KERALA STATE ROAD TRANSPORT CORPORATION v. KERALA MICRO AND SMALL ENTERPRISES - FACILITATION COUNCIL, THIRUVANANTHAPURAM; M/S HARDI TREBERS

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS** **TUESDAY, THE 08TH DAY OF DECEMBER 2020 / 17TH AGRAHAYANA, 1942** ## **WP(C).No.3751 OF 2013(T)** ## **PETITIONER:** **THE KERALA STATE ROAD TRANSPORT CORPORATION, REP. BY ITS CHAIRMAN AND MANAGING DIRECTOR, TRANSPORT BHAVAN, FORT P.O., THIRUVANANTHAPURAM-695 023.** **BY ADV. SRI.SAJEEV KUMAR K.GOPAL** ## **RESPONDENTS:** **1 THE KERALA MICRO AND SMALL ENTERPRISES - FACILITATION COUNCIL, THIRUVANANTHAPURAM, REP. BY ITS SECRETARY. 2 M/S.HARDI TREBERS, INDUSTRIAL ESTATE, UMAYANELLOOR P.O. KOLLAM - 691 589, REPRESENTED BY ITS PROPRIETOR, SRI.M.SAJITH KUMAR.** **R1 BY ADV. SRI.KURIAN GEORGE KANNANTHANAM SR. R1 BY ADV. SRI.THOMAS GEORGE R2 BY ADV. SRI.KURIAN GEORGE KANNANTHANAM (SR.)** ## **ADV TONY GEORGE KANNANTHANAM** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 08.12.2020, ALONG WITH WP(C).3752/2013(T), THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WP(C).No.3751 OF 2013 2 ## **JUDGMENT** ## **Dated this the 08[th] day of December 2020** Writ petitioner challenges the order negativing its objection on the maintainability of an application filed by the 2[nd] respondent, invoking the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (for short 'the Act'). 2. The aforesaid application filed under the Act by the 2[nd] respondent claimed amounts alleged to be due to it. Rs.4,51,078/- was claimed as due on account of tyre retreading materials supplied as per Purchase Order dated 15/04/1994. Alleging that K.S.R.T.C retained 10% of the amount due to the 2[nd] respondent under the Purchase Order as retention money, to be paid after assessing satisfactory performance of the material supplied, it was claimed that even after 14 years, the amount was not paid resulting in Ext.P2 application, invoking the WP(C).No.3751 OF 2013 3 jurisdiction under the Act. 3. The writ petitioner, who was the opposite party, raised the question of maintainability through Ext.P3 and Ext.P4, stating that the applicant had no right to claim the amount after the lapse of 14 years, it was stated in Ext.P3 that the last supply of material was on 21/01/1995 and hence the applicant had no right to claim the amount and it was barred by limitation. A petition was filed as Ext.P7 requesting the 1[st] respondent to consider the question of maintainability as a preliminary issue. 4. In deference to the said petition, the 1[st] respondent heard the parties and by Ext.P8 order, the application was found to be maintainable. The 1[st] respondent held that even though the claimant has preferred a civil suit, the same was not a bar to invoke the provisions of the Act. WP(C).No.3751 OF 2013 4 5. Challenging Ext.P8 order of the 1[st] respondent, this writ petition is preferred. Writ petitioner contends that Ext.P8 order is illegal, since the claim is barred by limitation and also that the provisions of the Act is not applicable for transactions that took place prior to the coming into force of the Act. 6. A counter affidavit has been filed by the 2[nd] respondent controverting the averments in the writ petition. It is pleaded that the 2[nd] respondent is a supplier coming within the purview of the Act and the statute applies to transactions even prior to the coming into force of the Act. 7. I have heard Sri. Sajeev Kumar K. Gopal, learned counsel for the petitioner, the learned Government Pleader on behalf of the 1[st] respondent and Adv.Shri.Tony George Kannanthanam on behalf of the 2[nd] respondent. 8. The learned counsel for the petitioner WP(C).No.3751 OF 2013 5 submitted that the transaction relates to supply of tyre retreading materials prior to 2006 and that the last supply was on 21/01/1995. It was pointed out that the Act has no application to supply of materials prior to 2006 and thus the application filed by the 2[nd] respondent was not maintainable before the 1[st] respondent. 9. He pointed out that admittedly in Ext.P2, it was stated that the amounts are due from 14-12-1995, as is seen from column 10 in Ext.P2. The learned counsel further submitted that the position of law is covered by the decision of the Supreme Court in **[2019 (1)** **SCALE 747] M/s. Shanti Conductors (P) Ltd. & Anr v. Assam State Electricity Board & Ors.** as well and that of the Karnataka High Court in **Karnataka Power Transmission Corporation Ltd. and Another V. Government of Karnataka and Others (AIR 2019 KAR 107)** . In the former judgment, the Supreme Court, while considering WP(C).No.3751 OF 2013 6 the erstwhile Act, known as Interest on Delayed Payment to Small Scale and Ancillary Industrial Undertakings Act, 1993, held that the said Act is prospective in nature and shall govern supply and services that took place after the commencement of the Act. He further submitted that, the erstwhile Act and the Act are in pari materia and the principle laid down by the Supreme Court in **M/s. Shanthi (supra)** applies in all its vigour to the present situation also. 10. To appreciate the arguments of Adv.Shri.Sajeev Kumar, it is necessary to extract Section 15 of the Act which is as follows: _“ Where any supplier, supplies any goods or renders any services to any buyer, the 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 day:_ _Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed forty-five days from the day of acceptance or the day of deemed acceptance.”_ 11. The phraseology used in the above provision indicate that, the provision is WP(C).No.3751 OF 2013 7 intended to cover supplies made after the commencement of Act. The terms “ supplier supplies any goods or renders any services” are words used in the indefinite present tense. There is nothing in Section 15 of the Act to indicate that the provisions will apply to past transactions. 12. A perusal of Sections 15,16,17 and 18 of the Act clearly shows that the application of the Act is dependent upon the supplies made after the commencement of the statute. Nowhere in the statute is there any indication of a retrospective operation of the statute. It is the settled proposition of law that every statute will have prospective application unless by express or necessary intendment the statute provides for retrospective operation. As mentioned earlier, there is nothing in the Act to indicate any such retrospective operation. 13. Reference to the decisions referred by Adv.Sajeev Kumar Gopal is apposite. In the WP(C).No.3751 OF 2013 8 decision in **Shanti Conductors** ( **P) Ltd. & Another** **Vs** . **Assam State Electricity Board & Ors (2019(1)SCALE 747)** . while dealing with the repealed statute - Interest on Delayed Payments to Small Scale and Ancilliary Industrial Undertaking Act, 1993, the Supreme Court held as follows: _32. Thus, statutory liability to make payment accrues to buyer as per Section 3, it is relevant to notice the event contemplated under Section 3 is “where any supplies any goods or renders any services to any buyer”._ _**The incidence of liability is supply of goods or rendering any service.** The Act is clearly prospective in nature and shall govern the incidence of supply and rendering service which happens after enforcement of the Act i.e. 23/09/1992._ _37. The liability to make payment under Section 3 and the liability to pay interest under Section 4 is not dependent of date of agreement between the parties to make supply. When the question of supply and payment are incidents contemplated under the Act which have to take place after the enforcement of the Act the day of agreement between the parties has no relevance in so far as statutory liability under the Act is concerned._ 14. The words in Section 3 of the erstwhile WP(C).No.3751 OF 2013 9 Act and Section 15 of the Act, are in pari materia as regards the incidence of liability contemplated under both statutes. 15. In the decision of Karnataka High Court in **(AIR 2019 KAR 107)** , **Karnataka Power Transmission Corporation Ltd. and Another V.Government of Karnataka and Others** relying upon the decision in **Shanti Conductors Case,** **(Supra)** it was held as follows: _16. “Liability to make payment of interest shall arise if supplies are made subsequent to the enforcement of the Act. Considering the phrase between retrospective and retroactive it is observed that the Act, 1993 is not retroactive in operation. The Act, 1993 is clearly prospective in operation. Further considering S.10 of the Act, 1993 which is in pari materia with S.24 of the Act, 2006 held that S.10 of 1993, Act will operate only with regard to expressed provisions contained in 1993, Act. It shall be given overriding effect but reading S.10 to the effect that it will override Limitation Act is not the interpretation to be given to S.10 and the Trial Court fell in error in relying on S.10 in holding the Limitation Act will not apply. The limitation for suit for recovery of interest under the Act, 1993 is a_ WP(C).No.3751 OF 2013 10 _suit of nature which shall be covered by Part X, Art.113 of the Schedule to the Limitation Act. The argument of the learned counsel for the claimant that last supply is the relevant factor for computing the period of limitation has been negated observing that the amount become due as soon as liability to pay arises placing reliance on S.4 of the Act, 1993 which is again in pari materia with S.15 of the Act, 2006. Thus the fact that the last payment made cannot be treated as period for beginning of the limitation and on that ground it cannot be held that the claim was within time. In the light of the said judgment, the arguments advanced by the learned counsel for the petitioner cannot be held to be unacceptable._ _18. These points are answered in favour of respondent No.2. As observed earlier, the Act, 2006 is in pari materia with Act, 1993. Hence, in the llight of the judgment of the Hon'ble Apex Court in Shanthi Conductors (supra), the decision rendered by the Council becomes unsustainable.”_ I am in full agreement with the proposition stated above. 16. In such circumstances, the contention of the learned counsel for the petitioner deserves to be upheld and Ext.P8 order is liable WP(C).No.3751 OF 2013 **==> picture [13 x 8] intentionally omitted <==** to be set aside. Accordingly, Ext.P8 order is set aside and Ext.P2 application is found to be not maintainable under the provisions of the Act. The writ petition is allowed. **Sd/BECHU KURIAN THOMAS JUDGE** SSK/08/12 WP(C).No.3751 OF 2013 12 ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE PURCHASE ORDER NO.SRA.5/55368/93 DATED 15-4-1994.** **EXHIBIT P2 TRUE COPY OF THE APPLICATION OF THE 2ND RESPONDENT BEFORE THE 1ST RESPONDENT DATED 16-11-2009.** - **EXHIBIT P3 TRUE COPY OF THE PETITION SUBMITTED BY THE PETITIONER BEFORE THE 1ST RESPONDENT DATED 6-5-2010.** - **EXHIBIT P4 TRUE COPY OF THE OBJECTION SUBMITTED BY THE 2ND RESPONDENT BEFORE THE 1ST RESPONDENT DATED 15-6-2010.** - **EXHIBIT P5 TRUE COPY OF THE REJOINDER SUBMITTED BY THE PETITIONER BEFORE THE 1ST RESPONDENT TO EXHIBIT P4 COUNTER.** - **EXHIBIT P6 TRUE COPY OF THE SUIT, O.S NO.763 OF 2010 FILED BY THE 2ND RESPONDENT BEFORE THE SUB COURT, THIRUVANANTHAPURAM DATED 31-5-2010.** - **EXHIBIT P7 TRUE COPY OF THE STATEMENT FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT.** **EXHIBIT P8 TRUE COPY OF THE ORDER IN O.A NO. 41 OF 2009 DATED 3-1-2013.** ## **RESPONDENT'S EXHIBITS:NIL** SSK //TRUE COPY// PA TO JUDGE