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2017 DIGILAW 50 (UTT)

Madhyanchal Vidyut Vitran Nigam Ltd. v. Union of India

2017-01-12

RAJIV SHARMA

body2017
ORDER : Rajiv Sharma, J. 1. This writ petition has been instituted by the petitioner seeking the following reliefs:-- A. "Issue appropriate writ/order/direction declaring Section 19 of the Micro, Small & Medium Enterprise Development Act, 2006 to be unconstitutional. B. Issue appropriate writ/order/direction in the nature of certiorari setting aside the order dated 12.01.2015 passed by the District Court, Dehradun to the extent that it dismissed the objection filed by the petitioner due to non-depositing of the 75% of the awarded amount as per Section 19 of the MSMED Act, 2006. C. Issue appropriate writ/order/direction directing that the Micro & Small Facilitation Council has no jurisdiction under Chapter V of the MSMED Act to deal with the case of "Medium Enterprise" and particularly M/s. Mahavir Transmission Udyog Pvt. Ltd." Petitioner has also moved the stay application No. 7069 of 2015 seeking a direction to the District Judge, Dehradun to hear the objections filed under Section 34 of the Arbitration & Conciliation Act, 1996 (here in after to be referred as 'the Act') against the award dated 13.12.2013, without insisting for depositing 75% of the awarded amount in cash and to take the security instead. 2. The Uttarakhand State Micro & Small Enterprise Facilitation Council (in short 'Facilitation Council') has made the Award on 13.12.2013. The Facilitation Council has awarded the amount of Rs. 1,18,03,669/-. 3. Petitioners filed their objections against the award under Section 34 of the Act. Learned District Judge, Dehradun on 12.1.2015 passed the order in Arbitration Case No. 40 of 2014. Since the petitioners have not deposited 75% of the award amount i.e. Rs. 1,18,03,669/- and learned counsel appearing on behalf of the petitioners was also not present, learned District Judge, Dehradun dismissed the arbitration case. Thereafter, Recall Application bearing No. 138 of 2015 was filed before the District Judge. Learned District Judge again ordered the petitioners to deposit 75% of the awarded amount on 8.5.2015. 4. Mr. Sharad Sharma, learned Senior Advocate, appearing for the petitioners, has vehemently argued that the petitioner should have been permitted to deposit 75% of the awarded amount by way of security instead of cash. 5. Mr. Learned District Judge again ordered the petitioners to deposit 75% of the awarded amount on 8.5.2015. 4. Mr. Sharad Sharma, learned Senior Advocate, appearing for the petitioners, has vehemently argued that the petitioner should have been permitted to deposit 75% of the awarded amount by way of security instead of cash. 5. Mr. Rajat Mittal, Advocate, appearing for respondent No. 3, has argued that in view of Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter to be referred as 'the Act of 2006)), 75 percent of the amount of the decree/award was required to be deposited by the petitioners in cash. 6. Section 19 of the Act of 2006 reads as under:-- "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 per cent 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." 7. According to the plain language of Section 19, 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, can 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, the other order in the manner directed by the Court. The expression used in Section 19 is 'shall'. It is mandatory. The provisions of the Act are required to be read as it is, more particularly, when there is no ambiguity in the language of that section. The expression used in Section 19 is 'shall'. It is mandatory. The provisions of the Act are required to be read as it is, more particularly, when there is no ambiguity in the language of that section. The purpose of deposit of 75 per cent of the amount in terms of the award apparently is to discourage the filing of frivolous appeals. 8. The prayer made in the petition is that the petitioners may be permitted to deposit 75 per cent of the awarded amount in terms of security instead of cash. This question is now no more res integra in view of the law laid down by Their Lordships in (2012) 6 SCC 345 in the case of 'Goodyear India Ltd. v. Norton Intech Rubbers Pvt. Ltd. & another'. Their Lordships have categorically held that the Court has no discretion to either waive or reduce the amount of 75 per cent, of award as a pre-deposit for filing of applicant/appeal. The Court can, however, permit the parties to allow pre-deposit to be made in installments. The intention of Mr. Ramchandran, learned advocate appearing before the Hon. Supreme Court, was that the expression 'in the manner directed by such court', could also be understood to include securing of the amount by way of bank guarantee or otherwise, having regard to the onerous and stringent conditions involved. The Hon. Supreme Court has upheld the judgment rendered by the Division Bench of Kerala High Court, whereby the petitioners, therein, were permitted to deposit the amount amounting to 75 per cent of the award within extended period of six weeks instead of security. Their Lordships have held that in fact, the discretion given to the Court to allow the pre-deposit to be made, if felt necessary, in installments. In other words, the contention of Mr. Ramchandran that, the amount could be deposited, by way of bank guarantee or otherwise, has been rejected by Their Lordships. Their Lordships have held as under:-- "4. Their Lordships have held that in fact, the discretion given to the Court to allow the pre-deposit to be made, if felt necessary, in installments. In other words, the contention of Mr. Ramchandran that, the amount could be deposited, by way of bank guarantee or otherwise, has been rejected by Their Lordships. Their Lordships have held as under:-- "4. As will be noticed, Section 19 provides that no application for setting aside any decree, award or other order made either by the Council, appointed under the 2006 Act, shall be entertained by any court unless the appellant (not being a supplier) deposits with the Court seventy-five per cent 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. 5. The learned single Judge having considered the submissions made on the said provision came to the conclusion that on a plain reading of the section, the Court had no discretion to either waive or reduce the amount of seventy-five per cent, of the award as a pre-deposit for filing of the appeal and, accordingly, dismissed the original petition, with leave to the petitioner to deposit an amount, amounting to seventy-five per cent, of the award, within an extended period of six weeks. The Division Bench before whom the aforesaid appeal was preferred concurred with the judgment of the learned single Judge and while dismissing the appeal, extended the period for deposit of the aforesaid amount by a further period of six weeks. 7. In the two special leave petitions, which have been filed by M/s. Goodyear India Ltd., once again the main thrust of the submissions made by Mr. M.G. Ramachandran, learned counsel appearing for the petitioner, was with regard to interpretation of the provisions of Section 19 of the 2006 Act. According to him, one of the questions of law which arise for consideration in these proceedings is: whether the requirement under Section 19 of the 2006 Act, regarding deposit of seventy-five per cent of the amount in terms of the award made under the said Act, is absolute, perverse, capricious or arbitrary in nature. Coupled with the said question, another submission was made by Mr. Ramachandran as to the interpretation of the expression "in the manner directed by such court", which appears at the end of Section 19, just before the proviso. 8. Mr. Coupled with the said question, another submission was made by Mr. Ramachandran as to the interpretation of the expression "in the manner directed by such court", which appears at the end of Section 19, just before the proviso. 8. Mr. Ramachandran sought to interpret Section 19 within the meaning of such expression by submitting that the said expression provided the court with the discretion to alter the provisions relating to the deposit of seventy-five per cent, amount as pre-deposit, for the appeal to be taken up for consideration. According to Mr. Ramachandran, the said expression could also be understood to include securing of the amount by way of bank guarantee or otherwise, having regard to the onerous and stringent conditions involved. 11. Having considered the submissions made, both on behalf of the petitioner and on behalf of the respondents, we do not see any reason to interfere with the views expressed, both by the learned single Judge, as also the Division Bench with regard to Section 19 of the 2006 Act. It may not be out of place to mention that the provisions of Section 19 of the 2006 Act, had been challenged before the Kerala High Court in Kerala SRTC v. Union of India, where the same submissions were negated and, subsequently, the matter also came up to this Court, when the special leave petitions were dismissed, with leave to make the pre-deposit in the cases involved, within an extended period of ten weeks. We may also indicate that the expression "in the manner directed by such court" would, in our view, indicate the discretion given to the court to allow the pre-deposit to be made, if felt necessary, in instalments." 9. In view of the definite law laid down by Their Lordships of Hon. Supreme Court, the petitioners are required to deposit 75 percent of the awarded amount, in cash, before the District Judge, Dehradun. There is no illegality in the orders dated 12.1.2015 and 8.5.2015 passed by learned District Judge, Dehradun. Accordingly, there is no merit in this stay application (CLMA 7069/2015). The same is hereby dismissed. Petition Dismissed.