IMPORTANT POINT
The main legal point established is that while a pre-deposit is mandatory under Section 19 of the MSMED Act, a petition under Section 34 of the Arbitration and Conciliation Act, 1996 can be filed without pre-deposit, but will not be entertained without the deposit of 75% of the awarded amount.

JUDGMENT

Jasmeet Singh, J. (Oral)

I.A. 7684/2023 in O.M.P. (COMM) 11/2023

1. This is an application on behalf of the respondent under Section 34(3) of the Arbitration and Conciliation Act, 1996 ("Act 1996") seeking dismissal of the present petition i.e. O.M.P. (COMM) 11/2023 as being beyond the limitation prescribed under section 34 of Act 1996.

2. It is stated by Mr Kaushik, learned counsel for the respondent that the petitioner has failed to comply with the mandatory provision of pre deposit as per section 19 of Micro, Small and Medium Enterprises Development Act, 2006 ("MSMED Act") and hence the present petition under section 34 of Act 1996 will not lie.

3. He further states that in terms of Section 19 of MSMED Act, the petitioner is required to deposit 75 % of the awarded amount at the time of filing the petition. In case the same is not done, it is non est filing in the eyes of law and the Court cannot grant time to make the pre deposit under section 34 of Act 1996. In the present case, in view of the award dated 23.09.2022, the last date to deposit was 21.12.2022. Since the same has not been deposited till now, the petition is liable to be dismissed.

4. Mr. Kaushik has relied upon the judgment passed by the Hon'ble Supreme Court in Snehadeep Structures (P.) Ltd. v. Maharashtra Small- Scale Industries Development Corpn. Ltd., MANU/SC/0030/2010 and more particularly para 5 and 55 which reads as under:

"5. Aggrieved, the Corporation filed an application under Section 34 of the Arbitration Act before the High Court of Bombay for setting aside the award which came to be numbered as Arbitration Petition No. 499 of 2003. During the pendency of these proceedings the appellant Company pointed out that under Section 7 of the Interest Act the Corporation has to deposit 75% of the amount awarded by the arbitrator under the award.

....... ......... ............

55. This provision, no doubt, requires the deposit to be made before an application under Section 34 of the Arbitration Act is filed. However, we are not inclined to read this provision of a subsequent legislation into the provision in question. While the learned counsel for the appellant Company urged that the legislature had used the terms "appeal" and "application" interchangeably, we are of the view that we cannot conclusively infer the same. Use of the term "application" appears to be in the context of the dispute resolution mechanism provided for under Section 17 (sic Section 18) which essentially comprises of conciliation and arbitration, to be governed by the Arbitration Act, 1996. The legislature has intended to bring about improvements to the Interest Act as stated in the Statement of Objects and Reasons of the 2006 Act. Indeed, it might have contemplated a change in the legal position while enacting the 2006 Act, but we cannot make that change apply retrospectively. In this respect, we agree with the reasoning of the High Court and with the contentions of learned counsel for the respondents as we cannot read the provision of a subsequent enactment into an Act which was repealed by the former."

5. Mr Kaushik further relies upon the judgement of Gujarat State Disaster Management Authority vs. Aska Equipments Limited, MANU/SC/0842/2021 and more particularly para 11 which reads as under:

"11. In view of the above and considering the language used in Section 19 of the MSME Act, 2006 and the object and purpose of providing deposit of 75% of the awarded amount as a pre-deposit while preferring the application/appeal for setting aside the award, it has to be held that the requirement of deposit of 75% of the awarded amount as a pre-deposit is mandatory. Therefore, as such, both the High Court as well as the learned Additional District Judge (Commercial), Dehradun were justified in directing the appellant to deposit 75% of the awarded amount as a pre-deposit.

However, at the same time, considering the fact that while issuing notice in the present proceedings on 23-10-2018, this Court pa