Arbitration Act Versus The MSME Act: The Delhi High Court Clears The Air.

Introduction

In a recent decision , a single judge of the Delhi High Court ("High Court") held that Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006 ("MSME Act") mandating a judgment debtor to deposit seventy-five percent of the awarded amount is not applicable, in the event the arbitration proceedings were commenced under the Arbitration and Conciliation Act, 1996 ("Arbitration Act") and not under Section 18 of the MSME Act.

Facts

AVR Enterprises ("Petitioner"), a company registered under the MSME Act submitted its bid to Union of India ("Respondent") and issued a tender enquiry for procuring water proof covers of a specific dimension. This was accepted by the Respondent and a contract dated April 5, 2005 ("Contract") was entered into between the parties.