Statutory interest for delayed payments under the 1993 Act overrides contract terms and requires proof of waiver.

Under the 1993 Act, interest on delayed payment is a statutory and mandatory liability that overrides contrary contractual terms. A suit seeking only interest is maintainable because Section 6 was read as permitting recovery of the amount due together with statutory interest. The Act also applies to pre-enforcement contracts where the default and delayed payment occur after commencement, so interest runs from the date the statute became operative until payment. Acceptance of the principal without reservation does not by itself bar a later claim for interest; waiver is not presumed and must be specifically pleaded and proved on facts.

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Issues: (i) Whether a suit for recovery of mere interest on delayed payments under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 is maintainable; (ii) whether the Act applies to contracts entered into before its enforcement where payment was delayed after enforcement; (iii) whether acceptance of principal amount without reservation bars a later claim for interest under the Act and whether the supplier can waive that right.

Issue (i): Whether a suit for recovery of mere interest on delayed payments under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 is maintainable.

Analysis: Section 6 of the Act was construed as creating a right to recover the amount due together with interest calculated under Sections 4 and 5. The opening words of Section 6 were held to mean that the principal amount and interest are recoverable together, but not that a principal sum must remain outstanding on the date of suit for a claim to interest to be maintainable. The Act was treated as a special beneficial legislation with overriding effect, and Sections 4 and 5 were read as mandating interest on delayed payment notwithstanding any agreement to the contrary.

Conclusion: A suit for recovery of mere interest on delayed payments under the Act is maintainable.

Issue (ii): Whether the Act applies to contracts entered into before its enforcement where payment was delayed after enforcement.

Analysis: The liability to pay interest was held to arise from the delay in payment after the Act came into force, not merely from the date of the contract. Because Sections 4 and 5 operate notwithstanding any agreement, a pre-enforcement contract does not exclude the statutory liability if the default and delayed payment continue after commencement. The Act was treated as prospective in operation because it regulates future defaults, even though the contract itself is earlier.

Conclusion: The Act applies to pre-enforcement contracts where the delayed payment occurs after enforcement, and interest is payable from the date of enforcement till payment.

Issue (iii): Whether acceptance of principal amount without reservation bars a later claim for interest under the Act and whether the supplier can waive that right.

Analysis: The Court held that waiver of a statutory right is possible if it is intentional and proved as a fact. There is no legal presumption that acceptance of principal without reservation automatically amounts to waiver of the statutory claim for interest. Whether waiver occurred depends on the evidence in each case. The earlier broad observation that receipt of principal without reservation necessarily bars any further claim was disapproved.

Conclusion: Acceptance of principal without reservation does not by itself bar the claim; waiver must be specifically pleaded and proved, and the supplier can waive the right if established on facts.

Final Conclusion: The reference was answered in favour of the supplier on all substantive questions, and the earlier contrary observations were overruled to the extent indicated.

Ratio Decidendi: Under the 1993 Act, liability for interest on delayed payment is statutory and mandatory, overrides contrary contractual terms, applies to post-enforcement defaults even under earlier contracts, and waiver of the supplier's right is not presumed but must be proved as a matter of fact.

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