An application under Section 34 of the Arbitration and Conciliation Act cannot be entertained without the pre-deposit of 75% of the awarded amount as mandated by Section 19 of the MSMED Act.

JUDGMENT :

ANU SIVARAMAN, J.

This Commercial Appeal is preferred challenging the order dated 26.07.2024 of the LXXXIII Additional City Civil and Sessions Judge, Bengaluru (CCH-84) ('Commercial Court' for short) in COMAP No. 68/2023.

2. We have heard Shri. Joshua Hudson Samuel, learned counsel appearing for the appellant and Shri. Udaya Holla, learned senior counsel as instructed by Shri. Balasubrahmanya K.M, learned advocate appearing for Caveator/Respondent No.1.

3. The appellant who was the respondent before the Arbitral Tribunal had filed an application under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the award dated 19.01.2023 passed by the Micro and Small Enterprises Facilitation Council ('Facilitation Council' for short) in Case No.141 of 2020. An office objection as well as the preliminary objection by the first respondent herein was raised as to the maintainability of the application without depositing 75% of the award amount. Relying on Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006, ('MSMED Act' for short), the Commercial Court held that whenever an application or petition is filed for setting aside an award made Facilitation Council, the Court cannot entertain the petition without deposit of 75% of the awarded amount.

4. It is the contention of the learned counsel for the appellant that respondent No.1 was not a "Supplier" within the meaning of the MSMED Act as on the date of entering into the contract with the appellant and consequently could not have made the reference under Section 18 of the MSMED Act. It is therefore contended that the award is made without jurisdiction and is non est in law. It is contended that these aspects of the matter were specifically raised before the Commercial Court, but were not considered in the proper perspective.

5. The learned counsel appearing for the appellant relies on the following judgments:-

Silpi Industries and Others Vs. Kerala State Road Transport Corporation and Another , reported in (2021) 18 SCC 790 ;

Vaishno Enterprises Vs. Hamilton Medical AG and Another reported in 2022 SCC On Line SC 355;

Tirupati Steels Vs. Shubh Industrial Component and Another reported in (2022)7 SCC 429;

NBCC (India) Limited Vs. State of West Bengal and Others reported in (2025)3 SCC 440; and

Tamil Nadu Cements Corporation Limited Vs. Micro and Small Enterprises Facilitation Council and Another reported in (2025) 4 SCC 1.

6. However, the learned senior counsel appearing for respondent No.1 would submit that the MSMED Act provides only for a registration of an entity as an MSME and the factum of the registration is not what makes the entity an MSME. It is submitted that it is for availing the benefits of the Act that registration is required.

7. The learned senior counsel appearing for respondent No.1 relies on the following judgments:-

M/s. Tirupati Steels Vs. Shubh Industrial Component and another , reported in AIR 2022 SC 1939;

Gujarat State Disaster Management Authority Vs. M/s. Aska Equipment Limited , reported in AIR On Line 2021 SC 870;

Hindusthan Commercial Bank Ltd. Vs. Punnu Sahu (Dead) Through LRs, reported in AIR 1970 SC 1384;

Martin and Harris Limited Vs. VI Additional District Judge and Others , reported in 1998 ALL. L.J 200(SC); and

NBCC (India) Ltd. Vs. State of West Bengal and Others, reported in (2025)3 SCC 440 .

8. Relying on these decisions, the learned senior counsel contended that an application under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an award mad