2003 (9) TMI 556 - HC - Companies Law

Summary

Issues:
1. Interpretation of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993.
2. Jurisdiction of the State for claims under the Act.
3. Impact of contractual clauses on jurisdiction for seeking relief.

Analysis:

Issue 1: Interpretation of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993
The petitioner, a Small Scale Industry registered in Haryana, submitted a tender for supply of conductors which was accepted by A.P. Transco. Despite supplying the agreed quantity, the petitioner claimed delayed payments and interest under the Act. The Act aims to protect the interests of Small Scale and Ancillary Industrial Undertakings by providing for interest on delayed payments. The State of Andhra Pradesh framed Rules to implement the Act, but the 2nd respondent refused the petitioner's claim citing registration in Haryana. The court analyzed the Act's definition of 'supplier' and emphasized the importance of permanent registration, not the place of registration, to enable units to seek remedies where the cause of action arises or the contract is executed.

Issue 2: Jurisdiction of the State for claims under the Act
The court noted that restricting claims to units registered within the State would defeat the Act's purpose, as units may have contractual relations with entities in other states. It highlighted that the Act does not impose restrictions based on the state of registration, and the Rules framed by Andhra Pradesh did not limit claims to in-state registrations. The court emphasized that claims should be processed where the cause of action arises to avoid rendering the Act futile and ensure legality and convenience in dealing with claims.

Issue 3: Impact of contractual clauses on jurisdiction for seeking relief
The petitioner argued that contractual clauses required remedies to be sought only in Hyderabad and Secunderabad, making relief in Haryana futile. The court found that processing claims in a state other than where the contract was executed would render the Act ineffective. It emphasized that states where the cause of action arises should adjudicate on contract-related issues to avoid rendering proceedings futile. The court held that the 2nd respondent's objection was not sustainable, allowing the writ petition to set aside the refusal and directing the respondent to process the petitioner's application in accordance with the Act and Rules.

In conclusion, the judgment clarified the interpretation of the Act, affirmed the jurisdictional scope for claims under the Act irrespective of the state of registration, and emphasized the importance of processing claims where the cause of action arises to ensure the effectiveness and legality of the Act's provisions.