Authority: High Court at Calcutta, Commercial Appellate Division (Original Side)

Order Date: September 28, 2026

Case Overview

  • Parties:
  • Appellant in AO COM 13/2026 and AO COM 20/2026: M/s. Mohindra Tubes Limited (formerly Mohindra Tubes Private Limited) ("MTL").
  • Respondent in those appeals: Public Health Engineering Department, Gorkha Territorial Administration, Darjeeling ("PHE").
  • Appellant in FMAT (ARBAWARD) 19/2025: M/s. Jaggi Brothers Overseas Private Limited ("JB").
  • Respondent in that appeal: M/s. BESCO Limited ("BL").
  • Statutory Framework: The disputes revolve around the interplay of the Arbitration and Conciliation Act, 1996 ("1996 Act") and the Micro, Small and Medium Enterprises Development Facilitation Act, 2006 ("2006 Act"). Key provisions examined are Section 34 & Section 36 of the 1996 Act, Sections 15‑19 & 24 of the 2006 Act, and Section 13 of the Arbitration and Conciliation (Amendment) Act, 2015.
  • Background:
  • MTL obtained an award dated 17 January 2023 from the West Bengal Micro, Small and Medium Enterprises Development Facilitation Council ("Facilitation Council") in favour of MTL against PHE for non‑payment of bills.
  • PHE filed an application under Section 34 of the 1996 Act (AP No. 763 of 2023) seeking to set aside the award. The application was listed on 17 Nov 2023 and 15 Dec 2023, but PHE failed to make the mandatory pre‑deposit under Section 19 of the 2006 Act.
  • The learned Single Judge, on 18 December 2023, directed PHE to deposit 75 % of the awarded amount (75 % via bank guarantee, 25 % cash) within five weeks, failing which MTL could enforce the award.
  • PHE did not comply; the petition under Section 34 was dismissed for default on 16 April 2024.
  • PHE later applied for restoration of the petition; the Single Judge condoned the delay on 31 March 2026 and restored the petition on 13 May 2026.
  • MTL appealed the two orders (AO COM 13/2026 assailing the May 13 2026 restoration; AO COM 20/2026 assailing the March 31 2026 condonation) alleging non‑compliance with Section 19.
  • In a separate matter, JB obtained an award dated 13 July 2023 from the Facilitation Council against BL. BL challenged the award under Section 33 of the 1996 Act (read with Rule 18 of the Council Rules, 2026). The Calcutta City Civil Court, on 10 February 2025, set aside the award on grounds of inadequate stamping, lack of mandatory pre‑deposit, and JB’s alleged non‑supplier status.
  • JB appealed the February 2025 judgment (FMAT (ARBAWARD) 19/2025).

Issues Considered

1. Whether an appeal against a restoration order of a Section 34 petition, where the petition cannot be entertained under Section 19 of the 2006 Act, is maintainable under Section 37(1)(c) of the 1996 Act.

2. Whether a Section 34 petition dismissed for default before compliance with Section 19 can be restored without simultaneous compliance with Section 19.

3. Whether the pre‑deposit requirement of Section 19 is mandatory.

4. Effect of the amendment to Section 36 of the 1996 Act on the mandatory nature of Section 19.

5. Whether registration under Section 8 of the 2006 Act is mandatory to invoke the Facilitation Council’s jurisdiction.

Findings & Reasoning

  • The Court held that Section 19 of the 2006 Act is mandatory for any petition under Section 34 of the 1996 Act that challenges an award of the Facilitation Council. Authoritative precedents (Tirupati Steels 2022, Gujarat State Disaster Management Authority 2022, Goodyear India 2022) were relied upon.
  • Non‑compliance with Section 19 makes a Section 34 petition non‑entertainable; consequently, an order restoring such a petition is ultra vires and appealable under Section 37(1)(c) of the 1996 Act.
  • The amendment to Section 36 of the 1996 Act (effective 23 Oct 2015) does not diminish the mandatory nature of Section 19; the two statutes operate in distinct fields, and the 2006 Act, being later in time and special, prevails over the general 1996 Act (principle generalia specialibus non derogant).
  • The Court rejected PHE’s contention that it had invoked Section 19 via a supplementary affidavit filed on 27 Feb 2026; the affidavit contained no pleadings under Section 19 and therefore could not be treated as a Section 19 application.
  • Regarding the JB‑BL dispute, the Court found that no party had complied with Section 19; the trial judge’s decision to set aside the award was therefore based on an ineligible petition.
  • The Court clarified that registration under Section 8 of the 2006 Act is not a prerequisite for invoking the Facilitation Council’s jurisdiction where the supplier status is otherwise established; however, in the present facts JB was not a registered supplier at the relevant time, reinforcing the non‑compliance conclusion.

Answers to Issues

  • Issue (i): An appeal against a restoration order of a Section 34 petition that cannot be entertained under Section 19 is maintainable under Section 37(1)(c).
  • Issue (ii): A Section 34 petition dismissed for default cannot be restored without simultaneous compliance with Section 19; compliance is a pre‑condition, though it does not guarantee restoration.
  • Issue (iii): Section 19’s pre‑deposit requirement is mandatory (as per cited Supreme Court and High Court decisions).
  • Issue (iv): The amended Section 36 does not affect the mandatory nature of Section 19.
  • Issue (v): Not decided as it lost relevance after the above determinations.

Directions

1. The orders dated 31 March 2026 (condonation) and 13 May 2026 (restoration) are set aside.

2. AP No. 763 of 2023 (PHE’s Section 34 petition) is dismissed as not entertainable for failure to satisfy Section 19.

3. The judgment and order dated 10 February 2025 in FMAT (ARBAWARD) 19/2025 are set aside.

4. The petition that led to the February 2025 judgment is dismissed as not entertainable for non‑compliance with Section 19.

5. No stay of the judgment is granted; the parties’ prayers for stay are denied.

Final Outcome

  • The Calcutta High Court nullified the restoration of the Section 34 petitions in both the MTL‑PHE appeals and the JB‑BL appeal, emphasizing that Section 19 pre‑deposit compliance is a jurisdictional prerequisite. All challenged orders and judgments are set aside, and the underlying petitions are dismissed as non‑entertainable.

Topics: Arbitration Law, Section 19 Pre‑Deposit Requirement, Appeal Maintainability