Calcutta High Court
Hindusthan Engineering & Industries ... vs Metaflux Company Private Ltd on 9 February, 2018
Author: Ashis Kumar Chakraborty
Bench: Ashis Kumar Chakraborty
OD-35
AP 21 of 2018
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
HINDUSTHAN ENGINEERING & INDUSTRIES LTD.
Versus
METAFLUX COMPANY PRIVATE LTD.
BEFORE:
The Hon'ble JUSTICE ASHIS KUMAR CHAKRABORTY
Date : 9th February, 2018.
Appearance:
Mr. Ranjan Bachawat, Sr. Adv.
Mr. Arindam Mukherjee, Adv.
Mr. Rudraman Bhattacharyya, Adv.
Mr. A.P. Agarwalla, Adv.
...for the petitioner.
Mr. Suresh Dhole, Adv.
Mr. Ravi Kumar Dubey, Adv.
...for the respondent.
The Court : In this application under Section 34 of the Arbitration & Conciliation Act, 1996 (in short 'the Act of 1996') the petitioner has prayed for setting aside of the award dated September 25, 2017 passed against it, in case no.164 of 2018 by the West Bengal State Micro Small Enterprises Facilitation Council (hereinafter referred to as the 'Council') constituted under Section 20 of the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as 'the Act of 2006'). 2
In the said case no.164 of 2018 before the Council, the present respondent was the claimant and the petitioner herein was the respondent.
By the impugned award the Council directed the petitioner to pay to the respondent the principal outstanding
amount of Rs.49,06,772/- plus interest thereon, at the rate of 3 times of bank rate of RBI, compounded with monthly rest under Section 16 of Chapter V of the Act of 2006. The respondent, as the supplier was directed to submit its claim to the petitioner, the buyer unit duly quantified and certified by the chartered accountant. The petitioner was directed to pay within 30 days from the date of submission of the claim by the respondent, failing which the latter would be entitled to realise the amount through the process of law.
At very outset of hearing of the application, Mr. Suresh Dhole, learned advocate appearing for the respondent raised strong objection to the maintainability of the application on the ground that the application is not accompanied by the deposit of 75% of the award of the Council as stipulated under Section 19 of the Act of 2006. In this regard, reliance was placed by the respondent on the decision of the Supreme Court in the case Goodyear India Ltd. Vs. Norton Intech Rubbers Pvt. Ltd. & Anr., reported in (2012) 6 SCC 345.
3
On the other hand, Mr. Bachawat, learned Senior Advocate appearing for the petitioner relied upon a Single Bench decision of the Bombay High Court in the case of Ravindranath GE Medicate Associate Pvt. Ltd. -Vs- Clean Coats Pvt. Ltd., reported in 2016(6) MhLJ 49, as well as an unreported Division Bench decision of this Court dated April 6, 2016 passed in GA 3759 of 2015, APOT 560 of 2015 in AP 202 of 2015 (Development Consultants Pvt. Ltd.- vs-Rama Engineering) and submitted that the provisions of Section 19 of the Act of 2006 cannot be construed to the effect that without depositing the 75% of the amount awarded by the Council a party cannot file an application before the competent Court to challenge an award passed by the Council. According to him, Section 19 of the Act of 2006 requires deposit of the awarded amount in Court, by the party challenging the award before the application under Section 34 of the Act of 1996 is taken up for final hearing. He pointed out that even in the unreported decision dated April 06, 2016 in the case of Development Consultants Pvt. Ltd. (supra) the Division Bench of this Court allowed the petitioner challenging the award passed by the Council to deposit 75% of the awarded amount in Court within three weeks from the date of the said order. He also submitted that the Supreme Court in the case of Goodyear India Ltd. (supra) also allowed the petitioner challenging the award passed by the Council to deposit 4 the awarded amount in a phased manner before admission of the application.
With regard to the contentions raised by the respondent about the maintainability of this application, I find that in the said unreported decision dated April 06, 2016 in Development Consultants Pvt. Ltd. (supra) the Division Bench of this Court held that the expression 'entertain' appearing in Section 19 of the Act of 2006 cannot be used interchangeably with the expression 'receive' or the expression 'file'. In view of the said Division Bench decision of this Court which is binding upon me,I find no merit in the contention urged by the respondent no. 1 with regard to the maintainability of this application. The petitioner shall deposit the amount mentioned hereinafter with the Registrar, Original Side of this Court for admission of this application.
With regard to the amount which is required to be deposited by the petitioner under Section 19 of the Act of 2006 for admission of this application, Mr. Bachawat submitted that the petitioner is required only to deposit 75% of the principal amount of Rs.49,06,772/- as mentioned in the impugned award. He strenuously urged that the proceeding before the Council is governed by the Act of 1996 but in the present case, the direction of the Council against the petitioner to pay interest to the respondent cannot be considered as an award and the petitioner cannot be required to deposit any amount in Court on account of 5 interest awarded by the Council as a condition for admission of this application. By referring to the impugned award Mr. Bachawat submitted that the Council has left the entire issue with regard to the amount of interest to be decided by a chartered accountant to be appointed by the respondent. In this connection, he referred to Section 16 of the Act of 2006. According to the petitioner, under Section 16 of the Act of 2006 where the buyer fails to make payment of the amount to the supplier as required under the Act the buyer may be made liable to pay compound interest with monthly rests to the supplier on that amount either from the "appointed day" defined in Section 2(b) of the Act or, as the case may be, from the date immediately following the date agreed upon. It was argued that it was the obligation of the Council to decide the date from which the petitioner can be made liable to pay interest but in the present case, in the award under challenge there is no decision of the Council and the entire matter to decide the date from which the petitioner can be made liable to pay interest has been delegated by the Council to a chartered account. Further, even the chartered accountant in this case has only mechanically certified the amount claimed by the respondent on account of interest. Urging all these grounds, it was strongly contended by the petitioner that in this case, in the absence of fixation by the Council the date from which the petitioner is required to pay interest to the respondent, there is no award against it for 6 payment of interest. Thus, according to Mr. Bachawat, the petitioner cannot be directed to deposit before this Court any amount on account of interest.
However, Mr. Dhole submitted for the respondent that there is no illegality on the part of the Council to direct the chartered accountant to quantity the interest payable by the petitioner on the principal dues of the respondent and to issue certificate in respect thereof. According to him, it is common knowledge that the bank rate of RBI fluctuates from day to day and as such, the Council was required to take the help of the chartered account to ascertain the amount of interest to be paid by the petitioner at the rate of three times of bank rate of RBI. It was strongly urged on behalf of the respondent that together with the principal amount of Rs.49,06,772/- the interest portion certified by the chartered account, a copy whereof was forwarded to the petitioner on November 28, 2017 forms a complete award and, as such, the petitioner has to deposit the principal amount as well as the interest amount certified by the chartered accountant.
I have considered the materials on record and the arguments advanced by the learned Counsel appearing for the respective parties. In view of the provisions contained in Section 18(2) of the Act of 2006, the proceeding conducted by the Council resulting in passing of the impugned award is governed by the Act of 1996. Under the provisions of the Act of 1996 it is the duty of the 7 Arbitrator to decide all issues involved in the arbitral proceeding. Therefore, while passing the impugned award it was the duty of the Council to fix the date from which the petitioner- buyer could be made liable to pay interest to the respondent- seller under Section 16 of the Act of 2006. However, in the present case, it prima facie appears that the certificate issued by the chartered accountant dated November 13, 2017 cannot be considered to be a part of the award dated September 25, 2017. Accordingly, the petitioner is directed to deposit 75% of the principal amount of Rs.49,06,772/- amounting to Rs.36,80,079/- with the Registrar, Original Side of this Court within February 23, 2018 upon notice to the advocate on record of the respondent.
Once the respondent's advocate on record receives the notice of the deposit of the above amount by the petitioner with the Registrar, Original Side of this Court, the respondent shall file its affidavit in opposition within two weeks thereafter. Reply thereto, if any, be filed within a week thereafter.
In the event of any failure on the part of the petitioner to deposit the above amount within the time stipulated above, the respondent will free to execute the impugned award.
Let this application appear under the heading "Adjourned Motion" on March 22, 2018.
(ASHIS KUMAR CHAKRABORTY, J.) sp2/s.das/pkd