Madras High Court
M/S.Leo Garments vs M/S.Indel Narrow Fabrics Private ... on 20 October, 2021
C.M.A.No.1640 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 20.10.2021
CORAM
THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSE
C.M.A.No.1640 of 2021
M/s.Leo Garments,
Represented by
Devarajan,
No.69, Lakshmi Nagar,
50 Feet Road,
Tiruppur. ... Appellant
Vs
1.M/s.Indel Narrow Fabrics Private Limited,
Represented by
S.Balasubramanian, Director,
740, Trichy Road,
Ramanathapuram,
Coimbatore – 45.
2.Regional Industrial Facilitation Council,
Represented by its Chairman,
Department of Industries and Commerce,
Codissia,
G.D.Naidu Towers,
T.B.Road,
Hozur Road,
Coimbatore – 18. ... Respondents
1/10
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C.M.A.No.1640 of 2021
PRAYER: Civil Miscellaneous Appeal filed under Section 37(1) (c) of the
Arbitration and Conciliation Act, 1996 against the fair and decreetal order
dated 29.09.2020 made in Arbitration Original Petition No.414 of 2005
passed by the learned Principal District Court, Coimbatore confirming the
Arbitral Award dated 27.02.2003 made in case No.IFC/CBER/2/2003
passed by the Statutory Arbitrator/2nd respondent.
For Appellant : Mr.N.S.Suganthan
For Respondent 1 : Mr.J.Franklin
JUDGMENT
This appeal has been filed under section 37 of the Arbitration and
Conciliation Act, 1996 challenging the order dated 29.09.2020 passed by
the learned Principal District Judge, Coimbatore in A.O.P.No.414 of 2005
under which, the Arbitral Award dated 27.02.2003 passed in favour of the
first respondent under the provisions of The Interest on Delayed Payments
to Small Scale And Ancillary Industrial Undertakings Act, 1993 was
confirmed.
2. The Appellant has raised several grounds challenging the Arbitral
Award dated 27.02.2003 passed against them under which the Appellant
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C.M.A.No.1640 of 2021
was directed to pay a sum of Rs.5,96,455/- together with interest and costs
to the first respondent for the non-payment of the value of the supplies made
by the first respondent to the Appellant.
3. The learned Principal District Judge, Coimbatore under the
impugned order dated 29.09.2020 passed in A.O.P.No.414 of 2005 under
section 34 of the Arbitration and Conciliation Act has dismissed the
application by giving the following reasons:
(a) The Appellant has admitted its liability to the first respondent in
the conciliation proceedings initiated by the second respondent and they
have only sought for waiver of interest; and
(b) The Appellant has not made the mandatory deposit of 75% of the
Award amount as per section 7 of the Interest on Delayed Payments to
Small Scale And Ancillary Industrial Undertakings Act, 1993.
4. Even in this appeal filed under section 37 of the Arbitration and
Conciliation Act, aggrieved by the aforementioned order, the grounds raised
in section 34 application have once again been reiterated by the Appellant.
The Appellant has raised the following grounds:
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C.M.A.No.1640 of 2021
(a) There is no arbitration agreement between the Appellant and the
first respondent;
(b) The Appellant is not liable to pay the value of the supplies, since
the supplies made by the first respondent was of substantiated quality;
(c) The principles of natural justice has been violated by the second
respondent counsel before passing the Arbitral Award as according to them,
no sufficient opportunity of hearing was granted to them by the second
respondent council.
5. Only after considering the aforementioned grounds, the impugned
order has been passed rejecting the Appellant's application filed under
section 34 of the Arbitration and Conciliation Act by the learned Principal
District Judge, Coimbatore.
6. This Court does not want to go into the merits of the matter, since
admittedly, the Appellant has not deposited the mandatory deposit for filing
an application under section 34 of the Arbitration and Conciliation Act.
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C.M.A.No.1640 of 2021
7. Section 7 of the Interest on Delayed Payments to Small Scale And
Ancillary Industrial Undertakings Act, 1993 reads as follows:
“7.Appeal. - No appeal against any decree, award or
other order shall be entertained by any Court or other
authority unless the appellant (not being a supplier) has
deposited with it seventy-five per cent, of the award amount
in terms of the decree, award or as the case may be, other
order in the manner directed by such Court or, as the case
may be, such authority.”
As seen from the aforementioned section, no appeal before any court can be
entertained as against an arbitral award passed by the second respondent
Council under the aforementioned Act, unless and until, the party aggrieved
by the said award deposits 75% of the award amount.
8. In the case on hand, admittedly, the Appellant has not made the
mandatory deposit for filing an application under section 34 of the
Arbitration and Conciliation Act. The appeal provision of section 7 of the
Interest on Delayed Payments to Small Scale And Ancillary Industrial
Undertakings Act, 1993 is pari materia to the provisions of section 19 of
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C.M.A.No.1640 of 2021
the Micro, Small and Medium Enterprises Development Act, 2006. Section
19 of the aforementioned Act reads as follows:
“ 19. Application for setting aside decree, award or
order.- No application for setting aside any decree, award
or other order made either by the Council itself or by any
institution or centre providing alternate dispute resolution
services to which a reference is made by the Council, shall
be entertained by any Court unless the appellant (not being
a supplier) has deposited with it seventy-five per cent, of
the amount in terms of the decree, award or, as the case
may be, the other order in the manner directed by such
Court:
Provided that pending disposal of the application to
set aside the decree, award or order, the court shall order
that such percentage of the amount deposited shall be paid
to the supplier, as it considers reasonable under the
circumstances of the case, subject to such conditions as it
deems necessary to impose.”
As seen from the aforementioned section also, the mandatory deposit of
75% of the award amount will have to be made for filing an appeal or
application aggrieved by an arbitral award passed under the provisions of
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C.M.A.No.1640 of 2021
the Micro, Small and Medium Enterprises Development Act, 2006.
9. The Hon'ble Supreme Court while considering section 19 of the
Micro, Small and Medium Enterprises Development Act, 2006 in the case
of M/s.Goodyear India Limited vs. Norton Intech Rubbers (P) Ltd &
Another reported in CDJ 2012 SC 495 held that the mandatory deposit
stipulated under section 19 of the said act cannot be waived by courts. As
section 7 of the Interest on Delayed Payments to Small Scale And Ancillary
Industrial Undertakings Act, 1993 is also similar to section 19 of the Micro,
Small and Medium Enterprises Development Act, 2006, there cannot be any
waiver of the statutory deposit of 75% for filing an application under
section 34 of the Arbitration and Conciliation Act, 1996.
10. In the case on hand, admittedly, the said statutory deposit of 75%
was not made by the Appellant along with the application filed under
section 34 of the Arbitration and Conciliation Act, 1996. Therefore, this
court is of the considered view that the dismissal of the application filed by
the Appellant under section 34 of the Arbitration and Conciliation Act, 1996
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C.M.A.No.1640 of 2021
by the learned Principal District Judge, Coimbatore on the ground that the
Appellant has not made the statutory pre-deposit amount for filing an
application under section 34 of the Arbitration and Conciliation Act, is a
correct order and there is no infirmity in the same. This Court is deciding
this appeal only on the ground that the Appellant has not made the statutory
pre-deposit amount stipulated under section 7 of the Interest on Delayed
Payments to Small Scale And Ancillary Industrial Undertakings Act, 1993
and is not deciding other issues raised by the Appellant on merits.
11. For the foregoing reasons, there is no merit in this appeal.
Accordingly, the Arbitral Award dated 27.02.2003 passed by the second
respondent in case No.IFC/CBER/2/2003 as well as the impugned order
dated 29.09.2020 passed by the learned Principal District Judge,
Coimbatore are hereby confirmed and this Appeal is dismissed. No costs.
20.10.2021
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Index: Yes/ No
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C.M.A.No.1640 of 2021
Internet: Yes/No
Speaking Order/Non-speaking Order
To
1. The Principal District Judge, Coimbatore.
2.The Section Officer, V.R.Section, High Court of Madras.
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C.M.A.No.1640 of 2021
ABDUL QUDDHOSE, J.
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C.M.A.No.1640 of 2021
20.10.2021
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