FAO(OS) (COMM) 23/2022

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IN THE HIGH COURT OF DELHI AT NEW DELHI

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Date of Decision: 14.02.2022

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FAO(OS) (COMM) 23/2022 & CM APPLs. 5885-5886/2022

INDIAN HIGHWAYS MANAGEMENT COMPANY LIMITED

..... Appellant

Through:

Ms. Aishwarya Bhati, ASG with

Mr.A P Singh, Ms. Padma Priya and

Ms. Shreya Sethi, Advs.

versus

SOWIL LIMITED

..... Respondent

Through:

Ms. Manmeet Arora, Ms. Samapika

Biswal and Ms. Pavitra Kaur, Advs.

CORAM:

HON'BLE MR. JUSTICE VIPIN SANGHI

HON'BLE MR. JUSTICE JASMEET SINGH

VIPIN SANGHI, J. (ORAL)

1.

The present appeal under Section 37 of the Arbitration & Conciliation

Act (the Act) is directed against the judgment dated 21.12.2021 passed by

the learned Single Judge in O.M.P. (COMM.) NO. 376/2021. The learned

Single Judge has dismissed the objections preferred by the appellant under

Section 34 of the Act against the Arbitral Award dated 11.10.2021 rendered

by the learned Sole Arbitrator appointed to adjudicate the claims of the

respondent/claimant.

2.

The respondent - who is admittedly a small enterprise under the

Micro, Small, Medium Enterprises Development Act, 2006 (hereinafter

This is a digitally signed Judgement.

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“MSMED Act”), is engaged in the business of providing consultancy

services to various organizations for development works, railway works,

bridges, structures and tunnelling. The parties entered into a contract dated

28.10.2014 whereunder the respondent rendered its services for “Conducting

Counter & Classified (ATCC) Systems”.

3.

Disputes arose between the parties under the contract, which were

referred to Arbitration before the learned Sole Arbitrator. Amongst the

claims that the respondent raised, was the claim for interest on the principle

dues, under Section 16 of the MSMED Act. The Arbitral Tribunal dealt with

the said claim and while doing so, rejected the submission of the

appellant/non-claimant that since the Arbitration was not invoked under

Section 18 of the aforesaid Act, the respondent-claimant was not entitled to

raise its claim for interest under Section 15 of the MSMED Act. The

consideration of the said issue by the Arbitrator reads as follows:-

Delhi in AVR Enterprises v. Union of India: MANU/ DE/ 1024/

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2020. However, that decision was on an entirely different context.

“15. Liability of buyer to make payment.—Where any

16. Date from which and rate at which interest is payable.—

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17. Recovery of amount due.—For any goods supplied or

16.‖

24. Overriding effect —The provisions of sections 15 to 23

and Claim No. 4 is decided accordingly.‖

4.

In the objection petition preferred by the appellant, the limited

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challenge to the Arbitral Award raised by the appellant was to the award of

interest at the rate of 20.25 % per annum compounded monthly in respect of

the delayed payments for the services rendered to it by the

respondent/claimant from due date till the date of payment. The learned

Single Judge has rejected the said submission in the following manner:

29. A plain reading of Section 15 of the MSMED Act makes it

mandatory for the buyer to make payment for the goods supplied

to it by a Supplier within the period as agreed by the parties or,

where there is no agreement in this regard, before the appointed

date. The expression ‘appointed date’ is defined under Section

2(b) of the MSMED Act to means the day following immediately

after the expiry of the period of fifteen days from the day of

acceptance of the goods. Further, the proviso to Section 15 of the

MSMED Act makes it clear that u