Big setback for APTRANSCO against an MSME unit, May lose 70 cr due to non-payment of 2001 Contract

HYDERABAD, India - Aug. 23, 2018 - PRLog -- This seems a big loss and failure of Transmission Corporation of Andhra Pradesh Ltd. and the PSU is on the verge of losing whole lot of Rs. 70 crore towards a MSME unit - Equipment Conductors & Cables Ltd. due to delay payment of a contract that took place in 1998 for supply of 6400 km All Alloy Aluminum Conductor to APTRANSCO for which the APTRANSCO delayed the payments for more than years. The original claimed interest amount on 30^th June 2001 was Rs. 1,11,13,301/- and Rs. 40,25,648/-. Even after completion of work and passing of due payment date, the supplier never received due payments and after multiple follow up, approached legal procedure to claim their dues.

The Interest on Delayed Payments to Small Scale and Ancillary Undertaking Act, 1993 (Interest Act, 1993) was constituted by the Parliament to protect the small and units and ensure timely payments of their dues by the mid and large scale companies who habitually delayed the payments causing grave damages to the cash flows and financial stability of the MSME sector. This act was further repealed by the Micro Small and Medium Enterprise Development Act, 2006. (MSMED Act, 2006). This is of particular significance today due to the thrust of the Government towards "Ease of Doing Business", "Make in India" and "Start-up India" initiatives are catapulted and complimented by such laws.

The matter first came in notice around June 2001 when ECCL, registered office- 605, Eros Apartment, Nehru Place, dragged APTRANSCO, Hyderabad, before Haryana Micro and Small Enterprises Facilitation Council, Chandigarh. That after a delay of ten years, on 26.06.2010,  the members of the council favoured ECCL against APTRANSCO under 'The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertaking Act 1993' (Act 32 of 1993). The council supported the provision of interest on delayed payment and awarded decision to pay complete amount with compounding interest till the date of realization as per the provisions of the law.

The APTRANSCO challenged the Award in the District Court in 2010. Yet again, after much delay, on April 2018, the case was finally decided by the "Additional District Judge of Chandigarh" where it faced dismissal and the court maintained the order in favor of ECCL. APTRANSCO again challenged the order in front of "Punjab and Haryana High Court". The case was again dismissed and maintained the order in favor of ECCL and then again APTRANSCO challenged the order in Supreme Court which also met with the same fate and dismissed their appeal in June 2018.

Even after being dismissed in Supreme Court, APTRANSCO yet again filed misc application to further stall the MSME Unit in realizing its claim in apex court, but here also the decree came in favor of ECCL awarded by Arbitral. Hence now till date after years of delay in contesting and surmounting the  compounding interest on the award amount, total amount due touched Rs. 69,16,14,413/- up to June 30, 2018. This shows sheer negligence of PSU in terms of payment and now they are under contempt the court's order.

Quote of official Spokesperson of ECCL on the request of anonymity, " This bears significance to the fact that with a view to push the "Ease of Doing Business" initiative, even the courts are not interfering with the Arbitral Awards, but the government companies itself, being the biggest litigant, shows no signs of adhering to the Orders of the Court. The Public Sector Companies have to be conscious about the fact that strict adherence to such laws promoting and safeguarding the micro and small scale sector is the primary requirement, in the absence of which the entire sector will perish."