The pre-deposit mandated under Section 19 of the MSME Act includes both principal and interest components, ensuring compliance for challengers of arbitral awards.

JUDGMENT

V. Kameswar Rao, J. (Oral)

I.A. 5291/2020

1. The present application has been filed by the applicant/respondent with the following prayers:

"i) Direct the Petitioner to deposit 75% of the interest amount in addition to the Principal amount already deposited

ii) Direct the release of the pre-deposit to the Respondent as per Proviso to Section 19 of the MSME Act on furnishing Indemnity Bond.

iii) Pass any other order which this Hon'ble Court deems fit and proper in the facts and circumstances of the present case."

2. Before delving into the issues raised in this application, an overview of factual matrix that surrounds the filing of the present application by the respondent/applicant needs to be stated.

3. An Arbitral Award dated December 14, 2018 (`Award', for short) was passed by the Micro and Small Enterprises Facilitation Council, Konkan Region, Thane, Maharashtra (`Council', for short) under the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (`MSME Act', for short). Aggrieved by Award, the petitioner/non-applicant has challenged the Award in the main petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (`Act of 1996', for shot). Subsequent thereto on October 21, 2019, this Court directed the petitioner to deposit 75% of the awarded amount as pre-deposit in terms of Section 19 of the MSME Act, for entertaining the main petition filed under Section 34 of the Act.

4. However, the petitioner/non-applicant deposited with the Court only 75 % of the principal amount in terms of the Award without the interest component. Aggrieved by the non-deposit of the 75% interest amount, the present application has been filed by the applicant/respondent seeking release of the entire pre- deposit made by the petitioner/non-applicant along with directions against the petitioner to deposit the remainder 75% of the interest amount as awarded to the applicant/respondent by the Council in terms of the Award.

5. It is the case of the applicant/respondent that the MSME Act is unambiguously clear in terms of Section 19 of the MSME Act which mandates a pre-deposit of 75 % of the amount in terms of the decree/award/order for entertaining an application for setting aside the Award and provides for the release of the deposited amount in favour of the supplier (applicant herein), as Court considers reasonable, pending the disposal of the said application.

6. It is stated by the applicant/respondent that the MSME Act being a beneficial/special legislation, the intent of the legislature in envisaging a proviso to Section 19 for withdrawal of the pre-deposit amount is to keep the small supplier, protected under the MSME Act, viable during litigation and that the non-deposit of the entire quantum as per the said Section defeats the vital objective of the MSME Act.

7. It is stated by the applicant/respondent that the petitioner/non-applicant, with malafide intent has been trying to stall the execution of the Award by resorting to different kinds of litigation before other forums.

8. It is stated by the applicant, vide order dated October 21, 2019, this Court had held that though the petition was maintainable under Section 34 of the Act without pre-deposit, the petition will not be entertained unless the 75 % of the awarded amount is deposited in