Bangalore District Court
North West Karnataka Road vs M/S.Rachana Rubbers Pvt.Ltd on 6 June, 2020
IN THE COURT OF THE VI ADDL.CITY CIVIL & SESSIONS JUDGE
BENGALURU CITY
CCCH. 11
Dated this the 6th day of June, 2020
PRESENT: Sri.Rama Naik, B.Com., LL.B.,
VI Addl.City Civil & Sessions Judge,
Bengaluru City.
A.S.NO:10/2013
PLAINTIFF NORTH WEST KARNATAKA ROAD
TRANSPORT CORPORATION
Central Offices, Gokul Road,
Hubli -580 030.
Reptd.by its Managing Director
through its Chief Law Officer.
[By Pleader Sri.P.D.Surana]
/Vs/
DEFENDANT M/S.RACHANA RUBBERS PVT.LTD.,
No.65B, 12th Cross, 5th Main,
M.C.layout, Vijayanagar,
Bengaluru -560 040.
and Work Place at :
No.82, P1, KIADB Industrial Area,
Nanjangud - 571 302.
Reptd.by its Managing Director.
[By Pleader by Sri.Suhaas.G.B.S]
--
AS.10/2013
2
JUDGMENT
This suit is filed under Section 34 of the Arbitration and Conciliation Act, 1996, by the Plaintiff to set aside the award in Case No.20/2008 passed by the Micro and Small Enterprises Facilitation Council, Bangalore [for brevity 'Facilitation Council'].
2) Facts as stated by Plaintiff, in brief, are that, Plaintiff is the buyer and Defendant is the supplier. Plaintiff called for tender for supply of Pre-cured Tread Rubber [PCTR], Bonding Gum and Black Vulcanizing Solution. Defendant, being the successful bidder, was issued the work orders for supply of PCTR, Bonding Gum, Black Vulcanizing and for processing of old tyres vide Letters of Intent dated 10.03.2007, 18.09.2007, 19/20-11-2007 and 26.12.2007.
AS.10/2013 3
3) It is stated that, Defendant made application to Facilitation Council on 24.07.2008 for claiming amount due from Plaintiff. On receipt of reference, Council took up the matter for conciliation. Conciliation stood terminated without any settlement between the parties. It is stated that, thereafter, Facilitation Council took up the matter for arbitration and impugned award came to be passed by the Facilitation Council.
4) Being aggrieved by the award, Plaintiff has challenged the same on the following grounds :
(1) Defendant's unit is not classified as Micro or Small Enterprises as per the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 [for brevity 'MSMED Act'].
Facilitation Council has not recorded any finding as to whether Defendant is a Micro or Small enterprises and whether claim petition filed by Defendant is maintainable before the Facilitation Council. In absence of such finding, the AS.10/2013 4 Facilitation Council could not have entertained the claim petition filed by the Defendant and therefore, impugned award passed is without jurisdiction. (2) Facilitation Council consists of chairman and three other members.
Impugned award is passed by the Chairman only. No award is passed by other members. Hence, it is not all a award in the eye of law.
(3) During the pendency of the proceedings, Plaintiff paid Rs.17,99,094/- to the Defendant, which amount was not taken into consideration by the Facilitation Council while passing the award.
(4) Facilitation Council has not taken into consideration of the accounts produced by the Plaintiff. Facilitation Council, without applying its mind, mechanically passed the award.
AS.10/2013 5 For all these grounds, Plaintiff prays for setting aside the award.
5) Defendant marked appearance through its counsel and filed its written statement, stating that, Section 19 of the MSMED Act lays down that, any person challenging the award has to deposit 75% of the award amount before filing the application for setting aside the award. Plaintiff filed this suit without depositing the same, hence, suit is not maintainable.
6) It is stated that, MSMED Act has overriding effect over other laws in the country. For the purpose of settling the disputes, it has only borrowed the provisions of the Arbitration and Conciliation Act, which is not strictly made applicable, hence, Plaintiff's contention is not sustainable.
AS.10/2013 6
7) It is further sated that, transaction being commercial one and MSMED Act permits the charging of interest at the rate of 18%, however, Facilitation Council awarded only 8% interest, hence, prays for modification of award by granting 18% interest. For all these reasons, prays for dismissal of suit.
8) Heard the learned Counsel for Defendant. Plaintiff failed to address its argument. Perused the record.
9) Points that arise for my consideration are :
(1) Whether Plaintiff has made out any of the grounds as enumerated in Section 34 of the Arbitration and Conciliation Act, 1996, to set aside the impugned award?
(2) Whether suit filed by Plaintiff is not maintainable in view of non-compliance of Section 19 of the MSMED Act?
(3) Whether Defendant is entitled to modification of the award so far as rate of interest is concerned?
AS.10/2013 7 (4) What Order?
10) My answers to the above points are :
Point No.1 : In the Negative;
Point No.2 : In the Affirmative;
Point No.3 : In the Negative;
Point No.4 : As per final order, for the following :
REASONS
11) Point No.1: This suit came to be filed by Plaintiff [Respondent before the Facilitation Council] for setting aside the award passed by the Facilitation Council in Case No.20/2008, whereby, Facilitation Council was pleased to direct the Plaintiff to pay total dues of Rs.1,08,86,689/- to the Defendant [Claimant before the Facilitation Council].
12) From the contentions of the parties and from the arbitral award, facts that have been unfolded AS.10/2013 8 are that, Plaintiff called for tender for supply of PCTR, Bonding Gum and Black Vulcanizing Solution. Plaintiff issued the work orders to Defendant for supply of PCTR, Bonding Gum, Black Vulcanizing Solution and for processing of old tyres vide Letters of Intent dated 10.03.2007, 18.09.2007, 19/20-11- 2007 and 26.12.2007. When dispute arose between them regarding the dues, Defendant made a reference to Facilitation Council on 24.07.2008. Facilitation Council held conciliation. On failure of conciliation, Facilitation Council, being also the Arbitral Tribunal under the MSMED Act, passed the impugned award. Findings of the Facilitation Council regarding the claims of Defendant are as follows :
"36.1. After due consideration of all the documents submitted by both the petitioner and the respondent and after hearing the arguments and counter arguments of both the petitioner and the respondent and after conciliation and arbitration as per the MSMED Act, 2006 the MSEFC concludes that the deductions from the security deposit and adjustment for the pro-rata recovery is not in accordance with the terms and conditions of the tender. Hence, the petitioner has to receive the AS.10/2013 9 pro-rata recovery, security deposit, invoice amount due, the amount due in respect of tyre retreading etc."
13) Being thus the award, Plaintiff contends that, it is only the person, who has filed the Memorandum of Micro or Small Enterprises with the authority as specified by the State Government or Central Government, can only maintain a claim petition before the Facilitation Council by invoking the provisions of the MSMED Act. It is contended that, Defendant is not a Micro or Small Enterprises as provided in MSMED Act. In support of its contention, it has placed reliance on the proceedings of the Facilitation Council held on 08.05.2009. Para - 13.0 of the award reads thus :
" 13.0. The Council noted the absence of the respondent. Since the petitioner unit is referred to BIFR, the unit has graduated to medium scale enterprise which was confirmed by the petitioner. It was pointed out that the MSEFC is to facilitate delay payments to micro and small enterprises only and not medium enterprises".
AS.10/2013 10 It is also relevant to read para - 14.1 of the award. It reads thus :
" 14.1 Petitioner vide his letter addressed to the MSEFC dated 30.06.2009 clarified the BIFR reference and the graduation to medium scale industry stating that they are still the small scale industry having cost of plaint & machinery of Rs.62,98,795/- and cannot be graduated to medium scale just because they have applied to BIFR, which is pending consideration".
14) In the backdrop of the contentions of Plaintiff, it is relevant to take note of Section 8 of the MSMED Act. It reads as follows :
" 8. Memorandum of micro, small and medium enterprises.- (1) Any person who intends to establish,-
(a) a micro or small enterprise, may, at his discretion; or
(b) a medium enterprise engaged in providing or rendering of services may, at his discretion; of
(c) a medium enterprise engaged in the manufacture or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 (65 of 1951), shall file the memorandum of micro, small or, as the case may be, of medium enterprise with such authority as may be specified by the State Government under AS.10/2013 11 sub-section (4) or the Central Government under sub-section (3):
Provided that any person who, before the commencement of this Act, established-
(a) a small scale industry and obtained a registration certificate, may, at his discretion; and
(b) an industry engaged in the manufacture or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 (65 of 1951, having investment in plant and machinery of more than one crore rupees but not exceeding ten crore rupees and, in pursuance of the notification of the Government of India in the erstwhile Ministry of Industry (Department of Industrial Development) number th S.O.477(E), dated the 25 July, 1991 filed an Industrial Entrepreneur's Memorandum, shall within one hundred and eighty days from the commencement of this Act, file the memorandum, in accordance with the provisions of this Act."
15) Acknowledgment cum Permanent Registration Certificate for having registered the Defendant as small establishment is available on records of arbitral proceedings, It clearly goes to show that, Defendant was registered as small establishment on 27.03.1997 for manufacture/ processing of rubber mix compound and Tread AS.10/2013 12 Rubber and date of commencement of production is mentioned as 18.02.1999. This Certificate makes it clear that, Defendant was registered as a small establishment before the commencement of the MSMED Act, 2006. It is, therefore, necessary to file Memorandum of Small Enterprises with the authority as specified by the State Government as provided in Section 8 of the Act and to obtain registration certificate. After going through the records of arbitral proceedings, Defendant has produced the "Entrepreneurs Memorandum Part II Acknowledgment" dated 13.07.2009. It goes to show that, after coming into force of the MSMED Act, Defendant rightly filed Memorandum of Small Establishment, wherein, category of the enterprises is shown as Small/Manufacture. Relevant portion of the Memorandum reads thus :
"M/s.Rachana Rubbers Pvt.Ltd. Has filed Memorandum for manufacture entrprise which has been set up at the address No.82-P1, KIADB Indl.Area, Nanjangud stated in the Form No. P2MSM02150 and allocated Entrepreneur's Memorandum No. as below:
........"
AS.10/2013 13
16) When fact being thus, there is no reason to contend that Defendant has not filed Memorandum as provided in Section 8 of the MSMED Act and claim is not maintainable before the Facilitation Council. Plaintiff, merely on the basis of observation made in the proceedings held on 08.05.2009, has taken evasive contention without any substantiation. Defendant informed the Facilitation Council that it has applied to BIFR for gradation of Defendant to medium scale industry and same is pending for consideration. Facilitation Council has considered the said letter in a perspective manner in Para 14.1 of the award. Be that as it may. As on the date of reference of the dispute to the Facilitation Council, Defendant remains small entrepreneur.
17) Plaintiff's next contention is that, impugned award has been passed by the Chairman only. Facilitation Council is multi members' body. Other AS.10/2013 14 members of the Facilitation Council have not participated in the meeting and they have not subscribed to the award and therefore, award is not at all award in the eye of law. Cause title of the award makes it clear that, proceedings were presided over by the Chairman and four members of the Facilitation Council. Award was signed by the Chairman. Plaintiff contends that, since the award was not signed by all the members of the Facilitation Council, it is not an award in the eye of law. Except bare plea as contended in the plaint, nothing has been placed before the Court to show that award is vitiated by non-subscribing by all the members of the Facilitation Council. First of all, Plaintiff never turned before the Court in order to substantiate its case in spite of giving sufficient opportunities. Be that as it may. Whether award vitiates merely because it was not signed by all the members of the Facilitation Council? Section 21 of the MSMED Act deals with composition of Micro and AS.10/2013 15 Small Enterprises Facilitation Council. Section 21(1) states that, Council shall consists of not less than three and not more than five members. Section 21(2) specifies that Director of Industries who is appointed under Section 21(1)(i) shall be the Chairman of the Facilitation Council. Section 21(3) states that composition of Facilitation Council and procedure to be followed in discharge of Council's functions shall be prescribed by the State Government.
18) At this juncture, it is also relevant to mention Section 18(4) of the MSMED Act. It reads thus :
"18(4). Notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council or the centre providing alternate dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator under this section in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India."
19) It is abundantly clear that, in resolving the dispute between the supplier and the buyer as AS.10/2013 16 referred to in Section 18 of the MSMED Act, Facilitation Council shall have jurisdiction to act as an Arbitrator under sub-section (4) of Section 18 and Director of the Industries shall act as chairperson of the Facilitation Council under Section 21(2) of the MSMED Act. Further, it is clear that, nothing contained in the Arbitration and Conciliation Act, 1996 in appointing Arbitrator is applicable to resolve the dispute between the supplier and the buyer. When a dispute is referred to the Facilitation Council under Section 18(1) of the MSMED Act, Facilitation Council itself takes the matter for conciliation and if conciliation fails, Facilitation Council shall have jurisdiction to act as an Arbitrator as if arbitration was in pursuance of an arbitration agreement referred to in sub-section (1) of Section 7 of the Arbitration and Conciliation Act, 1996, as envisaged in Section 18(3) of the MSMED Act. In the instant case, all the members of the Facilitation Council were shown to be present in AS.10/2013 17 the proceedings. However, award was signed only by Chairman. Section 31(1) of the Arbitration and Conciliation Act, 1996 mandates that, an arbitral award shall be made in writing and shall be signed by the members of the Tribunal. Sub-section (2) specifies that, when more than one Arbitrator, the signatures of the majority of the members of the Arbitral Tribunal shall be sufficient if reasons for omitting signature is stated. A bare reading of Section 31 of the Arbitration and Conciliation Act, 1996, it is clear that, where an Arbitral Tribunal consists of more than one Arbitrator, the signatures of majority members are required if reasons are stated for omitting signatures of other members. It is nowhere stated in Section 31 that, if the majority of the members have not signed the award, whether award becomes non est. When the Act is silent regarding the validity of the award being not signed by majority of the members, under such circumstances, it cannot be said that, award AS.10/2013 18 passed by Facilitation Council containing the signature of the Chairman who represents the Council is no award in the eye of law.
20) Moreover, Section 24 of the MSMED Act deals with overriding effect of Sections 15 to 23 of the MSMED Act. It states that, "the provisions of sections 15 to 23 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force". Section 21 of the MSMED Act states that, Facilitation Council shall consists of not less than three members but not more than five, in which, Director of Industries shall be the Chairman. In other words, Chairman represents the Facilitation Council. Nowhere, it is stated in the MSMED Act, that all the members of the Facilitation Council shall subscribe their signatures on the award being passed by the Facilitation Council. When the MSMED Act is silent regarding this aspect of the matter and moreover, AS.10/2013 19 the provisions of MSMED Act have overriding effect over the other laws, it has to be construed that Chairman, who represents the Facilitation Council, is entitled to sign the award being passed by the Facilitation Council. Even, if it is assumed that, award requires signatures of the majority of members, then, at the most, it can be said that, it may be a procedural lacunae. Said procedural lacunae in any way does not vitiates the award, particularly, when Chairman represents the Facilitation Council. In the instant case, Facilitation Council is constituted under the MSMED Act. It took up the dispute referred to it and passed the award. Proceedings were presided over by all its members. However, award was signed only by Chairman. Merely because, award does not bear the signatures of all its members, award passed by it cannot be said to be no award in the eye of law as contended by the Plaintiff.
AS.10/2013 20
21) Plaintiff's contention is that, during the pendency of the proceedings, Plaintiff paid a sum of Rs.17,99,094/- to the Defendant towards the dues. It is contended that, payment of said amount has been admitted by the Defendant, however, Facilitation Council has ignored the same while passing the award. A bare reading of the award makes it clear that, Facilitation Council has very much taken into consideration of payment of Rs.17,99,094/- by the Plaintiff to the Defendant and has deducted the said sum from the total award amount. Para-35.15 and 36.2 of the award read thus :
"35.15. Council observed that both petitioner and the respondent were agreed that an amount of Rs.17,99,091/- has received and paid after the application filed before the MSEFC. Hence the Council decided to less this amount in the total amount claimed by the petitioner.
36.2 The details of final dues to the petitioner are as follows :-
Invoice amount due Rs.49,80,545/-
Cash discount Rs.94,110/-
AS.10/2013
21
Security deposit Rs.1,54,376/- +
Rs.1,52,855/-
= Rs.17,80404
Pro-rata recovery Rs.4,85,383/-
Tyre retreading Rs.53,45,338/-
Total Rs.1,12,12,607/-
Less Rs.17,99,091/-
Total due Rs.94,13,516/-
"
22) Hence, there is no reason to contend that, Facilitation Council has not taken into consideration of the payment made by the Plaintiff to the Defendant during the arbitral proceedings.
23) Plaintiff's further contention is that, Facilitation Council has not taken into consideration of the accounts produced by the Plaintiff and Facilitation Council, without applying its mind, mechanically passed the award. To substantiate this contention, Plaintiff has not turned to the Court. Award discloses that, Facilitation Council, after due consideration of all the documents submitted by both the parties and after hearing them, has come to the conclusion that Plaintiff is AS.10/2013 22 liable to pay the dues to the Defendant. Contention raised by the Plaintiff has been not substantiated.
24) For the foregoing discussion, it can be fairly said that, Plaintiff has not made out any of the grounds as set out in Section 34 of the Arbitration and Conciliation Act, 1996. When award is passed as per the provisions of the MSMED Act and same is supported by reasons, there would be no occasion for setting aside the award; accordingly, I answer Point No.1 in the negative.
25) Point No.2: Main crux of the matter is that, whether suit filed by the Plaintiff under Section 34 of the Arbitration and Conciliation Act, 1996, is not maintainable due to non-compliance of mandatory provisions of Section 19 of the MSMED Act, 2006. Learned counsel for Defendant is pleased to submit that, suit filed by the Plaintiff is not at all maintainable, as Plaintiff has failed to deposit 75% of the award amount, which is AS.10/2013 23 mandatory to deposit under Section 19 of the MSMED Act, before filing Section 34 petition. This is also the contention of Defendant in its written statement.
26) To assail the contentions of Defendant, it is relevant to mention Section 19 of the MSMED Act, 2006. It 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 :
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."
27) A bare reading of Section 19 of the MSMED Act, it is abundantly clear that, deposit of 75% of AS.10/2013 24 the award amount is a condition precedent to entertain the Section 34 application. Admittedly, in this case, Plaintiff has not deposited 75% of the award amount as contemplated under Section 19 of the MSMED Act. Even after filing application by the Defendant under Section 19 of the Act, for dismissal of the suit for non-compliance of Section 19 of the MSMED Act, Plaintiff has not deposited 75% of the award amount. As per Section 19 of the MSMED Act, it is mandatory to deposit 75% of the amount before filing application under Section 34 of the Arbitration and Conciliation Act, 1996.
28) In Goodyear India Ltd., represented by its Zonal Manager, A.Baburaj Vs. Nortan Intec Rubber (P) Ltd. and another, [2013 (5) CTC 25], relied upon by Defendant, Hon'ble Madras High Court was pleased to hold that, constitutional validity of Section 19 of MSMED Act has already been upheld pre-deposit of 75% of the award AS.10/2013 25 amount is mandatory for entertaining any appeal/petition against the award passed by the Facilitation Council. It is relevant to read para-16 and 22 of the judgment supra.
"16. Even assuming that the argument of the Petitioner is acceptable, here again, the Petitioner failed to comply with the statutory requirement as on the date of filing of the Petition. The petition was admittedly filed on 29.3.2010 without any pre-deposit of 75% of the admitted amount and 75% of the principal amount was deposited only on 10.11.2010, which is much after the expiry of limitation period i.e. 14.04.2010. The grace period of 30 days from the date of filing the Petition expired on 13.5.2010 as on which date, admittedly no deposit of even admitted portion of the award amount was made. Though the Application was filed for waiving the pre-deposit requirement, it was not supported by any provision of law under MSMED Act. Further, the Application for waiving pre- deposit was disposed of on 5.10.2010 granting 6 weeks time for depositing 75% of the entire award amount. Again, the order was complied with only in part. Thus, the Petitioner has not complied with the pre-deposit condition either as on the date of filing of the Petition or before expiry of period of limitation specified for filing the Petition and even after the expiry of the time specified in the order made in the Waiver Application. In view of the mandatory requirement prescribed under Section 19 of MSMED Act, the Arbitration petition cannot be treated as maintainable either on 29.3.2010 or on 13.5.2010 without 75% of the pre-deposit. If at all the same shall be treated as in order, it was only on 4.6.2012, the date on AS.10/2013 26 which pre-deposit of 75% of award amount stands complied with. The petition is, as on 4.6.2012, hopelessly barred by limitation and as there is no provision under Arbitration Act to condone the delay beyond 30 days the Arbitration Petition is hit by limitation as laid down by the Hon'ble Supreme Court and our High Court in the judgments cited below:
22. Thus, the principles laid down in the authorities cited above, are to the effect that under Section 19 of MSMED Act, the constitutional validity of which is already upheld pre-deposit of 75% of the award amount is mandatory for entertaining any Appeal/Petition against the award passed by Conciliation Council. Though the present Arbitration Petition was filed within the time, the mandatory requirement has not been complied with either within the period of limitation or extended period and the petition is hence barred by limitation. On this score alone, the Original Petition is liable to be dismissed.
29) Same principle of law has been enunciated in Mr.S.Silambannan Vs. G.S.Rajasekaran [decided on 10.06.2011 in OSA.119/2011]. Hon'ble Madras High Court in Para-13, 14, 15, 16 and 17 was pleased to detail the applicability of Section 19 of the MSMED Act. Ratio laid down in the judgments supra has further clarified the mandatory nature of Section 19 of the MSMED Act. In the instant case, AS.10/2013 27 as on the date of filing of this suit and even after filing of the suit, Plaintiff has not complied with mandatory provisions of Section 19 of the Act. Under such circumstances, it has to be said that, suit filed by Plaintiff is not maintainable and same requires to be dismissed; accordingly, I answer Point No.2 in the affirmative.
30) Point No.3 : Defendant contends that, transaction, which took place between Defendant and Plaintiff is a commercial transaction. MSMED Act permits the charging of interest at the rate of 18%, however, Facilitation Council awarded only 8% interest, hence, prays for modification of award by granting 18% interest.
31) At this juncture, it is relevant to take note of Sections 15 and 16 of the MSMED Act. They read thus :
"15. Liability of buyer to make payment.- Where any supplier supplies any goods or renders any AS.10/2013 28 services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day:
Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed forty-five days from the day of acceptance or the day of deemed acceptance.
16. Date from which and rate at which interest is payable.-
Where any buyer fails to make payment of the amount to the supplier, as required under section 15, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay compound interest with monthly rests to the supplier on that amount from time the appointed day or, as the case may be, from the date immediately following the date agreed upon, at three times of the bank rate notified by the Reserve Bank."
32) Having gone through the provisions of the MSMED Act, Section 15 makes it clear that, buyer shall make payment for the goods supplied or service rendered on or before the agreed date and when there is no agreed date, before the appointed day. Section 16 further makes it clear that, on the AS.10/2013 29 appointed day, if the buyer fails to make payment, he shall be liable to pay compound interest with monthly rests to the supplier from the appointed day or from the date immediately following the agreed date at three times of the bank rate notified by the Reserve Bank. A bare reading of above provisions of law, it is clear that, Defendant is entitled to compound interest at three times of the bank rate as Plaintiff failed to make payment. However, it was necessary to lead evidence as to agreed date of payment for the goods supplied or when there is no agreement, what was the appointed day for payment. All are factual aspects of the matter and same were required be pleaded and proved before the Facilitation Council. Then only, Facilitation Council could have come to the conclusion that whether Defendant is entitled to compound interest as contemplated under Section 16 of the MSMED Act. In absence of all such evidence, arrival of such conclusion by the AS.10/2013 30 Facilitation Council would be impossible. It is not the case of Defendant that, it had made all those efforts before the Facilitation Council and same was not considered by the Facilitation Council. Its only contention is that, as per the provisions of MSMED Act, Facilitation Council ought to have granted 18% interest. There is no basis to contend so. Anyhow, Defendant has not challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 for the grounds stated therein. It is the Plaintiff, who challenged the arbitral award, in which, Defendant sought for modification of the award without challenging the same. Under such circumstances, in the absence of challenging the award, there is no reason to go into the merits of the award; accordingly, I answer Point No.3 in the negative.
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33) Point No.4: For the foregoing discussion and answer to Points No.1 to 3, I proceed to pass the following :
ORDER (1) Suit filed by Plaintiff under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the award in Case No.20/2008 passed by Micro and Small Enterprises Facilitation Council, Bangalore; is hereby dismissed.
(2) No order as to costs.
(Dictated to the Judgment Writer, transcribed and computerized by her, transcript thereof corrected and then pronounced by me in open court, on this the 6th day of June, 2020.) (RAMA NAIK) VI Addl.City Civil & Sessions Judge Bengaluru City