Uttarakhand High Court
M/S Lardums Electricals Pvt. Ltd. … vs Uttarakhand Power Corporation … on 16 December, 2021IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
Writ Petition (MS) No. 2483 of 2021
M/s Lardums Electricals Pvt. Ltd. and another
………………Petitioners
Mr. Rajat Mittal, Adv. for the petitioners
-versus-
Uttarakhand Power Corporation Ltd. and another
………Respondents
Mr. Dharmendra Barthwal. Adv. for the respondents
Date of hearing and Judgment
16.12.2021
Sri S.K.Mishra, J.
1. Heard Sri Rajat Mittal, learned counsel for the
petitioners and Sri Dharmendra Barthwal, learned
counsel for the respondents.
2. In this case, the petitioner has assailed the order
dated 24.09.2021 passed by the learned Additional
District Judge, in a sense, that he seeks modification
of the first part of the order dated 24.09.2021
whereby the learned Additional District Judge has
imposed a condition to furnishing a bank guarantee
against the amount to be released in favour of the
petitioner. He further prays to quash the second part
of the impugned order whereby the application for
payment of interest component on the awarded
amount to be paid by the respondents, herein, was
rejected by the learned Additional District Judge.
3. Facts of the case are not much in dispute. In this
case, the petitioner no. 1 is a private limited
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company incorporated under the Indian Companies
Act. He supplied certain materials to the respondent
no. 1. There is delay in payment of dues of the
petitioners. He filed an application before Facilitation
Council constituted under the Micro, Small and
Medium Enterprises Development Act, 2006
(hereinafter referred to as “the Act”, for brevity). The
Council allowed the application and passed an award
on 11.09.2020. Against such an award, the
respondents filed an appeal under Section 34 of the
Arbitration and Conciliation Act, 1996 before the
learned Additional District Judge, Commercial Court,
Dehradun, Uttarakhand, which was registered as
Arbitration Case No. 65 of 2020. It is further case of
the petitioners that as per Section 19 of the Act,
2006 before institution of such an appeal, the
appellant, not being a supplier, has to deposit 75% of
the awarded amount in terms of decree, award or, as
the case may be, the other order in the manner
prescribed by such Court, therefore, he has filed an
application for a direction to the respondents to
deposit 75% of the awarded amount along with
interest.
4. It is also brought to the notice of this Court that
respondent no. 1 while preferring the appeal has
deposited 75% of the awarded amount, but as per
respondents’ counsel deposition of interest on
awarded amount is not required in this case. The
arbitration case was taken up for hearing by the
learned Additional District Judge and he directed to
release 50% of the amount deposited in favour of the
petitioner, subject to the condition that petitioner
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shall furnish a bank guarantee of the equivalent
amount to be released.
5. The petitioners’ grievance is that the direction to
furnish a bank guarantee will be harsh on it, as it is
under financial stress. If petitioners deposits a bank
guarantee of the equivalent amount to be released, it
will frustrate the objective of the Act itself especially,
the Section 19 of the Act.
6. The second part of the order is that the learned
Additional District Judge rejected the petitioners’
application for payment interest accrued on 75% of
the awarded amount upto that date.
7. Therefore, two questions arise in this writ application
for consideration:-
i. Whether the petitioner is duty bound to
furnish a bank guarantee; and
ii. Whether the respondents should also deposit
the interest accrued on 75% of the awarded
amount in terms of the decree passed by the
Facilitation Council?
8. The learned counsel for the respondents has relied
upon the judgments passed by Bombay High Court
and Madras High Court in the case of “Maharashtra
State Road Transport Corporation v. Super Fine
Extrusions Pvt. Ltd. 2016 SCC Online Bom 9615” and
“Unicon Engineers v. Chief Engineer/PTPS-I 2018 SCC
Online Mad 13188”. He submits that it is necessary
for the petitioners to furnish a bank guarantee in
view of the fact that it is a financially stressed
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institution and the public money involved in the
matter may be lost, if the bank guarantee is not
there. He has also placed reliance on the judgment of
the Hon’ble Supreme Court in the case of “M/s
Annapurna Electronics Etc. v. M/s Crompton Greaves
Ltd. and Ors. etc.” – Special Leave to Appeal No.
21680 of 2015 decided on 09.03.2016″ wherein the
petitioners were allowed to withdraw the amount
deposited by the respondents after furnishing
appropriate immovable property security to the
satisfaction of the Registrar General of the Karnataka
High Court.
9. In this case, it is clear that the provision of the Act
has been enacted with a view to promote Micro,
Small and Medium Enterprises and for that reason,
the Parliament in its wisdom has enacted certain
safeguards for the suppliers so that they do not face
any financial hardships and do not lose commercial as
well as financial viability because of delayed payment
of dues, accrued to them.
10. In that view of the matter and taking a cue from the
judgment of the Hon’ble Supreme Court in the
aforesaid case, this Court directs to release 50% of
the amount deposited before the learned Additional
District Judge subject to condition that the petitioners
shall furnish adequate immovable property surety of
the equivalent amount of the aforesaid amount by
executing the indemnity bond before this learned
Additional District Judge. .
11. A close examination of the decree passed by the
Council reveals that it has granted three reliefs to the
petitioners, which reads as under:
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A. Payment of remaining bills – Rs.
38,74,758/-.
B. As per provisions of Section 15 and 16 of
the Act, 2006, amount of interest of Rs.
417392/-, at the rate of three time of Bank rate
notified by RBI with monthly rests, till the date
of payment.
C. Total sum mentioned at A and B amounting
to Rs. 42,92,150/- be paid within 30 days.
12. The effective decree is that the respondents should
deposit a sum of Rs. 42,92,150/-.
13. Writ petition is allowed. Respondents have already
deposited 75% of the awarded amount which comes
to Rs. 32,19,113/-. The Additional District Judge,
Commercial, Dehradun shall release 50% of the total
deposited amount within 21 days, hence. It is
needless to say that the petitioners shall furnish
immovable property surety in the shape of indemnity
bond equivalent to the amount to be released as
discussed above. There shall be no order as to costs.
Urgent certified copy of this order be granted on
proper application as per Rules.
(S.K.Mishra)
Judge
A/-
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