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2010 (1) TMI 1223 - SC - Indian LawsArbitration proceedings - Interpretation of the term 'appeal' appearing in Section 7 the Interest on Delayed Payments to Small Scale and Ancillary Undertakings Act - Whether the expression 'appeal' used in Section 7 of the Interest Act includes an application to set aside the arbitral award filed u/s 34 of the Arbitration Act? - Small Scale Industrial Undertaking for the purposes of the Interest Act - The Maharashtra State Electricity Board ('MSEB') issued a Work Order in favour of Maharashtra Small Scale Industries Development Corporation ('the Corporation') - work was completed and the bills were duly submitted - huge delay on the part of the Corporation in paying the said bills - demanded interest on delayed payment under the Interest Act - claim denied by the Corporation - Arbitration Application u/s 11 - the Corporation filed an application u/s 34 - During the pendency of these proceedings the Appellant company pointed out that u/s 7 of the Interest Act the Corporation has to deposit 75 % of the amount awarded by Arbitrator under the Award - Division Bench of the High Court had held that if one considers the expression "appeal" in the context of the expression decree, it can only be a judicial determination by a Regular Civil Court considering the hierarchy of courts. HELD THAT:- We fail to understand why the expression "appeal" shall be construed solely in the context of a decree or order when the Section clearly makes reference to 'Awards' as well. According to the Respondents, the word 'award' appearing in Section 7 relates to those that result from a reference made under Maharashtra Cooperative Societies Act to the Industry Facilitation Council. The provisions for such reference, which is to be governed by Arbitration Act, were incorporated in 1998 by way of an amendment in the INterest Act. However, section 7 contained the word 'award' even before such reference mechanism was incorporated in the Interest Act by way of the Amendment Act, 1998. Therefore, it is difficult to see why 'award' in section 7 should not include an arbitral award other than the one arising from reference made to the Industries Facilitation Council. It is true that in almost all definitions of appeal', there is reference to removal of a cause from an inferior Court to a superior Court. It is also trite that an arbitrator deriving his authority from a private agreement does not fit into the ordinary hierarchy of Courts. In our opinion, however, an appeal need not necessarily lie from an inferior Court to a superior Court, especially within the meaning of Section 7. We are of the view that "appeal" is a term that carries a wide range of connotations with it and that appellate jurisdiction can be exercised in a variety of forms. It is not necessary that the exercise of appellate jurisdiction will always involve reagitation of entire matrix of facts and law. We have already seen in the case of Abhayankar [1969 (4) TMI 106 - SUPREME COURT] that even an order passed by virtue of limited power of revision u/s 115 of the Code is treated as an exercise of appellate jurisdiction, though under that provision, the Court cannot go into the questions of facts. There is no quarrel that Section 34 envisages only limited grounds of challenge to an award; however, we see no reason why that alone should take out an application u/s 34 outside the ambit of an appeal especially when even a power of revision is treated as an exercise of appellate jurisdiction by this Court and the Privy Council. While the learned counsel for the appellant company urged that the Legislature had used the terms 'appeal' and application' interchangeably, we are of the view that we cannot conclusively infer the same. Use of the term 'application' appears to be in the context of the dispute resolution mechanism provided for under Section 17 which essentially comprises of conciliation and arbitration, to be governed by Arbitration Act, 1996. The legislature has intended to bring about improvements to the Interest Act as stated in the Statement of Objects and Reasons of the Act of 2006. Indeed, it might have contemplated a change in the legal position while enacting the Act of 2006, but we cannot make that change apply retrospectively. In this respect, we agree with the reasoning of the High Court and with the contentions of learned counsel for the respondents as we cannot read the provision of a subsequent enactment into an Act which was repealed by the former. The interest Act is a beneficial piece of legislation intended to expedite timely payment of money owed to Small Scale Industries. Most of the contracts of supply or sale that Small Scale Industries enter into contain arbitration clauses. These arbitration proceedings result in an 'award'. If the term appeal' is interpreted in the limited context of a 'decree or order' and as excluding an application to set aside or remit such awards, the very purpose behind the enactment of Interest Act will be defeated.
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