ORDER
I.A. Ansari, J.
1. By making this application under Article 226 of the Constitution of India, the petitioners have approached this Court seeking issuance of writ/writs commanding the respondents to release the out
standing bills of Rs. 4,38,676/- due to: the
petitioner No. 1, namely, M/s. Nefa Udyog
for supply of sawn timbers made to the Public Works Department, Government of
Arunachal Pradesh, for construction of Capital Complex at Itanagar.
2. In a nutshell, the case of the petitioners runs as follows : The petitioner No. 1, namely, M/s. Nefa Udyog, a registered partnership firm, is a Small Scale Industry located at Banderdewa and this Industry stands registered with the Department of Industry, Government of Arunachal Pradesh, since 8-1-1975. The petitioner No. 1 holds a licence issued by the Secretary, Department of Forests, Government of Arunachal Pradesh, for running a Saw Mill at Banderdewa and the petitioner Nos. 2 and 3 are partners of the said firm. The petitioner’s firm is a small-scale industry, which makes sawn timbers and other building materials. In the year 1973, when the work of the Capital Complex, at Itanagar, was started, the petitioners, on the orders placed by the Public Works Department, Government of Arunachal Pradesh, supplied sawn timbers from time to time to the various Divisions and sub-Divisions of the said department for construction of buildings and” bridges. On receipt one work orders/supply orders for the sawn timbers required, the petitioners’ firm used to make required sawn timbers ready in their saw mill and the same used to be collected by the representatives of the Sub-Division or Division concerned in their departmental truck from the premises of the said Mill. Before taking delivery of the sawn timbers, the representatives of the respondents used to inspect and measure the same, they used to record the requisite particulars in the challan book and take delivery of the sawn timbers by putting their signatures on the challan (i.e. credit memo). The Range Forest Officer used to issue, after verification, transit permits and on the basis of the permits so obtained, the representatives of the department concerned used to carry the timbers in their departmental truck. The petitioners used to prepare their bills and submit the same to the Junior Engineers concerned and after verification thereof, the Junior Engineers used to forward the bills, so raised, to the. Sub-Division and the Division concerned for making payment to the petitioner. For the supplies so made, bills raised by the petitioners are lying unpaid with the respondents since 7-9-1992. The petitioners made several representations seeking payment of their dues, but despite assurances given by the respondents and their representative, the bills were not paid. The total amount of bills pending with the respondents, in this regard, is given, in detail, in Annexure-B to the writ petition. In fact, on the representation made to the Commissioner/Secretary, Public Works Department, Government of Arunachal Pradesh, seeking payment of the said outstanding dues, the authority aforementioned issued a letter, dated 11-3-94 (Annexure F to the writ petition) directing the Chief Engineers concerned to make payment of the outstanding dues of the petitioners. It was further directed by this letter that the defaulting offices should be served with show-cause notices for making delay in releasing payments. The payments were, however, not made and on repeated representations made by the petitioners seeking payments of their pending bills, the respondent No. 4 eventually admitted, vide his letter, dated 7-5-98 (Annexure-H to the writ petition), that an amount of Rs. 4,38,676/-was lying outstanding with the respondents, but due to shortage of budget grants, the clues could not be cleared. Left with no alternative, the petitioners have approached this Court seeking relief/reliefs as hereinabove indicated.
3. The respondents have contested this case by filing their affidavit-in-opposition, their case being, in brief, thus : It is fact that the petitioners have supplied sawn timbers to the respondents from time to time. The acknowledgment by the respondents of the claims made by the petitioners is also correct, but the payment could not be released, because there was no fund or LOC available. However, supporting documents are required to be seen before accepting the claims. The petitioners are also required to furnish proof of royalty/monopoly having been paid to the Forest department for lifting timbers, in question. The petitioners have made huge supply of timbers to the Government departments and they must have exceeded the turn over of rupees one crore, hence, M/s Nefa Udyog cannot really be treated as a SSI unit.
4. Reacting to the above affidavit-in-opposition filed by the respondents, the petitioners have filed their affidavit-in-reply, the further case of the petitioners, set up in the affidavit-in-reply, being, briefly stated, thus, asserted that M/s. Nefa Udyog is a duly registered SSI unit and as per the prevailing procedure for lifting of timbers from the Forest Department, the timbers and other forests produces can be lifted only after clearing royalty and it is only upon receiving payment of royalty that the transit permits are issued by the Forest Ranger. In the case at hand, the petitioners have lifted timbers only upon making payment of royalty and after obtaining requisite transit permits. This apart, the concerned Range Officer of the department concerned has already certified, vide his letter, dated 25-10-2002 (Annexure-2 to the affidavit-in-reply) that as per prevailing procedure, the timbers and other forest produces are removed only after clearing full and final royalty payment. After institution of this writ petition, the respondent No. 4, vide his letter, dated 14-8-2002 (Annexure-3 to the affidavit-in-reply) asked the petitioners to send their representatives to the office of the respondent No. 3 for settlement of the pending dues and, upon verification, the respondent No. 4 has issued a statement (Annexure-4 with affidavit-in-reply) showing Rs. 19.46 lakhs due to be paid to the petitioners for three(3) divisions of Public Works Department, namely, Capital Division-A, Capital Division-B and Naharlagun Division. This apart, the Divisional Forest Officer, Banderdewa Forest Division, has also issued a certificate, dated 28-2-2002, to the effect that M/s. Nefa Udyog, and authorized world based industry, has made full and final payment of royalty/monopoly and nothing is lying outstanding against the timbers lifted by them. The petitioners, therefore, need to be paid their dues with interest as has been prayed for by them.
5. I have carefully perused the materials on record. I have heard Mr. S. K. Goswami, learned counsel for the petitioners, and Mr. R. H. Nabam, learned Addl. Senior Govt. Advocate, appearing on behalf of the State respondents.
6. It has been submitted, on behalf of the petitioners, that the petitioners’ firm, namely, M/s Nefa Udyog, Banderdewa, being a Small Scale Industry, is protected under the interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (hereinafter referred to as “the said Act”) and in the case at hand, since the lawful dues of the petitioners have not been paid without any justified reasons by the respondents, the respondents may be directed to make payment to the petitioners of the said outstanding dues with interest as per provisions of the said Act, w.e.f. 29-9-92, i.e. when the said Act came into force, until realization of the entire dues.
7. In support of his submission that the provisions of the said Act are applicable to every Small Scale Industry since after coming into force of the said Act on 29-9-92, Mr. Goswami has referred to Assam State Electricity Board v. Shanti Conductors (P) Ltd., (2002) 1 GLT 547.
8. It has also been submitted, on behalf of the petitioners, that the respondents may be directed to make payment of the admitted amount with such interest as the Court may deem fit w.e.f the date, when the dues of the petitioners became payable till 23-9-92. i.e., the date, when the said Act came into force.
9. Controverting the above submissions made on behalf of the petitioners, Mr. Nabam has submitted that M/s Nefa Udyog is, in reality, not a small scale industry and that the respondents are not liable to pay interest as per the provisions of the said Act inasmuch as the delay in making payment was caused due to non-availability of fund.
10. Before proceeding any further, it may be pointed out that during pendency of this writ petition, the respondents have paid to the petitioners, as per the order, dated 15-3-2002, passed in WP (c) 398 (AP) 2001, 50% of the total outstanding bills without, however, any interest.
11. Let me, now, deal with the merit of the rival submissions made before me on behalf of the parties. What is of utmost importance to note, in this writ petition, is that the respondents have not clearly denied, in their affidavit-in-opposition, that the amount of Rs. 4,38,676/- which the petitioners have claimed as outstanding dues against the sawn timbers supplied to the respondents concerned, is correct. This apart, the respondent No. 4 has vide Annexure-H to the writ petition, admitted that the amount of Rs. 4,38,676/- was lying outstanding in favour of the petitioners. In fact, in Para 14 of their affidavit-in-opposition, the respondent have clearly stated, “The fact of acknowledgment of claims as mentioned in the letter No. CD-A/A-2/6/98-99/86-88, dated 14-5-98. are correct as per list of claims submitted by M/s. Nefa Udyog. The payment would have been released, had there been fund and LOC”. The averments so made in Para 14 of the affidavit-in-opposition constitute clear admission of the aforesaid dues of the petitioner. It is also not in dispute before me that the unpaid bills of the petitioners are in respect of sawn timbers, which the petitioners had supplied to the department concerned, and that the timbers, so supplied, have been utilized by the respondents.
12. Coupled with the above, it transpires from the affidavit-in-reply of the petitioners that even after institution of the writ petition, the respondent No. 3 has, upon verification, clarified that the amount aforementioned is, indeed, pending unpaid with the respondents.
13. In the face of the above materials on record, there can be no escape from the conclusion that an amount of Rs. 4,38,676.00 is lying outstanding with the respondents for the sawn timbers supplied to them by the writ petitioners.
14. Turning to the question as to whether the petitioners have paid the royalty/monopoly to the Forest Department for the timbers lifted by them, it is of immense importance to note that the petitioners have clearly stated in their affidavit-in-reply that as per the prevailing procedure, a forest produce can be removed only after making payment of royalty. The averment so made by the petitioner is fully supported by the certificate dated 25-10-2002 (Annexure-2 to the affidavit-in-reply) inasmuch as in this letter, the Range Forest Officer, Banderdewa Forest Range, has clarified that as per the prevailing practice, payment of royalty/monopoly has to be made before lifting forest produces including timber.
15. What logically follows from the above is that before lifting timbers, the petitioners must be treated to have paid the royalty/ monopoly. This apart, the letter, dated 28-10-2002, aforementioned of the Divisional Forest Officer, Banderdewa Forest Division, clearly shows that M/s. Nefa Udyog, a wood based industry, has paid full and final royalty/monopoly and no amount is lying outstanding against them for the timbers lifted by them.
16. In the face of the above materials on record, the mere assertion of the respondents that it has to be verified whether the royalty have been paid by the petitioners to the Forest Department before lifting the timbers, in question, can be given no credence at all particularly, when the dues have been kept pending since 7-9-92 and no clear allegation has been made till today that any dues in respect of royalty/monopoly are pending against the petitioners for the sawn timbers lifted by them.
17. Now, coming to next contention of the respondents that the petitioners might have exceeded turn over of rupees one crore annually for the timbers supplied by them. suffice it to mention here that such a vague statement can be attributed no importance at all inasmuch as the respondents have not submitted any materials on record to show that the turn over of income of the petitioners, during the relevant period, was more than that of a SSI unit. This apart, the petitioners have already produced before this Court the certificate of registration of M/s. Nefa Udyog as a SSI unit. This certificate shows that the petitioner No. 1 is a SSI unit, which stood registered with the Department of Industry. Govt. of Arunachal Pradesh, since the year 1975 and the petitioner No. 1 has been supplying sawn timbers as a small scale industry.
18. What crystallizes from the above discussions is that the respondents have not paid the dues of Rs. 4,38,676/- without any justified reasons. The plea of the respondents that funds were not available with them for making payment of the dues of the petitioner can be of no avail to the respondents. In the face of the facts so established, this Court has to, now decide as to what relief/ reliefs can be granted to the petitioners.
19. While considering the question of relief/reliefs to be granted to the petitioners, it is important to bear in mind that the said, Act has been enacted to protect SSI units from being destroyed on account of delayed payment: A careful reading of the object of this Act shows that since inadequate working capital in a small scale or an ancillary industrial undertakings causes serious and endemic problems adversely affecting the survival of such industries. It was 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, for the buyers, if required under law to pay interest, would refrain from withholding payments to small scale and ancillary industrial undertakings.
20. Moreover, a bare reading, as a whole, of the said Act and, particularly, of the provisions contained in Section 4 thereof makes It clear that it is mandatory for the Court to impose interest on delayed payment of dues of SSI units and that the rate of interest shall be of the Prime Lending Rate charged by the State Bank of India.
21. Coupled with the above, Section 3 of the said Act lays down that where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor 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.
22. What is an “appointed day” has been defined in Section 2(b) of the said Act. According to Section 2(b), “appointed day” means the day following immediately after the expiry of the period of thirty days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier.
23. Thus, a combined reading of Section 3 read with Section 2(b) shows that when there is no agreement in writing, as regards the date of payment, the payment of the dues of a SSI unit has to be made immediately after the expiry of 30 days from the day of acceptance of the goods received or deemed to have been received by the buyer, It is, thus, clear that after 30 days from the date of receipt of the sawn timbers, in question by the respondents, the respondents became liable to pay to the petitioners interest in terms of the provisions of the said Act.
24. It has been rightly pointed out by Mr. Goswami that the full Bench of this Court in Assam State Electricity Board (Supra) has clarified that the provisions of the said Act would be applicable even to the contracts entered into prior to the enforcement of the said Act and that this Act creates a statutory liability against the buyer to pay interest under the Act on delayed payments.
25. In view of the fact that the petitioners have successfully shown that petitioner No. 1 is a Small Scale Industry duly registered with the Department of Industry, Government of Arunachal Pradesh, and that for the supplies of sawn timbers made by the petitioners to the respondents from time to time, an amount of Rs. 4,38,676/- had been kept outstanding by the respondents despite repeated demands made by the petitioners, there can be no escape from the conclusion that the respondents are liable to pay interest on the said unpaid dues as per provisions of the said Act, since after coming into force of the said Act. This apart, the petitioners are also entitled to receive interest at such rates as this Court may deem reasonable to impose on the said outstanding amount of Rs. 4,38,676/- with effect from 7-9-1992, i.e. the date, when the last bill was raised by the petitioners till the date, when the said Act came into force.
26. Considering, therefore, the matter in its entirety, the respondents are hereby directed to pay to the petitioners the admitted amount of Rs. 4,38,676/- with interest at the rate of Rs. 12/- per cent per annum with effect from 7-9-1992. i.e. the day on which the last bill was so raised, till 23-9-1992, i.e. the date, when the said Act came into force. The respondents shall also pay to the petitioners interest on the said amount of Rs. 4,38,676/- at the rate of one-and-a-half time of the Prime Lending Rate charged by the State Bank of India with effect from 23-9-1992 (i.e., the dates when the said Act came into force) until the time the said dues are totally cleared. It is further directed that the respondents shall clear the dues aforementioned with interests as aforementioned within a period of three months from today.
27. This writ petition shall stand disposed of in terms of the above directions.
28. No order as to costs.