Point of Law : Arbitration Award - Having specifically found that the petitioner/buyer failed to make payment of the outstanding amount to the respondent/supplier in respect of at least six of the eight Purchase Orders, the Council invoked section 16 to impose interest on the petitioner and this court hence sees no error in such imposition

JUDGMENT :

MOUSHUMI BHATTACHARYA, J.

1. The present application filed under section 36 of The Arbitration and Conciliation Act, 1996, is for stay of the operation of an award passed by the West Bengal State Micro Small Enterprises Facilitation Council under cover of a letter dated 7th November, 2019 and served on the petitioner on 21st November, 2019. The petitioner prays for securing a percentage of the principal sum of Rs.61,08,654/-awarded to the respondent under the provisions of The Micro, Small and Medium Enterprises Development Act, 2006 (the Act).

2. The issue which falls for adjudication is whether the petitioner/award-debtor should be directed to secure 75% of the principal sum and the interest under section 19 of the Act. The petitioner insists that depositing 75% of the award under Section 19 should be confined only to the principal sum awarded to the respondent while the respondent award-holder contends that the said percentage should also include the interest component. The submissions raised in support of and against securing a percentage of the award shall be referred to in more detail later on in this judgment.

3. The discussion is divided under separate sections for convenience.

The Award impugned in the present proceeding:

4. The Award was passed by the West Bengal State Micro Small Enterprises Facilitation Council on 24th September, 2019 on a claim made by the respondent-supplier on an assessment of the dispute between the petitioner (described as the “Buyer” in the Award) and the respondent (the “Supplier Unit”). The said Award noted that the respondent supplier unit is a small manufacturing enterprise which issued eight Purchase Orders on the respondent for supply of Solar Power Conditioning Unit and items for a diesel power plant at various places, including Bangalore, Bhilai, Kanchipuram, Bareilly, Rawra, Raichur and Lakshadweep Island on substantially similar payment terms being 80% -90% payment on supply + 100% taxes to be made with 30-45 days of credit from receipt of the material at site + 10% on completion of commissioning and balance 10% on execution of basic supply of the materials. The Award also noted that conciliation pursued under Section 18 of the Act failed since the petitioner buyer unit did not appear and did not file any written response. The Council assessed the total dues payable for the notified sites after considering the submissions of the parties before it.

5. The claim for each of the units were separately dealt with and the Council came to the conclusion that the records established that the respondent (petitioner before the Council) supplied the materials and completed the work as per the order of the petitioner buyer unit. The Council concluded that the claim of the respondent supplier is correct and that the petitioner buyer unit is liable to pay a total principal amount of Rs.61,08,654/-as the outstanding amount + interest thereon at three times of the Bank rate of RBI, compounded with monthly rests to the supplier unit (respondent herein) under Section 16 of the Act. The respondent was directed to submit its claim of interest on the principal amount to the petitioner duly certified by a Chartered Accountant along with the claim of the principal amount outstanding. The petitioner was directed to pay the amount within thirty days from the date of submission of the claim by the petitioner.

Contentions of the petitioner (Buyer) :

6. The petitioner seeks stay of operation of the Award upon securing such percentage of the principal sum of Rs.61,08,654/-as directed by the court. According to Mr. Jishnu Saha, Senior Counsel appearing for the petitioner, the portion of the Award providing for interest is vague and uncertain and is accordingly not executable. Counsel relies on Section 16 – ‘Date from which and the rate at which the interest is payable’ and Section 2(b) – ‘Appointed day’ of the Act to submit that the Award does not identify any appointed day or any date agreed upon by the parti