Case Note & Summary
The petitioner, Maharashtra Small Scale Industries Development Corporation, filed an arbitration petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award dated 30 June 2003 that directed it to pay Rs.78,19,540.13 with interest to the respondent, Snehadeep Structures Pvt. Ltd., a small scale industrial unit. The dispute arose from a work order placed by the Maharashtra State Electricity Board (MSEB) for supply and laying of slurry pipelines at its thermal power station. The petitioner, acting under a marketing assistance scheme, issued a supply order to the respondent. The respondent supplied goods and submitted running bills but payment was delayed. The respondent claimed interest under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993. The petitioner contended that clause 25 of the supply order conditioned payment upon receipt from MSEB, absolving it from liability. The arbitrator held the petitioner liable. The High Court examined the provisions and purpose of the 1993 Act, which is a beneficial legislation to protect small scale units by imposing mandatory interest on delayed payments by government bodies. The court noted the amendments that expanded the definition of supplier to include corporations like the petitioner. The judgment remains incomplete in the provided text, and the final decision is not available.
Headnote
A) Interpretation of Statutes - Beneficial Legislation - Compulsory interest on delayed payments - The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, Sections 3, 4 - The Act is a beneficial legislation enacted to protect small scale units from delayed payments by government bodies by providing for compulsory statutory interest on delayed payments irrespective of any agreement to the contrary (Paras 4-7). B) Interpretation of Statutes - Definitions of 'Supplier' and 'Buyer' - The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, Section 2 - After the amendment, small scale industries corporations such as the petitioner are also included within the definition of 'Supplier', while the MSEB is the 'Buyer' (Paras 9-12). C) Arbitration - Challenge to Award - Arbitrator's jurisdiction - The dispute regarding interest on delayed payments was referred to arbitration and the sole arbitrator awarded Rs.78,19,540.13 with interest; the petition seeks to set aside the award on grounds that the petitioner is not liable under the Act (Paras 1, 13-16).
Issue of Consideration
Whether the arbitral award holding the petitioner liable to pay interest under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, despite a contractual clause conditioning payment upon receipt from MSEB, is legally sustainable.
Law Points
- Liability of buyer to pay statutory interest on delayed payments under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act
- 1993
- effect of clause providing for payment only after receipt from third party
- interpretation of beneficial legislation
