Factual Matrix 

In the Matter of Pratap Industries Products v. Hindustan Construction Co. Ltd, The petitioner was given a favourable arbitration award by the arbitrator on October 30, 2021. In addition to contesting the decision, the respondent also applied Section 19 of the MSME Act asking for a moratorium on the arbitration decision’s implementation and execution. The District Judge accepted the respondent’s Section 19 application in an order dated December 21, 2022, because the respondent had paid 75% of the award amount in compliance with the MSME Act Section 19. The petitioner submitted a petition before this Court contesting the impugned ruling made by the District Judge because they were dissatisfied with it.

Issue 

Will the respondent’s deposit with the District Judge comply with Section 19 of the MSME Act’s requirements?

Observation of the Court 

The District Judge should first determine whether or not 75% of the amount awarded is deposited before allowing an application made in accordance with Section 19 of the Micro, Small, and Medium-Sized Business Development Act, 2006 MSMD Act according to a ruling made by the Himachal Pradesh High Court’s single bench, which was led by Justice Jyotsna Rewal Dua.

The court referenced Tirupati Steels v. Shubh Industrial Component, which determined that Section 19 of the MSME Act requires a mandatory pre-deposit of 75% of the granted sum. However, the court additionally permitted instalments due to the difficulty the appeal applicant had to endure. The District Judge’s order declared that the respondent had deposited 75% of the given amount without addressing whether the actual amount satisfied the pre-deposit requirement. The court accepted the petitioner’s argument that the respondent failed to deposit 75% of the awarded amount.
The Court overturned the challenged ruling dated 21 December 2022 and ordered the District Court to reconsider and rule on the respondent’s application in conformity with the law. The Court further ordered the District Court to postpone carrying out the contested Arbitral Award, which was issued on October 30, 2021, until the outcome of the respondent’s application.

CASE NAME – Pratap Industries Products v. Hindustan Construction Co. Ltd., CMPMO No. 301 of 2023