Summary
The Court held that the seventy-five per cent pre-deposit under Section 19 of the MSMED Act was mandatory before entertaining the non-supplier’s award challenge. A court could permit instalments on demonstrated undue hardship, but could not waive or reduce the statutory percentage. Exceptionally, because the challenge had already been heard under the Supreme Court’s earlier interim arrangement after a Rs 2.5 crore deposit, that arrangement continued until final disposal and was expressly denied precedential effect.
Issues
- Whether the court could waive or reduce Section 19’s seventy-five per cent pre-deposit for an award challenge.
- Whether instalments or continuation of the existing interim arrangement were permissible.
Provisions considered
- Section 19, Micro, Small and Medium Enterprises Development Act, 2006The statutory pre-deposit was mandatory for a non-supplier challenging the award. Discretion concerned the manner of payment, including instalments for undue hardship, rather than reduction of the percentage. (¶¶ 9, 9.1, 9.2, 10, 11, 12)
Held
- Before entertaining the application to set aside the award, the non-supplier applicant had to deposit seventy-five per cent of the awarded amount. The lower courts correctly required that statutory deposit, and there was no discretion to waive or reduce it. (¶¶ 9.1, 9.2, 10, 11)
- If paying the whole deposit at once would cause undue hardship and the court was satisfied on the material presented, it could allow instalments. The statutory phrase governing the manner of deposit supported that limited discretion. (¶¶ 9.2, 10)
- The earlier Supreme Court order had allowed the challenge to proceed on a Rs 2.5 crore deposit and the matter had since been heard. That particular interim arrangement was continued until final disposal, expressly without precedential effect; it did not alter the mandatory general rule. (¶¶ 6, 11, 12)
Result
Appeal disposed of with the legal question answered against the appellant. Existing interim deposit arrangement continued until final disposal of the award challenge, expressly not as a precedent.