considering all entirety of the matter I find and hold that the appellants are entitled to get relief as prayed for. The impugned judgment and order so passed by the learned trial Court in Money Suit No. 95/2000 dated 4.11.2003 is hereby quashed and set aside. However, the rate of interest as prayed for by the appellants is found to be on higher side. The appellants will be entitled to a decree for the principal sum of Rs.9,49,987/- with an interest of 12% per annum (average) from the filing of the suit before the trial Court till its realisation. Decreed that the defendants will pay the appellants the aforesaid amount and a cost of Rs.1 lakh for such delayed payment, within a period of three months from today. 18. The appeal is allowed accordingly. Send back the L.C.Rs. JUDGE Nandi RFA 27 of 2004 8