Case title:
M/s Pratap Industries Products Vs. M/s Hindustan Construction Company Ltd.
Date of Order:
26th June, 2023
Bench:
Hon'ble Ms. Justice Jyotsna Rewal Dua
Parties:
Petitioner: M/s Pratap Industries Products
Respondent: M/s Hindustan Construction Company Ltd.
SUBJECT
This petition is filed by the petitioner in order to challenge the order passed by the learned District Judge and the disposal of the application under Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006.
IMPORTANT PROVISIONS
The Code of Civil Procedure, 1908
- Section 151
The Arbitration and Conciliation Act, 1996
- Section 34
The Micro, Small and Medium Enterprises Development Act, 2006
- Section 19
BRIEF FACTS
- In this case, the petitioner received an arbitration award; the respondent then filed objections in accordance with Section 34 of the 1996 Arbitration and Conciliation Act. The respondent applied under Section 19 of the Act in addition to the objections, asking for a delay in the execution or implementation of the decision. According to the respondent, 75% of the money awarded had been deposited in accordance with Section 19.
- Given that the respondent had already paid in 75% of the award sum, the learned District Judge allowed the application and postponed the award's implementation. The petitioner argued that the respondent's deposit did not meet Section 19's requirements.
ISSUES RAISED
- Whether the order passed by the learned District Judge and the disposal of the application under Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006 is valid or not?
- Whether the deposit made by the respondent before the learned District Judge and was according to the Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006?
ARGUMENTS ADVANCED BY THE APPELLANT
- The Learned Counsel on the behalf of the petitioner mentioned that, they had told the learned District Judge that the deposit made by the respondent did not comply with Section 19 of the Act's provisions.
- The Learned Counsel further claims that, the District Judge erred in assuming that the deposit made by the respondent was indeed 75% of the awarded sum without determining whether it complied with Section 19 requirements.
ARGUMENTS ADVANCED BY THE RESPONDENT
- The Learned Counsel on the behalf of the respondent mentioned that, they submitted the application in accordance with Section 19 of the Micro, Small and Medium Enterprises Development Act of 2006 (MSMED Act) as read with Section 151 of the Code of Civil Procedure. This application was made in order to request a delay in the implementation or execution of the award that was made on October 30, 2021. In accordance with Section 19 of the MSMED Act, the respondent claimed that they had already deposited 75% of the total amount allocated.
- The Learned Counsel Further argued that, they had fulfilled the requirements of Section 19 of the MSMED Act by making the 75% deposits and were thus entitled to the stay of the award's execution.
JUDGEMENT ANALYSIS
- The High Court held that, the pre-deposit of 75% of the granted money under Section 19 of the Act is a condition that must be met. The High Court explained that while the requirement of a pre-deposit is mandatory, the court may allow it to be made in installments if undue hardship is shown in the instant case
- The High Court overturned the impugned ruling and instructed the learned District Judge to re-evaluate the respondent's application in conformity with the law after taking into account the factual dispute regarding the sufficiency of the respondent's deposit. Therefore, the respondent was restrained from implementing the award before a new judgement was rendered.
- Overall, the High Court's decision was based on how Section 19 of the Act should be interpreted as well as the pre-deposit requirement. It also gave the lower court the go-ahead to re-evaluate the application in light of the factual controversy surrounding the deposited amount and the present petition stands disposed of.
CONCLUSION
In conclusion, the High Court of Himachal Pradesh determined that the pre-deposit requirement under Section 19 of the MSMED Act is a need for 75% of the awarded amount. The district judge was given the instructions to reassess the respondent's application after the court reversed the earlier judgement. The award's execution has been stopped until the outcome of the application.
