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Date:May 3, 2023
Appeal Against MSME Order – Section 19 of MSMED Act
MSME Law Notes by NB Associates
Appeal against MSME order here we mean and discuss ‘an order arising out of the statutory arbitration proceeding under MSME Act’.
The MSME claim proceeding under MSME Act ultimately culminates into an Arbitration proceeding under section 18(3) of the MSMED Act.
The arbitration proceeding under MSMED Act can either be conducted by the MSME Facilitation Council or it may delegate the arbitration proceeding to any institution facilitating alternate dispute resolution. Such an institution appoints an arbitrator to adjudicate the dispute.
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So what is an Appeal against MSME order.
A Micro and Small enterprise can file an MSME claim against its buyer, if the buyer fails to make payment of the dues within a period of 15 (Fifteen) days of the date of the delivery of the goods or services.
Such a claim can be filed before the concerned MSME facilitation council through the online portal MSME Samadhan.
We have already published an article on MSME claim/court procedure and you can visit it by clicking here.
So, the MSME claim is finally adjudicated in an Arbitration proceeding conducted either by the MSME facilitation council or an arbitrator appointed.
A party aggrieved with any order, decree or award passed under this arbitration proceeding can file an appeal under section 19 of the MSME Act.
Section 19 of the MSME Act provides that an application for setting aside a decree, award or order made by the council itself or by any institution or centre providing alternate dispute resolution services to which a reference is made by the council, can be filed.
Section 18(3) of the Act provides the council shall either itself take up the dispute for arbitration or refer it to any institution or centre providing alternate dispute resolution services for such arbitration.
Section 18(3) of the Act further provides that the provisions of the Arbitration and Conciliation Act, 1996 apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in subsection (1) of section 7 of that Act.
Under the provisions of the Arbitration and Conciliation Act, 1996 an objection or appeal against the award passed by the arbitrator can be filed under section 34 of the Arbitration and Conciliation Act, 1996.
Thus, an appeal against the MSME order can be filed under section 34 of the Arbitration and Conciliation Act, 1996 read with section 19 of the MSMED Act.
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.
Section 19 of the MSMED Act provides that no application for setting aside any decree, award or other order made under the provisions of section 18(3) can be filed unless the appellant (who is not a supplier) has deposited with the court 75 % of the award amount.
Thus no Appeal against MSME order can be entertained in court unless 75% of the award amount is deposited in the court.
Section 19 of the MSMED Act further provides that the court can order such deposited amount to be paid to the supplier. Such an order by the court can be made if the court thinks it is reasonable under the circumstances and such order can be passed subject to such conditions as the court think fit.
Thus, section 19 of the MSMED Act provides the following:
1. An appeal against the order, decree or award under the proceeding started under section 18(3) / Arbitration proceeding can be filed.
2. No such appeal can be entertained by the court unless the appellant (not being a supplier) deposits with such court a sum equivalent to 75 % of the award amount.
3. Such deposited amount can be released to the respondent/supplier on such terms as the court may deem fit.
In an arbitration proceeding started under section 18(3) of the MSMED Act, the provision of the Arbitration and Conciliation Act, 1996 applies to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in subsection (1) of section 7 of that Act.
Section 18(3) reads as under:
18. Reference to Micro and Small Enterprises Facilitation Council.—
(1)
(2)
(3) Where the conciliation initiated under sub-section (2) is not successful and stands terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer it to any institution or centre providing alternate dispute resolution services for such arbitration and the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall then apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in subsection (1) of section 7 of that Act.
Under the provisions of the Arbitration and Conciliation Act, 1996 an objection or appeal to the award passed by the arbitrator can be filed under section 34 of the Arbitration and Conciliation Act, 1996.
Thus, an appeal against MSME order can be filed under section 34 of the Arbitration and Conciliation Act, 1996 read with section 19 of the MSMED Act.
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