Madhya Pradesh High Court
M/S Foundry Of India vs Hindustan Copper Ltd. on 3 October, 2017
HIGH COURT OF MADHYA PRADESH, PRINCIPAL SEAT AT
JABALPUR
Case No. WP. No.7396/2017 & 8229/2017
Parties Name M/s Foundry of India
Vs.
Hindustan Copper Ltd. & Others
Date of Judgment 03/10/17
Bench Constituted Single Bench
Judgment delivered by Justice Sujoy Paul
Whether approved for reporting YES/NO
Name of counsels for parties Petitioner:Shri R.P. Khare, Adv.
Respondents: Shri R.K. Sanghi, Adv.
Law laid down -
Significant paragraph numbers -
(Order)
03.10.2017
These petitions filed under Article 227 of the Constitution take exception to the similar orders passed on 07-04-2017. The singular issue on which parties are at loggerheads is whether Section 7 of the Interest on Delayed Payment to Small-scale and Ancillary Industrial Undertaking Act, 1993 (hereinafter referred to as the "Act of 1993") can be made applicable in a proceeding filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act of 1996").
2. Shri R.P. Khare, learned counsel for the petitioner with the aid of AIR 2010 SC 1497 (Snehadeep Structures Private Limited v. Maharashtra Small Scale Industries Development Corporation Limited) contended that in view of principles laid down in this judgment, it is clear that Section 7 of the Act of 1993 is very much applicable even to a proceeding initiated pursuant to an application filed by the other side under Section 34 of the Act of 1996.
-:- 2 -:-
WP. No. 7396/17 & 8229/17
3. Shri R.K. Sanghi, learned counsel for the respondents contended that by impugned order, the Court below has decided an application preferred by the present petitioner under Order 7 Rule 11 of CPC. In the said application, the present petitioner did not raise the objection regarding payment of 75% of award amount before the Court below. In absence thereof, the said objection cannot become subject matter of adjudication in a proceeding under Article 227 of the Constitution. He relied on (2013) 10 SCC 693 (Sri Paravathi Permeshwar Cables & Ors. vs. A.P. Transmission Corpn. Ltd. & Anr.) to contend that the judgment which is relied upon by Shri Khare was although considered in this later judgment, the fact remains that both the judgments are arising out of proceedings under the Act of 1993 whereas the present case is relating to applicability of Section 7 of the Act of 1993.
4. No other point is pressed by the parties.
5. I have heard the parties at length and perused the record.
6. First of all, I deem it proper to deal with the objections raised by Shri R.K. Sanghi that the present petitioner in his application preferred before the Court below under Order 7 Rule 11 CPC did not raise the objection regarding pre-deposite of 75% of award amount as per Section 7 of the Act of 1993. The said application dated 05.07.2016 (Annexure- P/4) filed in W.P. No.7396/2017 clearly shows that the said contention of Shri Sanghi runs contrary to the record. In the application aforesaid, the petitioner has very much raised this objection in para 4 & 5. Thus, the first contention of Shri Sanghi must fail.
7. The question of applicability of Section 7 of the Act of 1993 in arbitration proceedings and in particular, in relation to application under Section 34 of the Act of 1996 was considered by the Supreme Court in the case of Snehadeep Structures Private Limited (supra). The relevant portion reads as under:
-:- 3 -:-
WP. No. 7396/17 & 8229/17 "The term "appeal" appearing in S.7 of the Interest Act should include an application under S. 34 of Arbitration Act 1996 as well. It cannot be said that appeal shall mean only a challenge to a decree or order where the entire matrix of law and fact can be re-agitated with respect to the impugned order/decree. There is no quarrel that S. 34 envisages only limited grounds of challenge to an award; however, there is no reason why that alone should take out an application under S. 34 outside the ambit of an appeal especially when even a power of revision is treated as an exercise of appellate jurisdiction by Supreme Court and the Privy Council.
As far as interest on delayed payment to Small Scale Industries as well as connected matters are concerned, the Act is a special legislation with respect to any other legislation, including the Arbitration Act. The contention that the matter of interest payment will be governed by S. 31(7) of the Arbitration Act, hence, is erroneous. S. 4 of the Interest Act endorses the same. Hence, the right context in which the meaning of the term 'appeal' should be interpreted is the Interest Act itself. The meaning of this term under Arbitration Act or Code of Civil Procedure would have been relevant if the Interest Act had made a reference to them. For this very reason, it is note relevant that the Arbitration Act deals with applications and appeals in two different chapters. Attention cannot also be invited to R.803B and R.876 of the High Court of Bombay Rules to show the differences in procedures for filing and dealing with applications, on one hand and appeals, on the other hand. The difference in procedures with respect to application and appeal under the Bombay High Court Rules is only indicative of the procedural aspect of the matter, that too with limited application for matters pending before that Court.
Further, if the word 'appeal' is not constructed as including an application under S.34 of Arbitration Act, it would render the term 'award' redundant and the requirement of pre-deposit a total nullity with respect to all cases where a Small Scale Industry undertaking preferred arbitral proceedings, prior to the incorporation of the reference procedure in 1998. The fact that an order passed on such application/challenge under S. 34 is appealable under S. 37 of no consequence. Such appeal is filed against an order passed by the Court under S. 34, not against an award passed against the buyer and in favour of the Small Scale Industry undertaking. In all cases where the Small Scale Industry undertaking enters into arbitration proceedings to obtain payment of interest, if we limit the requirement of pre-deposit to appeal under Section 37, we will be rendering the term 'award' a nullity."
(Emphasis Supplied)
-:- 4 -:-
WP. No. 7396/17 & 8229/17
8. A plain reading of the aforesaid paragraphs, leave no room for any doubt that Section 7 of the Act of 1993 is wide enough to include a proceeding initiated by filing application under Section 34 of the Act of 1996. The aforesaid principles laid down by the Supreme Court in the case of Snehadeep Structures Private Limited (supra) were followed in the case of Sri Paravathi Permeshwar Cables (supra). Thus, I have no scintilla of doubt that the Court below has erred in rejecting the application preferred by the petitioner under Order 7 Rule 11 CPC. So far in relation to mandatory deposit of awarded amount as per Section 7 of the Act of 1993. The said legislative mandate ingrained in Section 7 aforesaid needs to be followed in the proceedings under Section 34 of the Act. Consequently, the impugned order dated 07.04.2017, passed in both the appeals are set aside. The Court below shall entertain the application under Section 34 of the Act of 1996 provided the legislative mandate envisaged under Section 7 of the Act of 1993 are fulfilled. The petition is allowed to the extent indicated above.
(Sujoy Paul) Judge mohsin/s@if