Telangana High Court: The present petition was filed under Article 227 of the Constitution, wherein the petitioner assailed the validity of the order dated 23-04-2024 passed by the Special Judge for Trial and Disposal of Commercial Disputes, Ranga Reddy District, at L.B. Nagar (‘the Commercial Court’), whereby Respondent 1 was permitted to withdraw Rs 50,85,490 deposited by petitioner. The Division Bench of Alok Aradhe, CJ., and Anil Kumar Jukanti, J., opined that the Court while dealing with a prayer to release the amount under Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006 (‘the 2006 Act’) had to assign reasons for releasing such percentage of the amount as it considered reasonable. The Court thus disposed of the petition and set aside the order dated 23-04-2024.
The petitioner is a Government of India Enterprise incorporated to promote, aid, and foster the growth of Micro, Small, and Medium Enterprises in the country. The petitioner and Respondent 1 entered into an agreement on 14-05-2013 under tender marketing scheme. The dispute between the parties subsequently arose, which was referred for adjudication to Facilitation Council under the 2006 Act. The Council passed an award on 03-11-2022 in Respondent 1’s favour, which was challenged in a proceeding under Section 34 of the Arbitration and Conciliation Act, 1996 (‘the Act’).
In the proceedings under Section 34 of the Act, the petitioner deposited Rs 50,23,828 which was kept in the fixed deposit. The Commercial Court by an ex parte order dated 14-12-2023 called for the FDR along with interest. Thereafter, by order dated 23-04-2024, the Commercial Court permitted withdrawal of the amount by Respondent 1. Thus, the present petition was filed.
The Court took note of Section 19 of the 2006 Act and observed that the Court was empowered to permit release of such percentage of amount deposited to the supplier as it considered reasonable under the circumstances of the case, subject to such condition as it deemed necessary to impose. The Court thus opined that the Court while dealing with a prayer to release the amount had to assign reasons for releasing such percentage of the amount as it considered reasonable.
The Court noted that in the present case, the petition under Section 36 of the Act seeking stay of the award was also pending. The Court stated that the propriety demanded that the Commercial Court ought to have dealt with both the applications together. The Court also noted that the Commercial Court had not assigned any reason for releasing the whole amount by the petitioner in Respondent 1’s favour.
The Court disposed of the petition and set aside the order dated 23-04-2024. The Court directed the Commercial Court to decide the application along with the petition under Section 36 of the Act, after hearing the parties.
[National Small Industries Corpn. Ltd. v. Brahma Teja Paper Products, 2024 SCC OnLine TS 1346, Order dated 19-06-2024]
Advocates who appeared in this case:
For the Petitioner: Senior Counsel J. Prabhakar; Counsel D. Venkata Padmaja
For the Respondents: Counsel Dida Vijaya Kumar
Buy Constitution of India HERE
Buy Arbitration and Conciliation Act, 1996 HERE
