ASSAM SMALL SCALE IND. DEV. CORPN. LTD. AND ORS. versus M/S J.D. PHARMACEUTICALS AND ANR.

ASSAM SMALL SCALE IND. DEV. CORPN. LTD. AND ORS. versus M/S J.D. PHARMACEUTICALS AND ANR.

The corporation was statutorily obliged to pay 90% of the value of supply orders placed by state departments to the respondent upon supply, regardless of receipt from the departments; the State of Assam was not a necessary party due to absence of privity; the 1993 Act applied only to transactions after 23.09.1992, and interest for earlier transactions is payable at 9% p.a. as simple interest; decree for 23% interest for all periods was erroneous and modified accordingly.

Parties
Appellant: Assam Small Scale Industrial Development Corporation Ltd.; Respondent: J.D. Pharmaceuticals
Jurisdiction
India
Judgment Date
07 October 2005
Procedural Posture
Civil Appeal / Appeal From Gauhati High Court Judgment Dated 19.1.2005 in F.a. No. 79 of 1998
Outcome
Appeal partly allowed
Legal Topics
Preferential Stores Purchase, Interest on Delayed Payments, Agency and Statutory Obligations, Small Scale Industries, Necessary Parties in Litigation
Commercial Law Contract Law Statutory Interpretation Preferential Stores Purchase Interest on Delayed Payments Agency and Statutory Obligations Small Scale Industries Necessary Parties in Litigation

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Parties

Assam Small Scale Industrial Development Corporation Ltd.

Appellant

J.D. Pharmaceuticals

Respondent

Procedural Posture

Civil Appeal / Appeal From Gauhati High Court Judgment Dated 19.1.2005 in F.a. No. 79 of 1998

Legal Issues

  1. 1 Whether the appellant corporation is liable to pay the price and interest for goods purchased from the respondent SSI unit as agent for state departments under Assam Preferential Stores Purchase Act, 1989
  2. 2 Whether the State of Assam is a necessary party to the suit for recovery of price and interest
  3. 3 Whether the Interest on Delayed Payment to Small Scale and Ancillary Industrial Undertakings Act, 1993 applies to the disputed transactions

Ratio Decidendi

The corporation was statutorily obliged to pay 90% of the value of supply orders placed by state departments to the respondent upon supply, regardless of receipt from the departments; the State of Assam was not a necessary party due to absence of privity; the 1993 Act applied only to transactions after 23.09.1992, and interest for earlier transactions is payable at 9% p.a. as simple interest; decree for 23% interest for all periods was erroneous and modified accordingly.

Court Disposition

Appeal partly allowed

Orders

  • Judgment and decree modified: appellant corporation to pay respondent SSI unit purchase price; simple interest at 9% p.a. on transactions prior to 23.09.1992; compound interest at 23.5% per annum under 1993 Act for transactions after 23.09.1992; corporation to bear costs in appeal, counsel’s fee assessed at Rs. 25,000.