O.P.(C) No.1508/2023

## `IN THE HIGH COURT OF KERALA AT ERNAKULAM` ## `PRESENT` ## `THE HONOURABLE MR.JUSTICE C.S.DIAS` ``` WEDNESDAY, THE 9[TH] DAY OF AUGUST 2023 / 18TH SRAVANA, 1945 ``` ## `OP(C) NO. 1508 OF 2023` ``` AOP 23/2022 OF II ADDITIONAL SUB COURT,THIRUVANANTHAPURAM ``` ``` PETITIONER: ``` ``` BOBAN JOSEPH AGED 64 YEARS /O. JOSEPH MALIEKKAL HOUSE, EDATHALA KARA ALUVA EAST VILLAGE, ALUVA TALUK ERNAKULAM 683 112 PARTNER, M/S. INSTITUTE OF SCIENTIFIC RESEARCH AND TRAINING PRANAAMAM COMPLEX, CHOONDY, ALUVA ERNAKULAM, PIN – 683112 ``` ``` BY ADVS.C.HARIKUMAR SANDRA SUNNY ARUN KUMAR M.A FARAH JYOTHI PRADEEP ``` ``` RESPONDENT: ``` ``` R. MADHAVA MENON MANAGING DIRECTOR M/S. AEGIS COMMUNICATIONS PRIVATE LIMITED 3RD FLOOR, CHANDRIKA BUILDINGS, M.G. ROAD ERNAKULAM, PIN – 682011 ``` ``` BY ADV KODOTH SREEDHARAN ``` ``` THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 09.08.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` O.P.(C)No.1508/2023 ``` ``` -:2:- ``` Dated this the 9[th] day of August,2023 ## **J U D G M E N T** The original petition is filed to set aside Ext P5 order passed by the Commercial Court, Thiruvananthapuram(court below), in I.A.No.1/2023 in O.P.(Arb)No.23/2022. 2. The relevant factual matrix for the determination of the original petition are: (i) The petitioner has filed O.P.(Arb)No.23/2022 (Ext P2) before the court below, to set aside Ext P1 award passed in O.A.No.18/2020 of the Kerala Micro and Small Enterprises Facilitation Council, Thiruvananthapuram(in short, ‘Council’) passed under Sections 17 & 18 of the Micro, Small and Medium Enterprises Development Act, 2006(in short, ‘Act’). (ii)The petitioner asserts that Ext P1 award has been passed unilaterally by the Council, in favour of the respondent, for an amount of ``` O.P.(C)No.1508/2023 ``` ## `-:3:-` ## Rs.47,92,892/- with compound interest. - (iii) The respondent filed I.A.No.1/2023 (Ext P3) in Ext P2 O.P., questioning the maintainability of the original petition as a preliminary issue, for the want of pre-deposit of 75% of the award amount as per the mandate under Section 19 of the Act. The petitioner objected to the application by filing Ext P4 objection. - (iv) The petitioner has contended that, as Ext P1 award was passed without proper service of notice to him, there was non-compliance of the statutory formalities under the Act. Hence, Ext P1 is liable to be set aside. - (v) The court below, on an erroneous appreciation of the law and the facts, by the impugned Ext P5 order, has directed the petitioner to deposit 75% of the amount ordered to be paid in Ext P1 award. - (vi) Ext P5 is erroneous and onerous. Hence, the original petition. ``` O.P.(C)No.1508/2023 ``` ``` -:4:- ``` 3. Heard; Sri. C. Harikumar, the learned counsel appearing for the petitioner and Sri. Kodoth Sreedharan, the learned counsel appearing for the respondent. 4. Sri. C. Harikumar placed reliance on the decision of the Hon'ble Supreme Court in **Goodyear India Limited v. Norton Intech Rubbers (P) Ltd. & Ors.** [MANU/SC/1215/2012] to canvass the position that, discretion has been conferred on the courts to permit the pre-deposit amount to be paid in instalments. Hence, this Court may permit the petitioner to deposit 75% of the award amount in at least three instalments. 5. Sri. Kodoth Sreedharan vehemently opposed the original petition. He argued that Section 19 of the Act has to be mandatorily complied with, to entertain the original petition. The said ``` O.P.(C)No.1508/2023 ``` ``` -:5:- ``` position is no longer res-intergra in view of the decision of the Hon'ble Supreme Court in **Tirupati Steels v. Shubh Industrial Component & Anr.** [MANU/SC/500/2022]. Hence, the original petition may be dismissed. 6. Challenging Ext P1 award passed by the Council, the petitioner has filed Ext P2 O.P. before the court below. 7. Section 19 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, 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:** ``` O.P.(C)No.1508/2023 ``` ``` -:6:- ``` 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.” [Emphasis given] 8. A reading of the above provision undoubtedly establishes that, to maintain an application to set aside an award passed under the Act, it is mandatory that 75% of the award amount is to be deposited in the manner directed by the court. 9. Interpreting Section 19 of the Act, the Hon'ble Supreme Court in **Goodyear India Limited** (supra) held thus: 11. Having considered the submissions made, both on behalf of the Petitioner and on behalf of the Respondents, we do not see any reason to interfere with the views expressed, both by the learned Single Judge, as also the Division Bench with regard to Section 19 of the 2006 Act. It may not be out of place to mention that the provisions of Section 19 of the 2006 Act, had been challenged before the Kerala High Court in K.S.R.T.C. v. ``` O.P.(C)No.1508/2023 ``` ``` -:7:- ``` Union of India, MANU/KE/0864/2009: Indlaw Ker 666, where the same submissions were negated and, subsequently, the matter also came up to this Court, when the Special Leave Petitions were dismissed, with leave to make the pre-deposit in the cases involved, within an extended period often weeks. **12. We may also indicate that the expression "in the manner directed by such Court” would, in our view, indicate the discretion given to the Court to allow the pre-deposit to be made, if felt necessary, in installments.** [Emphasis given] 10. Although the Hon'ble Supreme Court has upheld the pre-condition under Section 19 of the Act in **Tirupati Steels** (supra), the same has been watered down in **Goodyear India Limited** (supra), by conferring the discretion on the Court to permit the petitioner in the application under Section 19 of the Act, to pay the pre-deposit amount of 75% in instalments. 11. In the light of the clear enunciation of law in **Goodyear India Limited** (supra), I am of the definite ``` O.P.(C)No.1508/2023 ``` ``` -:8:- ``` view that the petitioner can be permitted to pay 75% of the award amount in three equated monthly instalments, as prayed by the learned counsel appearing for the petitioner, especially keeping in mind the fact that Ext P1 award was allegedly passed without notice to the petitioner. 12. At the said point of time, the learned counsel appearing for the respondent submitted that, if the petitioner makes such deposit, the respondent may be permitted to withdraw the amount as provided under the proviso to Section 19 of the Act. 13. On an appreciation of the pleadings and materials on record and the rival submissions made across the Bar, I am of the view that a quietus can be given to the original petition by disposing of the original petition in the manner mentioned below: Resultantly, in exercise of the supervisory powers ``` O.P.(C)No.1508/2023 ``` ``` -:9:- ``` of this Court under Article 227 of the Constitution of India, I order the original petition as follows: - (i) The petitioner is permitted to deposit the award amount, as held in Ext P5 order, in three equated and successive monthly instalments commencing from 09.09.2023. - (ii)If the petitioner fails to deposit one of the instalments as permitted above, the court below shall dismiss O.P.(Arb)No.23/2022 for non-compliance of Section 19 of the Act. - (iii) On the petitioner complying the condition ordered above, it would be up to the respondent to file an application before the court below, for the enforcement of his right under the proviso to Section 19 of the Act. - (iv) On the petitioner complying with the condition, the Commercial Court, Thiruvananthapuram, is directed to consider and dispose of O.P. (Arb)No.23/2022, in accordance with law and as expeditiously as possible, at any rate, within a ``` O.P.(C)No.1508/2023 ``` ``` -:10:- ``` period of three months, after affording both sides an opportunity of being heard. Sd/- ## **C.S.DIAS,JUDGE** DST/09.08.23 //True copy// P.A.To Judge ``` O.P.(C)No.1508/2023 ``` ## `-:11:-` ## `APPENDIX` - `PETITIONER EXHIBITS EXHIBIT P1` - `THE TRUE COPY OF THE AWARD IN O.A.NO 18 OF 2020 PASSED BY THE MICRO AND SMALL ENTERPRISES FACILITATION COUNCIL, THIRUVANANTHAPURAM, KERALA DATED 22.04.2022` - `EXHIBIT P2 THE TRUE COPY OF THE MEMORANDUM OF ORIGINAL PETITION IN O.P.(ARB.)NO 23 OF 2022 ON THE FILE OF THE HON'BLE ADDITIONAL SUB JUDGEII, THIRUVANANTHAPURAM FILED BY THE PETITIONER DATED 17.12.2022` - `EXHIBIT P3 THE TRUE COPY OF THE PETITION IN I.A.NO 1 OF 2023 IN O.P.(ARB.)NO 23 OF 2022 ON THE FILE OF THE HON'BLE ADDITIONAL SUB JUDGEII, THIRUVANANTHAPURAM FILED BY THE RESPONDENT DATED 17.01.2023` - `EXHIBIT P4 THE TRUE COPY OF THE OBJECTION IN I.A.NO 1 OF 2023 IN O.P.(ARB.)NO 23 OF 2022 ON THE FILE OF THE HON'BLE ADDITIONAL SUB JUDGEII, THIRUVANANTHAPURAM FILED BY THE PETITIONER DATED 03.07.2023` - `EXHIBIT P5 THE TRUE COPY OF THE ORDER IN I.A.NO 1 OF 2023 IN O.P.(ARB.)NO 23 OF 2022 PASSED BY THE HON'BLE ADDITIONAL SUB JUDGE-II, THIRUVANANTHAPURAM DATED 12.07.2023` ``` RESPONDENT’S EXHIBITS: NIL ```