Gauhati High Court
Charu Technology (Pvt. ) Ltd vs The State Of Assam And 3 Ors on 27 April, 2026
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GAHC010121262018
2019:GAU-AS:20883
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C)/3655/2018
CHARU TECHNOLOGY (PVT. ) LTD.
A PRIVATE LTD. COMPANY REGISTERED UNDER THE COMPANIES ACT,
HAVING ITS REGISTERED OFFICE AT THAKURIA NOVELTY, FOREST GATE,
MOTHER TERESA ROAD,
NARENGI, GUWAHATI - 781026.
VERSUS
THE STATE OF ASSAM AND 3 ORS.
REP. BY THE SECRETARY TO THE GOVT. OF ASSAM,
PUBLIC HEALTH ENGINEERING DEPARTMENT,
DISPUR, GUWAHATI -781003.
2:ASSAM STATE HOUSING BOARD
REP. BY ITS CHAIRMAN
R.G. BARUAH ROAD
GUWAHATI- 781005.
3:THE COMMISSIONER
ASSAM STATE HOUSING BOARD
R.G. BARUAH ROAD
GUWAHATI- 781005.
4:THE CHIEF ENGINEER
PUBLIC HEALTH ENGINEERING DEPARTMENT
GOVT.OF ASSAM
HENGRABARI
GUWAHATI - 781003
Advocate for the Petitioner : MS M HAZARIKA, MS KEWI
Advocate for the Respondent : SC, P H E, SC, A S H B
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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
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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
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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., the Assam State Housing Board, has illegally deducted an amount of
approximately Rs. 32,00,000.00 from the petitioner’s bill in the name of
statutory deductions. The learned Senior Counsel further submits that, in terms
of Sections 15, 16, and 17 of the MSMED Act, the petitioner is entitled to
interest on delayed payment by the respondent Board, however, the same has
not been taken into account. It is contended that the statutory deduction cannot
be to the extent of Rs. 32,00,000.00 and the non-payment of interest by the
respondent Board is contrary to the settled position of law.
9. Ms. Hazarika, learned Senior Counsel further submits that, in no case, shall
the period agreed upon between the supplier and the buyer in writing exceed
45 days from the date of acceptance or the deemed date of acceptance for such
payments. Consequently, any delay beyond 45 days is liable to be compensated
by payment of interest for each day of such delay. In this connection, the
learned Senior counsel has referred to the Common Judgment and Order dated
13.11.2025 passed in Garg Poly Industries and another vs. State of
Assam and others [WP(C)/4631/2023], SRK Metals and Plastics Private
Limited vs. State of Assam and others [WP(C)/5273/2023] and
Kamakhya Poly Udyog and another vs. State of Assam and others
[WP(C)/5966/2023], wherein the Coordinate Bench of this Court, while
discussing the Sections 15, 16 and 17 of the MSMED Act, has laid down the
procedure to be followed in the event of delay in payment of admitted bill
amount.
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10. Ms. Hazarika, learned Senior Counsel appearing for the petitioner, submits
that in terms of the aforesaid Common Judgment and Order dated 13.11.2025,
a direction can be issued to the respondent Board to calculate the amount due
to the petitioner by taking into account the procedure required to be followed
for inclusion of interest that may be payable to the petitioner on account of
delay in payment of the amount due for completion of the work under the work
orders dated 04.03.2016 and 08.08.2016.
11. Upon hearing the learned counsel for the parties, this Court finds it
appropriate to extract hereinbelow the relevant paragraphs of the aforesaid
Common Judgment and Order dated 13.11.2025.
“79. Having opined so it is also very pertinent to take note of Sections 15
and 16 of the Act of 2006, which are reproduced hereinunder:
“15.Liability of buyer to make payment.–Where any supplier supplies any goods or renders any
services to any buyer, the buyer shall make payment therefor on or before the date agreed upon
between him and the supplier in writing or, where there is no agreement in this behalf, before the
appointed day:
Provided that in no case the period agreed upon between the supplier and the buyer in writing
shall exceed forty-five days from the day of acceptance or the day of deemed acceptance.
16. Date from which and rate at which interest is payable.–Where any buyer fails to make
payment of the amount to the supplier, as required under section 15, the buyer shall, notwithstanding
anything contained in any agreement between the buyer and the supplier or in any law for the time
being in force, be liable to pay compound interest with monthly rests to the supplier on that amount
from the appointed day or, as the case may be, from the date immediately following the date agreed
upon, at three times of the bank rate notified by the Reserve Bank.”
80. A perusal of the above-quoted Section 15 of the Act of 2006 statutorily
imposes an obligation upon the buyer to make payment on or before the
date agreed upon between the buyer and the supplier in writing or where
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there is no agreement in that behalf before the appointed day. The term
„appointed day‟ has been defined in Section 2(b) of the Act of 2006,
meaning the day following immediately after the expiry of the period of
15(fifteen) days from the date of acceptance or the day of deemed
acceptance of any goods or any services by a buyer from a supplier.
Section 2(b) of the Act of 2006 being relevant is reproduced hereinunder:
“2(b). “appointed day” means the day following immediately after the expiry of the period of fifteen
days from the day of acceptance or the day of deemed acceptance of any goods or any services by a
buyer from a supplier”.
81. The proviso to Section 15 further stipulates that under no
circumstances, the period agreed upon between the supplier and the
buyer in writing shall exceed 45 (forty-five) days from the date of
acceptance or the day of deemed acceptance. The proviso is relevant
taking into account that irrespective of any agreement/contract between
the parties, the statutory injunction holds the field and thereby confines
the period not to exceed 45(forty-five) days from the date of acceptance or
the day of deemed acceptance.
82. Now let this Court take note of Section 16. There are two aspects of
interest in Section 16: first, that it is to be calculated from the appointed
day and secondly, the liability to pay compound interest with monthly
rests. In this regard, this Court finds it very relevant to take note of a
judgment of the learned Calcutta High Court in the case of V.K. Patel and
O Vs. Simplex Infrastructure Ltd. reported in 2024 SCC Online Cal.6617,
wherein the learned Calcutta High Court explained the very concept as to
how the calculation is to be made in terms of Section 16. Paragraph No.
20 to Paragraph No. 31 of the said judgment being relevant are
reproduced hereinunder:
“20. To ascertain such issue, the very concept of compound interest versus simple interest is to be
explored, since compound interest is the chosen mode in Section 16. Importantly, it has also been
stipulated in Section 16 of the MSME Act that the compound interest shall be with “monthly rests”.
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Thus, the interest is to be compounded at the end of each month after the appointed day.
21. The very concept of compound interest is variable progression, as opposed to simple interest
which, by its very definition, always has to be at a fixed rate as on the date of commencement of
calculation. In case of simple interest, the interest is calculated at the fixed rate which prevailed at the
juncture of commencement of calculations till the date of payment, on the principal.
22. As opposed thereto, the premise of compound interest is staggered progression in the sense
that the interest has to be calculated at defined intervals, in the present case, at monthly intervals,
which are known as “rests”. Hence, for example, if the principal is Rs. 100/- and the initial rate of
interest on the appointed day is 10%, after the end of the first month, the total amount would be Rs.
100 + 10% thereof that is Rs. 10/-, which equals Rs. 110/-. 23. The said sum of Rs. 110/-, which is the
initial principal plus interest for the first month, forms the basis of calculation or principal for the
second month. Thus, calculated, the principal for the second month would be Rs. 110/-, which would
be the base amount on which further interest would be calculated.
24. Hence, although the commencement of calculation is tied to the appointed day, the point of
incidence of the bank rates for calculation of interest becomes the end point of each month, which are
also known as monthly “rests” as stipulated in Section 16 itself. Hence, by its very nature, compound
interest has to be imposed at staggered intervals.
25. Since the point of incidence of the rate of interest is the rate prevailing at the end of each
month, which is the monthly rest, the rate prevailing on such date must be the premise of calculation.
For instance, if the initial rate of interest prevailing on the appointed day was “x%”, the calculation
for the first month would be equal to Principal (P) + “x% of principal”. Again, at the beginning of the
second month the rate of interest becomes “y”, the second month’s calculation would be equal to (P +
x% of P) + y% of (P+ x% of P), which would again form the base amount for calculation of the third
month. The only difference between a normal calculation of compound interest and that under Section
16 is that the rate will be three times the bank rate as notified by the RBI in case of the latter.
26. Section 16 mentions the appointed day merely as the starting point of calculation but does not
provide that the rate of interest should also be inextricably linked to the said date; rather, the
language used is “three times the bank rate notified by the Reserve Bank”.
27. The argument of the petitioner, that if the rates are variable, the appointed day has to be
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calculated at the end of each month, is not acceptable, since there is no such possibility if the variable
rates are taken into consideration. The appointed day merely provides the starting point of
calculation. Thereafter, the calculation will progress at compound rate with monthly rests, meaning
thereby that the rate prevailing at each monthly rest should be taken into account for incidence of
interest for the said month. In Section 16, the term “rests” has been interchangeably used with
“intervals”.
28. The very character of compound interest makes it fluid and variable. If the rate of calculation
of interest is fixed at the date of inception of calculation, the same would be a counter-intuitive,
artificial and arbitrary superimposition on the normal mode of calculation as given in the statute,
since Section 16 provides that the compound interest will be calculated with „monthly rests”, at which
points the prevailing bank rate of interest is to be taken into account.
29. Just as in the case of the simple interest if suddenly varied rates are imposed it would be
arbitrary since the mode of calculation is continuous, similarly, in case of compound interest, which is
to be calculated on a staggered basis, fixation of the rate prevailing at the inception would also be
arbitrary.
30. The very premise of compound interest with monthly rests is that the calculation of further
interest is made at the end of every month at the rates prevailing then. In a Section 16 scenario, the
rate at which interest is to be imposed at each monthly rest is three times the bank rate notified by the
RBI prevalent at that juncture.
31. Hence, by its very definition, compound interest at monthly rest is variable and cannot be
static, frozen at the appointed day.”
83. It is the opinion of this Court that the interpretations so given to
Section 16 of the Act of 2006 by the learned Calcutta High Court as
quoted hereinabove have lucidly laid down the principles for calculation of
the interest and this Court duly agrees to the same.
84. The above analysis shows that the petitioners herein in the batch of
three writ petitions would be entitled to the benefits under Sections 15, 16
and 17 of the Act of 2006. Be that as it may, what would be the interest
component on the admitted dues has to be worked out as per the
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principles laid down as discussed above. The materials before this Court
only refers to the work orders and the date on which these work orders
were issued. Questions of facts arise pertaining to as to when the
supplies were made; when the supplies were accepted; whether it was
accepted or it was a deemed acceptance; what is the rate declared by the
RBI during the relevant period, more particularly, taking into account that
the interest payable is to be compounded with monthly rests; cannot be
decided by this Court. It would require exercise to be carried out by the
petitioners and looked into by the respondent PHED.
12. In the instant case, it is observed that there is no dispute with regard to
the total amount, except for the allegation of the petitioner that a statutory
amount has been deducted by the respondent Board without taking into
account various relevant factors, including the interest component that may be
applicable in the facts of the present case. Accordingly, in the considered
opinion of this Court, a direction can be issued to the respondents to consider
the case of the petitioner in terms of the aforesaid Common Judgment and
Order dated 13.11.2025.
13. Therefore, the petitioner is directed to submit a detailed representation,
along with a proper calculation of the amount claimed, taking into account the
delayed payment in terms of the aforesaid Common Judgment and Order dated
13.11.2025, before the Commissioner, Assam State Housing Board (respondent
No. 3) with a copy to the Chief Engineer, Public Health Engineering Department,
Government of Assam (respondent No. 4) along with a copy of this order.
14. Upon receipt of such representation, the respondent No. 3 shall, after
affording an opportunity of hearing to the petitioner, dispose of the same within
a period of 2 (two) months from the date of receipt thereof. Upon such
verification, the due amount, if any, shall be released in favour of the petitioner
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in accordance with law.
15. In terms of the aforesaid direction the instant writ petition stands disposed
of.
JUDGE
Comparing Assistant