M/S TIRUPATI STEELS versus M/S SHUBH INDUSTRIAL COMPONENT & ANR.

Citation: [2022] 3 S.C.R. 356 · Decided: 19-04-2022 · Supreme Court of India · Bench: M.R. SHAH · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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SUPREME COURT REPORTS
[2022] 3 S.C.R.
   [2022] 3 S.C.R. 356
356
M/S TIRUPATI STEELS
v.
M/S SHUBH INDUSTRIAL COMPONENT & ANR.
(Civil Appeal No. 2941 Of 2022)
APRIL 19, 2022
[M. R. SHAH AND B. V. NAGARATHNA, JJ.]
Micro, Small and Medium Enterprise Development Act, 2006
(MSMED Act) – s.19 – Parties governed by provisions of MSMED
Act – Appellant preferred claim petition before Micro and Small
Enterprises Facilitation Council constituted under the MSMED Act
– On failure of conciliation, dispute referred to Arbitrator –
Arbitrator, appointed through MSME Facilitation Council, passed
award in favour of appellant – Appellant filed execution petition –
Respondent No.1 filed application u/s.34 of the Arbitration Act for
setting aside the arbitral award – Appellant submitted application
u/s.19 of the MSMED Act for direction to respondent no.1-judgment
debtor to deposit 75% of the arbitral award – Special Commercial
Court allowed the application moved by appellant granting six
weeks’ time to Respondent No.1 to deposit 75% of the arbitral award
before its’ application u/s.34 of the Arbitration Act, could be
entertained by the Court – Respondent No.1 filed appeal before
High Court which permitted proceedings u/s.34 of the Arbitration
Act to go on, without insisting for pre-deposit of 75% of the awarded
amount – Whether pre-deposit of 75% of the awarded amount as
per s.19 of the MSMED Act, while challenge to the award u/s.34 of
the Arbitration Act is made mandatory or not – Held: Requirement
of deposit of 75% of the amount in terms of the award as a pre-
deposit as per s.19 of the MSMED Act, is mandatory – However,
considering the hardship which may be projected before the
appellate court and if the appellate court is satisfied that there shall
be undue hardship caused to the appellant /applicant to deposit
75% of the awarded amount as a pre-deposit at a time, the court
may allow the pre-deposit to be made in installments – Unless and
until respondent No.1 deposits 75% of the awarded amount, its
application u/s.34 of the Arbitration Act, challenging the award
not to be entertained and decided on merits and, in that case, the
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execution proceedings to continue – Arbitration and Conciliation
Act, 1996 – s.34.
Allowing the appeal, the Court
HELD:1.1. The requirement of deposit of 75% of the
amount in terms of the award as a pre-deposit as per section 19
of the Micro, Small and Medium Enterprise Development Act,
2006, is mandatory. However, at the same time, considering the
hardship which may be projected before the appellate court and
if the appellate court is satisfied that there shall be undue hardship
caused to the appellant /applicant to deposit 75% of the awarded
amount as a pre-deposit at a time, the court may allow the pre-
deposit to be made in installments. Therefore, pre-deposit of 75%
of the awarded amount under section 19 of the MSMED Act,
2006 is a mandatory requirement. [Para 4][360-A-C]
1.2. The impugned order passed by the High Court
permitting the proceedings under section 34 of the Arbitration
and Conciliation Act, 1996 without insistence for making
pre-deposit of 75% of the awarded amount is unsustainable.
[Para 5][360-F]
Gujarat State Disaster Management Authority v. Aska
Equipments Limited, (2022) 1 SCC 61 and Goodyear
(India) Ltd.  v. Norton Intech Rubbers (P) Ltd., (2012)
 6 SCC 345 – relied on.
M/s Mahesh Kumar Singla and another v. Union of India
and others [Decision of High Court in CWP No. 23368 of
2015] – partly overruled.
2. Respondent No.1 is directed to deposit 75% of the
awarded amount before its application under section 34 of the
Arbitration and Conciliation Act, 1996 challenging the award is
entertained and considered on merits. Unless and until
respondent No.1 deposits 75% of the awarded amount, its
application under section 34 of the Arbitration and Conciliation
Act, 1996, challenging the award shall not be entertained and
decided on merits and, in that case, the execution proceedings
may continue. [Para 6][361-A-C]
M/S TIRUPATI STEELS v. M/S SHUBH INDUSTRIAL
COMPONENT & ANR.
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SUPREME COURT REPORTS
[2022] 3 S.C.R.
Case Law Reference
(2022) 1 SCC 61
relied on
Para 4
(2012)  6 SCC 345
relied on
Para 4
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2941
of 2022.
From the Judgment and Order dated 09.04.2019 of the High Court
of Punjab and Haryana at Chandigarh in FAO-Com No.4 of 2019.
Pankaj Bhagat, Adv. for the Appellant.
Dr. Vinod Kumar Tew
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