M/S. Decor India Pvt. Ltd. vs Council For Advancement Of ...
2010 Latest Caselaw 277 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI



+                          OMP No. 227/2002

                                                   19th January, 2010


M/S. DECOR INDIA PVT. LTD.                                       ...Petitioner

                           Through:     Ms. Bimla Sharma, Advocate with Ms.
                                        Vidhi Goel, Advocate.

                           VERSUS

COUNCIL FOR ADVANCEMENT OF PEOPLES ACTIONS AND RURAL
TECHNOLOGY(CAPART)

                                                                 ....Respondent

                           Through:     Nemo.


CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

1. Whether the Reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not?

3. Whether the judgment should be reported in the Digest?

    %                            JUDGMENT (ORAL)

VALMIKI J.MEHTA, J

1. By this petition under Section 34 of the Arbitration and

Conciliation Act, 1996 the petitioner is only challenging one aspect of the

Award with respect to grant of interest @ 12% per annum instead of a higher

OMP 227/2002 Page 1 rate and compounding thereof in terms of the Act, The Interest on Delayed

Payments to Small Scale and Ancillary Industrial Undertakings Act,

1993(hereinafter referred to as 1993 Act). The Arbitrator while awarding Claim

Nos. 9 and 10 relating to interest and compound interest has disallowed the

claim of the objector for payment under the 1993 Act. The counsel for the

objector has very strenuously contended before this Court that since the

petitioner was admittedly a small scale industry and registered as such, it was

entitled to the benefit of a higher rate of interest and also compounding thereof

as prescribed under the 1993 Act.

2. Section 4 of the said 1993 Act is relevant, in this regard, and the

same reads as under:

"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 one-and-half time of Prime Lending Rate charged by the State Bank of India.

Explanation:- For the purposes of this section, "Prime Lending Rate" means the Prime Lending Rate of the State Bank of India which is available to the best borrowers of the bank"

3. A reading of the aforesaid Section makes it clear that before

interest is awarded at a particular rate it is necessary that the said interest must

be one and half times the Prime Lending Rate of the State Bank of India.

Putting it differently, it is necessary for a person to claim benefit of the interest

OMP 227/2002 Page 2 under this Section of the 1993Act to prove the Prime Lending Rate of the State

Bank of India and only thereafter can such interest can be awarded.

4. The counsel for the petitioner urged that the Arbitrator has not

declined the higher rate under 1993 Act on the ground that the Prime Lending

Rate of the State Bank of India has not been filed, but has independently

awarded lesser interest @ 12% per annum. To this argument, I put a query to

the counsel for the objector to show me any document in the record before the

Arbitrator where such Prime Lending Rate of the State Bank of India has been

proved in any manner whatsoever, for even this Court to consider the issue in

favour of the petitioner, however, the counsel for the objector failed to show me

any such document which has been filed by the objector in the arbitration

proceedings to prove the Prime Lending Rate of State Bank of India. Therefore,

if this aspect was not proved before the Arbitrator, surely, the Arbitrator was

justified in not considering the rate as per the said Act. Merely because now the

Prime Lending Rate of State Bank of India is sought to be proved in this Court

for the first time, during the hearing of the objections by filing a certificate of

the State Bank of India, cannot take the petitioner's case any further because

this Court does not sit as an Appellate Court while hearing objections under

Section 34. It was for the petitioner to prove its case in the arbitration

proceedings in order to succeed in its claim for the rate of interest in terms of

the Interest on Delayed Payments to Small Scale and Ancillary Industrial

Undertakings Act, 1993.

OMP 227/2002 Page 3

5. Accordingly, I do not find any merits in these objections and which

are therefore dismissed, leaving the parties to bear their own costs.

                                                     VALMIKI J.MEHTA, J


January 19, 2010
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OMP 227/2002                                                              Page 4