Limitation Act Applies To Proceedings Under Interest On Delayed Payments To Small Scale & Ancillary Industrial Undertakings Act: Telangana High Court

The Telangana High Court bench of Justice P. Sam Koshy and Justice N. Tukaramji 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 Court clarified that the overriding effect under Section 10 of the 1993 Act applies only to the express provisions of that Act and does not exclude the applicability of the Limitation Act in the absence of any express limitation provision under the 1993 Act or the MSMED Act, 2006.Accordingly, the Court held that the Facilitation Council and the XIV Additional Chief Judge had erred in interpreting that the Limitation Act did not apply to the arbitral proceedings under the 1993 Act. Brief FactsThe appellants filed the Civil Miscellaneous Appeals under Section 37 of the Arbitration and Conciliation Act, 1996 challenging the order dated 20.07.2015 passed by the XIV Additional Chief Judge, Hyderabad. By that order, the Judge dismissed the appellants' petitions under Section 34 of the 1996 Act and upheld the arbitral award dated 16.11.2002 issued by the A.P. Industry Facilitation Council.The dispute arose when Transmission Corporation of Andhra Pradesh Limited (APTRANSCO) purchased AAA and ACSR Conductors in 1996 from the Respondent, M/s. Sri Gowri Shankar Cable Industries. Although the Respondent completed the supply, APTRANSCO failed to make timely payments and left several bills unpaid. In 2001, the Respondent approached the Facilitation Council seeking ₹32.63 lakhs with interest. The Council awarded ₹24.14 lakhs with 10% post-award interest. The appellants challenged this award under Section 34, which was dismissed.ContentionsCounsel for the Appellant contended that the claim was barred by limitation. He submitted that the neither the 1993 Act nor does the MSMED Act prescribe any period of limitation for any of the parties to approach Facilitation Council in respect of their claim. Counsel for the Respondents contended that Section 10 of the 1993 Act provides overriding effect to its provisions. Neither the 1993 Act nor the MSMED Act prescribes any limitation period. Therefore, the provisions of Section 43 of the Arbitration and Conciliation Act or for that matter the provisions of the Limitation Act would not be applicable. He submitted that the liability of the appellant was continuous and as per Section 8 of the 1993 Act and Section 22 of the 2006 Act and, in view of the same, the appellant who is statutorily bound to acknowledge the liability on day-to-day basis in their pubic accounts, the question of limitation arising out of such transactions would not arise at all. ObservationsThe Court held that the Facilitation Council and the learned 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 relied upon the case of Shanti Conductors Private Limited and Another v. Assam State Electricity Board where the Supreme Court held:“The overriding effect given under Section 10 of the 1993 Act is only in respect of the express provisions contained therein and cannot be read so as to override the Limitation Act. There being no provision in the 1993 Act pertaining to limitation, the provisions of the Limitation Act, 1963 continue to apply to proceedings under the said Act.”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.The Court held that the finding of the Facilitation Council on limitation and its interpretation that the Limitation Act did not apply, was not legally tenable. The Court set aside the findings of the Facilitation Council and the XIV Additional Chief Judge on the issue of limitation.The court 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.Thus, the Court partly allowed the appeals.Case Title: Transmission Corporation of Andhra Pradesh Ltd. v. M/s. Sri Gowri Shankar Cable Industries Case Number: CMA Nos. 940, 941, 943, 944, 946, 952, 953 & 954 of 2015Counsel for the Appellant(s): Vikram Pooserla, Senior Counsel representing Mr. Anup Koushik. Counsel for the Respondent(s): Mr. P. Sri Raghu Ram, Senior Counsel, representing Mr. K. Raghu Babu, counsel for Respondent No. 1.Date of Judgment: 21.05.2025Click Here To Read/Download Order

Limitation Act Applies To Proceedings Under Interest On Delayed Payments To Small Scale & Ancillary Industrial Undertakings Act: Telangana High Court

Tazeen Ahmed

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