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2020 Supreme(Del) 1345
IN THE HIGH COURT OF DELHI AT NEW DELHI
Sanjeev Sachdeva, J.
Avr Enterprises - Appellant
Versus
Union Of India - Respondent
Civil Miscellaneous (M) No. 769 of 2018; Civil Miscellaneous Application No. 27219 of 2018
Decided On : 08-05-2020
A.K. Behera, Advocate, B.S. Mathur, Advocate, Praveen Kumar Jain, Advocate, Akanksha Agrawal, Advocate, Sajal Manchanda, Advocate, Lokendra Chundawat, Advocate
Sections 18 and 19 of the MSMED Act apply only to proceedings initiated under Section 18 of the MSMED Act and do not apply to arbitration conducted under the Arbitration Act by a privately appointed arbitrator.
Headnote:
Arbitration Act - Applicability of MSMED Act - Section 34 of the Arbitration Act, 1996 - Sections 18 and 19 of the MSMED Act
Fact of the Case:
The petitioner challenges the trial court's rejection of the preliminary objection that the respondent's petition under Section 34 of the Arbitration Act was not maintainable due to non-deposit of 75% of the awarded amount as per Section 19 of the MSMED Act.
Finding of the Court:
The court analyzed the applicability of Sections 18 and 19 of the MSMED Act and concluded that they do not apply to arbitration conducted under the Arbitration Act by an arbitrator privately appointed by the respondent. The court found no merit in the petition and dismissed it.
Issues: Applicability of Sections 18 and 19 of the MSMED Act to the arbitration conducted under the Arbitration Act
Ratio Decidendi: Sections 18 and 19 of the MSMED Act apply only to proceedings initiated under Section 18 of the MSMED Act and do not apply to an award published by an arbitrator appointed by the parties otherwise than in accordance with Section 18 of the MSMED Act.
Final Decision: The petition is dismissed.
JUDGMENT
Sanjeev Sachdeva, J. - CM(M) 769/2018 with CM APPL. 27219/2018
1. Petitioner impugns order dated 18.04.2018 whereby the Trial Court has rejected the preliminary objection raised by the Petitioner that the petition filed by the Respondent under section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter called the Arbitration Act) impugning award dated 14.07.2016 was liable to be dismissed because Respondent had not deposited 75% of the awarded amount as stipulated in Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as the MSMED Act).
2. Respondents had issued a Tender Enquiry for procuring Cover Water Proof 9.1 M x 9.1 M. The bid of the Petitioner was accepted by the Respondents and contract dated 05.04.2005 was entered between the parties.
3. Dispute arose between the parties with regard to supplies. Liquidated damages were imposed by the Respondent and balance payment was also adjusted. Petitioner vide their letter dated 23.7.2010 invoked Arbitration and requested that matter may be referred to Arbitration. Respondents thereafter appointed a Sole Arbitrator to adjudicate upon the disputes
4. The Arbitrator published his award dated 14.07.2016 inter alia reducing the quantum of Liquidated Damages, directed payment of the balance amount with compound interest.
5. The award was challenged by the Respondents by filing the subject petition under Section 34 of the Arbitration Act before the Trial Court.
6. Petitioner in its reply took up a preliminary objection that the petition filed by the Respondent under Section 34 of the Arbitration Act were not maintainable because the Respondent had failed to deposit 75% of the awarded amount in terms of Section 19 of the MSMED Act. Petitioner relied upon the decision of the Supreme court of India in M/s Snehadeep Structures Private Ltd vs Maharashtra Small Scale Industries Development Corporation Ltd, (2010) 3 SCC 34 .
7. By the Impugned Judgment, the Trial Court has held that the provisions of MSMED Act are not applicable and has thus rejected the preliminary objection raised by the Petitioner.
8. Learned counsel for the Petitioner relies upon the Judgment of the Supreme Court in Snehadeep Structures Private Ltd (supra); Judgment of the High Court of Gauhati in Union of India Versus Hindustan Metal Refining Works (P) Ltd.,MANO/GH/0577/2014 and the Division Bench of the Gujarat High Court in Saryu Plastics Private Limited & Ors. Versus Gujarat Water Supply and Sewerage Board,MANU/GJ/1526/2017 .
9. Learned counsel for the Respondent contends that the MSMED Act is not applicable to the facts of the present case as it was not a case of a statutory reference under the MSMED Act and Arbitrator had been appointed by the parties. He relies upon the judgment of a coordinate bench of this court dated 18.09.2017 in W.P.(C) 10886/2016 titled Bharat Heavy Electrical Limited Versus the Micro and Small Enterprises Facilitation Centre & Anr.
10. Section 18 of the MSMED Act stipulates as under:
"18. Reference to Micro and Small Enterprises Facilitation Council.-(1) Notwithstanding anything contained in any other law for the time being in force, any party to a dispute may, with regard to any amount due under Section 17, make a reference to the Micro and Small Enterprises Facilitation Council.
(2) On receipt of a reference under sub-section (1), the Council shall either itself conduct conciliation in the matter or seek the assistance of any institution or centre providing alternate dispute resolution services by making a reference to such an institution or centre, for conducting conciliation and the provisions of Sections 65 to 81 of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to such a dispute as if the conciliation was initiated under Part III of that Act.
(3) Where the conciliation initiated under sub-section (2) is not successful and stands terminated without any settlement between the parties, the Council shal
