Back
2026 Supreme(Online)(Gau) 14629
GAUHATI HIGH COURT
Anjan Moni Kalita, J
Charu Technology (Pvt.) Ltd. – Appellant
Versus
State of Assam – Respondent
WP(C)/3655/2018
For the Appellants/Petitioners: M. Hazarika, D. Khan
For the Respondents: I. Bhorthakur, T. R. Gogoi
Under Sections 15 and 16 of the MSMED Act, 2006, a buyer must pay interest on delayed payments at three times the RBI bank rate, calculated as compound interest with monthly rests, requiring a factual determination of the period and prevailing rates for each case.
Headnote:(A) Micro, Small and Medium Enterprises Development Act, 2006 - Sections 15, 16, 17 - Delayed payment to small enterprises - Mandatory interest liability - Petitioner, a registered MSME, supplied Rainwater Harvesting Systems to government housing board - Payment delayed, and statutory deductions contested - Coordinate Bench laid down procedure for calculation of interest under Sections 15 and 16 - Interest is to be calculated as compound interest with monthly rests at three times the bank rate notified by the RBI - Such interest is dynamic and variable, not static from the appointed day (Paras 11, 12)
Facts of the case:
The petitioner is a private limited company registered under the MSME Act that completed work orders for the construction of Rainwater Harvesting Structures for the respondent housing board. Despite completing the work and submitting bills, the petitioner alleged wrongful statutory deductions and the failure of the authorities to pay interest on delayed payments as mandated by the MSME Act.
Findings of Court:
The Court directed the petitioner to submit a detailed representation with specific calculations to the respondent housing board. The respondent is directed to afford a hearing to the petitioner and dispose of the representation within two months, ensuring the interest component is calculated according to the principles established in prior coordinate bench judgments.
Issues: Whether the petitioner is entitled to interest on delayed payments under the MSME Act, 2006 and whether the statutory deductions and interest calculations require recalculation by the competent authorities.
Ratio Decidendi: Under Sections 15 and 16 of the MSME Act, 2006, interest on delayed payments is mandatory and must be calculated as compound interest with monthly rests at three times the bank rate, necessitating a factual inquiry into payment dates, acceptance dates, and prevailing bank rates which should be performed by the administrative authorities first.
Result: Petition disposed of with directions for administrative consideration.
| Table of Content |
|---|
| 1. petitioner's claim regarding breach of payment obligations by state authorities. (Para 2 , 3 , 4 , 5 , 6 , 7) |
| 2. legal contention regarding entitlement to interest under msmed act. (Para 8 , 9 , 10) |
| 3. application of statutory interest benchmarks for delayed commercial payments. (Para 11 , 12) |
| 4. procedures for administrative dispute resolution of dues. (Para 13 , 14 , 15) |
BEFORE
HONOURABLE MR. JUSTICE ANJAN MONI KALITA
ORDER
Date : 27.04.2026
Heard Ms. M. Hazarika, learned Senior Counsel assisted by Mr. D. Khan, learned counsel for the petitioner. Also heard Mr. I. Bhorthakur, the learned Standing Counsel, PHE Department, appearing for the respondent Nos. 1 and 4 as well as Mr. T. R. Gogoi, the learned Standing Counsel, Assam State Housing Board, appearing for respondent Nos. 2 and 3.
2. The petitioner herein is a private limited company having its industrial unit at Hajobori, Chandrapur, Guwahati, wherein it carries on the business of manufacturing, inter alia, PVC pipes and fittings, Ribbed Screen Strainers, Direct Action Hand Pumps and Casing Pipes, PVC Gutter Pipes, PVC Down Pipes, Rainwater Harvesting Systems, PVC Half-Round Pipes for Water Harvesting and Assemblies for Rainwater Harvesting. The items manufactured by the petitioner, except Rainwater Harvesting Systems, are “scheduled items” under the Assam Preferential Stores Purchase Act.
3. The petitioner’s unit is duly registered under the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as the “MSMED Act”) by an Entrepreneurs Memorandum Part II bearing No. 18-24-12-00223 dated 26.03.2010 issued by the concerned authority.
4. The petitioner’s case is that the Commissioner, Assam Housing Board, issued a work order to the petitioner for construction of Rainwater Harvesting Structures, vide letter No. ASHB/TECH/971/2016/20 dated 04.03.2016, at various locations as mentioned therein, valued at Rs. 3,11,363.82 per unit, which was subsequently enhanced to Rs. 3,28,230.93 per unit.
5. Upon completion of the work, the petitioner intimated the same to the Commissioner, Assam State Housing Board and submitted a bill vide letter No. CT/Mkt&Dev/35/16-187 dated 03.02.2017 for an amount of Rs. 1,37,85,699.00 only.
6. It is contended that, in respect of the aforesaid work completed by the petitioner, a status report regarding completion of the work, i.e., Rainwater Harvesting Systems implemented by the petitioner, was submitted by the Executive Engineer (PHE), Karimganj Division to the Chief Engineer (PHE), Water, Hengrabari vide Memo No. PHEE/KXJ/TB-572/2017-18/2650 dated 24.08.2017, stating that the petitioner had fully completed the work and that the aforesaid systems were found to be functioning satisfactorily. Accordingly, the Commissioner, Assam State Housing Board addressed a letter to the Chief Engineer (PHE) requesting for releasing the bill amounting to Rs. 1,37,85,588.00, vide letter No. ASHB/Const/809/2017/297/374, dated 13.02.2018.
7. In terms of the aforesaid communication, the Commissioner, Assam State Housing Board, vide letter No. ASHB/WA/141/2017/10/560 dated 10.04.2018, informed the petitioner that an amount of Rs. 1,24,07,000.00 had been released and that the same would be disbursed to the petitioner after verification and collection of geo-tagging data and photographs for each and every Rainwater Harvesting System. However, despite several representations submitted by the petitioner seeking release of the said amount, the same was not forthcoming. Consequently, the petitioner has approached this Court by filing the present writ petition. It is further contended that the last representation in this regard was submitted on 09.05.2018 by the petitioner for release of the due amount.
8. Ms. Hazarika, learned Senior Counsel appearing for the petitioner, submits that during the pendency of the instant writ petition, an amount of Rs. 1,05,62,394.00 has been released to the petitioner. However, the respondent Board, i.e., th
