Pre-Deposit Of 75% Of Awarded Amount As Per S.19 Of MSMED Act Can Be Made In Installments: Gujarat High Court

The Gujarat High Court recently permitted a party in appeal under the Micro, Small and Medium Enterprises Development Act, 2006 to make a pre-deposit to Court in terms of Section 19 of the Act, i.e., 75% of the amount awarded, in installments.

The Petitioner herein was aggrieved by an order of Additional District Judge, whereby its application for extension of time to deposit the 75% of the award amount was rejected.

A Bench comprising Justice NV Anjaria and Justice Samir Dave noted that the Petitioner in this case, M/S Yamuna Cable Accessories Pvt Ltd, had already deposited Rs. 30 lakh and undertook to deposit the remainder Rs. 2,50,96,654/- on or before 29th September. The award is of Rs. 3,46,07,118.31.

The Bench directed the Appellant to abide by its undertaking and accordingly, allowed the petition.

The brief facts of the case were that arbitration proceedings took place between the Petitioner and the Respondent which culminated into an award by the sole arbitrator where the Petitioner was directed to pay the amount of INR 3,46,07,118.31 to the Respondent along with 12% interest. The Respondent, subsequently, filed an application under Section 33 of the Arbitration Act for an additional award of INR 1,50,000 to be paid by the Petitioner as interest till its realisation. Consequently, the Petitioner challenged the award under Section 34(2)(IV) of the Arbitration Act and the impugned order rejected the application of the Petitioner.

The Petitioner contested that basis the opinion of the Supreme Court, the pre-deposit could be submitted in installments.

The High Court, while issuing notice for the final order had noted that basis the provisions of Section 19 of MSMED Act and the decision of the Supreme Court in Goodyear India Limited Vs. Norton Intech Rubbers Private Limited and Another, it cannot compel the Petitioner to pay the deposit of 75% in one go and may permit installments.

To show bonafides, the Petitioner had deposited INR 30 lakhs towards the 75% amount. The authorised signatory of the Petitioner company also undertook that having paid INR 30 lakhs, the Petitioner would deposit the balance amount of INR 2,50,96,654, as well.