ORDER :

We have heard Mr. M.L. Lahoty, learned counsel for the petitioner and Mr. Manoj Goel, learned counsel for the respondent No.3.

2. We do not think that in the present case, it is necessary to deal with the question of law, whether the expression "pre-deposit" used in Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006 (for short "2006 Act") is covered within the expression "execution, distress or the like" in Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short "1985 Act").

3. Bereft of unnecessary details, suffice it to say that petitioner made a reference under Section 15(1) of the 1985 Act on 8.9.2006. The Board for Industrial and Financial Reconstruction (BIFR) registered the reference on 15.9.2006. Somewhere in September, 2006, respondent No. 3 filed a Claim Petition before the Industries Facilitation Council, Kanpur (for short "the Council") under Section 6 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (for short "1993 Act") to recover the amount of Rs. 17,37,994.40 along with interest for the supply of parts made to the petitioner company payment of which was not made.

4. 1993 Act was replaced by the 2006 Act during the pendency of the proceedings. After the reference was registered, on 8.5.2007, BIFR passed an order, inter alia, directing the secured/unsecured creditors not to file or pursue the suits already filed. It was further made clear that if the directions/guidelines are not complied with by the petitioner company within the given time frame, BIFR would reconsider its decision.

5. Subsequent to the above order of 8.5.2007, on 22.12.2008, the Council passed an award in favour of respondent No. 3. It was held that the petitioner would pay a sum of Rs. 28,44,711.55 and compound interest on the principal amount to respondent No. 3. The award has been challenged by the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 (for short "1996 Act") before the District Judge, Kanpur Nagar.

6. On 12.5.2011, the District Judge directed the petitioner to deposit 75% of the amount awarded by the Council within a month. It was further directed that failure to deposit the amount would render the petition defective and was liable to be dismissed as not maintainable. This order was challenged by the petitioner before the High Court of judicature at Allahabad. The Single Judge of that Court has dismissed the writ petition with certain observations on 30.8.2011. It is this order which is under challenge in the Special Leave Petition.

7. Mr. M.L. Lahoty, learned counsel for the petitioner submits that as the matter stands today, the finalisation of scheme under Section 18 of the 1985 Act is at advanced stage before the BIFR.

8. Mr. Manoj Goel, learned counsel for the respondent No. 3 has conceded before us that so long as the proceedings remain pending before the BIFR under 1985 Act, the award dated 22.12.2008 cannot be enforced by respondent No. 3 in light of this Court's decisions in Jay Engineering Works Ltd. v. Industry Facilitation Council & others, 2006 (8) SCC 67 and Morgan Securities & Credit (P) Ltd. v. Modi Rubber Ltd., 2006 (12) SCC 642.

9. Having regard to the above position, we are satisfied that this is not a case where we should go into the legal question noted by us in the beginning of our order. We are satisfied that interest of justice shall be sub-served if it is directed that failure to deposit the amount as directed by the District Judge, Kanpur Nagar in its order dated 12.5.2011 would not result in dismissal of the arbitration petition filed by the petitioner under Section 34 of 1996 Act challenging the award dated 22.12.2008. The said arbitration petition may remain pending with the District Judge until the finalisation of scheme by the BIFR under Section 18 of 1985 Act. We order accordingly.

10. Special Leave Petition is disposed of as above.

11. Respondent No. 3 is granted liberty