PRAGATI CHEMICAL INDUSTRIES P LTD Vs. APSSIDC LTD

JUDGEMENT

(1.) This writ petition seeks a direction to the respondent to release the amount due to the petitioner with interest of 25 per cent per annum.

(2.) The petitioner-company is a small scale industry engaged in manufacture of fine chemicals and laboratory chemicals. The petitioner-company has been registered with the respondent-Corporation for marketing assistance. According to the scheme, the Corporation has to render the service of marketing the petitioner's products after charging service charges of 5 per cent and the scheme is intended to assist the small scale units in marketing its products. Accordingly, the petitioner is prohibited from dealing directly with the Central and State Government Departments and orders have to be placed only through the respondent-Corporation. Acting under that scheme, the respondent-Corporation placed an order on 5-7-1996 for supply of laboratory chemicals valued at Rs.10,20,495.20 to 57 A.P.S.W.R.E.I. schools. The respondent had earlier invited the indents from the schools and collected 90 per cent of the value from the Secretary, A.P.S.W.R.E.I. Society, Hyderabad in the amount of Rs.9,18,445/- on 20-6-1996. The petitioner having the experience of delayed payments, requested the respondent-Corporation to sanction an amount of Rs.3.50 lakhs as advance knowing that 90 per cent of the value was already collected by the Corporation but the Corporation wrote on 8-8-1996 in reply to this request of 11-7-1996 that they will try to release the payment without any delay and advised the petitioner-Company to complete the supplies within the due date. Thereafter, the petitioner made a request to the Corporation to make the payment directly to Indian Bank, Himayatnagar, which had financed the petitioner-Company and the Respondent-Corporation by letter dated 7-12-1996 assured the Indian Bank that they had no objection for honouring the bills. Yet, when all the materials have been supplied on 5-7-1996 and delivery challans and delivery notes were presented through the Indian Bank on 16-1-1997, the Corporation failed to release the amount. Several reminders proved futile. This is the reason for writ petition, in which it is also claimed that under the provisions of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 the Corporation should also pay compound interest of 25 per cent.

(3.) An interim direction was given to release the amount whereupon the respondent filed a counter-affidavit and sought for vacation of the direction. In the counter-affidavit, it was admitted that the petitioner had supplied the goods ordered but it was stated that in view of stringent financial circumstances, the Corporation was unable to release the funds and a plea was taken that any dispute should be referred to the Arbitration. The interim direction was vacated on 2-4-1997 and the writ petition itself was posted for final hearing. The respondent has filed an additional counter-affidavit to submit that as soon as it is better financially placed, they will do their best to release the amounts and the remedy by way of writ petition is not maintainable.