The provision for enhanced rate of interest under the Act No. 32 of 1993 operates prospectively from the date of enforcement of the Act, and does not have retrospective effect.

This first appeal has been preferred against the judgment and decree dated 14.12.95 passed in MS No.245 of 1993 by Assistant District Judge No. 1, Kamrup, Guwahati.

2. The appellant is aggrieved by only a part of the impugned decree by S which interest payable under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 has not been awarded from the appointed day i.e. on expiry of 30 days of the supply of goods. Instead the trial Judge allowed interest with effect from 23.9.92 when the Act of 1993 came into force.

3. We have heard learned counsel for the appellant and the respondents.

4. The plaintiff-appellant is a firm registered as a small scale unit manufacturing medicines. It had taken loan for the purpose of its pharmaceutical factory from the Bank of Baroda on interest as per the guidelines of the Reserve Bank of India. The appellant had been supplying medicines as per orders placed to it by the respondents from time to time against different indents in the year 1988-89. According to the appellants, the total amount outstanding for payment as price of medicines supplied comes to Rs. 1,21,293.60. The said amount was not paid despite several letters/reminders and requests of the plaintiff-appellant. Ultimately the plaintiff served a notice upon the defendants under section 80 CPC on 7.9.93 demanding payment of the principal amount and the interest. No payment was made even after notice under section 80 CPC was served. Hence, the appellant filed a suit for realisation of the principal amount and a sum of Rs. 2.75,878.60 as interest i.e. for a total sum of Rs. 3,97,222.20. The appellant had claimed interest under section 4 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act. 1993, hereinafter for short to as the Act No. 32 of 1993, which provides interest at a higher rate by 5% of the usual rate of lending as per circular of the Reserve Bank of India during the period and floor rate of comparable lending. The higher rate is chargeable with, effect from the appointed day namely, immediately after expiry of the period of 30 days from the date of acceptance i.e. the date of delivery of the goods. The trial Court framed several issues out of which Issue Nos 5 and 6 are relevant for the purposes of decision of this first appeal. The said issues are :

5. Whether Rs. 1,21,343.69 being value of medicines and Rs. 2,75,870.60 as interest thereon are due to be paid by the defendants to the plaintiffs?

6. Whether the claim of the plaintiff in respect of interest is inflated?

5. The trial Court decreed a sum of Rs. 1,21,293.80 with compound interest (with monthly interest) @ 23.25% per annum with effect from 23.9.92 till the date of realisation. It was further held that the amount of interest as claimed by the plaintiff in the plaint was inflated. The interest in accordance with the Act No. 32 of 1993 was held to be not admissible prior to 23.9.92, namely, for the period before the said Act came into force since it was found that the medicines

were supplied by the plaintiff-appellants on 16.10.89,22.4.89 and 19.3.88, that is to say, much before the Act came into force. The trial Court held that the Act had no retrospective effect so as to entitle the appellant for higher rate of interest for the period prior to the coming into force of the Act itself.

6. In this appeal the controversy is only confined to the question as to whether section 4 of the Act No. 32 of 1993 is retrospective in effect or it is prospective in operation. The appellant's entitlement to the interest at the higher rate with o effect from the appointed day, which is relatable in this case to a day prior to coming into force of the Act No. 32 of 1993, would depend upon the answer to the question involved, as indicated above. In order to determine the above question, we may peruse the relevant provisions of the Act. Section 3 of the Act No. 32 of 1993 provides as under”:

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