Case Note & Summary
The case involved an appeal by Bijli Cotton Mill, a unit of National Textile Corporation U.P. Limited, against U.P. Power Corporation Limited regarding recovery proceedings for late payment surcharge on electricity dues. The appellant's production had ceased in 1992, and it had referred its sickness to the Board for Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1985. A significant bill was raised against the appellant, which included a late payment surcharge that the appellant contested, arguing it was contrary to the approved scheme by BIFR. The High Court had upheld the surcharge, stating it was applicable and not a penalty or compensation. The appellant contended that the late payment surcharge should not apply as it was not part of the approved scheme and referenced a similar case involving Lord Krishna Mills where the surcharge was waived. The Supreme Court noted that the High Court did not adequately address the distinctions in the Lord Krishna Mills case and remitted the matter back to the High Court for clarification on whether the late payment surcharge was included in the interest and damages as per the scheme. The court directed that the BIFR should clarify this issue and consider the waiver effect in the Lord Krishna Mills case, with a timeline for the parties to act and for the High Court to review the matter thereafter.
Headnote
A) Industrial Law - Sick Industrial Companies - Inclusion of Late Payment Surcharge - Sick Industrial Companies (Special Provisions) Act, 1985, Section 18 - The court examined whether the late payment surcharge was part of the interest and damages as per the approved scheme. It held that the matter should be clarified by the BIFR regarding the inclusion of the surcharge in the scheme, given that no interest was levied (Paras 11-12).
Issue of Consideration
Whether the late payment surcharge is included in the interest and damages as per the approved scheme under the Sick Industrial Companies (Special Provisions) Act, 1985.
Final Decision
The appeal was allowed to the extent that the matter was remitted to the High Court for clarification on the inclusion of late payment surcharge in the approved scheme, with specific directions for the BIFR to clarify and consider relevant documents.
Law Points
- Sick Industrial Companies
- Recovery Proceedings
- Late Payment Surcharge
- Binding Effect of Approved Scheme
- BIFR Clarification
