Arbitration act 1996
rajasekaran
(Querist) 13 December 2011
This query is : Resolved
For an application/appeal under 19 of MSMED Act read with section 34 of Arbitration and conciliation Act 1996 pre-deposit of 75% of award is mandated. Are the Courts entitled to condone delay beyond three months and 30 days in filling application with 75% pre-deposit? . If so under which provision of law representation delay/ filling delay is condonable?
rajasekaran
ajay sethi
(Expert) 13 December 2011
section 34 (3)An application for setting aside may not be made after three months have elapsed from the
date on which the party making that application had received the arbitral award, or, if a request
had been made under section 33, from the date on which that request had been disposed of by
the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from
making the application within the said period of three months if may entertain the application
within a further period of thirty days, but not thereafter
2)In view of the judgement of the Apex Court in "Union of India Vs. Popular Construction Company" (2001(8) SCC P-470 , the question of applicability of Section 5 of the Limitation Act and the condonation of delay in the filing of the objections under Section 34 of the Act is finally settled. The Courts have no power to condone the delay in the filing of the objections under Section 34 of the Act,if the same have not been filed within the period provided by Section 34(3) of the Act. In this case, the observations made by the Court in para 16 of the judgement read as under:
"Furthermore, Section 34(1) itself provides that recourse to a Court against an arbitral award may be made only by an application for setting aside such award "in accordance with" sub-section (2) and sub-section(3). Sub-section (2) relates to grounds for setting aside an award and is not relevant for our purposes. But an application filed beyond the period mentioned in Section 34, sub-section (3) would not be an application "in accordance with" that sub-section. Consequently by virtue of Section 34(1), recourse to the court against an arbitral award cannot be made beyond the period prescribed. The importance of the period fixed under Section 34 is emphasised by the provisions of Section 36 which provide that :
"where the time for making an application to set aside the arbiytral award under Section 34 has expired ... the award shall be enforced under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the court."
ajay sethi
(Expert) 13 December 2011
Ashok Kalra vs Akash Paper Board Pvt Ltd & Anr on 18 February, 2011
Author: Mool Chand Garg
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on:17.02.2011 Decided on: 18. 02.2011
+ FAO 23/2011
ASHOK KALRA ..... Appellant Through Mr. V.M. Issar, Mr. Vishesh
Issar, Advs.
versus
AKASH PAPER BOARD PVT LTD & ANR .... Respondents Through None
+ FAO 24/2011
ASHOK KALRA ..... Appellant Through Mr. V.M. Issar, Mr. Vishesh
Issar, Advs.
versus
AKASH PAPER AGENCIES & ANR ..... Respondents Through None
CORAM:
HON'BLE MR. JUSTICE MOOL CHAND GARG
1. Whether the Reporters of local papers may be allowed to see the judgment? Yes
2. To be referred to Reporter or not? Yes
3. Whether the judgment should be reported in the Digest? Yes
: MOOL CHAND GARG,J
1. These appeal arises out of an order passed by the Addl. District judge in having dismissed the objections filed by the appellant to the award given by the sole arbitrator dated 20.10.2008. The objections have been filed beyond a period of 120 days inasmuch it has been filed on 02.06.2009.
2. The only ground which is urged before this Court is that the address in the award as given was B-51, Jangpura, New Delhi whereas that address was not correct and, therefore, the award was not served upon the appellant.
FAOs No.23/2011 &24/2011 Page 1 of 4
3. I have perused the objections filed by the appellant. No such plea that the award was not served upon the appellant at the correct address has been taken therein though a condonation of delay application has been filed.
4. The record shows that the address at which the award has been sent is the same address which has been mentioned by the appellant in the affidavit filed by them by way of evidence before the learned arbitrator. In the affidavit given on behalf of the appellant by way of evidence, the address of the appellant have been given as B-51, Jangpura, New Delhi which is the same address at which the award has been sent by the arbitrator. This is reflected from the award as available on the record of the arbitrator. At no point of time there is any objection taken by the appellant that the address as given in the award or in the proceedings was not the correct address. There is no explanation as to how the appellants had come to know of the award and why did they waited till 01.06.2009 to apply for certified copy of the award which it is stated was obtained on 02.06.2009 and, therefore, it is claimed that the award filed by them is within time.
5. It is apparent from the record of the arbitrator that the service of the notice for initiating the proceedings upon the appellant was affected at B- 51, Jangpura, New Delhi. He had been appearing before the arbitrator on receipt of such notices, as is apparent from the communication available on record i.e. the correspondence exchanged by the arbitrator with the appellant in question including the A.D. cards and the certificate of posting.
6. Thus, the plea of the appellant that he was not served with the award at the aforesaid address as it was not the correct address cannot be accepted and seems to be an afterthought which seems to the very reason that he has not even taken this point as a ground in the objections. The Addl. District Judge while taking consideration has taken note of the aforesaid situation and made the following observations: "4. From the perusal of the Arbitration file, it is clearly reflected that the process has been issued as against the petitioner herein at the address of B-51, Jangpura, New Delhi and on service of the same, petitioner herein has participated in the Arbitration proceedings. It is also revealed from the arbitration proceedings that the petitioner herein was present in both the matters on 17.09.08 and on the said date, the date of pronouncing of the Award was fixed up by the Arbitrator as 20.10.08 and thereafter, the Arbitrator is found to have FAOs No.23/2011 &24/2011 Page 2 of 4 rendered the Award on 20.10.08 i.e. the date which was fixed up by him on 17.09.08. It is further revealed from the Arbitration files that copy of the said Award has been sent to the petitioner herein at his given address vide Regd. Post on 25.11.08 and since there is nothing on record that said Registered letter has been received back unserved, I have no hesitation to presume that the said letter containing the Award was duly delivered to the petitioner herein at least within a week from the date of dispatch i.e. 25.11.08. it is further revealed from the record that both petitions under Section 34 of the Arbitration & Conciliation Act 1996 in both these matters have been filed on 02.06.2009, which clearly reflect that these petitions have been filed much after the stipulated period as contemplated under Section 34(3) of the Arbitration & Conciliation Act which reads as under:-
"An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application with the said period of three months it may entertain the application within a further period of thirty days, but not thereafter."
5. In the judgment reported as AIR 2001 SUPREME COURT 4010, Union of India Vs. M/s Popular Construction Co., it was observed by Hon'ble Supreme Court of India in Para 12 and Para 16 as under:
12. As far as the language of Section 34 of the 1996 Act is concerned, the crucial words are „but not thereafter‟ used in proviso to sub-section (3). In our opinion, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would therefore bar the application of Section 5 of that Act. Parliament did not need to go further. To hold that the Court could entertain an application to set aside the Award beyond the extended period under the proviso, would render the phrase „but no thereafter‟ wholly otiose. No principle of interpretation would justify such a result.
16. Furthermore, section 34(1) itself provides that recourse to a court against an arbitral award may be made only by an application for setting aside such award "in accordance with" sub-section (2) and sub-section (3) sub- section (2) relates to grounds for setting aside an award and is not relevant for our purposes. But an application filed beyond the period mentioned in Section 34, sub Section (3) would not be an application "in accordance with" that sub section. Consequently by virtue of Section 34(1), recourse to the court against an arbitral award cannot be made beyond the period prescribed. The important of the period fixed under Section 34 is emphasized by the provisions of Section 36 which provide that "where the time for making an application to set aside FAOs No.23/2011 &24/2011 Page 3 of 4 the arbitral award under Section 34 has expired ........ the award shall be enforced and the Code of Civil Procedure, 1908 in the same manner as if it were a decree of a court". This is a significant departure from the provisions of the Arbitration Act, 1940. Under the 1940 Act, after the time to set aside the award expired, the court was required to "proceed to pronounce judgment according to the award and upon the judgment so pronounced a decree shall follow". Now the consequence of the time expiring under Section 34 of the 1996 Act is that the award becomes immediately enforceable without any further act of the Court. If there were any residual doubt on the interpretation of the language used in Section 34, the scheme of the 1996 Act would resolve the issue in favour of curtailment of the Court‟s powers by the exclusion of the operation of Section 5 of the Limitation Act.
6. By taking the cue from the aforesaid observation of the Hon'ble Supreme Court of India and applying the same to given facts of the present cases, I have no hesitation to safely conclude that since the petitions under Section 34 of the Arbitration & Conciliation Act, 1996 in both these matters bearing C.S. No. 65/09 and C.S. No. 66/09 have not been filed within the stipulated period as contemplated under Section 34 of the Arbitration & Conciliation Act, 1996, both these petitions deserves dismissal being time barred and are hereby dismissed accordingly.
7. Thus, when the objections have been filed belatedly, condonation of delay could have been awarded in favour of the appellant. The objections were therefore rightly dismissed. In view of that, I do not find any reason to interfere with the impugned order.
6. Accordingly, both the appeals are dismissed with no orders as to costs.
7. TCR be sent back along with a copy of this order. CM No. 1327/2011 (stay)
CM No. 1338/2011 (stay)
Dismissed as infructuous.
MOOL CHAND GARG,J
FEBRUARY 18, 2011
rajasekaran
(Querist) 13 December 2011
Award passed under Micro, Small and Medium Enterprises Development Act 2006 read with Arbitration Act.
In this case application filed and returned and represented after seven months for waiver of predeposit.
Whether the award can be executed where the application has been filed and it has been refused, where 'such application having been made' has been refused as contemplated in law from the use of the expression 'such' which in the context is used to describe something which has been referred to earlier. The refusal contemplated in the section is the refusal by the Court where the application is filed and not by the appellate court as such words as 'finally refused' not being used.
query 1
whether delay in representation can be condoned under section 5 of limitation Act
query 2
the meaning of word "entertain" would mean at the filing stage or at the adjudication stage.
query 3
Whether filing of an application in accordance with section 34(1) of Arbitration Act 1996, for setting aside the award and the bar against entertaining of such application without pre-depositing 75% of the awarded amount under Section 19 of the MSMED Act 2006 be made beyond the period prescribed in Section 34 (3) and whether such application would be an application in accordance with Section 34(1)?
rajasekaran
(Querist) 13 December 2011
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 10/06/2011
*CORAM
THE HONOURABLE MRS.JUSTICE R.BANUMATHI
AND
THE HONOURABLE MR.JUSTICE V.PERIYA KARUPPIAH
+OSA.119 of 2011
#Goodyear India Limited
$Nortan Intech Rubbers P Ltd
!FOR PETITIONER : Mr.S.Silambannan
^FOR RESPONDENT : Mr.G.S.Rajasekaran
:ORDER
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 10.06.2011
CORAM
THE HONOURABLE MRS.JUSTICE R.BANUMATHI
AND
THE HONOURABLE MR.JUSTICE V.PERIYA KARUPPIAH
O.S.A.No.119 of 2011
and
M.P.No.1 of 2011
M/s. Goodyear India Limited
Mathura Road, Ballabgarh,
Faridabad 121 004
(Haryana)
Represented by its Zonal Manager
Mr.A.Babu Raj ... Appellant
..Vs..
1. M/s. Nortan Intech Rubbers (P) Ltd.,
A-4, Sipcot Complex,
Gummidipoondi 601 201.
2. The Chairman
MSE Facilitation Council &
Industries Commissioner and
Director of Industries & Commerce
Thiru.Vi.Ka.Industrial Estate
Guindy, Chennai 600 032.
... Respondents
Appeal filed under Order XXXVI Rule 1 of O.S. Rules read with Clause 15 of the Letters Patent Appeal against the Judgment and decree dated 07.04.2011 made in O.P.No.888 of 2010.
For Appellant : Mr.S.Silambannan
Senior Counsel for
M/s. Rajani Ramadoss
For Respondent : Mr.G.S.Rajasekaran
(Managing Director)
(Party in Person)
JUDGMENT
V.PERIYA KARUPPIAH.,J
This appeal is directed against the order of the learned single Judge dated 07.04.2011 made in O.P.No.888 of 2010, an application to set aside the award under Arbitration and Conciliation Act, 1996.
2. The appellant herein was the petitioner before the learned single Judge and the respondent before the Arbitrator / MSE Facilitation Council. The first respondent, who was the applicant before the said Council, raised the dispute in between the appellant and first respondent in respect of payment of the money payable towards 52 bills spanning the period 23.05.1997 to 11.02.1998 amounting to a sum of Rs.70,93,422.52 and seven bills for the period 26.08.1999 to 16.10.1999 amounting to Rs.9,18,072/- for a total sum of Rs.80,11,495/- with subsequent interest. The said claim was made before the said Council by the first respondent as applicant before the said MSE Facilitation Council (herein after referred to as Council) as per the provisions of "The Micro, Small and Medium Enterprises Development Act, 2006" (herein after referred to as MSMED Act) and on the claim made, the said Council also held enquiry in accordance with the law and found the appellant liable to pay a sum of Rs.80,11,495/- with interest as prescribed in "The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (32 of 1993)" to till date of enforcement of MSMED Act (27 of 2006) and further be liable to pay compound interest with monthly rests to the supplier / applicant on that amount at three times of the bank rate notified by the Reserve Bank of India from the date of commencement of MSMED Act till the date of settlement of the amount.
3. Against the finding and conclusion reached by the said Council, the appellant had preferred a Original Petition in O.P.No.888 of 2010 on various grounds, seeking to set aside the award dated 31.12.2009 passed by the said Council and also for costs.
4. The learned single Judge heard the arguments of both sides and had come to a conclusion on the preliminary objection as to the maintainability of the petition and had passed a conditional order. According to the said order, the learned single Judge directed the appellant to deposit 75% of the accrued interest amount also, as 75% of the principal sum i.e., Rs.60,08,622/- was deposited already. The further order passed by the learned single Judge would go to show that the said condition to deposit 75% of the award amount for filing an application to set aside the award would include both the principal as well as interest amount as ordered in the award as per the provisions of Section 19 of the MSMED Act. It has been directed by the learned single Judge that 75% of the interest amount ordered in the award shall be paid within a period of six months from the date of receipt of a copy of this order, failing which the petition shall stand dismissed and on such payment, the Original Petition will be heard on merits.
5. Now, the appellant has preferred this appeal against the said order of the learned Single Judge dated 07.04.2011 passed in O.P.No.888 of 2010.
6. Heard Mr.Silambannan, learned senior counsel appearing for Mr.Rajani Ramadoss, learned counsel for the appellant and Mr.G.S.Rajasekaran, who is the Managing Director of the first respondent company who appeared in person. No appearance for the second respondent.
7. The learned senior counsel appearing for the appellant would submit in his argument that the award passed by the Council was totally against law and all the points for setting aside the award should have been heard along with other objections raised before the learned single Judge and order should have been passed on all the submissions of the appellant. He would further submit in his argument that the award passed by the Council was based upon repealed Act, namely, "The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (Act 32 of 1993)" and therefore, the entire award is liable to be set aside and the liability to pay interest would also not sustainable and the direction to deposit 75% of the accrued interest also as a condition precedent for entertaining the petition to set aside the award itself is not correct. He would also submit in his argument that the subsequent Act, namely, MSMED Act introduced in the year 2006 does not have any retrospective effect and therefore the interest awarded by the Council is not sustainable. He would further submit that however benevolent or beneficial the legislation be, it can not be considered retrospectively in force unless the Act categorically specifies so. He would also submit that the Original Petition was admitted by the learned single Judge on 09.12.2010 after hearing elaborate arguments accepting the contention of the appellant that it would deposit 75% of the principal amount, since interest cannot be calculated for payment of such 75% of the award amount and the admission of O.P.No.888 of 2010 cannot be reconsidered for not paying the 75% of the accrued interest amount awarded by the Council. He would further submit in his argument that the question of payment of compound interest as per the award passed by the Council with reference to MSMED Act cannot be applied at all and therefore the already admitted Original Petition should have been heard by the learned single Judge in full and order should have been passed on the entire grounds of objections raised before the learned single Judge. He would further submit in his argument that the learned single Judge should not have ordered to deposit 75% of the payment of accrued interest which if calculated it would reach a sum of Rs.10 crores and the depositing of 75% of the amount would tantamount defeating the purpose of filing the Original Petition challenging the award dated 31.12.2009. He would further submit that the accrued interest would exceed ten times the principal amount and considering all these aspects, it was accepted on an earlier occasion by the learned single Judge i.e., on 19.12.2010. He would also submit that even the claim made by the first respondent before the second respondent was barred by law of limitation and it was also one of the grounds in the Original Petition for the appellant to set aside the award and therefore the conditional order should not have been made by the learned single Judge. He would also submit that the entire objections should have been heard by the learned single Judge and final order should have been passed in the Original Petition. He would further submit in his argument that the provisions of MSMED Act will not apply to the transactions had prior to the promulgation of the said Act. He would further submit that when the provisions of Section 19 of the said Act are not applicable, the condition imposed under the said provision is also not sustainable much less the condition for the deposit of the interest amount. Even otherwise, the said provisions would include only the principal amount and the award amount will not comprise the subsequent interest also. He would further insist in his argument that the arguments advanced before the learned single Judge in respect of the entire objections raised in the Original Petition to set aside the award of the Council were not considered and the preliminary objections raised as per the provisions of Section 19 of the MSMED Act was only ordered. He would therefore request the Court to interfere and set aside the order passed by the learned single Judge and to pass necessary guidelines.
8. The Managing Director of the first respondent, namely, Mr.G.S.Rajasekaran, would submit in his argument that both the Acts enacted in Act 32 of 1993 and MSMED Act repealing the earlier Act 32 of 1993 are for the purpose of protecting the suppliers, whether they are Small Scale Industries or the Ancillary Suppliers to the manufacturers and therefore stringent provisions have been incorporated and still the appellant had not paid the amount payable to the first respondent and because of its default, the bank which honoured the payment had proceeded against the first respondent before the Debt Recovery Tribunal and he (the first respondent) had paid the said amount to the bank and the said incident would also support and corroborate the claim of the first respondent against the appellant. He would also submit in his argument that there was an arbitration clause in between the parties and there was no dispute over the said existence of the Arbitration clause and Arbitration can be invoked when negotiation had in between parties, not fructified and the settlement of claims in between parties was continuously in existence and on its failure only, the arbitration clause could be invoked and therefore either Article 113 or 137 of the Limitation Act would not apply to the present case and the claim that the law of limitation would defeat the rights of the first respondent is not correct. He would also submit in his argument that the right accrued before the introduction of MSMED Act will be covered by the earlier Act 32 of 1993 and the right accrued cannot be defeated by virtue of subsequent Act. The repeal provision in Section 32 of MSMED Act is relevant and according to the said provision anything done or any action taken under the Act so repealed (Act 32 of 1993) shall be deemed to have been done or taken under the corresponding provisions of this Act (MSMED Act). The explanation of repeal in General Clause Act would also go to show that what are all the acts done or benefits accrued prior to the promulgation of the subsequent Act would not be defeated by virtue of the latter Act. He would refer to a judgment of the Hon'ble High Court of Delhi in between S.K.Mittal and others ..vs.. Union of India and another passed in the batch of Writ Petitions in W.P.Nos.112 of 2004, 1651 of 2004 etc., dated 26.05.2009. He would also submit in his argument that the provisions of Act 32 of 1993 is applicable to those transactions had prior to the enforcement of MSMED Act and at the same time the action taken i.e., appointment of Arbitrator / Facilitation Council constituted under MSMED Act could be done only through MSMED Act and the subsequent interest could be ordered only under the provisions of MSMED Act and the Arbitrator had also promptly followed the provisions of the Act and passed the award. The appellant, who wanted to question the said award ought to have deposited 75% of the entire award which included principal and interest also. He would also submit in his argument that 75% of the award amount as directed to be paid under Section 19 of MSMED Act is quite correct in view of the judgment of the Hon'ble Apex Court reported in 2010 (3) SCC 34 (Snehadeep Structures Private Limited ..vs.. Maharashtra Small Scale Industries Development Corporation Limited). He would also cite a judgment passed in a batch of Writ Petitions, viz., W.P.No.16908 of 2010 etc., by this Court in respect of the application of Section 19 of MSMED Act in a case between M/s.Eden Exports Company ..vs.. Union of India dated 20.08.2010. He would also cite a judgment of the High Court of Kerala reported in 2010 (1) KLT 65 (K.S.R.T.C. ..vs.. Union of India) for the principle that the pre-deposit of 75% of the amount due under the award is mandatory. He would also submit that the provisions in Section 19 of MSMED Act would not give any discretionary power to the Court to waive the part of deposit of award amount at the time of preferring any Original Petition to set aside the award and it is mentioned in the Act that such power can be conferred only through the exercise of legislative competence. He would also submit that similar provisions have been made under SARFAESI Act in Section 18(1). He would also submit that the dictum laid down in the judgment of the Hon'ble Apex Court reported in AIR 1999 SC 2213 (Kondiba Dagadu Kadam ..vs.. Savitribai Sopan Gujar & Others) would show that such condition should have been strictly fulfilled before an appeal can be entertained. He would further submit in his argument that the right to appeal is neither an absolute right nor an ingredient of natural justice and if it is attached with any condition, it should have been complied with. He would draw the support from the judgments of the Hon'ble Apex Court reported in AIR 1988 SC 2010 (Vijay Prakash D.Mehta & Jawahar D.Mehta ..vs.. Collector of Customs (Preventive), Bombay) and AIR 1980 SC 2097 (Nandlal ..vs.. State of Haryana) for the said proposition. He would further argue that the award amount mentioned in Section 19 of the MSMED Act comprises both the principal and interest, and hence there was a direction in the award to pay the interest also. He would also submit that it is implicit from the judgment of the Hon'ble Apex Court reported in 2010 (3) SCC 34 cited supra, that the award amount contemplated under section 19 of the MSMED Act would contain the interest component also and the same is evident in the provisions itself. It was relied on the said judgment that the pre-deposit of the interest has been legislatively provided for to dissuade larger interest from using dilatory tactics to the total detriment of Small Scale buyers. He would also submit that the Hon'ble Supreme Court had also held in the context of the interest payable by the buyers. The Apex Court had in unequivocal terms cautioned that such buyers cannot be allowed to challenge the arbitrator's award unless 75% of the pre-deposit of the award amount including interest is paid. He would, therefore, request the Court that the finding of the learned single Judge to direct the appellant to pay 75% of the accrued interest also, as part of the award amount within a time limit is quite in accordance with law and therefore, the appeal preferred by the appellant may be dismissed.
9. We have given anxious consideration to the arguments advanced on either side.
10. The present appeal is against the order passed by the learned single Judge dated 07.04.2011 on the preliminary objections raised by both parties. The learned single Judge had given his findings resulting in a conditional order as under:-
"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."
In the said order, it has been categorically mentioned that on complying with the direction of paying 75% of the interest amount awarded, the appellant / petitioner is entitled to be heard the Original Petition on merits. Therefore, we could understand that the learned single Judge had not dealt with the entire merits of the case in his order. The order would go to show that he has decided only on preliminary objection.
11. However, arguments have been advanced by the learned Senior Counsel appearing on behalf of the appellant as well as the first respondent / party-in-person, regarding the merits of the case in other aspects also. As far as this case is concerned, the consideration of merits like liability to pay the amount, the limitation point, and the quantum of interest cannot be and need not be discussed in this appeal. The only point to be discussed would be whether the order passed by the learned single Judge directing the appellant to deposit 75% of the award of interest also within a period of six weeks from the date of receipt of a copy of this order, by holding that the accrued interest will also form part of the award amount could be sustained. According to the learned Senior Counsel appearing for the appellant, the quantum of interest as ordered by the Council in its order dated 31.12.2009 was as per the provisions of Act 32 of 1993, calculated till the pronouncement of MSMED Act and thereafter with the compound interest on monthly rests over the amount at three times, the rate of interest of Reserve Bank of India till the date of realisation; and the said accrued interest would be around Rs.10 crores and more and since he had questioned the quantum of interest and the applicability of the Acts and the merits of the case, there is no necessity to deposit the said amount i.e., interest.
12. For the purpose of appreciating the arguments of the learned Senior Counsel, We have to refer to the judgments cited by the first respondent in the course of his argument. Section 19 of MSMED Act contemplates the procedure for setting aside the decree, award or order passed under the provisions of the said Act. For better understanding, it is necessary to extract the provisions of Section 19, 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 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."
13. The judgment of the Hon'ble Apex Court reported in 2010 (3) SCC 34 cited supra at para 42 runs as follows:
"42. The requirement of pre-deposit of interest is introduced as a disincentive to prevent dilatory tactics employed by the buyers against whom the small-scale industry might have procured an award, just as in cases of a decree or order. Presumably, the legislative intent behind Section 7 was to target buyers, who, only with the end of pushing off the ultimate event of payment to the small-scale industry undertaking, institute challenges against the award/decree/order passed against them. Such buyer cannot be allowed to challenge arbitral awards indiscriminately, especially when the section requires pre-deposit of 75% interest even when appeal is preferred against an award, as distinguished from an order or decree."
It is categorically referred in the judgment that 75% of the interest should also be deposited as per the requirement contemplated in Section 19 of the said Act.
14. Yet another judgment of the Hon'ble Apex reported in AIR 1999 SC 2213 cited supra would also lay down the dictum as follows:-
"It has to be kept in mind that the right of appeal is neither a natural nor an inherent right attached to the litigant being a sustantive statutory right it has to be regulated in accordance with law in force at the relevant time. The conditions mentioned in the section must be strictly fulfilled before an appeal can be maintained and no Court has the power to add to or enlarge those grounds. The appeal cannot be decided on merit on merely equitable jurisdiction."
15. Similar view has been expressed in the judgment of the Hon'ble Apex Court reported in AIR 1988 SC 2010 cited supra, which runs as follows:-
"Right to appeal is neither an absolute right nor an ingredient of natural justice, the principles of which must be followed in all judicial or quasi-judicial adjudications. The right to appeal is a statutory right and it can be circumscribed by the conditions in the grant'..
16. The judgment of the Hon'ble Apex Court reported in 2010 (3) SCC 34 cited supra was followed by the Kerala High Court reported in 2010 (1) KLT 65 cited supra which was held as follows:-
"Here, the Arbitrator passes an award in favour of the supplier. If the buyer wants to set aside that award, he has to make pre-deposit of 75% of the amount due under the award."
17. All these principles laid down would categorically go to show that the award amount as mentioned in Section 19 comprises both principal as well as interest and not the principal alone. Further, it was ordered at the time of admitting the O.P.No.888 of 2010 that the 75% of the principal amount was directed to be deposited as condition precedent in accordance with Section 19 of the Act. As rightly argued by the first respondent / party-in-person that the legislative intention to impose certain conditions for preferring the appeal cannot be waived by the Court by showing concession. This has been very strictly laid down in the judgment of the Hon'ble Apex Court reported in 1999 SC 2213 cited supra and various plenthero of judgments reported in AIR 1975 SC 1234 (Anant Mills Co., Ltd., ..vs.. State of Gujarat), AIR 1992 SC 2279 (Shyam Kishore and others ..vs.. Municipal Corporation of Delhi and Another). The aforesaid judgments of Hon'ble Apex Court would clearly and categorically show that the right of appeal if put to certain conditions, such conditions must be strictly adhered to.
18. It is argued by the learned Senior Counsel that once the Original Petition has been admitted to set aside the award it cannot be reviewed by the Court for passing some other order for the maintainability of the said Original Petition. The said argument of the learned Senior Counsel is not appreciable because the statutory condition imposed upon a person who wants to file an application to set aside the award of the Council should deposit 75% of the award amount which would no doubt include the interest also. The Council / Arbitrator had directed to pay the accrued interest also and therefore when it is placed before the E.P Court for execution, the principal as well as interest would be calculated through process. Therefore, it cannot be said that the already admitted O.P cannot be dismissed for want of non-payment of 75% of the interest also. Therefore, we are convinced with the findings reached by the learned single Judge in directing the appellant to deposit the 75% of the accrued interest ordered by the Council / Arbitrator within a period of six weeks from the date of receipt of a copy of the order of the learned single Judge. However, the time limit given by the learned single Judge is not sufficient and therefore we are inclined to grant six weeks time to deposit the said 75% of the accrued interest amount as ordered by the Council / Arbitrator. In such a way, we have modified the order passed by the learned single Judge and on such deposit, the O.P would be considered to be intact and the learned single Judge will hear the O.P. on merits and at that time the parties are at liberty to argue on all points which are available to them before the learned single Judge.
19. For the foregoing discussions, we are of the considered view to concur with the order passed by the learned single Judge. But inorder to facilitate the appellant to pay the said 75% of the accrued interest, six weeks time is granted from the date of this order. The consequential condition imposed by the learned single Judge will also hold good. Accordingly, the order of the learned single Judge is confirmed with the modification regarding the time limit to deposit the said amount only. No order as to costs. Consequently, connected Miscellaneous Petition is closed.
(R.B.I.J.,) (V.P.K.,J.)
10.06.2011
Index:Yes
Internet:Yes
mra
Note : Issue copy on 13.06.2011
R.BANUMATHI.,J.
AND
V.PERIYA KARUPPIAH.,J.
mra
Pre-delivery judgement made in
O.S.A.No.119 of 2011
and
M.P.No.1 of 2011
10.06.2011
Raj Kumar Makkad
(Expert) 13 December 2011
There seems no scope for adding anything now.
rajasekaran
(Querist) 15 May 2012
The Hon’ble Supreme court has upheld the above order so far as predeposit is concerned and granted liberty to raise contentions regarding time expiring under Section 34 of the Arbitration 1996 before the Hon’ble High Court when the Original petition is heard.
Is exclusion of re-presentation time is an exercise totally distinct from condoning the delay in filing an action?
On the rejection or return of the Objections, the period for refilling can it be waived under Section 10(a) in Order VII,CPC and whether this provision of CPC is applicable to arbitration section 34 application for condonation of delay in re-presentation?
The Objections filed can it be sought to be rejected under Order VII Rule 11 of the CPC,1908 taking a view that time provided in the Section 34(3) Arbitration Act for filing of an application is inclusive of re-presentation time and such proviso is analogous to Section 5 of the Limitation Act, 1963?
Question remains whether the consequence of the time expiring under Section 34 of the Arbitration Act can be waived?
