IMPORTANT POINT
The Commercial Court has discretion under the MSME Act to allow installment payments for pre-deposit, and cannot dismiss a petition solely for non-compliance without considering requests for extensions.

JUDGMENT :

This appeal is directed against the order dated 12th March, 2024 passed by Commercial Court, Court No. 2, Lucknow whereby the petition filed by the appellant under Section 34 of the Arbitration and Conciliation Act, 1996 has been dismissed for failure to pre-deposit the amount to the extent of 75% in terms of provisions of section 19 of the Micro, Small and Medium Enterprises Development Act, 2006 (for short, 'Act of 2006').

2. The appellant aggrieved of the award dated 07th October, 2023 passed by the MSME Council, filed petition under Section 34 of the Arbitration and Conciliation Act, 1996 before the Commercial Court, Lucknow. Along with the petition, an application seeking waiver of pre-deposit as required under Section 19 of the Act of 2006 was filed. The application seeking waiver came to be dismissed by order dated 19th February, 2024 inter-alia relying on the judgment of Hon'ble Supreme Court in Tirupati Steels v. Shubh Industrial Component and Another; (2022) 7 SCC 429.

3. The Court while dismissing the application, directed the appellant to deposit the 75% of the awarded amount within three weeks and ordered that failing which the Misc. Case shall stand dismissed by itself. On the same day, i.e. 19th February, 2024, another order was passed based on the determination already made indicating deposit of the 75% of the awarded amount within a period of three weeks and failure thereof would result in dismissal of the pending proceedings.

4. When the matter came up before the Commercial Court on 12th March, 2024, an application was attempted to be filed by the appellant seeking further time to deposit the amount in compliance of the order dated 19.02.2024 wherein it was indicated that the applicant has applied for loan/overdraft from the Bank which is still under process and therefore four weeks' time may be granted for doing the needful in terms of the order dated 19.02.2024. Reliance was placed in this regard on judgments in Goodyear India Ltd. v. Norton Intech Rubbers Pvt. Ltd. and Another; 2012 (6) SCC 345 and Gujarat State Disaster Management Authority v. Aska Equipments Ltd. 2022 (1) SCC 61. However, it is submitted that the application was not even received/entertained by the Commercial Court and on 12th March, 2024, the impugned order was passed inter-alia noticing the fact that 75% of the awarded amount has not been deposited and consequently dismissed the petition.

5. Learned counsel for the appellant made submissions that the order passed by the Commercial Court on 19.02.2024 directing the deposit within a period of three weeks and on failure the proceeding shall stand dismissed and the order dated 12.03.2024 dismissing the same as a consequence of non-deposit are ex-facie incorrect and against settled law. It was emphasized that while passing the order dated 19.02.2024 granting three week's time, there was no occasion to order that in case of failure, the proceeding shall stand dismissed.

6. Further, as laid down by the Hon'ble Supreme Court in the case of Goodyear India Ltd. (Supra) and Gujarat State Disaster Management Authority (supra), the Commercial Court had the jurisdiction to extend the time and even grant installments for payment of the amount of pre-deposit, however, even the application which was sought to be made by the appellant on 12th March, 2024 was not entertained and the appeal had been dismissed leading to a failure of justice in so far as the appellant is concerned.

7. Submissions have been made that the appellant is prepared to deposit the 75% of the awarded amount within a period of one week from today, therefore, the order impugned may be set aside and the appellant may be granted an opportunity to do the needful.

8. The learned counsel for the respondents made submissions that the filing of the application seeking waiver itself was contrary to the law laid down by the Hon'ble Supreme Court and the same has rightly been dismissed by the Commercial Court and sufficient time was granted