Supreme Court

Gujarat State Disaster Management Authority vs. Aska Equipments Limited

MANU/SC/0842/2021

08.10.2021

Commercial

Requirement of deposit of 75% of the awarded amount as a pre- deposit is mandatory

Present appeal is against the impugned judgment and order passed by the High Court, by which the High Court confirmed the order passed by the learned Additional District Judge (Commercial), whereby the appellant herein was directed to deposit 75% of the awarded amount in terms of Section 19 of Micro, Small and Medium Enterprises Development Act, 2006 (‘MSME Act, 2006’).

The parties are governed by the provisions of the MSME Act, 2006. A dispute arose between the parties regarding payment of goods which was taken by the Appellant. The proceedings under Section 18 of the MSME Act, 2006 commenced. The Facilitation Council passed an award in favour of the respondent herein and directed the appellant to pay a sum of Rs. 105,053,387.

The short question posed for the consideration of present Court is, whether in an appeal/application filed under Section 34 of the Arbitration and Conciliation Act, 1996 read with Section 19 of the MSME Act, 2006, the appellate court would have any discretion to deviate from deposit of 75% of the awarded amount as a pre-deposit?

As per Section 19 of the MSME Act, 2006, no application for setting aside any decree, award or other order made either by the Council itself or by any institution or centre providing alternate dispute resolution services to which a reference is made by the Council, shall be entertained by any court unless the Appellant (not being a supplier) has deposited with it seventy-five per cent of the amount in terms of the decree, award or, as the case may be.

In view of the language used in Section 19 of the MSME Act, 2006 and decision in case of Goodyear India Limited v. Norton Intech Rubbers Private Limited and the object and purpose of providing deposit of 75% of the awarded amount as a pre-deposit while preferring the application/appeal for setting aside the award, it has to be held that the requirement of deposit of 75% of the awarded amount as a pre- deposit is mandatory. Therefore, as such, both the High Court as well as the learned Additional District Judge (Commercial), Dehradun were justified in directing the appellant to deposit 75% of the awarded amount as a pre-deposit.

In view of facts and circumstances and that the Petitioner-Authority is a Public Sector Undertaking, in exercise of the discretion vested with the court under Section of the said Act, present Court directs the Petitioner-Authority to deposit Rs.2,50,00,000 before the Appellate Authority within a period of four weeks from today. On such deposit, the District and Sessions Judge, Dehradun, is directed to take up the appeal on file and proceed with the same.

Tags : Pre-deposit Condition Legality

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