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Section 47 CPC Cannot Sidestep Under MSMED Act:
High Court Rejects Attempt to Stall Execution Through
The has firmly ruled that an cannot use proceedings under to sidestep the required under the . A Division Bench of Justice Moushumi Bhattacharya and Justice Renuka Yara allowed a civil revision petition filed by , an MSME supplier, against , the .
Background: Unpaid Dues and an MSME Award
Atlantis Agritech, a manufacturer of agricultural machinery, supplied goods to under multiple orders between and . When payments were not forthcoming, Atlantis approached the under . On , the Council passed an award directing to pay ₹41.86 crore as principal, plus interest and additional interest. The total amount due stood at ₹74.62 crore as of .
Atlantis initiated before the . The court directed to file an in . Dissatisfied with the disclosure filed on , which it found vague and incomplete, Atlantis sought a fresh affidavit and supporting documents through Commercial Execution Application (CEA) No. 135 of 2025.
Petitioner’s Arguments: Vague Disclosure and Non-Compliance with Section 19
, representing Atlantis, argued that 's disclosure of contract-wise margins did not satisfy the requirements of Form No. 16A. He submitted that the respondent had failed to deposit 75% of the awarded amount as mandated by , and that its subsequent Section 47 application had no bearing on the disclosure proceedings.
Respondent’s Defense: No Profit, No Loss and Pending Section 47 Application
, appearing for , contended that the disclosure application should be kept in abeyance until its Section 47 application—challenging the award on —was decided. He described as a dependent on commissions, and claimed that assets exceeding the award had already been disclosed.
Court’s Analysis: Section 47 Cannot Be Used to Sidestep
The High Court rejected the argument that a pending Section 47 application automatically halts all . It observed that the Section 47 application was filed only after Atlantis’s disclosure application had been decided, and that no statutory basis existed for delaying disclosure.
Crucially, the court equated a Section 47 challenge to an application for under . “Section 47 of the CPC which allows the to raise questions in relation to the decree can be equated to a challenge to the decree or Award as contemplated under ,” the Bench stated. “Therefore, proceedings under section 47 cannot be said to be independent of the mandate in . Section 47 of the CPC also does not pre-suppose that the would automatically be exempted from making the 75% deposit of the .”
The court distinguished the ’s decision in , noting that it did not address the between Section 47 CPC and . It reiterated the ’s ruling in that the cannot be bypassed; the court’s discretion is limited to permitting payment in installments upon proof of financial hardship.
Vague Disclosure of Receivables Was Insufficient
The court found that ’s affidavit was deliberately vague. The annexure disclosed margins only as percentages (e.g., 1% for a ₹6.40 crore contract) without stating the corresponding receivable amounts. This omission was significant because had separately filed claiming specific sums—₹6.33 crore from the and ₹3.30 crore from the —and the High Court had already directed those amounts to be released.
“The ambiguity of the last column of Annexure-2 of the respondent No.1’s is incongruous with the specificity of the amounts claimed by the respondent No.1 in the ,” the court observed.
Key Observations
“The attempt of the Award-Debtor to put the petitioner’s application for disclosure on the backburner becomes stark in light of the Award-Debtor’s continued resistance to depositing 75% of the awarded amount under .”
“Disclosure of the items under the ‘KB Margin’ as a percentage, without stating the corresponding amount in rupees is unexplained.”
“The Commercial Court failed to appreciate that Annexure-2 to the … does not contain any particulars, let alone sufficient particulars. Mere indication of percentages would not satisfy the requirement in Form No.16A of Appendix-E of the CPC.”
Decision: Fresh Within Three Weeks
The High Court set aside the Commercial Court’s order that had refused to direct production of documents relating to receivables. It directed to file a fresh affidavit disclosing all receivables due from ongoing and completed projects across India, including specific amounts, within three weeks from receipt of the order.
The ruling reinforces that the mandatory under is a that cannot be circumvented by filing execution-stage objections. It also underscores the obligation of award debtors to make full and specific in Form No. 16A, particularly where the decree has remained unsatisfied for over thirty days.
