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Date:June 4, 2023
MSME Award Appeal – Appeal against MSME Arbitration Award
MSME Law Notes by NB Associates
MSME Award Appeal here we mean and discuss Appeal against the order, decree or Award arising out of the statutory arbitration proceeding under MSME Act
An appeal against an Award, order or decree arising from a statutory arbitration proceeding under the MSME Act refers to the process of challenging a decision made during arbitration in accordance with Section 18(3) of the MSMED Act.
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In the MSME claim proceeding, which is initiated under the MSMED Act, the dispute between the parties is eventually resolved through an arbitration proceeding.
This arbitration can be conducted by the MSME Facilitation Council or delegated to an alternative dispute resolution institution. The institution appoints an arbitrator to adjudicate the dispute.
If a party involved in the arbitration proceeding is dissatisfied with the final award, order or decision, they have the option to file an appeal. The appeal seeks to challenge the decision made during the arbitration process and requests a review of the order by a higher authority or court.
So what is MSME Award Appeal.
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 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 MSME facilitation council or an arbitrator appointed.
A party aggrieved with any order, decree or award passed under this arbitration proceeding can file an MSME Award Appeal under section 19 of the MSME Act.
Section 19 of the MSME Act provides that an application for setting aside 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 applies to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in sub-section(1) of section 7 of that Act.
Under the provisions of 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 MSME Award Appeal 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 MSME Award Appeal can be entertained in court, unless 75% of award amount is deposited in the court.
Section 19 of the MSMED Act further provides that court can order such deposited amount to he paid to the supplier. Such order by the court can be made if court thinks it is reasonable under 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 followings:
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 court unless the appellant (not being supplier) deposit 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 Arbitration and Conciliation Act, 1996 applies to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in sub-section(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 sub-section(1) of section 7 of that Act.
Under the provisions of 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 MSME Award Appeal 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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