Madras High Court
M/S.Ncba Exports Private Limited vs M/S.Smile Publishing (India) Private ... on 18 September, 2024
Author: S.S. Sundar
Bench: S.S. Sundar
O.S.A.No.181 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 18.09.2024
CORAM :
THE HONOURABLE MR. JUSTICE S.S. SUNDAR
AND
THE HONOURABLE MR. JUSTICE K. RAJASEKAR
O.S.A.No.181 of 2022
and
C.M.P.No.11308 of 2022
M/s.NCBA Exports Private Limited,
No.212, ShahpurJat,
New Delhi – 110 049
Represented by its Director
Amitabha Sen ... Appellant
Vs.
M/s.Smile Publishing (India) Private Limited,
SP-118, Deccan Complex,
Ambattur Industrial Estate,
Ambattur,
Chennai – 600 058
Represented by its Director
Rajesh ... Respondent
Original Side Appeal filed under Order XXXIX Rule 9 of Original
Side Rules read with Clause 15 of Letters Patent against the judgment and
decree dated 22.08.2019 in A.No.4179 of 2019 in O.P.SR.No.27219 of 2019
on the file of this Court.
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O.S.A.No.181 of 2022
For Appellant : Mr.Pranava Charan M.G.
For Respondent : Mr.R.Murali
JUDGMENT
(Judgment was delivered by S.S. SUNDAR, J.)
This Original Side Appeal is directed against the order of the learned
Single Judge in A.No.4179 of 2019 in O.P.SR.No.27219 of 2019, dated
22.08.2019.
2.The appellant suffered an Award by the Micro Small Enterprises
Facilitation Council and as against the Award, they preferred an Original
Petition before this Court under Section 34 of the Arbitration and
Conciliation Act. The appellant also filed an application for waiver of pre-
deposit of a sum of Rs.18,88,340/- as required under Section 19 of the
Micro, Small and Medium Enterprises Development Act, 2006 (“MSMED
Act” for brevity). Before the learned Single Judge, the appellant stated that
the appellant acted only as a Commission Agent and it is not the buyer of
goods. It was mainly on that count, the appellant sought for waiver of pre-
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deposit. The learned Single Judge found that the issue raised by the
applicant can be gone into only in the Original Petition and that the pre-
deposit of 75% of Award amount for filing of application/appeal cannot be
dispensed with merely because the applicant has a good case on merits. The
learned Single Judge also granted three months' time to deposit the entire
amount from the date of receipt of the order. As against the order of the
learned Single Judge, the appellant has preferred the above Original Side
Appeal mainly on the ground that the appellant has a prime facie case to
show that they are not liable for the Award amount.
3.Learned counsel appearing for the appellant relied upon the order of
a learned Single Judge of this Court in A.Nos.2059 and 2060 of 2024 in
Unnumbered Original Petition, dated 09.09.2024. The learned Single
Judge, in the said order, allowed the said applications for waiver of pre-
deposit under the Act on the ground that the claim before the Council was by
an industry which was not registered at the relevant point of time. Since
jurisdictional issue was raised before the learned Single Judge, the learned
Single Judge found that the Award itself is without jurisdiction.
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4.The learned counsel for the appellant also relied upon the judgment
of a Division Bench of this Court in the case of M/s.Super Steam Boilers
Engineers Pvt. Ltd. v. Micro, Small Enterprises Facilitation Council and
another [W.A.No.2655 of 2021, dated 07.03.2022]. The Writ Appeal was
against the order of the learned Single Judge dismissing the writ petition
challenging the order of the MSME Facilitation Council on the allegation
that the entire Award is not sustainable for lack of jurisdiction. It was found
that the procedure as contemplated under Section 18 of the MSMED Act,
which is mandatory, is not followed. The challenge before this Court was
again on the ground of violation of a mandatory procedure required to be
followed before passing Award and therefore, this Court entertained the writ
petition. This Court is unable to find any support from the judgments relied
upon by the learned counsel on principles to argue that, in the case of
appellant also, there can be waiver of pre-deposit.
5.The learned counsel then submitted that the appellant is made liable
to pay interest on interest. The Award, according to him, gives a direction to
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pay principal amount of Rs.8,02,655.79 along with interest with monthly
rests at three times the Bank rate notified by the Reserve Bank of India as
stipulated in the MSMED Act. It is to be seen that, before the Micro Small
Enterprises Facilitation Council, the respondent claimed a sum of
Rs.4,99,028.35 and compounded monthly interest. The prayer in the
application before the Arbitrator was for recovery of a sum of
Rs.8,02,655.79 towards the principal and compounded monthly interest at
24% from the date of liability to pay the amount till the month of October,
2016. This Court finds that the total liability towards the interest is
alarming. In view of the considerable delay, this Court is of the view that,
though the provisions give a discretion for awarding interest, there must be
some application of mind to award the maximum interest that can be
directed by the Council. In the absence of recording strong reasons, this
Court is of the view that there can be some concession. The amount now
calculated as per Award comes to more than Rs.18 Lakhs.
6.Therefore, having regard to the peculiar facts and circumstances of
the case, this Court directs the appellant to deposit a sum of Rs.10,00,000/-
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(Rupees Ten Lakhs only) as pre-deposit within a period of three months from
today, to satisfy the requirement under Section 19 of the MSMED Act. To
that extent, this Original Side Appeal is partly allowed. No costs.
Consequently, connected miscellaneous petition is closed.
(S.S.S.R., J.) (K.R.S., J.)
18.09.2024
mkn
Internet : Yes
Index : Yes / No
Neutral Citation : Yes / No
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S.S. SUNDAR, J.
and
K. RAJASEKAR, J.
mkn
18.09.2024
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