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2011 DIGILAW 2009 (MAD)

First v. First

2011-04-07

S.RAJESWARAN

body2011
Judgment :- 1. This Original Petition has been filed to set aside the purported award dated 31.12.2009 passed by the second respondent. 2. The maintainability of this O.P. is being considered as objected to by the first respondent. 3. Heard the learned senior counsel Mr.Silambanan for the petitioner and G.S.Rajasekaran, the Managing Director of the first respondent who appeared as Party in Person. 4. A preliminary objection was raised by the first respondent that the O.P. itself is not maintainable as the petitioner company has not complied with Section 19 of the Micro Small and Medium Enterprises Development Act, 2006 (Act 27 of 2006), hereinafter referred to as Act 27 of 2006. 5. According to the party in person representing the first respondent, under Section 19 of the Act 27 of 2006, no application for setting aside the award made by the MSC Facilitation Council, the second respondent herein shall be entertained by any court unless the petitioner has depositted with it 75% of the amount in terms of the Award. Since this provision has not been complied with, the party in person contends that the O.P. is not maintainble and as such, the same is to be dismissed. 6. Per contra, the learned senior counsel appearing for the petitioner submits that the provision has been already complied with by depositing a sum of Rs.60,08,622/- being the 75% of the award amount of Rs.80,11,495/-. Therefore, the learned senior counsel submits that as there was proper compliance with the provision of the Act, the O.P. is very much maintainable and the same is to be argued on merits. However, the party in person representing the first respondent submits that on 31.12.2009, the second respondent passed an award, according to which, the petitioner is directed to pay the principal amount of Rs.80,11,495/- with interest at the rate prescribed in The Interest on Delayed Payments To Small and Ancillary Industrial Undertaking Act, 1993 to till the date of coming into force of Act 27, 2006 and further it is liable to pay compound interest with monthly rests. The petitioner herein ought to have paid on that account at the three times of the Bank's rate notified by the Reserve Bank of India from the date of coming into effect of the Act 27, 2006 i.e., 02.10.2006. The petitioner herein ought to have paid on that account at the three times of the Bank's rate notified by the Reserve Bank of India from the date of coming into effect of the Act 27, 2006 i.e., 02.10.2006. Therefore, the party in person argues that it is not sufficient if 75% of the principal amount alone is deposited and unless 75% of the interest awarded is also deposited, then, there is no proper and sufficient compliance of Section 19 of the Act 27 of 2006 and therefore, the O.P. cannot be entertained at all by this Court. 7. In reply, the learned senior counsel for the petitioner submits that the interest granted by the Council is arbitrary and in fact, the first part of the interest deals with Act 1993 which has already been repealed. He further contends that elaborate arguments were advanced on 09.12.2010 with regard to the interest portion and the admissibility of the O.P. and after hearing elaborate arguments only, this Court admitted the O.P. on 09.12.2010. Therefore, it is not open to the first respondent herein to agitate the very same preliminary objection once again. Hence, the learned senior counsel prayed for overruling the preliminary objections raised by the first respondent. 8. I have considered the rival submissions carefully. 9. The area of contention is shortened to Section 19 of Act 27 of 2006 which reads as follows: 19. Application for setting aside decree, award or order:- 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 percent of the amount in terms of the decree, award or, as the case may be, the other order in the manner directed by such Court: Provided that pending disposal of the application to set aside the decree, award or order, the Court shall order that such percentage of the amount deposited shall be paid to the supplier, as it considers reasonable under the circumstances of the case, subject to such conditions as it deems necessary to impose. This clause seeks to debar any Court or other authority from entertaining an appeal against any decreee, award or any other order unless the appellant (not being a supplier) has deposited with it seventy-five percent of the amount in terms of the decree, award or other order. (Notes on Clauses) 10. A perusal of the Section will make it very clear that no application for setting aside any award made by the Council shall be entertained by any Court unless the petitioner has deposited the 75% of the amount in terms of the award. Therefore, it is very clear that the deposit of 75% of the awarded amount is a pre-condition for hearing any setting aside petition i.e., to be filed by a petitioner who is aggrieved by the award. In fact, the petitioner herein is aware of the same and that is why they filed an application before this Court praying to waive 75% of the principal deposit amount awarded by the second respondent. When the Registry of this Court questioned the maintainability of the above said application seeking to waive 75% of the pre-deposit amount, the same was posted before this Court for maintainability. This Court on 05.10.2010, after hearing the learned counsel's submissions held that 75% of the award is to be deposited and the same cannot be waived, granted six weeks time for depositing the amount as sought by the learned counsel for the petitioner. This Court further directed the office to number the petition on the petitioner depositing 75% of the award amount. 11. It is not in dispute that the petitioner deposited 75% of the principal amount that is Rs.60,08,622/- within the time stipulated by this Court and only thereafter the O.P. was numbered by this Court. Whether the deposit of Rs.60,08,622/- is sufficient compliance of Section 19 of Act 27 of 2006 or not is the only question that arises for consideration in this matter. 12. According to the learned senior counsel for the petitioner depositing 75% of the principal amount itself is sufficient compliance of Section 19 of the Act 27 of 2006 as the interest awarded is arbitrary and ambiguous. 12. According to the learned senior counsel for the petitioner depositing 75% of the principal amount itself is sufficient compliance of Section 19 of the Act 27 of 2006 as the interest awarded is arbitrary and ambiguous. According to the party in person appearing for the first respondent unless 75% of the interest awarded is also deposited, then, it is not sufficient compliance of Section 19 of the Act 27 of 2006 and therefore, the O.P. is not maintainable. 13. After perusing Section 19 of Act 27 of 2006, I am of the considered view that 75% of the award amount has to be deposited which means 75% of the principal amount as well as 75% of the interest awarded. Therefore, I find force in the arguments advanced by the party in person representing the first respondent that the petitioner has not complied with Section 19 of the Act 27 of 2006 in its entirety. 14. When the second respondent passed the award, the second respondent not only directed the petitioner to pay the principal amount, but also the principal amount with interest. If the interest awarded is arbitrary and contrary to the well established procedure, then it is open to the petitioner to agitate the same also on merits after depositing 75% of the interest awarded. The question of arbitrariness or illegality of the awarded interest will not come at the time of numbering the O.P. as unless 75% of the principal and interest is deposited, then, the O.P. cannot be entertained at all. 15. Therefore, I have no hesitation in holding that the petitioner has not complied with Section 19 of the Act 27 of 2006 in its entirety. Hence an opportunity should be extended to the petitioner to pay 75% of the award of interest also within six weeks from the date of receipt of a copy of this order. Only when the petitioner pays 75% of the interest awarded by the second respondent within the time stipulated above, then, only, the petitioner is entitled to be heard on merits and if the amount is not deposited, it is needless to state here that the O.P. will be dismissed without further reference to this Court. No cost.