TaxTMI 
TaxTMI 
2009 (2) TMI 694
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....num till the date of suit and cost of legal notices. However, during the pendency of the suit, the plaint was amended after coming into force of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (hereinafter referred to as the `Act'). The Act came into force with effect from 23.9.1992 whereunder if the buyer fails to make the payment on or before the agreed date or where there is no agreement before the appointed date the supplier becomes entitled to interest at such rate which is 5%, point above the floor rate for comparable lending with monthly rest. 4. By virtue of the aforesaid amendment the respondent requested for payment of interest at the rate of 24% per annum from 1.11.1991 to 22.9.1992 and 2% per month compounded with monthly rest from 23.9.1992 till the actual date of realization. The aforesaid suit filed by the respondent-plaintiff was decreed by the Civil Judge (Junior Division) for recovery of Rs. 15,027.75 along with interest at the rate of 18% per annum under judgment and decree dated 30.7.1998. 5. Feeling aggrieved by the aforesaid judgment and decree passed by the trial court, the appellant-defendant preferre....
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....f this Court in Assam Small Scale Industries Development Corpn. Ltd. & Ors. v. J.D. Pharmaceuticals & Anr. (2005) 13 SCC 19. Relying on the ratio in the said case it was submitted that the provisions of the Act could not have been made applicable to the facts of the present case. 10. We heard the learned counsel appearing for the appellant on the aforesaid issue which was also raised in the Assam Small Scale Industries Development Corpn. Ltd. & Ors. (supra) (wherein one of us, namely, Sinha, J. was a member) after referring to the provisions of Section 1, 3, 4, 5 and 10 of the said Act, considered the scope of applicability of the Act. Sections 1, 3, 4, 5, and 10 of the Act are extracted below : 1. Short title, extent and commencement.- (1) This Act may be called the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993. (2) It extends to the whole of India except the State of Jammu and Kashmir. (3) It shall be deemed to have come into force on the 23rd day of September, 1992. 3. Liability of buyer to make payment.- Where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor o....
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....into effect from 23-9-1992 and will not apply to transactions which took place prior to that date. We find that out of the 71 suit transactions, Sl. Nos. 1 to 26 (referred to in the penultimate para of the trial court judgment), that is supply orders between 5-6-1991 to 28-7-1992, were prior to the date of the 1993 Act coming into force. Only the transactions at Sl. Nos. 27 to 71 (that is supply orders between 22-10-1992 to 19-6-1993), will attract the provisions of the 1993 Act. 38. The 1993 Act, thus, will have no application in relation to the transactions entered into between June 1991 and 23-9- 1992. The trial court as also the High Court, therefore, committed a manifest error in directing payment of interest at the rate of 23% up to June 1991 and 23.5% thereafter. 12.In view of the ratio of the aforesaid decision the scope of the present appeal is very limited for it is already laid down by this Court that the Act, namely Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 came into effect from 23.9.1992. Therefore, the said Act would have no application and would not apply to transactions which took place prior to the aforesaid d....
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.... shall not lie. 14. In fact, in the plaint the appellant claimed interest at the rate of 18% per annum but later on when it was found that the Act had come into force with effect from 23.9.1992 an amendment was sought for to the plaint which was allowed by the trial court. The said amendment, in our opinion, should not have been allowed as the said provisions of the Act are not applicable to the facts and circumstances of the present case. 15.The quantum and rate of interest which the appellant in the present case is entitled to would be in accordance with the provisions of Section 34 of the Code and not in accordance with the provisions of the Act. According to the provisions of Section 34 of the Code interest is to be awarded at a reasonable rate and on the principal amount. 16. In Clariant International Ltd. v. Securities & Exchange Board of India, (2004) 8 SCC 524, it was held by this Court that the interest can be awarded in terms of an agreement or statutory provisions and it can also be awarded by reason of usage or trade having the force of law or on equitable considerations but the same cannot be awarded by way of damages except in cases where money due is wron....