M/S Shanti Conductors (P) Ltd. v. Assam State Electricity Board & Ors.
Background
Several small-scale manufacturers had supplied electrical goods (conductors, cement poles) to the Assam State Electricity Board under purchase orders placed in 1992, before a special law, the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, came into force. Payments were delayed and made only after the Act took effect, and the suppliers sued for interest on the delayed payments under the new Act. A split opinion by an earlier two-judge Supreme Court bench on whether the Act applied to contracts signed before its commencement led to the matter being referred to this three-judge bench.
Decision Breakdown
The Court held that what matters under the Act is not when the supply contract was signed, but when the actual supply of goods and the due date for payment fell: if the supply happened after the Act came into force, the buyer's statutory liability to pay the enhanced interest applies, regardless of when the underlying agreement was made. It held the Act is prospective (not retrospective) in that sense, resolving the earlier conflicting precedents. On the specific appeals, the Court dismissed Shanti Conductors' appeal as time-barred, upheld 9% interest awarded in equity (rather than under the Act) for a transaction predating the Act, and dismissed Brahmaputra Concrete Pipe's appeal for lack of evidence that any supply was made after the Act commenced.
Lesson Learnt
For time-sensitive commercial statutes like this one, courts look at when the relevant triggering event (here, actual supply of goods) occurred, not merely the date the contract was signed, so businesses should track performance dates, not just contract dates, when assessing which law applies.