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Issues Involved:
1. Maintainability of a suit for recovery of mere interest under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993. 2. Applicability of the Act to contracts entered into prior to its enforcement. 3. Effect of accepting principal payments without reservation on the right to claim interest under the Act. 4. Ancillary question: Whether a supplier can waive the right to recover interest under the Act. Detailed Analysis: Issue 1: Maintainability of a Suit for Recovery of Mere Interest The court examined whether a suit solely for the recovery of interest under the 1993 Act is maintainable. The appellant argued that such a suit is not maintainable unless a principal amount is also due, referencing Section 6(1) of the Act and the precedent set in Assam State Electricity Board v. Trusses & Towers (P.) Ltd. The court, however, concluded that the Act does not necessitate the principal sum to be due at the time of filing the suit. The Act's objective is to ensure prompt payments to small scale industries, and interest on delayed payments is mandatory as per Sections 4 and 5. Thus, a suit for recovery of mere interest is maintainable, and any contrary observations in the Trusses & Towers case were overruled. Issue 2: Applicability of the Act to Pre-enforcement Contracts The court addressed whether the 1993 Act applies to contracts entered into before its enforcement on 23.09.1992. The appellant contended that applying the Act to such contracts would be retrospective. The court held that the Act applies to delayed payments made after its enforcement, regardless of when the contract was entered into. Interest on such delayed payments should be calculated from the date of the Act's enforcement, not from the original due date under the contract. This interpretation aligns with the Act's purpose to benefit small scale industries and ensure timely payments. Issue 3: Effect of Accepting Principal Payments Without Reservation The court examined whether accepting principal payments without reservation affects the right to claim interest under the Act. It was clarified that waiver is a factual issue that must be proven with evidence. The court overruled the broad statement in Trusses & Towers that accepting principal payments without reservation precludes further claims for interest. Each case must be evaluated based on its specific facts to determine if a waiver occurred. Ancillary Question: Waiver of Right to Recover Interest The court considered whether a supplier can waive the right to recover interest under the Act. It concluded that while the Act imposes a statutory liability on the buyer, the supplier can waive this right. Waiver requires full knowledge of the right and an intentional decision to relinquish it. This principle is consistent with general legal doctrines on waiver, which allow individuals to forgo statutory rights unless such rights are fundamentally public in nature. Conclusion: The Full Bench provided clear answers to each question: 1. A suit for recovery of mere interest under the 1993 Act is maintainable. 2. The Act applies to contracts entered into before its enforcement, with interest calculated from the date of the Act's enforcement. 3. Waiver of the right to recover interest must be proven as a fact in each case. 4. Suppliers can waive their right to recover interest under the Act. The case was then referred back to the Division Bench for a decision in accordance with these findings.
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