Rajasthan High Court – Jaipur
Superintending Engineer (Mm) vs M/S Anamika Conductors Pvt. Ltd. on 24 July, 2026
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HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Civil Miscellaneous Appeal No. 5190/2024
CNR: RJHC021075212024 | URN: CMA / 8464U / 2024
1. Superintending Engineer (MM), Purvanchal Vidyut Vitran
Nigam Limited, Vidyut Nagar, Varansi 221004
----Appellant/Buyer/Applicant
(Non-Claimant Before MSE Fecilitation Council, Jaipur)
Versus
M/s Anamika Conductors Pvt. Ltd., Through Its Director B-70,
Upasana House, II Floor Rajendra Marg, Bapu Nagar, Jaipur
302015
----Respondent/Supplier/Non-Applicant
(Claimant Before MSE Fecilitation Council, Jaipur)
For Appellant(s) : Mr. Alok Chaturvedi, Adv.
Mr. Rahul Sharma, Adv.
Mr. Bhawani Shanker, Adv.
Mr. Kartik Sharma, Adv.
Ms. Vedika Yadav, Adv.
Mr. Ajay Kumar Saini, Adv.
For Respondent(s) : Mr. R.K. Agarwal, Senior Adv.
assisted by
Mr. Pulkit Arora,Adv.
Mr. Anmol Vyas, Adv.
HON’BLE MR. JUSTICE ARUN MONGA
HON’BLE MR. JUSTICE ASHUTOSH KUMAR
Order (Oral)
Reportable
24/07/2026
Per: Arun Monga, J.
1. This appeal is directed against the order dated 16.11.2024 passed
by the Commercial Court No. 1, Jaipur Metropolitan-II, Jaipur, whereby
the appellant’s objection application under Section 34 of the Arbitration
and Conciliation Act, 1996 (for short “the Act of 1996”) was dismissed
for non-compliance with the requirement of pre-deposit of 75% of the
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awarded amount under Section 19 of the Micro, Small and Medium
Enterprises Development Act, 2006 (for short “the MSME Act“).
2. Briefly, the facts are that the respondent, M/s Anamika
Conductors Pvt. Ltd., invoked Section 18(1) of the MSME Act by filing a
reference before the Rajasthan Micro and Small Enterprises Facilitation
Council, Jaipur Headquarters-I (“the Facilitation Council”) for recovery
of amounts allegedly due under two invoices arising out of purchase
orders issued by the appellant. The Facilitation Council took up the
matter for conciliation under Section 18(2); in its meeting dated
22.12.2020, it directed the parties to explore an amicable settlement,
and in its meeting dated 10.02.2021, recording that no settlement had
been reached within the prescribed period, it declared the conciliation to
have failed and initiated arbitration under Section 18(3) of the MSME
Act.
2.1 Upon commencement of the arbitral proceedings, the Facilitation
Council directed the respondent to file its statement of claim and the
appellant to file its statement of defence upon receipt thereof. The
matter was listed before the Facilitation Council on several dates. By
order dated 27.02.2023, Shri Pankaj Purohit was appointed as the sole
Arbitrator. The appellant filed preliminary objections before the learned
Arbitrator on 09.05.2023, whereupon time was granted to the
respondent to file its reply.
2.2 While the proceedings before the learned Arbitrator were pending,
the matter was again taken up by the Facilitation Council itself. The
appellant participated and raised objections relating, inter alia, to
limitation, the scope of the reference, the quality of the goods supplied,
and the jurisdiction of the Facilitation Council. Upon conclusion of the
proceedings, the Facilitation Council passed an award dated
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02.07.2024, directing the appellant to pay a sum of ₹6,50,95,249/-,
inclusive of interest, to the respondent.
2.3 Aggrieved, the appellant filed an objection application under
Section 34 of the Act of 1996 before the Commercial Court on
25.09.2024. The respondent entered appearance on caveat. The
appellant initially sought permission to furnish a bank guarantee
equivalent to 75% of the awarded amount in lieu of the statutory pre-
deposit, but withdrew that application on 08.11.2024 and, on the same
day, filed an application, supported by an affidavit of the competent
authority, praying that it be permitted to deposit 75% of the awarded
amount within fifteen days.
2.4 On 16.11.2024, the appellant moved a further application seeking
additional time to make the deposit. By the impugned order of the same
date, the Commercial Court declined the request for extension of time
and, in the absence of the statutory pre-deposit, dismissed the
application under Section 34 of the Act of 1996.
2.5 Hence this appeal.
3. Learned counsel for the appellant submits that the impugned
order is unsustainable, as the learned Commercial Court dismissed the
Section 34 application solely on the ground of non-deposit, without
examining the merits of the challenge to the award. The appellant never
sought exemption from the statutory pre-deposit; it prayed only for
reasonable time to comply, having regard to the substantial amount
involved and the financial sanctions required of a public sector utility
dealing with public funds.
3.1 On merits, it is contended that the award dated 02.07.2024 is
without jurisdiction: once the Facilitation Council had appointed a sole
Arbitrator, it could not thereafter resume the arbitral proceedings and
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pronounce the award itself; the appellant’s preliminary objections
remained undecided; no proper statement of claim was filed in terms of
the directions issued; and the award travelled beyond the scope of the
original reference, which was confined to two invoices. It is further
contended that the award was rendered beyond the period prescribed
under the Act of 1996, the arbitral proceedings having commenced on
10.02.2021 and the award having been passed only on 02.07.2024.
3.2 On these grounds, it is prayed that the impugned order be set
aside, reasonable time be granted to comply with the requirement of
pre-deposit, and the objections under Section 34 be restored for
adjudication on merits.
4. Per contra, learned Senior Counsel for the respondent contends
that the impugned order is in accordance with law. The requirement of
depositing 75% of the awarded amount under Section 19 of the MSME
Act is mandatory, as consistently held by the Hon’ble Supreme Court
and this Court. The appellant first sought exemption by offering a bank
guarantee, withdrew that application on 08.11.2024, and, despite being
granted seven days’ time, failed to deposit the requisite amount; on
16.11.2024, instead of complying, it sought yet further time. The
Commercial Court, therefore, rightly rejected the request and dismissed
the Section 34 application. It is urged that, absent the pre-deposit
made prior to or along with the objection petition, the petition was not
maintainable, and no cognizance thereof could even have been taken by
the Commercial Court. Reliance is placed upon the following decisions:
(ii) Union of India & Ors. v. M/s Vijay Electricals2;
1 D.B. SAW No.1540/2017, Rajasthan High Court
2 D.B. CMA No.207/2025, Rajasthan High Court
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(iii) M/s Crompton Greaves Ltd. v. M/s Annapurna Electronics
& Ors.3;
(iv) M/s India Glycols Ltd. & Anr. v. Micro and Small
Enterprises Facilitation Council & Ors.4
5. Having heard the rival contentions and perused the record, the
questions that arise for our consideration are:
(i). Whether Section 19 of the MSME Act requires the pre-deposit of
75% of the awarded amount to be made prior to or
simultaneously with the filing of the application under Section 34
of the Act of 1996, failing which the application is liable to be
dismissed as not maintainable ?
and ;
(ii). Whether, on the facts of this case, the learned Commercial Court
was justified in declining the appellant’s request for time and
dismissing the application ?
6. Before adverting to the authorities cited, it is apposite to notice
the relevant statutory provision i.e. Section 19 of the MSME Act which
reads as under:-
“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.” (emphasis is ours)
7. A plain reading of Section 19 yields two significant features. First,
the bar it enacts is against the application being “entertained” by the
3 AIR 2016 Kartnataka 13
4 AIR 2024 SC 285
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Court without the pre-deposit, not against its institution or presentation.
To “entertain” an application is to take it up for consideration on its
merits; the provision does not, in terms, require the deposit to be made
prior to or simultaneously with the filing of the application. Secondly,
the deposit is to be made “in the manner directed by such court”, words
which themselves contemplate a judicial direction issued after the
application is presented, prescribing the mode and, by necessary
implication, the time within which the deposit is to be made. The
statutory scheme thus mandates the pre-deposit as a condition
precedent to the adjudication of the challenge, while leaving the
manner and timing of compliance to the sound discretion of the Court.
8. The decisions relied upon by learned Senior Counsel are
consistent with, and not contrary to, this construction. In M/s India
Glycols Ltd. (supra), the Hon’ble Supreme Court held:
“9. Section 19 provides recourse against an award of the Facilitation
Council in the following terms:
“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.”
10. In terms of Section 19, an application for setting aside an award of
the Facilitation Council cannot be entertained by any court unless the
appellant has deposited seventy-five per cent of the amount in terms of
the award. In view of the provisions of Section 18(4), where the
Facilitation Council proceeds to arbitrate upon a dispute, the provisions
of the Act of 1996 are to apply to the dispute as if it is in pursuance of an
arbitration agreement under sub-section (1) of Section 7 of that Act.
Hence, the remedy which is provided under Section 34 of the Act of 1996
would govern an award of the Facilitation Council. However, there is a
super added condition which is imposed by Section 19 of MSMED Act
2006 to the effect that an application for setting aside an award can be
entertained only upon the appellant depositing with the Council seventy-
five per cent of the amount in terms of the award. Section 19 has been
introduced as a measure of security for enterprises for whom a special
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provision is made in the MSMED Act by Parliament. In view of the
provisions of Section 18(4), the appellant had a remedy under Section 34
of the Act of 1996 to challenge the award which it failed to pursue.”
8.1 In M/s Crompton Greaves Ltd. (supra), it was held:
“21. Sub-section (2) of Section 34 of the Arbitration Act provides that,
an arbitral award may be set aside by the Court only if the party
making the application furnishes proof of the grounds set out in the said
application. Therefore, only if the aforesaid statutory ground is made
out, the Court gets the jurisdiction to set aside the award. Otherwise the
question of setting aside the award would not arise. Sub-section (3) of
Section 34 provides the period of limitation within which an application
for setting aside the said award is to be made. Even if such an
application is made the Court is to be satisfied that the applicant was
prevented by sufficient cause from making the application, within a
period of three months, to condone the delay. The Court has the
discretion to condone the delay and entertain the application and
decide the application on merits. Then the question of setting aside the
award, on the grounds mentioned under sub Section (2) arises. If the
delay is not condoned, the application for condonation of delay is
dismissed, consequently the application under sub-section (1) of Section
34 of the Arbitration Act, also stands dismissed. The resultant position
is that the court is declining to set aside the award. The other scenario
is that if the application is not made within the prescribed period, an
application for setting aside the award under Section 34 is not
maintainable, and consequently the application stands dismissed.”
8.2 These decisions, as also those in Bihar State Electricity Board
(supra) and M/s Vijay Electricals (supra), enunciate the principle
that the requirement of pre-deposit under Section 19 is mandatory and
that, absent compliance, the Court is precluded from proceeding to
adjudicate the challenge on merits. With that principle, we are in
respectful and complete agreement. However, none of these decisions
holds that the deposit must be made prior to or simultaneously with the
presentation of the Section 34 application, or that an application
unaccompanied by the deposit is stillborn and incapable of even being
taken cognizance of for the limited purpose of directing compliance.
9. That the rigour of Section 19 accommodates judicially-regulated
flexibility in the manner of compliance stands settled by the Hon’ble
Supreme Court in Gujarat State Disaster Management Authority v.
Aska Equipments Limited5, wherein it was held:
5 2021 SCC OnLine SC 917
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[2026:RJ-JP:28578-DB] (8 of 10) [CMA-5190/2024]“13. On a plain/fair reading of Section 19 of the MSME Act, 2006,
reproduced hereinabove, at the time/before entertaining the application for
setting aside the award made under Section 34 of the Arbitration and
Conciliation Act, the appellant-applicant has to deposit 75% of the amount in
terms of the award as a pre-deposit. The requirement of deposit of 75% of the
amount in terms of the award as a pre-deposit is mandatory. However, at the
same time, considering the hardship which may be projected before the
appellate court and if the appellate court is satisfied that there shall be undue
hardship caused to the appellant-applicant to deposit 75% of the awarded
amount as a pre-deposit at a time, the court may allow the pre-deposit to be
made in instalments.”
9.1 If, as held in Aska Equipments (supra), the Court may, upon
satisfaction of undue hardship, permit the pre-deposit to be made in
instalments, it follows a fortiori that the Court may grant a reasonable
time for making the deposit in a lump sum. The High Court of Orissa
adopted precisely this course in M/s Aryan Ispat & Power Limited v.
General Manager6, observing:
“24. This Court therefore declines to interfere with the impugned order
directing deposit of 75% of the awarded amount. However, in the interest of
justice, the Petitioner is granted 3 months from the date of this order to deposit
the requisite amount in the manner specified by the Ld. Court below. After
deposit of the same, the appeal under Section 34 of the A&C Act preferred by
the Petitioner shall be heard. All contentions on merits are left open. Nothing
contained in the present order shall influence the adjudication of the Section 34
application. The Parties shall cooperate so as to enable early resolution of their
dispute.”
10. Examined on the anvil of the above principles, the facts of the
present case speak for themselves. The award was passed on
02.07.2024; the objection application was preferred on 25.09.2024,
i.e., within limitation; and when the matter came up before the learned
Commercial Court on 08.11.2024, the appellant, having withdrawn its
application for furnishing a bank guarantee, filed on the very same day
an application duly supported by an affidavit of the competent authority
praying that it be permitted to deposit 75% of the awarded amount
within fifteen days. The appellant is a State Government entity; the
deposit of an amount exceeding ₹6.50 crore from the public exchequer
necessarily entails administrative and financial sanctions, a ground
reality of which judicial notice can be taken.
6 WPC NO. 34448/2025
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10.1 Moreover, the appellant at no stage sought exemption from, or
evaded, the statutory obligation; its request was the innocuous one of a
short accommodation to comply. Its bona fides stand conclusively
established by the fact that the amount was actually deposited on
08.01.2025.
10.2 The learned Commercial Court, instead of weighing these
circumstances and satisfying itself whether a short extension would
cause any prejudice to the respondent, whose interest stood fully
protected by the proviso to Section 19, under which a reasonable
percentage of the deposit is to be released to the supplier pending
disposal, proceeded to dismiss the Section 34 application outright within
eight days of the first listing. Such an approach, in our considered view,
is over-pedantic and mechanical, and reflects non-application of mind to
the discretion which Section 19 itself vests in the Court through the
words “in the manner directed by such court”. The consequence of the
impugned order is to foreclose, on a procedural default remedied within
weeks, the appellant’s only statutory remedy against an award of over
₹6.50 crore, a consequence wholly disproportionate to the default, and
one the statute does not compel.
11. We accordingly hold that while the requirement of pre-deposit of
75% of the awarded amount under Section 19 of the MSME Act is
mandatory and must be complied with before the Section 34 application
is entertained on merits, the provision does not require the deposit to
accompany the application at the time of its presentation, and the Court
is empowered to grant reasonable time and, in an appropriate case of
demonstrated hardship, to permit instalments for making the deposit.
The learned Commercial Court erred in declining the appellant’s bona
fide request for time and in dismissing the application.
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12. The appeal is, therefore, allowed. The impugned order dated
16.11.2024 is set aside, and the objection petition under Section 34 of
the Act of 1996 is restored to its original number, the statutory pre-
deposit having already been made on 08.01.2025. The parties are
directed to appear before the learned Commercial Court on 24.08.2026,
and the petition shall thereafter be proceeded with in accordance with
law. Nothing observed herein shall be construed as an expression of
opinion on the merits of the objections. No order as to costs.
13. All pending applications also stand disposed of.
(ASHUTOSH KUMAR),J (ARUN MONGA),J
27/KESHAV/TANISHA
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