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2023 DIGILAW 337 (CHH)

South Eastern Coalfields Ltd. v. M. R. Beltings

2023-07-21

NARENDRA KUMAR VYAS

body2023
ORDER : (Narendra Kumar Vyas, J.) The petitioner in his usual course of business has issued supply order to respondent No. 1 for supply of 5400 mtrs. of 1000 mm FR grade rubber conveyor belt on 18.05.2014. As per supply order, the respondent No. 1 was to complete the supply of entire material up to 02.08.2014 but the firm after expiration of time schedule given for each of supply, has supplied the material on 18.08.2014 and 14.09.2014 to the tune of 2443 mtrs. and balance quantity was required to be supplied to the tune of 2957 mtrs. 2. Learned counsel for the petitioner would submit that the respondent was requested to supply the material within stipulated time period but the firm failed to supply the balance quantity of 2957 rubber belting despite the extension of the said delivery period but no supply was made. Thereafter, the respondent No. 1 has made an application before respondent No. 2-Haryana Micro & Small Enterprises Facilitation Council claiming the dues on 05.03.215 which was registered as Claim Application No. 48/2015. The petitioner raised objection and detailed reply was also filed and vide order dated 04.04.2016, respondent No. 2 appointed Shri C.B. Jagla, Retired District Judge, Gurgaon as Arbitrator. The petitioner has challenged these proceedings before this Court by filing present writ petition and has prayed for following reliefs:- i) This Hon'ble Court be pleased to set aside proceeding initiated by the Respondent No.2 under the provision of Micro, Small & Medium Enterprises Development Act, 2006 and the respondents be restrained to exercise the jurisdiction under the Act of 2006 on the ground that it lacks jurisdiction to take cognizance of the cause of action which was never accrued within the local limits of the respondent No.2 and also set aside the memo dated 4-4-2016 by which the respondent No.2 has appointed Shri C.B. Jaglian, District & Sessions Judge (Retired), Gurgaon, as an Arbitrator, because the appointment of Arbitrator is also without jurisdiction. ii) Any other relief as deemed fir by this Hon'ble Court. iii) Cost of the petition may also be granted to the petitioner. 3. Learned counsel for the respondents have raised objection about maintainability of the writ petition mainly contending that the Facilitation Council has already passed the award on 24.08.2016 directing the petitioner to pay the amount as detailed in paragraph 17 of the award which reads as under. "17. iii) Cost of the petition may also be granted to the petitioner. 3. Learned counsel for the respondents have raised objection about maintainability of the writ petition mainly contending that the Facilitation Council has already passed the award on 24.08.2016 directing the petitioner to pay the amount as detailed in paragraph 17 of the award which reads as under. "17. So the total amount payable by the respondent to the claimant comes to Rs.14,13,557/- (2,22,307+11,75,250+ 12500+3500). The respondent is liable to pay interest on an amount of Rs.11,75,250/- with effect from 10-03-2016, and interest on an amount of Rs.2,22,307/- with effect from 05-01-2015 at the rate provided in Section 16 of the Act, of 2006". 4. Therefore, the writ petition is not maintainable. Learned counsel for the respondent would submit that the Sole Arbitrator was appointed by the Haryana Micro And Small Enterprises Facilitation Council, therefore, the petitioner has alternative and efficacious remedy under the Act to file an appeal before the District Court. He would further submit that as per section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (for short "the Act, 2006"), reference to the facilitation council is to be made . Section 19 of the Act, 2006 provides that the application for setting aside decreeing award or order made either by the council itself of by an institution or centre providing alternate dispute resolution services to which a reference is made to the council, shall be entertained by any court unless the appellant (not being a supplier) has deposited with it 75% of amount in terms of decree, award or as the case may be, the other orders in the manner directed by such court. Therefore, he would submit that since by impugned award the petitioner was directed to pay Rs. 14,13,557/- and the said amount has not deposited by the petitioner, therefore, the writ petition is not maintainable. 5. I have have heard learned counsel for the parties and perused the documents placed on record with utmost satisfaction. 6. Learned Senior counsel for the petitioner would submit that since the supply were made at Bilaspur therefore, the facilitation council Haryana has no jurisdiction as nonest order has been passed by respondent No. 2, therefore, this Court can entertain the writ petition even without depositing 75% of the amount as awarded by the Facilitation Council. 6. Learned Senior counsel for the petitioner would submit that since the supply were made at Bilaspur therefore, the facilitation council Haryana has no jurisdiction as nonest order has been passed by respondent No. 2, therefore, this Court can entertain the writ petition even without depositing 75% of the amount as awarded by the Facilitation Council. He would further submit that the award has been passed after filing of the writ petition as such there was no occasion for the petitioner to challenge the said award, as such, it was not incumbent upon them to deposit the amount. 7. Considering the rival submission of both the parties, the point emerged for determination for this Court whether in absence of depositing the 75% award amount, the writ petition is maintainable or not. For better understanding, the issue raised in this petition, it is expedient for this Court to extract Section 19 of the Act, 2006 which 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." 8. From bare perusal of the records of the case, it is quite vivid that the writ petition was filed on 12.07.2016 and the award was passed on 24.08.2016 at that time, no award was passed but after filing of the petition and there was no interim protection in favour of the petitioner restraining respondent No. 2 to proceed further in the matte, award was passed by respondent No. 2-Council on 24.08.2016 as such, after passing of the award, it is mandatory on the part of the petitioner to deposit 75% amount as awarded by the Arbitrator on 24.08.2016. Thus, the writ petition is not maintainable. The provisions of Section 19 of the Act, 2006 has come up for consideration before Hon'ble the Supreme Court in case of Tirupati Steels v. Shubh Industrial Component & another reported in (2022) 7 SCC 429 . The Hon'ble Supreme Court in paragraph 8, 9, 10 & 13 has held as under:- "8. The question which is posed for consideration of this Court is, whether, the pre-deposit of 75% of the awarded amount as per section 19 of the MSMED Act, 2006, while challenge to the award under section 34 of the Arbitration Act, 1996, is made mandatory or not, is now no longer res integra in view of the decision of this Court in the case of Gujarat State Disaster Management Authority v. Aska Equipments Limited; (2022) 1 SCC 61 . While interpreting section 19 of the MSMED Act, 2006 and after taking into consideration the earlier decision of this Court in the case of Goodyear (India) Ltd. v. Norton Intech Rubbers (P) Ltd.; (2012) 6 SCC 345 , it is observed and held that the requirement of deposit of 75% of the amount in terms of the award as a predeposit as per section 19 of the MSMED Act, is mandatory. It is also observed that however, at the same time, considering the hardship which may be projected before the appellate court and if the appellate court is satisfied that there shall be undue hardship caused to the appellant/applicant to deposit 75% of the awarded amount as a predeposit at a time, the court may allow the predeposit to be made in instalments. Therefore, it is specifically observed and held that pre deposit of 75% of the awarded amount under section 19 of the MSMED Act, 2006 is a mandatory requirement. 9. In para 13 of the aforesaid judgment, it is observed and held as under: "13. On a plain/fair reading of Section 19 of the MSME Act, 2006, reproduced hereinabove, at the time/before entertaining the application for setting aside the award made under section 34 of the Arbitration and Conciliation Act, the appellant applicant has to deposit 75% of the amount in terms of the award as a predeposit. The requirement of deposit of 75% of the amount in terms of the award as a predeposit is mandatory. The requirement of deposit of 75% of the amount in terms of the award as a predeposit is mandatory. However, at the same time, considering the hardship which may be projected before the appellate court and if the appellate court is satisfied that there shall be undue hardship caused to the appellant applicant to deposit 75% of the awarded amount as a predeposit at a time, the court may allow the predeposit to be made in instalments." 10. In view of the aforesaid decision of this Court, the impugned order passed by the High Court permitting the proceedings under section 34 of the Arbitration Act, 1996 without insistence for making predeposit of 75% of the awarded amount is unsustainable and the same deserves to be quashed and set aside. 13. It is observed and held that unless and until respondent No. 1 deposits the 75% of the awarded amount, its application under section 34 of the Arbitration Act, 1996, challenging the award shall not be entertained and decided on merits and, in that case, the execution proceedings may continue. The present appeal is accordingly allowed. There shall be no order as to costs." 9. In view of the above stated legal position and law laid down by Hon'ble the Supreme Court and also considering the fact that after filing of present writ petition, the award has been passed on 24.08.2016, therefore, liberty is granted to the petitioner to challenge the said award after complying with the requirement of Section 19 of the Act, 2006 by depositing 75% of the amount as awarded by the Arbitrator appointed by the Facilitation Council within 30 days from the date of receipt of copy of this order. In the eventuality of taking recourse under Section 19 of the Act, 2006, the Court who has jurisdiction to decide the same shall not insist for delay as the writ petition was filed on 12.07.2016 before this Court. 10. With the aforesaid directions, the writ petition is disposed of.