Case Note & Summary
The dispute arose from a civil appeal concerning the interest entitlement of the respondent, who had filed a suit for recovery of a sum due from the appellant. The respondent initially claimed Rs. 15,027.75 along with interest at varying rates, citing the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, which came into force on 23.9.1992. The trial court decreed the suit in favor of the respondent, awarding interest at 18% per annum. The appellant appealed this decision, and the First Appellate Court modified the interest rate to 23% per annum. The appellant then filed a second appeal in the High Court, which ruled that the provisions of the Act were not applicable to the case as the cause of action arose before the Act's commencement. The High Court modified the interest rate to 18% per annum from 2.4.1993. The Supreme Court, upon reviewing the case, noted that the Act's provisions could not be applied retrospectively and that the appropriate interest should be determined under Section 34 of the Code of Civil Procedure, 1908. The court directed that the interest rate be set at 9% per annum, modifying the High Court's decision accordingly. The appeal was disposed of with this modification.
Headnote
A) Interest Law - Applicability of Interest on Delayed Payments Act - Statutory provisions applicable only prospectively - Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, Sections 1, 3, 4 - The court held that the provisions of the Act would not apply to transactions that occurred prior to its commencement on 23.9.1992, thus limiting the interest claim to the provisions of Section 34 of the Code of Civil Procedure, 1908. Held that the High Court erred in applying the Act retrospectively (Paras 12-18).
Issue of Consideration
The nature of interest that the respondent is entitled to in respect of the amount claimed.
Final Decision
The Supreme Court modified the interest rate to 9% per annum, holding that the provisions of the Interest on Delayed Payments Act were not applicable to the transactions in question, which occurred prior to its commencement.
Law Points
- Interest on Delayed Payments
- applicability of statutory provisions
- reasonable interest
- Code of Civil Procedure
- 1908
- Section 34
- amendment of plaint
