2001 (4) TMI 869 - HC - Companies Law

Summary

Issues Involved:
1. Cause of action for the suit.
2. Maintainability of the suit in its present form.
3. Whether the suit is barred by the law of limitation.
4. Amount recoverable on account of supply of poles.
5. Entitlement to interest under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act.
6. Whether the plaintiff's claim is inflated.
7. Reliefs to which the plaintiff is entitled.

Issue-wise Analysis:

1. Cause of Action for the Suit:
The court examined whether there was a cause of action for the suit. The plaintiff's claim was based on the delayed payment for the supply of PSC poles and the interest accrued due to this delay under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993.

2. Maintainability of the Suit in its Present Form:
The court assessed the maintainability of the suit, considering the defendants' argument that the delay in payment was due to a lack of funds and that the contract was entered before the enactment of the Interest on Delayed Payments Act. The court concluded that the suit was maintainable as the plaintiff had a legitimate claim under the Act.

3. Whether the Suit is Barred by Law of Limitation:
The court evaluated if the suit was barred by the law of limitation. It was determined that the suit was filed within the permissible time frame, considering the period from when the delay in payment occurred to the filing of the suit.

4. Amount Recoverable on Account of Supply of Poles:
The court examined the total amount recoverable by the plaintiff. The plaintiff supplied 3885 poles out of 3900 ordered, with a total value of Rs. 39,70,065.70 excluding sales tax, and Rs. 42,32,072.02 including sales tax. The defendants acknowledged the receipt and made partial payments in six installments. The court confirmed the amount recoverable was Rs. 42,32,072.02.

5. Entitlement to Interest under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act:
The court deliberated on whether the plaintiff was entitled to interest under the Act. The plaintiff claimed interest at 28.75% per annum due to delayed payments. The court referred to the Act, which mandates prompt payment to small-scale industries and interest on delayed payments. However, since the payments were made before the Act's commencement, the court held that the plaintiff could not claim interest under the Act.

6. Whether the Plaintiff's Claim is Inflated:
The court scrutinized whether the plaintiff's claim was inflated. The defendants argued that the plaintiff's claim included an exaggerated interest amount. The court found that the claim for interest was not justified under the Act, as the payments were made before the Act's enforcement.

7. Reliefs to which the Plaintiff is Entitled:
The court concluded that the plaintiff was not entitled to any relief under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, as the payments were made before the Act came into effect. The suit was dismissed, and the plaintiff was ordered to return the amount received under the interim order of the court within three months, failing which the amount could be realized by the appellant with interest.

Conclusion:
The appeal was allowed, and the plaintiff's suit was dismissed with costs. The court emphasized that once the principal amount is received without any reservation, no further claim for interest can be made. The Act did not revive claims settled before its enforcement. The plaintiff was directed to deposit the amount received under the interim order, failing which the appellant could recover it with interest.