HIGH COURT OF UTTARAKHAND AT NAINITAL Second Appeal No. 33of 2008 Akhil Kumar ………… Appellant versus State & another ………… Respondents Sri S.K. Jain, Advocate for the appellant Sri R.C. Arya, Standing counsel for the respondents. Dated: 11.6.2008 Hon’ble Rajesh Tandon, J. Heard Sri S.K. Jain counsel for the appellant and Sri R.C. Arya Standing Counsel for the respondents. Present appeal has been filed against the judgment and decree dated 16.10.1998 passed by the 2nd Addl. District Judge, Dehradun. Briefly stated plaintiff filed a suit against the defedants for the recovery of Rs.21,214.20 along with interest @ 18 % per annum and from 23.9.1992 @ 2% per month till actual date of recovery. According to the plaintiff he used to supply Hydrated lime to the defendant but the defendant did not pay bills amounting to Rs.21,214.20. The plaintiff is also entitled to get 18% interest. According to the plaintiff it is a small-scale industry and a partnership firm. It comes within the purview of the Interest on 2 Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993. The suit of the plaintiff was decreed by the Civil Judge (SD) Dehradun for the recovery of Rs.21,214.20 along with interest @ 18% per annum vide judgment and decree dated 14.2.1997. Feeling aggrieved the plaintiff Akhil Kumar has filed the first appeal against the interest part of the judgment. The lower appellate court has dismissed the appeal vide judgment and decree dated 16.10.1998 against which the plaintiff Akhil Kumar has filed the present second appeal. The appeal has been admitted in this court on the following substantive question of law: “Whether courts below have committed the patient illegality, while not awarding the interest @ 23% per annum from 23.9.1992 under “The Interest on Delayed Payments to Small Scale and Ancillary Industrial undertaking Act, 1993.” Counsel for the appellant has confined his argument only on the point of interest. He has submitted that the rate of interest fixed by the lower appellate court are to the lower site. Section 4 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (hereinafter called ‘the Act’) provide for date from which and rate of interest payable to the small industry. Section 4 reads as under: 4. Date from which and rate at which interest is payable- Where any buyer fails to make payment of the amount to the supplier, as required under section 3, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay interest to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at such rate which is five per cent, points above the floor rate for comparable lending. Explanation- For the purposes of this section, “floor rate comparable lending” means the highest of the minimum lending rates charged by scheduled banks (note being co- operative banks) on credit limits in accordance with the directions given or issued to banking companies generally by the Reserve Bank of India under the Banking Regulation Act, 1949. Section 5 of the Act provides for payment of compound interest. Section 5 of the Act, reads as under: 5. Liability of buyer to pay compound interest- notwithstanding anything contained in any agreement between a supplier and a buyer or in any law for the time being in force the buyer shall be liable to pay compound interest (with monthly rests) at the rate mentioned in Section 4 on the amount due to the supplier. A perusal of the aforesaid section 4 and 5 shows that the defendant is liable to pay interest at the rate five percent above the scheduled Banking rate till the appointed date and thereafter compound interest with monthly rests at the same rate. The plaintiff has not filed any document showing the scheduled Banking rate of interest. Thus in the absence of any evidence on record the schedule rate of interest is presumed @ 13% per annum. After adding 5% more as provided under 4 section 4 of the Act, the rate of interest comes to 18% per annum with monthly rests. The Act No. 32 of 1993 was promulgated on 2nd April 1993, therefore, the increased rate of interest shall be payable from 2nd April 1993 whereas the present suit was filed on 23.9.1992. The decree passed by the trial Court is, therefore, modified to the extent that the plaintiff shall be entitled to recover interest on the decreetal amount at the rate of 18% per annum with monthly rests from 2nd April 1993 till actual payment. Accordingly the appeal is allowed with costs. Dated: 11.6.2008 Rajesh Tandon, J. *Dhyani