Telangana High Court
M/S Kendriya Bhandar vs Atlantis Agritech Private Limited on 15 April, 2026
*THE HON'BLE JUSTICE MOUSHUMI BHATTACHARYA
AND
*THE HON'BLE JUSTICE GADI PRAVEEN KUMAR
+ CIVIL REVISION PETITION NO.503 OF 2026
% 15-04-2026
# M/s. Kendriya Bhandar
... Petitioner
AND
$ Atlantis Agritech Private Limited and Three Others
...Respondents
!Counsel for the Appellant: Mr. Avinash Desai, learned Senior Counsel
representing Mr.M.Pranav, learned counsel
for the petitioner.
^Counsel for Respondents: Mr. A. Venkatesh, learned Senior Counsel
representing Mr.Mohammed Omer Farooq,
learned counsel for the respondent No.1
<Gist :
>Head Note :
? Cases referred
1 WRIT APPEAL No.734 of 2022
2 (1991) 4 SCC 139
3 2023 SCC OnLine Cal 2200
4 (2021) 18 SCC 790
5 (2023) 6SCC 401
6 2025 INSC 54
2
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CRP.No.503 of 2026
HIGH COURT FOR THE STATE OF TELANGANA
AT HYDERABAD
***
THE HON'BLE JUSTICE MOUSHUMI BHATTACHARYA
AND
THE HON'BLE JUSTICE GADI PRAVEEN KUMAR
CIVIL REVISION PETITION NO.503 OF 2026
15th April, 2026
BETWEEN:
M/s. Kendriya Bhandar
... Petitioner
AND
Atlantis Agritech Private Limited and Three Others
...Respondents
Mr. Avinash Desai, learned Senior Counsel representing Mr. M. Pranav,
learned counsel appearing for the petitioner.
Mr. A. Venkatesh, learned Senior Counsel representing Mr. Mohammed
Omer Farooq, learned counsel appearing for the respondent No.1.
ORDER:
(Per Hon’ble Justice Moushumi Bhattacharya)
1. The Civil Revision Petition has been filed against an order dated
06.02.2026 passed by Commercial Court at Hyderabad dismissing an
application filed by the petitioner for exemption the petitioner from the
mandatory deposit requirement under section 19 of The Micro, Small
and Medium Enterprises Development Act, 2006 (“MSMED Act“). The
petitioner made an alternative prayer for directing one KPJ
Tradings/KPJ Industries Limited to deposit 75% of the awarded
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amount or to permit the petitioner to deposit Rs.1,00,000/- in
instalments.
2. The petitioner sought the above reliefs in respect of the
petitioner’s challenge to an Arbitral Award passed by the Micro and
Small Enterprises Facilitation Council (“Facilitation Council”) on
07.08.2024 whereby the petitioner (respondent before the Facilitation
Council) was directed to pay Rs.41,86,98,166/- along with interest of
Rs.29,70,66,757/- along with future interest.
3. The total amount payable by the petitioner to the respondent
No.1 under the Arbitral Award is Rs.98,78,88,428.94/- inclusive of
interest as on 15.02.2026. The admitted position is that the petitioner
has not paid a single rupee to the respondent No.1 till date.
4. By the impugned order, the Commercial Court dismissed the
petitioner’s application on inter alia the basis that section 19 of the
MSMED Act bars the Court from entertaining any application under
section 34 of the 1996 Act until the petitioner deposits 75% of the
awarded amount.
5. The Commercial Court also relied on an order passed by this
Court (consisting of one of us – Justice Moushumi Bhattacharya)
dated 02.05.2025 in CRP No.1591 of 2025 wherein the Court held
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that the Award-Debtor must comply with the statutory mandate of
section 19 of the MSMED Act, 2006.
6. A Writ Petition filed by the petitioner challenging the Award was
also dismissed by a learned Single Judge of the High Court of Gujarat
on 18.11.2024. The petitioner’s Appeal challenging the said order was
dismissed by the Division Bench of the High Court of Gujarat on
27.01.2025. The Supreme Court dismissed the petitioner’s SLP
against the order of the Division Bench on 09.05.2025
7. It is also undisputed that this Division Bench, sitting in a
different combination, had passed an ex parte order in favour of the
petitioner in an earlier CRP (No.1591 of 2025) granting a limited stay
of the Execution Proceedings filed by the respondent No.1 arising out
of the Arbitral Award till the said respondent was served and had an
opportunity to present its case, while making it clear that the order
shall not prevent the petitioner from approaching the Trial Court to
file an appropriate application for compliance with section 19 of the
MSMED Act and for the Trial Court to entertain the same in
accordance with law.
8. On 11.06.2025, after hearing learned Senior Counsel appearing
for the petitioner as well as the respondent No.1, the Court directed
the Commercial Court to number the section 34 petition filed by the
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petitioner and further that the petitioner shall file an application for
compliance of section 19 of the MSMED Act by 16.06.2025.
9. The petitioner filed I.A.No.515 of 2025 for the Commercial Court
to hold that section 19 is not applicable to the petitioner to the extent
of the pre-deposit requirement. The Trial Court dismissed the said
I.A. by way of the impugned order dated 06.02.2026.
Contentions of the Parties
10. Learned Senior Counsel appearing for the petitioner submits
that the petitioner should be exempted from the pre-deposit
requirement under section 19 since the petitioner is a “Supplier” as
defined under section 2(n) of the MSMED Act and by reason of the fact
that the petitioner itself is an MSME under section 2(n)(iii). Counsel
relies on M/s. S. R. Technologies (Unit-II) v. Micro and Small Enterprises
Facilitation Council 1 to urge that a Micro or Small Enterprise would be
exempted from the pre-deposit requirement under section 19.
11. Counsel relies on the nature of the transaction also to urge that
the petitioner is actually the “Supplier” (as opposed to the “Buyer”) by
reason of a back-to-back transaction with the respondent No.1 and
one other third party. According to counsel, the nature of the
transaction would make it clear that the petitioner would only be
1 WRIT APPEAL No.734 of 2022
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liable for payment as and when amounts were received by it from one
KPJ Industries Limited/KPJ Tradings. Counsel submits that the
order passed by this Court on 11.06.2025 directing the petitioner to
file an application for compliance of section 19 would have to be
understood in terms of the objective of the MSMED Act.
12. Learned Senior Counsel appearing for the respondent No.1 gives
the factual background with reference to the transaction between the
petitioner and the respondent No.1 which involved the respondent
No.1 supplying agricultural machinery to the petitioner under Supply
Orders issued by the petitioner on the respondent No.1 from
26.08.2019 onwards. The respondent No.1 raised invoices on the
petitioner and the petitioner acknowledged receipt of the goods.
13. Counsel construes section 19 of the MSMED Act to urge that
exemption can only be given to an entity who is a “Supplier” and
further that there is no privity of contract between the respondent
No.1 and the entity to which the petitioner chose to sell the goods. It
is further submitted that M/s. S.R. Technologies (Unit-II) (supra)
cannot be interpreted to mean that all Micro or Small Enterprises are
exempted from the requirement of pre-deposit and can be read only as
an authority for the point which the Court was called upon to decide.
14. It is argued that the petitioner obtained MSME registration on
23.07.2021, whereas the invoice for the last supply made by the
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respondent No.1 to the petitioner was raised much earlier on
08.01.2021. Counsel submits that the contention of the petitioner
being exempted from the pre-deposit requirement by reason of being
an MSME is beyond the pleadings of the petitioner before the
Commercial Court.
Decision
15. We deem it fit to decide the issues raised by the parties under
separate heads since several points have been raised on behalf of the
parties.
Section 19 of the MSMED Act, 2006
16. Section 19 of the MSMED Act falls under Chapter V – “Delayed
Payments to Micro and Small Enterprises”. Section 19 is a
culmination of sections 15-18, which encompass the liability of a
Buyer to make payment to a Supplier before the appointed day,
computation of interest on the failure of the Buyer to make payment
of the agreed amount to the Supplier and recovery of the amount from
any goods supplied/services rendered by the Supplier.
17. Section 18 (pre-notification pursuant to The Mediation Act,
2023) provides for the stages after reference of a dispute to the
Facilitation Council with regard to any amount due under section 17.
Section 18 provides for Conciliation and thereafter Arbitration through
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the deeming provision under sub-section (3) thereof. Sections 18(3)
and (4) provide for adjudication of the reference through the
Facilitation Council acting as an Arbitrator (section 18(4)) in the
dispute.
18. Section 19 begins with the use of mandatory words, which
continues through the statement of the section, including the proviso
thereto. Section 19 is set out below:
“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”
19. Section 19 makes it clear that the deposit requirement of 75%
must be paid by all other entities, except the Supplier, for any
application for setting aside any Award by the Facilitation Council.
Section 19 further contains an express bar on the Court from
entertaining any application challenging the Award/Decree passed by
the Council unless the applicant deposits 75% of the awarded
amount/Decree. Section 19 aligns with the stated object of the
MSMED Act for facilitating the promotion, development and
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enhancing the competitiveness of Micro, Small and Medium
Enterprises.
20. The construction of section 19, which is relevant to the present
matter, is that a Buyer or any other entity, not being a Supplier, is
under a statutory obligation to comply with the pre-deposit
requirement for assailing any Award passed by the Facilitation
Council. In this case, the petitioner seeks exemption from the
mandate on the ground that the petitioner is not a Supplier but an
MSME and would hence not be amenable to the mandatory
requirement.
21. Section 24 of the Act seals the mandate by declaring that
sections 15 to 23 (which includes section 19) shall have overriding
effect over any inconsistent laws for the time being in force.
“Supplier” under the MSMED Act
22. Section 2(n) defines a “Supplier” as follows.
“(n) “supplier” means a micro or small enterprise, which has
filed a memorandum with the authority referred to in sub-section (1)
of section 8, and includes,–
(i) the National Small Industries Corporation, being a company,
registered under the Companies Act, 1956 (1 of 1956);
(ii) the Small Industries Development Corporation of a State or a
Union territory, by whatever name called, being a company registered
under the Companies Act, 1956 (1 of 1956);
(iii) any company, co-operative society, trust or a body, by whatever
name called, registered or constituted under any law for the time
10MB,J & GPK,J
CRP.No.503 of 2026being in force and engaged in selling goods produced by micro or
small enterprises and rendering services which are provided by such
enterprises;”
23. The above definition would make it clear that a Supplier would
have to be a Micro or Small Enterprise as defined under sections 2(h)
and 2(m), respectively. The definition of Supplier assumes importance
with reference to section 19, which exempts only a Supplier from the
pre-deposit requirement. The definition of Supplier must also be seen
in the context of the petitioner’s argument that the petitioner is
actually a Supplier (and not a Buyer as held by the Commercial Court)
in relation to the back-to-back transaction where the petitioner was to
supply goods to a third party/KPJ Tradings.
The Court’s View
24. The definition of “Supplier” under section 2(n) must be seen
within the prism of not only the object of the MSMED Act but also the
“relief provisions” in favour of the Supplier under sections 15-19 of the
MSMED Act.
25. In essence, the MSMED Act favourably looks upon a Supplier
who has supplied goods to a Buyer but has not received payment.
Sections 15-19 are the protective provisions whereby the un-paid
Supplier can not only demand payment from the Buyer, under the
statutory liability cast upon the Buyer under sections 15, 16 and 17 of
the MSMED Act, but an enhanced liability to pay compound interest
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with monthly rests to the Supplier in relation to the failed payment.
The Act also entitles the aggrieved party to make a reference to the
Facilitation Council with regard to the unpaid amounts under section
17.
26. Section 18(1) read with section 17 would make it clear that ‘any
party to a dispute’ would mean a Supplier who has not received
payment despite supply of goods and services to the Buyer and the
liability of the Buyer to pay the amount with interest as provided
under section 16.
27. The tilt in the statute in favour of the Supplier would also be
evident from section 18, which confers jurisdiction on the Council to
act as an Arbitrator or Conciliator (or Mediator) in a dispute between
the Supplier located within its jurisdiction and a Buyer located
anywhere in India.
28. The proposed amendment to section 18 retains this authority of
the Council under section 18(5). The un-amended section 18(5) also
mandates that every reference made under section 18 shall be decided
within a period of ninety days from the date of making such a
reference. However, the protection given to a Supplier under the Act
is most pronounced in section 19 where every other entity, who is not
a Supplier, must comply with the mandate of depositing 75% of the
awarded/decretal amount before seeking to set aside the Award.
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29. The exemption is contained in the express words is reiterated
below:
‘…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…’
30. The purposive construction of the exception carved out for the
Supplier in section 19 is that the exemption would apply only to a
Supplier as defined under section 2(n) of the MSMED Act, as opposed
to any other entity or, in other words, the world at large. The un-
exempted category would include not only a Buyer, which is obvious
from sections 15-18, but also any possible stakeholders or
transactional entities to the transaction or the dispute which was
adjudicated by the Council and culminated in the Award or Decree.
31. The petitioner’s interpretation of the definition of a Supplier as
also including a company, co-operative society, trust, or a body
registered or constituted under any law (section 2(n)(iii)) is
self-defeating since sub-clause (iii) ends with the qualification – set
out below.
‘…and engaged in selling goods produced by micro
or small enterprises and rendering services which are
provided by such enterprises…’
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32. Therefore, section 2(n)(iii) qualifies that the company, co-
operative society, trust, or a body registered or constituted under any
law must to be a Seller of Goods or Supplier of Services produced by,
or provided by, a micro or small enterprise.
33. The proviso to section 19 confirms the statutory favour granted
to a Supplier by empowering the Court to order the payment of a
percentage of the amount deposited by the other entity under section
19, pending disposal of the application to set aside the Award, Decree,
or Order.
34. As a consequence, the express exemption in section 19 would
only apply to a “Supplier” as understood by a combined reading of
section 2(n), i.e., entities mentioned under that section (under (i), (ii),
and (iii)) and other entities who are engaged in selling goods and
rendering services produced and provided by Micro or Small
Enterprises.
The Transaction between the Parties:
35. The respondent No.1 supplied agricultural machinery to the
petitioner pursuant to supply orders issued by the petitioner on the
respondent No.1 from 26.08.2019 onwards. The respondent No.1
raised invoices on the petitioner and the petitioner acknowledged
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CRP.No.503 of 2026
receipt of the goods and its liability to pay the respondent No.1 vide
letters dated 07.09.2021, 09.01.2021 and 08.09.2022.
36. The respondent No.1 initiated arbitral proceedings before the
Micro Small Enterprise Facilitation Council, Gandhinagar, Gujarat
since the petitioner failed to make payment for the supplies. The
Facilitation Council passed an Award dated 07.08.2024 in favour of
the respondent No.1. Under the Award, the petitioner was held liable
to pay a principal amount of Rs.41,86,98,166/- and interest of
Rs.29,70,66,757/-, in addition to future interest. The total amount
payable by the petitioner to the respondent No.1, under the Arbitral
Award, including interest, stood at Rs.98,78,88,428.94 as of
15.02.2026.
i. The Petitioner is described as the ‘Buyer’ in the Transaction:
37. The petitioner is described as the ‘Buyer’ in the material
documents filed before the Commercial Court.
• It was specifically averred by the respondent No.1 in the
Statement of Claim that the respondent No.1 had supplied
goods to the petitioner and the same were accepted by the
petitioner, leaving an outstanding principal balance of
Rs.41,86,98,166/-.
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CRP.No.503 of 2026
• In the Statement of Defense filed by the petitioner before the
Facilitation Council, the petitioner specifically admitted receipt
of goods and further acknowledged its liability to make
payments to the respondent No.1.
• The Statement of Defence filed by the petitioner before the
Facilitation Counsel is captioned as ‘Statement of Defense by the
respondent/Buyer’.
• The petitioner is also shown as the ‘Buyer’ in the Memorandum
of Understanding (MoU) dated 09.08.2019 executed between the
respondent No.1 and the Regional Manager of the petitioner.
The MoU describes the respondent No.1 as the ‘Supplier’ and
the petitioner as ‘Stockist’ (Spelt as ‘Stockiest’ at various
places). Furthermore, several clauses in the MoU refer to the
petitioner as the ‘Buyer/Stockist’.
• The supply orders on record, issued by the petitioner to the
respondent No.1, clearly stipulate that the respondent No.1 was
required to supply and deliver the goods to the petitioner in
accordance with the terms and conditions specified therein.
38. Hence, contrary to the stand taken by the petitioner, the
documents filed before the Commercial Court, which also form part of
the record before this Court, unequivocally and consistently describe
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CRP.No.503 of 2026
the petitioner as the ‘Buyer’. The respondent No.1, on the other hand,
is uniformly described as the ‘Supplier’.
ii. ‘Back-to-Back Contract’ – as alleged by the Petitioner:
39. The petitioner’s primary contention with regard to the claimed
exemption under section 19 of the MSMED Act is that the petitioner
is, in fact, a ‘Supplier’ (as opposed to a ‘Buyer’) in respect of the goods
allegedly supplied by the petitioner to a third party. The petitioner
contends that the petitioner’s liability to pay the respondent No.1
arises only upon receipt of payment from KPJ Industries, which is the
ultimate beneficiary of the contract. Consequently, the petitioner
sought for an alternative prayer for a direction to KPJ Industries to
deposit 75% of the awarded amount under the impugned Arbitral
Award, in compliance with section 19 of the Act. The aforesaid
curious prayer made in the petitioner’s I.A. before the Commercial
Court must be understood in light of this argument.
40. This Court is of the firm view that the petitioner’s contention of
a ”Back-to-Back Contract’ is devoid of merit, for the following reasons:
41. A party may act as a ‘Buyer’ in respect of a particular
transaction, while the same party may act as a ‘Supplier’ in an
entirely different transaction and context. The term ‘Supplier’, as
defined under section 2(n) of the MSMED Act, derives its meaning
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CRP.No.503 of 2026
from the specific transaction between the ‘Supplier’ and the other
party, the ‘Buyer’. The characterization of a party as a ‘Supplier’ is
further reinforced by the reference made to the Facilitation Council
under section 18(1) of the MSMED Act.
42. Section 18(1) of the Act permits a party to a dispute to make a
reference to the Facilitation Council specifically regarding an amount
due under section 17 of the Act. Section 17 of the Act, in turn,
imposes liability on the Buyer to pay the amount along with interest
for any goods supplied or services rendered by the Supplier.
Consequently, when read in conjunction with the undisputed facts of
the present case, it is clear that the respondent No.1 approached the
Facilitation Council to recover unpaid dues from the petitioner. The
dispute was adjudicated based on the Statement of Defense filed by
the petitioner, wherein the petitioner described itself as the ‘Buyer’.
Therefore, the alleged ‘Back-to-Back’ nature of the Contract does not
alter the legal import of the term ‘Supplier’, which must be construed
in light of the fundamental principle of Privity of Contract.
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iii. There is no Privity of Contract between the Respondent No.1 and
KPJ Industries:
43. The only privity of contract in the present case is between the
respondent No.1 and the petitioner, as the ‘Supplier’ and ‘Buyer’,
respectively. The respondent No.1 has no role in, or connection with,
the petitioner’s decision to supply goods to a third party. While the
petitioner may choose to supply goods procured from the respondent
No.1 to a third party, this does not bring such third party within the
contractual privity established between the respondent No.1 and the
petitioner. The petitioner has not established any contractual
relationship between the respondent No.1 KPJ Industries. Hence, no
contract exists between the respondent No.1 and the entity to which
the petitioner chooses to sell the goods.
44. Thus, it follows that there is no ‘privity of contract’ between the
respondent No.1 and KPJ Industries Limited, as averred by petitioner
in its I.A filed before the Commercial Court.
45. Even otherwise, it is undisputed that the petitioner’s attempt to
shift the burden of compliance on a third party was only taken in the
section 34 proceedings. This plea was not raised in the arbitration
proceedings. Arguable, such a defense would not withstand the
limited scrutiny available to the petitioner for setting aside the award
under section 34 of the 1996 Act. The document relied on by the
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petitioner is a letter from one Rotoking to the petitioner and does not
even carry an inference of a tripartite contract between the petitioner,
the respondent No.1 and KPJ Industries.
46. The exception in section 19 would apply when a ‘Supplier’
seeks to set aside an Award under section 19 of the MSMED Act. In
such instances, the applicant/appellant ‘Supplier’ is exempted from
the requirement to deposit 75% of the awarded amount. This
exemption may arise in various situations including when a
claim/reference made by the Supplier is dismissed by the Facilitation
Council and the Supplier subsequently chooses to challenge the
Award.
S.R. Technologies Case
47. The petitioner has relied on the above decision pronounced by a
Division Bench of this Court in W.A.No.734 of 2022 setting aside an
order passed by a learned Single Judge in W.P.No.16918 of 2022.
48. The issue before the Division Bench was whether a Writ Court
can interfere under Article 226 of the Constitution of India with an
Award passed by the Facilitation Council under the provisions of the
MSMED Act. In that case, the learned Single Judge had held that
section 34 of the 1996 Act was not an effective alternative remedy and
that the Facilitation Council had not followed the procedure laid down
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CRP.No.503 of 2026
under section 18(2) of the MSMED Act. The Learned Single Judge
accordingly held that the Writ Petition was maintainable and
proceeded to set aside the Award passed by the Facilitation Council.
The appellant/Supplier approached the Division Bench urging that
the that the learned Single Judge had erred in entertaining the Writ
Petition and setting aside the Award passed by the Facilitation
Council since the respondent No.2/Buyer had the remedy of assailing
the Award under section 34 of the 1996 Act. The appellant also took
the point that the respondent No.2/Buyer had not deposited 75% of
the Awarded amount as required under section 19 of the MSMED Act
and that the learned Single Judge had completely overlooked this
issue. The Division Bench considered the relevant provisions of the
MSMED Act and concluded that the learned Single Judge had erred in
entertaining the Writ Petition and setting aside the Award passed by
the Facilitation Council.
49. Senior Counsel for the petitioner relies on paragraph 11.8 of the
decision where the Division Bench held that the mandate under
section 19 of the MSMED Act would not be applicable where the
appellant is a micro or small enterprise and urges that this would
include the petitioner in the present case since the petitioner claims to
be a micro and small enterprise.
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50. We are unable to accept the reliance on S.R. Technologies since
it would be clear from a comprehensive reading of the decision,
including paragraph 11.8 thereof, that the Division Bench took the
definition of a Supplier under section 2(n) of the MSMED Act as a
‘micro or small enterprise’ as being exempted from making the pre-
deposit. This would be clear from the observations of the Division
Bench is paragraphs 11.7, 11.8, 12 as well as the ultimate conclusion
arrived at in favour of the appellant/Supplier therein. In fact, S.R.
Technologies reinforces the mandate contained in section 19 of the
MSMED Act to the extent of all others (except the Supplier) being
under the statutory obligation to deposit 75% of the awarded amount
along with the application/appeal a challenge to the Award/Decree
passed by the Facilitation Council. We fail to see how the petitioner
can read paragraph 11.8 of the decision to its benefit since clause (iii)
of section 2(n) of the MSMED Act qualifies the meaning of Supplier in
relation to company, corporate society, trust or a body or any other
entity with the foundational requirement of that particular entity
being a seller of goods or a provider of services provided by or
rendered by a micro or small enterprise.
51. Even if the petitioner claims to be a micro or small enterprise,
the petitioner is certainly not the ‘Seller’/’Supplier’ in the context of
the transaction between the petitioner and the respondent No.1 as
evidenced from the MOU dated 09.08.2019. We do not wish to repeat
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CRP.No.503 of 2026
the various documents wherein the petitioner has expressly been
described as the Buyer/Stockist.
52. In any event, a decision is only an authority on the point
decided by the Court. Further, the question of interpretation of the
words ‘not being a supplier’ in section 19 of the MSMED Act did not
fall for consideration by the Division Bench in S.R. Technologies at all.
We may refer to State of U.P. v. Synthetics and Chemicals Ltd. 2 in this
context where the Supreme Court held that a conclusion, which was
neither raised nor preceded by any discussion, cannot be treated as a
binding precedent or a declaration of law under Article 141 of the
Constitution of India.
53. We are hence of the view that the petitioner’s reliance on S.R.
Technologies is misplaced and does not take the petitioner’s case
forward.
‘Still-born’ Applications
54. The express bar contained in section 19 of the MSMED Act
makes it clear that a Court is prohibited from entertaining an
application for setting aside of an Award unless the applicant (not
being a Supplier) has deposited 75% of the awarded amount along
with the application. An application for setting aside of the Award
2 (1991) 4 SCC 139
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CRP.No.503 of 2026
under section 34 of the 1996 Act remains inert (or lifeless) until the
Buyer satisfies the condition-precedent in section 19 of the Act in
terms of making the deposit of 75% of the awarded amount. In other
words, failure to deposit the mandated amount along with the
application to challenge the Award renders the application ‘still-born’.
The application takes shape and form only after the Buyer, or any
other entity except the Supplier, fulfils the pre-deposit condition: The
Board of Major Port Authority for the Shyama Prasad Mookerjee Port v.
Marine Craft Engineers Private Limited 3. In essence, there is no escape
route for a Buyer for circumventing the mandate of section 19 of the
MSMED Act.
The Petitioner’s other Defence
55. The petitioner claims that it should be exempted from the
mandate of section 19 of the MSMED Act also on account of being a
micro and small enterprise. We do not wish to repeat the same since
we have already dealt with this argument in the preceding
paragraphs. The only relevant factual aspect in this context is that
the petitioner obtained its micro and small enterprise registration on
27.03.2021 whereas the respondent No.1 raised the invoices for the
last supply on the petitioner on an earlier point of time i.e., on
08.01.2021. Moreover, in Silpi Industries v. Kerala State Road
3 2023 SCC OnLine Cal 2200
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CRP.No.503 of 2026
Transport Corporation 4 the Supreme Court held that a micro or small
enterprise which is registered subsequently cannot claim the benefit
of being a Supplier retrospectively for the supplies made and
completed prior to registration. Silpi Industries was followed in
Gujarat State Civil Supplies Corporation v. Mahakali Foods Private
Limited 5.
56. We hence find that the Commercial Court correctly followed the
above judgments and held that the petitioner is not entitled to claim
any benefit by reason of being a micro and small enterprise or a
Supplier as its registration as a micro and small enterprise was
subsequent to the completion of supplies by the respondent No.1.
57. The striking facts which cannot be overlooked are that
Facilitation Council passed the Award on 07.08.2024 with a liability
on the petitioner to pay to the respondent No.1 an amount of
Rs.98,78,88,428.94/-. The petitioner has failed to pay even a single
Rupee to the respondent No.1 till date despite more than twenty
months having elapsed from the date of the Award.
58. The petitioner filed a Special Civil Application challenging the
Award before a learned Single Judge of Gujarat High Court and the
same was dismissed on 18.11.2024. Thereafter, the Letters Patent
Appeal filed by the petitioner was dismissed by the Gujarat High
4 (2021) 18 SCC 790
5 (2023) 6SCC 401
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Court on 27.01.2025. The Special Leave Petition filed by the
petitioner before the Supreme Court was also dismissed on
09.05.2025.
59. The petitioner filed C.R.P.No.1591 of 2025 before this Court
against a docket order dated 01.04.2025 passed by the Commercial
Court whereby the petitioner’s application under section 34 of the
1996 Act was returned for non-compliance of the pre-deposit
condition under section 19 of the MSMED Act. The Court granted a
limited protection on 02.05.2025. The said Civil Revision Petition was
disposed of on 11.06.2025 with a direction on the Commercial Court
to consider the application filed by the petitioner for compliance of
section 19 of the MSMED Act. The Court made it clear that there
cannot be any leap-frogging of that provision by any entity apart from
a Seller.
60. Instead of filing an application for compliance of section 19, the
petitioner filed I.A.No.515 of 2025 before the Commercial Court
seeking exemption of the pre-deposit requirement. The reasons given
in the preceding paragraphs make it clear that the petitioner’s
application was ill-conceived given the legislative thrust of the
61. The decisions pronounced by the Supreme Court reinforce that
section 19 of the MSMED Act does not contemplate a circumvention
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CRP.No.503 of 2026
or a shortcut – unless the applicant/appellant is a Supplier: Silpi
Industries (supra) and Gujarat Civil supplies (supra). The only
relaxation granted by the Supreme Court was compliance by way of
staggered payments, that too subject to the applicant showing a
special case of hardship. NBCC v. State of West Bengal 6 in fact
weakens the argument of the petitioner since the Supreme Court held
that the definition of a Supplier is relatable only to a micro or small
enterprise (and does not encompass a medium enterprise) and
includes the entities in section 2(n)(iii) of the MSMED Act. The
decision follows the definition of a Supplier under section 2(n) of the
MSMED Act.
62. As already held above, the petitioner cannot escape the
qualifying criterion of an entity under section 2(n)(iii) being a seller of
goods or provider of services produced or rendered by a micro or small
enterprise. The inclusion of section 2(n)(iii) in the MSMED Act as a
departure to the repealed “Interest on Delayed Payments to Small
scale and Ancillary Industrial Undertakings Act, 1993” hence does not
take the petitioner’s case forward.
6 2025 INSC 54
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Conclusion
63. We are thus constrained to hold that the petitioner does not
have a case in the present Civil Revision Petition insofar as its
contention that the petitioner should be exempted from the
pre-deposit mandate under section 19 of MSMED Act. We conclude
that the petitioner is not a ‘Supplier’ as defined under the MSMED Act
and was admittedly not a Supplier in the subject transaction between
the petitioner and the respondent No.1.
64. The records in the case describe the petitioner as a
Buyer/Stockist; the petitioner is also described as the Buyer in the
Arbitration proceeding conducted by the Facilitation Council. The
petitioner’s reliance on S.R. Technologies is misconceived since S.R.
Technologies only bolsters the non-negotiable nature of section 19 of
the MSMED Act. The parenthesis in section 19 ‘(not being a suppler)’
unerringly points to the exception being applicable only to a Supplier
challenging the Award/Decree. All other entities including a Buyer
would be covered by the mandate of pre-deposit. We also take note of
the petitioner’s repeated attempts to try every loophole in the book for
avoiding the condition precedent in section 19 of the MSMED Act.
The petitioner’s attempt to foist the liability of section 19 on a third
party (KPJ Industries), with which the respondent No.1 has no privty
of contract, is an instance of such mis-directed attempts.
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65. The Commercial Court correctly refused the petitioner’s prayer
for a direction on KPJ Industries to deposit 75% of the awarded
amount or permission to the petitioner to deposit only Rs.1 lakh in
instalments. The Commercial Court accordingly directed the
petitioner to deposit 75% of the amount to the respondent No.1 within
three months from the date of impugned order i.e., by 06.05.2026.
66. We do not find any infirmity in the impugned order dated
06.02.2026 or any direction contained therein. We have stated our
reasons above. C.R.P.No.503 of 2026, along with all connected
applications, is accordingly dismissed. No costs.
_________________________________
MOUSHUMI BHATTACHARYA, J
____________________________
GADI PRAVEEN KUMAR, J
15th April, 2026.
Note: L.R. Copy be marked.
(b/o.) NDS/VA/BMS
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CRP.No.503 of 2026
THE HON’BLE JUSTICE MOUSHUMI BHATTACHARYA
AND
THE HON’BLE JUSTICE GADI PRAVEEN KUMAR
CIVIL REVISION PETITION NO.503 OF 2026
15th April, 2026
15th April, 2026.
Note: L.R. Copy be marked.
(b/o.) NDS/VA/BMS
