INTEREST ON DELAYED PAYMENT TO SMALL SCALE AND ANCILLARY INDUSTRIAL UNDER-TAKING ACT 1993

THE INTEREST ON DELAYED PAYMENT TO SMALL SCALE AND ANCILLARYINDUSTRIAL UNDER-TAKING ACT, 1993

ACT No. 32 OF 1993

2ndApril, 1993.

An Act to provide for and regulate the payment of interest ondelayed payments to small scale and ancillary industrial undertaking and formatters connected therewith or incidental thereto.

BE it enacted by Parliament inthe forty–fourth Year of the Republicof India as follows: –

1.Short title, extent andcommencement: (1) thisAct may be called the Interest on Delayed Payments tot Small Scale andAncillary Industrial Undertakings Act, 1993.

(2) It extends to the whole of India, except the State of Jammu and Kashmir.

(3) It shall be deemed to havecome into force on the 23rd day of September, 1992.

2.Definitions: In this Act, unless thecontext otherwise requires, –

(a) "ancillary industrialundertaking" has the meaning assigned to it by clause (aa) of section 3 ofthe Industries (Development and Regulation) Act, 1951; (65 of 1951)

(b) "appointed day, meansthe day following immediately after the expiry of the period of thirty daysfrom the day of acceptance or the day of deemed acceptance of any goods or anyservices by a buyer from a supplier.

Explanation, – For the purposesof this clause, –

(i) ‘the day of acceptance’means, –

(a) the day of the actualdelivery of goods or the rendering of services; or

 

(b) where any objection is madein writing by the buyer regarding acceptance of goods or services within thirtydays from the day of the delivery of goods or the rendering of services, theday on which such objection is removed by the supplier;

(ii) ‘the day of deemedacceptance’ means, where no objection is made in writing by the buyer regardingacceptance of goods or services within thirty days from the day of the deliveryof goods or the rendering of services, the day of the actual delivery of goodsor the rendering of services;

(c) ‘buyer’ means whoever buysany goods or receives any services from a supplier for consideration;

(d) ‘goods’ means every kind ofmovable property other than actionable claims and money;

(e) ‘small scale industrialundertaking’ has the meaning assigned to it by clause (j) of section 3 of theIndustrial (Development and Regulation) Act, 1951; (65 of 1951)

(f) ‘supplier’ means an ancillaryindustrial undertaking or a small scale industrial undertaking holding apermanent registration certificate issued by the Directorate of Industries of aState ¹ [or Union territory and includes,–

(i) the National SmallIndustries Corporation, being a company, registered under the Companies Act, (1of 1956),1956;

(ii) the Small IndustriesDevelopment Corporation f a State or a union territory, by whatever namecalled, being a company registered under the companies Act, (1 of 1956),1956].

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1.Substituted for the words "or Union territory" by the Interest on DelayedPayments to Small Scale and Ancillary Industrial Undertakings (Amendment) Act,1998 (23 of1998) Section 2.

3.Liabilityof buyer to make payment: Where any supplier supplies any goods orrenders any services to any buyer, the buyer shall make payment therefore on orbefore the date agreed upon between him and the supplier in writing or, wherethere is no agreement in this behalf, before the appointed day:

¹ [Provided than in no case the period agreed upon between thesupplier and the buyer in writing shall exceed on hundred and twenty days fromthe days from the day of acceptance or the day of deemed acceptance]

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1. Inserted by the Interest on DelayedPayments to Small Scale and Ancillary Industrial Undertakings (Amendment) Act,1998 (23 of1998) Section 3.

¹ [4.Date from which and rate at which interest is payable:Where any buyer fails to make payment of the amount to the supplier, asrequired under section 3, the buyer shall, notwithstanding anything containedin any agreement between the buyer and the supplier or in any law for the timebeing in force, be liable to pay interest to the supplier on that amount fromthe appointed day or as the case may be, from the date immediately followingthe date agreed upon, at one an half time of Prime Lending Rate charged by theState bank of India.

Explanation: for thepurposes of this section, "Prime Lending Rate" means the Primelending Rate of the State bank of India which is available to thebest borrowers of the bank.]

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1. Substituted for the originalsection 4 by the Interest on DelayedPayments to Small Scale and Ancillary Industrial Undertakings (Amendment) Act,1998 (23 of1998) Section 4.

5.Recoveryof amount due: Notwithstanding anything contained in any agreementbetween a supplier and a buyer or in any law for the time being in force, thebuyer shall be liable to play compound interest (with monthly interest) at therate mentioned in section 4 on the amount due to the supplier.

6.Liabilityof buyer to pay compound interest: ¹ [(1)]The amount due from a buyer, together with the amount of interest calculated inaccordance with the provisions of section 4 and 5.shall be recoverable by thesupplier from the buyer by way of a suit of other proceeding under any law forthe time being in force.

¹ [(2) Notwithstanding anything contained in sub–section(i), any party to a dispute may make a reference to the industry FacilitationCouncil for acting as an arbitrator or conciliator in respect of the mattersreferred to in that sub–section the provisions of the Arbitration andConciliation Act, (26 of 1996), 1996 shall apply to such dispute as if thearbitration or conciliation were pursuant to an arbitration agreement referredto in sub–section (i) of section 7 of that Act.]

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1. Section 6 renumbered assub-section (1) and sub-section (2) inserted by the Interest on Delayed Payments to Small Scale andAncillary Industrial Undertakings (Amendment) Act, 1998 (23 of1998) Section 5.

7.Appeal:Noappeal against any decree, award or other order shall be entertained by anycourt or other authority unless the appellant (not being a supplier) hasdeposited with it seventy–five percent of the amount in terms ofthe decree, award or, as the case may be, other order in the manner directed bysuch court or, as the case may be, such authority.

¹ [7A.Establishment of industry Facilitation Council: TheState Government may, by notification in Official Gazette, establish one ormore Industry Facilitation Councils at such places exercising such jurisdictionand for such areas, as may be specified in the notification.

7B. Composition of industryFacilitation Council: (1) The industry Facilitation Council shall consist of one ormore members to be appointed from amongst the following categories:–

(i) Director f industries bywhatever name called or any other officer not below the rank of such Director,of the State Government;

(ii)Representative of banks andfinancial institutions;

(iii)Office–bearers orrepresentatives of State Industry Association; and

(iv)Person having specialknowledge in the filed of industry, finance, law, Trade and commerce.

(2) The person appointed underclause (i) of sub–section (i) shall be the Chair–person of theIndustry Facilitation Council.

(3) The composition of theIndustry Facilitation Council, the manner of filling vacancies among, and theprocedure to be followed in the discharge of their functions by the membershall be such as may be prescribed by rules by the State government.

7C.laying of rules before StateLegislature: Everynotification issued and every rule made by the State Government under this ActShall be laid, as soon as may be after it is issued or made, before the StateLegislature]

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1. Sections 7A, 7B and 7Cinserted by the Interest on DelayedPayments to Small Scale and Ancillary Industrial Undertakings (Amendment) Act,1998 (23 of1998) Section 6.

8.Requirementto specify unpaid amount with interest in the annual statement of accounts: Whereany buyer is required to get his annual accounts audited under any law for thetime being in force, such buyer shall specify the amount together with theinterest in his annual statement of accounts as remains unpaid to any supplierat the end of each accounting year.

9.Interestnot to be allowed as deduction from income: Notwithstanding anythingcontained in the Income–tax Act, 1961, (43 of 1961) the amount ofinterest payable or paid by nay buyer, under or in accordance with theprovisions of this Act, shall not, for the purposes of computation of incomeunder the Income–tax Act, 1961, be allowed as deduction.

10.Overridingeffect: Theprovisions of this Act shall have effect notwithstanding anything inconsistenttherewith contained in any other law for the time being in force.

11.Repealand saving: (1) the Interest on Delayed Payments to Small Scaleand Ancillary Industrial Undertakings Ordinance, 1993 (Ord.4 of 1993) is herebyrepealed.

(2)Notwithstanding such repeal, anything done or any action taken under theOrdinance so repealed shall be deemed to have been done or taken under thecorresponding provisions of this Act.

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