LexSNEHADEEP STRUCTURES PVT. LIMITED versus MAHARASHTRA SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION LTD.
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[2024] 3 S.C.R. 454 : 2024 INSC 201 Snehadeep Structures Pvt. Limited v. Maharashtra Small Scale Industries Development Corporation Ltd. (Civil Appeal No. 3856 of 2024) 05 March 2024 [Sanjiv Khanna and Dipankar Datta, JJ.] Issue for Consideration High Court whether justified in setting aside the arbitral award and holding that Maharashtra Small Scale Industries Development Corporation Ltd. (MSSIDCL) cannot be said to be a buyer within the meaning of Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 and therefore, the appellant (SSPL) was not entitled to claim interest under the 1993 Act against MSSIDCL; whether the proviso to s.3, 1993 Act would be applicable to the agreement in question entered into between the parties on 30.03.1995, albeit the proviso was enacted and enforced with effect from 10.08.1998. Headnotes Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 – s.2(b), (c), (f); proviso to s.3; s.4 – “buyer”; “supplier” – Liability of buyer to make payment – Date from which and rate at which interest is payable: Held: On a reading of s.3 of the 1993 Act, as it stood before the enactment of the proviso, the buyer and the supplier could agree upon the date of payment – In case of absence of stipulation with regard to the date of payment, the “appointed day” in terms of s.2(b) of the 1993 Act, would be the date, on which the payment is due – This is also clear from reading s.4, which states the date from which interest is payable – As per s.4, the buyer is liable to pay interest if he fails to pay the amount to the supplier as required by s.3 – After enactment of the proviso to s.3, the contractual rights of the parties to agree to the date of payment, have been restricted in terms of the said proviso – Thus, if the contractual date of payment exceeds 120 days from the day of [2024] 3 S.C.R. 455 Snehadeep Structures Pvt. Limited v. Maharashtra Small Scale Industries Development Corporation Ltd. acceptance or the day of deemed acceptance, interest would be payable for the period beyond 120 days from the day of acceptance or the date of deemed acceptance – In the present case, the supply/purchase order dated 30.03.1995 issued by MSSIDCL to SSPL, postulated and the parties had agreed that MSSIDCL would be liable to pay SSPL only after the goods were delivered and accepted by the consignee-Maharashtra State Electricity Board (MSEB) and on the payment being received by MSSIDCL from the MSEB – No reason to interfere with the conclusion in the impugned judgment passed by the High Court, setting aside the arbitral award – Further, by way of Act No.23 of 1998, which came in effect from 10.08.1998, amending clause 2(f), MSSIDCL is to be treated or deemed to be a supplier to MSEB – However, this will not deviate from the fact that MSSIDCL was the buyer under the supply/purchase order dated 30.03.1995 issued by MSSIDCL to SSPL – Equally, the G.O. 2(1)/A/93- SSI Bd. and Policy dated 05.05.1993 issued by the Ministry of Industry, Department of SSI, Agro and Rural Industries, Office of the Development Commissioner (Small Scale Industries), had an effect of treating MSSIDCL as a supplier for the purpose of claiming interest from the buyer, that is MSEB, with whom they have entered into a contract for the purpose of the 1993 Act – The liability to pay and the privity of contract in terms of the supply/purchase order dated 30.03.1995 is between MSSIDCL and SSPL – The contractual relationship, rights and obligations inter se MSSIDCL and SSPL do not undergo any change. [Paras 6, 8-10, 13, 14] List of Acts Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993; Arbitration and Conciliation Act, 1996. List of Keywords “Buyer”; “Supplier”; Interest; Date of payment; Appointed date, Acceptance date; Deemed date of acceptance; Small scale Industries. Case Arising From CIVIL APPELLATE JURISDICTION : Civil Appeal No.3856 of 2024 From the Judgment and Order dated 26.03.2018 of the High Court of Judicature at Bombay in AN No. 203 of 2017 456 [2024] 3 S.C.R. Digital Supreme Court Reports Appearances for Parties Ranjit Kumar, Siddharth Bhatnagar, Sr. Advs., Ms. Tahira Karanjawala, Arjun Sharma, Shreyas Maheshwari, Ms. Sukanya Das, Aditya Sidhra, M/s. Karanjawala & Co., Advs. for the Appellant. Dr. S. Muralidhar, Sr. Adv., Zubin Morris, Nirav Shah, Udit Gupta, Ms
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