SOLIDAIRE INDIA LTD. versus FAIRGROWTH FINANCIAL SERVICES LTD. AND ORS.

Citation: [2001] 1 S.C.R. 932 · Decided: 07-02-2001 · Supreme Court of India · Bench: B.N. KIRPAL · Disposal: Dismissed

Cited by 4 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
. SOLIDAIRE INDIA LTD. 
v. 
• 
FAIRGROWTH FINANCIAL SERVICES LTD. AND ORS. 
FEBRUARY 7, 2001 
B 
[B.N. KIRPAL, RUMA PAL AND BRIJESH KUMAR, JJ.] 
~ -
Special Court (Trial of Offences Relating to Transactions and Securities) 
Act, 1992-Seclion 13-Sick Industrial Companies (Special Provisions) Act, 
c 
1985-Section 32 (/)-Appellant claimed to have colllracted loan at the 
rate of 18 per cent p.a.-Decree passed at a higher rate for non-repayment 
of loan inspite of the fact that appellant had declared itself sick and relevant 
proceedings were 011-0n appeal Held, application of higher rate of interest 
permissible as there was no formal agreement and a claim to a higher rate 
had not been immediately refi1ted by the appellant in its correspondence-
D Both the Acts are Special Acts. However the 1992 Act would have an 
overriding effect, as the legislature never intended to permit appiication of 
the 1985 Act even if proceedings in respect of a company may be going on 
before the B./. F. R. 
lnterpre/alion o/Statutes--Overriding effect a/Special Acts-Held, later 
).. 
E Special Act would prevail over the earlier Special Act. 
Appellant contracted three loans of Rs. 50 Iakhs, Rs. 25 lakhs and Rs. 
25 lakhs respectively from the respondent and claime_d that 18 per cent p.a. 
was agreed as the rate of interest. The repayments were not made and 
F proceedings were initiated under the Special Court(frial of Offences Relating 
~ 
to Transactions and Securities) Act, 1992. A decree was passed by the Speeial 
Court at a higher rate of interest, in spite of the fact that proceedings were 
going on under the Sick Industrial Companies (Special provisions) Act, 1985 
in respect of the appellant. Hence this appeal. 
G 
Appellant contended that awarding interest at a rate higher than 18 
per cent was impermissible, and that in view of the provisions of the Sick 
~ 
Industrial Companies (Special Provisions) Act, 1985 no proceedings should 
have been initiated or continued by the Special Court. 
H 
Dismissing the appeal, the Court 
932 
,-
SOLIDAIRE INDIA LTD. 1•. FJ\IKGROWTH FINANCIAL SERVICES LTD. 
933 
"""' 
HELD: I. It appears that there was 1w formal agreenient, which had A 
. -, ' 
been entered into between the parties at the time when the loan was advanced. 
The correspondence, which has been placed on record, clearly indicates that 
the respondent had claimed interest at the rate of 21.5 per cent p.a. on the 
loan of Rs. 50 lakhs first advanced and on the balance amount the claim was 
for 23 per cent p.a. There is no document on record to show that the amount B 
of interest claimed was immediately refuted, though it was belatedly refuted 
~ 
by the appellant. There is no infirmity in the decision of the Special Court as 
regards the rate of interest. (935-B-CI 
2. The effect of Section 32(1) of the Sick Industrial Companies (Special 
Provisions) Act, 1985 is that the Act will have effect notwithstanding anything c 
inconsistent therewith contained in any other law except to the provisions of 
j_ 
the Foreign Exchange Regulation Act, 1973 and the urban Land (Ceilling 
and Regulation) Act, 1976. A similar non-obstante provision is contained in 
Section 13 of the Special Court (Trial of Offences Relating to Transactions 
and Securities) Acts, 1992. It is clear that both these Acts are special \cts 
and it has been laid down in no uncertain terms that in such an event it is the D 
later Act which .must prevail. It is clear that there was no intention of the 
legislature to permit the 1985 Act to apply notwithstanding the fact that 
' 
' 
proceedings in respect of a company may be going on before the 8.1.F.R. The 
~ ...... 
1992 Act is to have an overriding effect notwithstanding any provision to the 
contrary in another Act. (935-F; 938-C-DI 
E 
... 
Maharashtra Tubes Ltd.. v. State Industrial & Investment Corporation 
of Maharashtra Ltd. & Anr., (19931 2 SCC 144; Sarwan Singh & Anr. v. 
Kasturi Lal, 119771 2 SCR 421; Allahabad Bank v. Canara Bank&. Anr., 
120001 4 SCC 406 and Shri Ram Narain v. The Simla Banking Industrial Co. 
limited, ( 19561 SCR 603, relied on. 
F 
Bhoruka Steel Ltd. v. Fairgrowth Financial Services ltd., (1997) V. 89 
Company Cases 547, approved. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3760 of 
1995. 
G 
;. 
From the Judgment and Order dated 16.2.95 of the Special Court, (Trial 
of Offences Relating to Transactions and Securities) at Bombay, in Misc. P. 
No. 70 of 1994. 
A. Subba Rao and Dr. A. Francis

Excerpt shown. Read the full judgment & AI analysis in Lexace.