Limitation Applies in Proceedings Under Interest on Delayed Payments to Small Scale & Ancillary Industrial Undertakings Act: Telangana HC [Read Order]

The Telangana High Court have held that the provisions of the Limitation Act, 1963 are applicable to proceedings initiated under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993.

The appellants, Transmission Corporation of Andhra Pradesh Ltd., challenged the XIV Additional Chief Judge, Hyderabad's ruling dated July 20, 2015, in a Civil Miscellaneous Appeals filed under Section 37 of the Arbitration and Conciliation Act, 1996. In that ruling, the judge confirmed the arbitral award made by the A.P. Industry Facilitation Council on November 16, 2002, and dismissed the appellants' appeals under Section 34 of the 1996 Act.

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The issue started in 1996 when the Respondent, M/s. Sri Gowri Shankar Cable Industries, sold AAA and ACSR Conductors to Transmission Corporation of Andhra Pradesh Limited (APTRANSCO). Despite the fact that the Respondent finished the supply, APTRANSCO neglected to pay on time and left a number of bills outstanding. The Respondent requested ₹32.63 lakhs with interest from the Facilitation Council in 2001. 10% post-award interest was applied to the ₹24.14 lakhs that the Council granted. Under Section 34, the appellants contested this award, and their challenge was denied.

The appellant's attorney argued that the claim was limit-barred. He argued that there is no time limit on when any party may contact the Facilitation Council about their claim under the 1993 Act or the MSMED Act.

The respondents' counsel argued that the 1993 Act's provisions have superseding effect under Section 10. The MSMED Act and the 1993 Act do not provide a statute of limitations. As a result, neither the Arbitration and Conciliation Act's Section 43 nor the Limitation Act's provisions would apply. He claimed that the appellant's liability was continuous and that, in accordance with Sections 8 of the 1993 Act and 22 of the 2006 Act, the appellant is required by law to acknowledge the liability on a daily basis in their public accounts. As a result, he claimed that the question of limitation arising from such transactions would not even come up.

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The Court held that the Facilitation Council and the XIV Additional Chief Judge had erred in holding that the provisions of the Limitation Act, 1963 were not applicable to proceedings under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993.

The Court further relied upon Sonali Power Equipment v. Maharashtra State Electricity Distribution Co. Ltd., where the Bombay High Court reiterated that even for claims under the 1993 Act, the law of limitation continues to apply and Section 10 of the Act does not override the Limitation Act.

A division bench of Justice P. Sam Koshy and Justice N. Tukaramji held that the Facilitation Council's conclusion regarding limitation and its judgment that the Limitation Act did not apply were not supported by the law. Regarding the question of limitation, the Court overturned the conclusions of the XIV Additional Chief Judge and the Facilitation Council.

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The court partly allowed the appeals and remanded the matter to the Facilitation Council to decide the issue of limitation afresh based on the relevant dates and materials to be produced by the appellants.

To Read the full text of the Order CLICK HERE

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