1997 Supreme(SC) 564

SUPREME COURT OF INDIA
K Venkataswami, S P Bharucha
JINDAL PAPER & PLASTICS AND ANOTHER, APPELLANTS
VERSUS
UNION OF INDIA AND ANOTHER, RESPONDENTS.
Civil Appeal No. 2418 of 1997 (Arising out of SLPs (C) Nos. 3685, 3216 and 4076 of 1994), decided on March 25, 1997.

The main legal point established in the judgment is that the uncertainty of the law until a specific decision was rendered influenced the court's decision on the applicable interest rate.

Headnote:

Interest Rate - Appellants' Liability - The court held that there was uncertainty about the law until the decision in the case of Kasinka Trading was rendered on 18-10-1994, and therefore, interest from the date it became payable until 18-10-1994 should be payable at the rate of 12% per annum. Interest for the further period should be at the rate of 17.5% per annum, as ordered by the High Court.

Fact of the Case:

The principal issue is covered against the appellants by the judgment of this Court in Kasinka Trading v. Union of India. The appellants argued that the award of interest at the rate of 17.5% per annum from the date the duty became payable till it was paid or recovered was uncalled for due to the uncertainty of the law until 18-10-1994.

Finding of the Court:

The court found that there was uncertainty about the law until the decision in the case of Kasinka Trading was rendered on 18-10-1994, and therefore, interest from the date it became payable until 18-10-1994 should be payable at the rate of 12% per annum. Interest for the further period should be at the rate of 17.5% per annum, as ordered by the High Court. The appeals were allowed to the aforesaid extent.

Issues: The principal issue was the appellants' liability for interest at the rate of 17.5% per annum from the date the duty became payable till it was paid or recovered.

Ratio Decidendi: The court held that there was uncertainty about the law until the decision in the case of Kasinka Trading was rendered on 18-10-1994, and therefore, interest from the date it became payable until 18-10-1994 should be payable at the rate of 12% per annum. Interest for the further period should be at the rate of 17.5% per annum, as ordered by the High Court.

Final Decision: The appeals were allowed to the extent that interest from the date it became payable until 18-10-1994 should be payable at the rate of 12% per annum, and interest for the further period should be at the rate of 17.5% per annum, as ordered by the High Court. The balance and interest due by the appellants shall be paid to the respondents within 8 weeks. There shall be no order as to costs.