Matter: Gujarat State Disaster Management Authority v. Aska Equipments Ltd.
Order dated: 08 October 2021.
Summary:
A dispute arose between Aska Equipments Ltd. (Aska) and Gujarat State Disaster Management Authority (GSDMA), which was referred to the Facilitation Council as per the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (MSME Act). The Facilitation Council passed an award (Award) in favor of Aska, directing GSDMA to pay Aska a sum of INR. 105,053,387 (Indian Rupees One Hundred and Five Million Fifty-Three Thousand Three Hundred and Eighty-Seven only) (Award Amount).
Aggrieved by the Award, GSDMA filed an application under the Arbitration and Conciliation Act, 1996 (Arbitration Act) to set aside the Award. In the said proceedings, GSDMA was directed to deposit 75% of the Award Amount as per provisions of the MSME Act. However, GSDMA did not comply with the said directions and eventually an appeal was filed before the SC. The main issue before the SC was whether in an appeal filed under the Arbitration Act, the appellate court has any discretion to deviate from directing the appellant from depositing 75% of the awarded amount as a pre-deposit.
The SC interpreted the provisions of the MSME Act and held that the requirement of deposit of 75% of the awarded amount as a pre-deposit is mandatory. The SC further held that if the appellate court is satisfied that there shall be undue hardship caused to the appellant to deposit this 75% of the awarded amount as a pre-deposit at a time, the court may allow the pre-deposit to be made in instalments. Accordingly, the appeal filed by GSDMA was dismissed.
For more information about the MSME Act, please read our article available here.
For further information, please contact:
Souvik Ganguly, Partner, Acuity Law
al@acuitylaw.co.in
