High Court rules late payment surcharge valid, not a penalty. No waiver based on similar case. Remittance for BIFR clarification.

The High Court held that the late payment surcharge was applicable as it was not considered a penalty or compensation, contrary to the appellant's argument. The Court found no grounds to waive the surcharge based on a similar case and clarified that the surcharge was distinct from interest or damage. The matter was remitted to the High Court for further clarification from BIFR on the inclusion of the surcharge in interest or damages and to consider the waiver in the related case. The appeal was allowed with no order as to costs.

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Issues:
Challenge to judgment of Allahabad High Court regarding recovery proceedings and late payment surcharge.

Analysis:
The appellant, a unit of National Textile Corporation U.P. Limited, moved the High Court to quash recovery proceedings and sought direction to not demand or recover any amount. The appellant's unit was involved in cotton yarn manufacture, which ceased in 1992. The appellant referred the matter of mill sickness to BIFR under SICA. A bill was raised for a substantial sum towards principal and late payment surcharge. The appellant argued that late payment surcharge demand was contrary to the approved scheme by BIFR, which did not include surcharge but only interest and damage.

The main issue revolved around whether the surcharge was included in the interest and damage as per the approved scheme. The High Court held that late payment surcharge was applicable, not being a penalty or compensation. The appellant cited a similar case where the Corporation had written off surcharge, but the High Court found no grounds to do the same in this case. The appellant contended that no separate levy was made, so the question of waiving interest did not arise. The Corporation argued that late payment surcharge was distinct from interest or damage and could not be waived.

The approved scheme included clauses regarding relief undertakings and waiver of interest and damages on dues. The High Court did not discuss why a similar case was distinguishable or clarify the effect of the approved scheme. The matter was remitted to the High Court with directions to seek clarification from BIFR on the inclusion of delayed payment surcharge in interest or damages and consider the waiver in a related case. The High Court was requested to review the matter within a specified timeframe. Two additional applications were filed but deemed irrelevant to the issues in the appeal. The appeal was allowed with no order as to costs.

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