2004 (2) TMI 348 - HC - Companies Law

Summary

Issues:
1. Jurisdiction of the Industry Facilitation Council under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (1993 Act).
2. Conflict between the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) and the 1993 Act regarding the payment of interest on delayed payments.

Issue 1: Jurisdiction of the Industry Facilitation Council under the 1993 Act:
The petitioner, a company registered under the Companies Act, challenged the order of the A.P. Industry Facilitation Council regarding interest on delayed payments claimed by another company. The petitioner argued that the provisions of SICA, under which they were a Sick Industrial Company, should prevail over the 1993 Act. The first respondent rejected the application for stay, citing the over-riding effect of the 1993 Act on SICA. The petitioner contended that the later enactment should prevail unless there is an inconsistency between the two acts. The communication from the Ministry of Small Scale Industries clarified that the provisions of the 1993 Act would take preference over SICA in case of over-riding provisions in two acts.

Issue 2: Conflict between SICA and the 1993 Act regarding payment of interest:
The key question was whether SICA had over-riding effect over the 1993 Act concerning the payment of interest on delayed payments. The petitioner argued that SICA, being a special enactment intended to protect sick companies, should prevail over the general nature of the 1993 Act. The court referred to the communication from the Ministry of Law and Justice, which stated that the provisions of the 1993 Act would take preference over SICA in case of over-riding provisions. Relying on the Supreme Court's decision in Solidaire India Ltd. v. Fairgrowth Financial Services Ltd., the court held that the 1993 Act prevailed over SICA. The court emphasized that the legislative intent was crucial in determining which act prevails, and in this case, the provisions of the 1993 Act were upheld as having over-riding effect.

In conclusion, the court dismissed the writ petition, finding it devoid of merit. The judgment highlighted the importance of legislative intent in resolving conflicts between statutes and upheld the over-riding effect of the 1993 Act over SICA in matters of interest on delayed payments to small scale industries.