{"id":325067,"date":"2024-06-25T14:00:55","date_gmt":"2024-06-25T08:30:55","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=325067"},"modified":"2024-07-01T11:32:37","modified_gmt":"2024-07-01T06:02:37","slug":"court-must-give-reasons-for-releasing-amount-u-s-19-msme-act-telhc","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2024\/06\/25\/court-must-give-reasons-for-releasing-amount-u-s-19-msme-act-telhc\/","title":{"rendered":"Court must give reasons for releasing the amount under Section 19 of MSME Act, 2006: Telangana High Court"},"content":{"rendered":"<div style=\"text-align: justify; line-height: 150%;\">\n<p style=\"margin-bottom: 3%;\"><span style=\"font-weight: bold;\">Telangana High Court:<\/span> The present petition was filed under Article <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001574971\" target=\"_blank\" rel=\"noopener\">227<\/a> of the <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002726967\" target=\"_blank\" rel=\"noopener\">Constitution<\/a>, 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 (&#8216;the Commercial Court&#8217;), whereby Respondent 1 was permitted to withdraw Rs 50,85,490 deposited by petitioner. The Division Bench of <span style=\"font-weight: bold;\">Alok Aradhe, CJ.<\/span>, and Anil Kumar Jukanti, J., opined that the Court while dealing with a prayer to release the amount under Section <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001546081\" target=\"_blank\" rel=\"noopener\">19<\/a> of the <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002942157\" target=\"_blank\" rel=\"noopener\">Micro, Small and Medium Enterprises Development Act, 2006<\/a> (&#8216;the 2006 Act&#8217;) 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.<\/p>\n<p style=\"margin-bottom: 3%;\">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&#8217;s favour, which was challenged in a proceeding under Section <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001544939\" target=\"_blank\" rel=\"noopener\">34<\/a> of the <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002726958\" target=\"_blank\" rel=\"noopener\">Arbitration and Conciliation Act, 1996<\/a> (&#8216;the Act&#8217;).<\/p>\n<p style=\"margin-bottom: 3%;\">In the proceedings under Section <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001544939\" target=\"_blank\" rel=\"noopener\">34<\/a> of <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002726958\" target=\"_blank\" rel=\"noopener\">the Act<\/a>, 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.<\/p>\n<p style=\"margin-bottom: 3%;\">The Court took note of Section <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001546081\" target=\"_blank\" rel=\"noopener\">19<\/a> of <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002942157\" target=\"_blank\" rel=\"noopener\">the 2006 Act<\/a> 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.<\/p>\n<p style=\"margin-bottom: 3%;\">The Court noted that in the present case, the petition under Section <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001544941\" target=\"_blank\" rel=\"noopener\">36<\/a> of <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002726958\" target=\"_blank\" rel=\"noopener\">the Act<\/a> 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&#8217;s favour.<\/p>\n<p style=\"margin-bottom: 3%;\">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 <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001544941\" target=\"_blank\" rel=\"noopener\">36<\/a> of <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002726958\" target=\"_blank\" rel=\"noopener\">the Act<\/a>, after hearing the parties.<\/p>\n<p style=\"margin-bottom: 3%;\">[<span style=\"font-weight: bold; color: #632423;\">National Small Industries Corpn. Ltd. v. Brahma Teja Paper Products, <a href=\"http:\/\/www.scconline.com\/DocumentLink\/GR7MUOsf\" target=\"_blank\" rel=\"noopener\">2024 SCC OnLine TS 1346<\/a>, Order dated 19-06-2024<\/span>]<\/p>\n<hr\/>\n<p>Advocates who appeared in this case:<\/p>\n<p style=\"margin-left: 18pt;\"><span style=\"font-weight: bold;\">For the Petitioner:<\/span> Senior Counsel J. Prabhakar; Counsel D. Venkata Padmaja<\/p>\n<p style=\"margin-left: 18pt;\"><span style=\"font-weight: bold;\">For the Respondents:<\/span> Counsel Dida Vijaya Kumar<\/p>\n<h3 style=\"color: #000080;\">Buy Constitution of India &nbsp;<a href=\"https:\/\/www.ebcwebstore.com\/product\/the-constitution-of-india-coat-pocket-edition?products_id=100647\" target=\"_blank\" rel=\"noopener\">HERE<\/a><\/h3>\n<p style=\"margin-bottom: 3%;\"><a href=\"https:\/\/www.ebcwebstore.com\/product\/the-constitution-of-india-coat-pocket-edition?products_id=100647\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/s3.amazonaws.com\/ebcwebstore\/images\/the-constitution-of-india-coat-pocket-edition-Gopal-Sankaranarayanan-ebc-front-cover.JPG\" alt=\"Constitution of India\" width=\"300\" height=\"200\" class=\"aligncenter size-large wp-image-294438\" \/><\/a><\/p>\n<h3 style=\"color: #000080;\">Buy Arbitration and Conciliation Act, 1996 &nbsp; <a href=\"https:\/\/www.ebcwebstore.com\/product_info.php?products_id=382\" target=\"_blank\" rel=\"noopener\">HERE<\/a><\/h3>\n<p style=\"margin-bottom: 3%;\"><a href=\"https:\/\/www.ebcwebstore.com\/product_info.php?products_id=382\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/arbitration-and-conciliation-act-1996-191x300.png\" alt=\"arbitration and conciliation act, 1996\" width=\"191\" height=\"300\" class=\"aligncenter size-large wp-image-294803\" srcset=\"https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/arbitration-and-conciliation-act-1996-191x300.png 191w, https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/arbitration-and-conciliation-act-1996-38x60.png 38w, https:\/\/www.scconline.com\/blog\/wp-content\/uploads\/2023\/06\/arbitration-and-conciliation-act-1996.png 620w\" sizes=\"auto, (max-width: 191px) 100vw, 191px\" \/><\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p style=\"font-style: italic;\">The Court is empowered to permit release of such percentage of amount under Section 19 of the MSME Act, 2006, deposited to the supplier as it considers reasonable under the circumstances of the case, subject to such condition as it deems necessary to impose.<\/p>\n","protected":false},"author":1,"featured_media":315575,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,10],"tags":[47046,70206,62091,70205,23694,33941],"class_list":["post-325067","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-highcourts","tag-commercial-court","tag-msme-act-2006","tag-reason","tag-release-amount","tag-section-19","tag-telangana-high-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO 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