Encashed bank guarantee proceeds deposited as pre-deposit condition for MSME award stay held corporate debtor's CIRP asset subject to moratorium; decree holder claim via resolution process; writ not maintainable.

JUDGMENT :

ANIL L. PANSARE, J.

WRIT PETITION NO. 2874 OF 2012

WITH CIVIL APPLICATION NOS. 782 OF 2025 AND 2413 OF 2025

IN WRIT PETITION NO. 2874 OF 2012

Heard Mr. Akshay Doctor, learned Counsel for the petitioners, and Mr. Simil Purohit, learned Senior Counsel for respondent no.3. None for respondent nos.1 and 2.

2] The facts necessary to decide the petition and the applications are as under :

3] Petitioner no.1 (formerly knows as ‘Morarjee Brembana Limited) issued a work order to respondent no.3 for weaving clothes/fabrics in accordance with the conditions set out therein. Petitioner no.2 is Head – Finance and Accounts of petitioner no.1. The parties entered into an agreement. The work commenced. Later on, there occurred dispute between the parties. Respondent no.3 filed a claim being Reference No. 25/2010 against petitioner no.1 before respondent no.2 under the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (for short “MSME Act”). Petitioner no.1 filed its reply to respondent no.3’s claim, and also filed counter claim. Respondent no.2 passed the impugned award dated 20/3/2012 allowing respondent no.3’s claim, and directed petitioner no.1 to pay an amount of Rs.13,44,32,898/-. Accordingly, the petition came to be filed.

4] On 5/7/2012, this Court, while issuing Rule, directed the petitioners to deposit, in the Court, a sum equivalent to 75% of Rs.13,40,00,000/- within a period of three months as a condition for stay to the impugned award. This interim order was challenged before the Hon’ble Supreme Court in a Special Leave to Appeal (Civil) No. 27590/2012, and on 28/9/2012, while issuing notice, the Supreme Court stayed the order passed by this Court to the extent of directing petitioners to deposit 75% of the amount in terms of the award, subject to the condition that the petitioners shall deposit 60% of the principal amount by way of bank draft or furnishing bank guarantee of a nationalized bank for an amount representing 60% of the principal amount in favour of the Registrar, Bombay High Court, Nagpur Bench. In compliance to the said order, the petitioners had furnished bank guarantee. The Supreme Court, vide order dated 13/2/2025, dismissed the appeal in following terms :

“5. After having heard the learned counsel appearing for the first appellant, we find no error in the impugned order. The submission of the learned counsel appearing for the first appellant is that there is an issue of jurisdiction involved as the third respondent was not an MSME and that is the reason why the appellant(s) invoked the extraordinary jurisdiction under Article 226 Constitution of India. He would, therefore, submit that without considering the existence of a prima facie case, the High Court ought not to have imposed an onerous condition of deposit of a sum equivalent to 75% of the awarded amount of Rs.13,40,00,000/- (Rupees Thirteen Crore Forty Lakh).

6. The efficacious remedy of taking recourse to Section 19 of the 2006 Act was available to the appellant(s). Obviously to avoid the condition of pre- deposit under Section 19 of the 2006 Act, that the recourse was taken to the writ jurisdiction. It is pertinent to note that the High Court has not dismissed the writ petition on the ground of availability of the efficacious remedy. The High Court has only put a condition of deposit of a sum equivalent to 75% of the amount covered by the Award as a condition for stay. The Award is in the nature of a money decree and, therefore, we find absolutely no error in the view taken by the High Court.

7. We are informed that the High Court has finally heard the pending writ petition and in November 2024, the judgment has been reserved which is not pronounced till date.

8. This Court vide order dated 28th September, 2012 granted stay to the appellant(s) subject to furnishing a bank guarantee which has been accordingly furnished by the appellant(s). The Registry of this Court is directed to encash the said bank guarantee furnished by the ap