M/S. RAMPUR FERTILISER LTD. versus M/S. VIGYAN CHEMICALS INDUSTRIES

Citation: [2009] 2 S.C.R. 650 · Decided: 18-02-2009 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Disposed off
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Judgment (excerpt)

[2009] 2 S.C.R. 650 
A 
MIS. RAMPUR FERTILISER LTD. 
V. 
..... 
M/S. VIGYAN CHEMICALS INDUSTRIES 
Civil Appeal No. 1101 of 2009 
B 
FEBRUARY 18, 2009 
[S.8. SINHA AND DR. MUKUNDAKAM SHARMA, JJ.] 
Interest on Delayed Payments to Small Scale and 
Ancillary Industrial Undertakings Act, 1993: Applicability of the 
'1 
Act - The Act came into effect on 23. 9. 1992 - Suit filed on 
c 31.10.1991 - Held: The 1993 Act not applicable as cause of 
action took place prior to 23. 9. 1992 - The plaintiff is entitled 
to rate of interest in accordance with the provisions of s. 34 
i-
CPC and not in accordance with 1993 Act - Code of Civil 
Procedure, 1908 - s. 34. 
D 
Respondent supplied goods to the appellant. 
Appellant· failed to pay the bill amount. Respondent filed 
suit on 31.10.1991 clairr.ing the bill amount along with 
interest @ 18% p.a. till date of suit. During pendency of 
E suit, Interest on Delayed Payments to Small Scale and 
Ancillary Industrial Undertakings Act, 1993 came into force. 
Respondent amended the plaint and claimed interest @ 
24% p.a. from 1.11.1991 to 22.9.1992 and 2% per month 
compounded with monthly rest from 23.9.1992 till actual 
date of realization. 
F 
The question for consideration before this Court was 
whether the claim· of respondent was justified. 
Disposing of the appeal, the Court 
G 
HELD: 1. Interest or1 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 date. In the case 
H 
650 
M/S. RAMPUR FERTILISER LTD. V. M/S. VIGYAN 
651 
CHEMICALS INDUSTRIES 
in hand the transaction which was· the subject matter of A 
yt 
the suit took place prior to 23.9.1992. This position is clear 
for the suit itself was filed on 31.10. 1991 and therefore 
cause of action for filing the suit has to be prior in point of 
time. (Para - 12) [657-E-F] 
2. In the plaint the respondent-plaintiff had itself B 
stated that the cause of action for the suit arose on dates 
}" 
prior to coming into force of the Act. It is obvious from the 
records that on the date when the Act came into force, 
the present suit was pending for consideration, and c 
therefore, what would be applicable to the facts of the 
present case is the provisions of Section 34 of the Code 
of Civil Procedure, 1908. (Para - 13) [657-G-H; 658-A] 
Assam Small Scale Industries Development Corpn. Ltd. 
& Ors. v. J. D. Pharmaceuticals & Anr. (2005) 13 SCC 19 -
D 
relied on. 
3. 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 E 
" 
an amendment was sought t0r to the plaint which was 
r 
allowed by the trial court. The said amendment, should 
not have been allowed as the said provisions of the Act 
are not applicable to the facts and circumstances of the 
present case. (Para - 14) [658-H, 659-A-B] 
F 
4. 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 t~e provisions of the Act. 
According to the provisions of Section 34 of the Code G 
interest is to be awarded at a reasonable rate and on the 
_J 
principal amount. (Para - 15) [659-C] 
Clariant International Ltd. v. Securities & Exchange Board 
' 
of India (2004)" 8 SCC 524; Kaushnuma Begum v. New India H 
652 
SUPREME COURT REPORTS 
[2009] 2 S.C.R. 
A 
Assurance Co. Ltd. (2001) 2 SCC 9; H. S, Ahammed Hussain 
·, 
v. lrfan Ahammed (2002) 6 SCC 52; United India Insurance 
Co. Ltd. v.Patricia Jean Mahajan (2002) 6 SCC 281 - referred 
to. 
B 
5. The High Court was not justified in granting 
interest at the rate of 18% per annum with monthly rests. 
Considering the facts and circumstances of the present 
case, it is directed that pendente lite and future interest at 
'( 
the rate of 9% shall be paid. (Para - 18) [660.;C] 
c 
Case Law Reference 
(2005) 13 sec 1 s 
Relied on 
Para - 9 
' 
(2004) a-sec 524 
Referred to 
Para - 16 
c2001 > 2 sec s 
Referred to 
Para - 16 
o· 
(2002) 6 sec 52 
Referred to 
Para - 16 
(2002) 6 sec 281 
Referred to 
Para - 16 
CIVILAPPELLATE JURISDICTION: Civil Appeal No 1101 
E of 2009 
From the final Judgement and Order dated 2.5.2007 of 
the High Court of Uttarakhand at Nainital in Second Appeal No. 
167 of 2001. 
F 
Ashwani Garg (for Vij
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