# SNEHADEEP STRUCTURES PRIVATE LIMITED v. MAHARASHTRA SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION LTD

- **Citation:** [2010] 1 S.C.R. 76
- **Court:** Supreme Court of India
- **Decided:** 2010-01-05
- **Case number:** Civil Appeal No. 10 of 2010
- **Bench:** Tarun Chatterjee, V.S. Sirpurkar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/snehadeep-structures-private-limited-v-maharashtra-small-scale-industries-26528
- **Pages:** 33

## Headnote

Interest on Delayed Payment to Small Scale and
C Ancillary Undertakings Act, 1993 - s. 7 - Expression 'appeal'
under - Scope of - Held: Word 'appeal' u/s 7 includes an
application uls 34 of Arbitration Act in view of language of s. 7,
object of legislation and contextual meaning of the term
'appeal' - Arbitration and Conciliation Act, 1996 - s.34 -
D Interpretation of Statutes.
Interpretation of Statutes - In case of doubt about
meaning of a word in a statute, the interpretation which
harmonizes the object and purpose of the statute should be
E adopted.
Words and Phrases - 'Appeal' - Meaning of, in the
context of s. 7 of Interest on Delayed payment to Small Scale
and Ancillary Undertakings Act, 1993.
F
The question for consideration before this Court was
whether the expression 'appeal' occurring uls. 7 of
Interest on Delayed Payments to Small Scale and
Ancillary Undertakings Act, 1993, whether would include
an application uls. 34 of the Arbitration and Conciliation
G Act, 1996.
Partly allowing the appeal, the Court
HELD: 1. "Appeal" is a term that carries a wide range
of connotations with it and that appellate jurisdiction can
H
76
SNEHADEEP STRUCTURES PRIVATE LTD. v. MAHARASHTRA
77
SMALL SCALE INDUS. DEVELOPMENT CORPN. LTD. ·
be exercised in a variety of forms. It is not necessary that A
the exercise of appellate jurisdiction will always involve
re-agitation of entire matrix of facts and law. It is not
correct to say that appeal shall mean only a challenge to
a decree or order where the entire matrix of law and fact
can be re-agitated with respect to the impugned order/ B
decree. [Para 32] [95-G-H; 96-A-C]
Nagendra Nath v. Suresh Chandra AIR 1932 PC 165;
Raja Kulkarni v. State of Bombay AIR 1954 SCR 384; Mela
Ram v. CIT AIR 1956 SC 367; S.R.Abhayankar v. K.D. Bapat
(1969) 2 SCC 74; Tirupati Balaji v. State of Bihar (2004) 5 C
sec 1, relied on.
Gramophone Company of India vs. Birendra Bahadur
Pandey and Ors. (1984) 2 SCC 534; Central Bank of India
v. State of Kera/a 2009 (3) SCR 735; Santa Singh v. State D
of Punjab (1976) 4 SCC 190; State of Gujarat v. Salimbhai
Abudul Gaffar Shaikh and Ors. (2003) 8 SCC 50; Promotho
Nath Roy v. WA. Lee AIR 1921 Cal 415, referred to.
2.1. Keeping in mind the language of Section 7, E
object of the legislation and the contextual meaning of
the term appeal, the term "appeal" appearing in Section
7 ?f the Interest Act should include an application u/s 34
as well. [Para 58] [108-8-C]
State of Kera/a v. MK. Krishnan Nair 1978 1 SCC 552,
F
referred to.
2.2. Section 34 envisages only limited grounds of
challenge to an award; however, that alone will not take
out an application u/s 34 outside the ambit of an appeal G
especially when even a power of revision is treated as
an exercise of appellate jurisdiction. [Para 32] [96-C-D)
2.3. So far as interest on delayed payment to Small
Scale Industries as well as connected matters are
H
78
SUPREME COURT REPORTS
(2010] 1 S.C.R.
A concerned, the Act is a special legislation with respect to
any other legislation, including the Arbitration Act.
Therefore, it is not correct to say that the matter of interest
payment will be governed by Section 37(1) of the
Arbitration Act. Section 4 of the Interest Act endorses the
8
same which sets out the liability of the buyer to pay
interest to the supplier 'notwithstanding anything
contained in any agreement between the buyer and the
supplier or in any law for the time being in force.' Thus,
Interest Act is a special legislation as far as the liability
C to pay interest, or to make a deposit thereof, while
challenging an award/decree/order granting interest.
[Para 34) (96-H; 97-A-C]
D
Jay Engineering Works v. Industry Facilitation Council
and Anr. 2006 (8) sec 677, referred to.
2.4. Section 6(1) of Interest Act empowers the buyer
to obtain the due payment by way of any proceedings.
Thus the proceedings that the buyer can resort to, no
doubt, includes arbitration as well. As opposed to
E Section 6(2), Section 6(1) does not s

## Text

_Characters 0–39,877 of 64,480. This is a partial read: ask again with offset=39877 for what follows._

[2009) 1 S.C.R. 76
A
SNEHADEEP STRUCTURES PRIVATE LIMITED
B
v.
MAHARASHTRA SMALL SCALE INDUSTRIES
DEVELOPMENT CORPORATION LTD.
(Civil Appeal No. 10 of 2010)
JANUARY 5, 2010
[TARUN CHATTERJEE AND V.S. SIRPURKAR, JJ.]
Interest on Delayed Payment to Small Scale and
C Ancillary Undertakings Act, 1993 - s. 7 - Expression 'appeal'
under - Scope of - Held: Word 'appeal' u/s 7 includes an
application uls 34 of Arbitration Act in view of language of s. 7,
object of legislation and contextual meaning of the term
'appeal' - Arbitration and Conciliation Act, 1996 - s.34 -
D Interpretation of Statutes.
Interpretation of Statutes - In case of doubt about
meaning of a word in a statute, the interpretation which
harmonizes the object and purpose of the statute should be
E adopted.
Words and Phrases - 'Appeal' - Meaning of, in the
context of s. 7 of Interest on Delayed payment to Small Scale
and Ancillary Undertakings Act, 1993.
F
The question for consideration before this Court was
whether the expression 'appeal' occurring uls. 7 of
Interest on Delayed Payments to Small Scale and
Ancillary Undertakings Act, 1993, whether would include
an application uls. 34 of the Arbitration and Conciliation
G Act, 1996.
Partly allowing the appeal, the Court
HELD: 1. "Appeal" is a term that carries a wide range
of connotations with it and that appellate jurisdiction can
H
76
SNEHADEEP STRUCTURES PRIVATE LTD. v. MAHARASHTRA
77
SMALL SCALE INDUS. DEVELOPMENT CORPN. LTD. ·
be exercised in a variety of forms. It is not necessary that A
the exercise of appellate jurisdiction will always involve
re-agitation of entire matrix of facts and law. It is not
correct to say that appeal shall mean only a challenge to
a decree or order where the entire matrix of law and fact
can be re-agitated with respect to the impugned order/ B
decree. [Para 32] [95-G-H; 96-A-C]
Nagendra Nath v. Suresh Chandra AIR 1932 PC 165;
Raja Kulkarni v. State of Bombay AIR 1954 SCR 384; Mela
Ram v. CIT AIR 1956 SC 367; S.R.Abhayankar v. K.D. Bapat
(1969) 2 SCC 74; Tirupati Balaji v. State of Bihar (2004) 5 C
sec 1, relied on.
Gramophone Company of India vs. Birendra Bahadur
Pandey and Ors. (1984) 2 SCC 534; Central Bank of India
v. State of Kera/a 2009 (3) SCR 735; Santa Singh v. State D
of Punjab (1976) 4 SCC 190; State of Gujarat v. Salimbhai
Abudul Gaffar Shaikh and Ors. (2003) 8 SCC 50; Promotho
Nath Roy v. WA. Lee AIR 1921 Cal 415, referred to.
2.1. Keeping in mind the language of Section 7, E
object of the legislation and the contextual meaning of
the term appeal, the term "appeal" appearing in Section
7 ?f the Interest Act should include an application u/s 34
as well. [Para 58] [108-8-C]
State of Kera/a v. MK. Krishnan Nair 1978 1 SCC 552,
F
referred to.
2.2. Section 34 envisages only limited grounds of
challenge to an award; however, that alone will not take
out an application u/s 34 outside the ambit of an appeal G
especially when even a power of revision is treated as
an exercise of appellate jurisdiction. [Para 32] [96-C-D)
2.3. So far as interest on delayed payment to Small
Scale Industries as well as connected matters are
H
78
SUPREME COURT REPORTS
(2010] 1 S.C.R.
A concerned, the Act is a special legislation with respect to
any other legislation, including the Arbitration Act.
Therefore, it is not correct to say that the matter of interest
payment will be governed by Section 37(1) of the
Arbitration Act. Section 4 of the Interest Act endorses the
8
same which sets out the liability of the buyer to pay
interest to the supplier 'notwithstanding anything
contained in any agreement between the buyer and the
supplier or in any law for the time being in force.' Thus,
Interest Act is a special legislation as far as the liability
C to pay interest, or to make a deposit thereof, while
challenging an award/decree/order granting interest.
[Para 34) (96-H; 97-A-C]
D
Jay Engineering Works v. Industry Facilitation Council
and Anr. 2006 (8) sec 677, referred to.
2.4. Section 6(1) of Interest Act empowers the buyer
to obtain the due payment by way of any proceedings.
Thus the proceedings that the buyer can resort to, no
doubt, includes arbitration as well. As opposed to
E Section 6(2), Section 6(1) does not state that in case the
parties choose to resort to arbitration, the proceedings
in pursuance thereof will be governed by Arbitration Act.
Hence, the right context in which the meaning of the term
'appeal' should be interpreted is the Interest Act itself. The
F meaning of this term under Arbitration Act or CPC would
have been relevant if the Interest Act had made a
reference to them. Therefore, it is not relevant to say that
the Arbitration Act deals with applications and appeals in
two different chapters. [Para 36) [97 -E-G]
G
Morgan Securities and Credit Pvt. Ltd. v. Modi Rubber
H
Ltd. AIR 2007 SC 683, relied on
Hanskumar Keshavchand v. Union of India AIR 1958 SC
947, referred to.
SNEHADEEP STRUCTURES PRIVATE LTD. v. MAHARASHTRA
79
SMALL SCALE INDUS. DEVELOPMENT CORPN. LTD.
2.5. The word 'appeal' appearing in Section 7 of A
Interest Act need not be necessarily interpreted within the
meaning of that word in CPC. It is not correct to hold that
the expression "appeal" shall be construed solely in the
context of a decree or order wtfen the Section clearly
makes reference to 'Awards' as well. The plea of the B
Corporation, that the word 'award' appearing in Sectio11
7 relates to those that result from a reference made under
Maharashtra Cooperative Societies Act to the Industry
Facilitation Council, is not acceptable. The provisions for
such reference, which is to be governed by Arbitration c
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. Therefore, it is difficult to see why
'award' in Section 7 should not include an arbitral award 0
other than the one arising from reference made to the
Industries Facilitation Council. [Paras 40 and 41] [99-CG]
2.6. If the word 'appeal' is not construed as including
an application under section 34 of Arbitration Act, it would E
render the term 'award' redundant and the requirement
of pre-deposit, a total nullity with respect to all cases
where a Small Scale Industry undertaking preferred
arbitral proceedings, prior to the incorporation of the
reference procedure in 1998. Arbitration necessarily has
F
to result in an award. The only way of challenging an
award in a court, in accordance with Section 5 r/w the
opening clause of Section 34 is filing an application under
the latter Section. If such challenge is not construed as
an 'appeal', the requirement of pre-deposit of interest G
before the buyer challenging an award passed against
him, becomes a total nullity. The fact that an order passed
on such application/challenge u/s 34 is appealable u/s 37
is of no consequence. [Para 42] [99-H; 100-A-C]
H
80
SUPREME COURT REPORTS
[2010) 1 S.C.R.
A
Sri Paravathi Parameshwara Cables, K.M. Va/asa
B
represented by its Managing Partner, K. Surapu Naidu and
Ors. vs. A.P. Transmission Corpn. Ltd. represented by
Chairman and Managing Director and Anr. 2006 (5) ALT 647,
disapproved.
2.7. 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. However, an appeal
C need not necessarily lie from an inferior Court to a
superior Court, especially within the meaning of Section
7, for the following reasons: (1) Section 7 itself uses the
term 'before a Court or other Authority'. Hence, the inter
se relation between an arbitrator and court is not relevant
D for the purpose of interpreting Section 7. If an appeal can
lie only from an inferior court to a superior Court, the
words 'other authority' in Section 7 will be rendered
redundant. The terminology of the Section indicates that
it is intended to cover a wide range of judicial/non-judicial
E determinations and challenges instituted therefrom
before courts or any other authority empowered to
entertain such challenge. (2) Section 37(2) provides for
appeals from arbitral tribunals. Thus it is not impossible
to have appeals lying from arbitral tribunals to courts. (3)
F Though practically unknown in India, there are two tier
arbitration mechanisms known to other jurisdictions.
These contemplate appeal from an arbitral award to yet
another appellate arbitral tribunal. The arbitrator and the
appellate arbitral tribunal do not constitute inferior and
G superior Courts, but a challenge instituted against the
award passed by the former before the latter is treated
as an 'appeal' nonetheless. (4) There are other
legislations in which the term 'appeal' is used when
courts are not in the context of reference. [Para 46) [92H A-HJ
SNEHADEEP STRUCTURES PRIVATE LTD. v. MAHARASHTRA
81
SMALL SCALE INDUS. DEVELOPMENT CORPN. LTD.·
Virgo Conductors Pvt. Ltd. represented by its M8naging A
Director v. A.P. Transmission Corporation represented by its
Chairman and Managing Director and Anr. AIR 2008 AP 123,
held inapplicable.
Promotho Nath Roy v. W.A. Lee AIR 1921 Cal 415;
Sanshin Chemicals Industry v. Oriental Carbons and B
Chemicals Ltd. and Ors. (2001) 3 SCC 341, referred to.
2.8. An application may sometimes be treated as
appeal. It is not correct to say that if an application uls.
34 is treated as an appeal, an appeal uls 37 from the order c
disposing of such an application, then will be a second
appeal, which is prohibited uls 37(3) of the Arbitration Act.
A second appeal is prohibited from an order that is
passed u/s 37. This bar operates with respect to the
period post such appeal, and not prior to it. The Section
D
prohibits a second appeal only from an order passed in
appeal under that very Section. An award may be
challenged by an application u/s 34, which may be treated
as an appeal for the purposes of Interest Act, and an
order can be made either setting aside/remitting/ or E
affirming the said award. Only when from that order an
appeal is filed uls 37, the bar of second appeal u/s 37
applies which is clearly evinced by the use of the words:
"from an order passed in appeal under this Section."
[Paras 51 and 52] [104-E-H; 105-A-B]
F
Mis. Pandey & Co. Builders Pvt. Ltd. v. State of Bihar and
Anr. (2007) 1 sec 467, relied on.
'The Law and Practice of Arbitration and Conciliation' by
O.P. Malhotra and lndu Malhotra, page 1270, referred to.
G
2.9. When there is doubt about the meaning of a
word appearing in legislation, the interpretation that
harmonizes the object and purpose of the statute should
.~
H
82
SUPREME COURT REPORTS
[2010] 1 S.C.R.
A be adopted, rather than the one which renders the
legislation a futility. 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
B 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
c Interest Act will be defeated. [Para 56] [107-C-E]
Supdt. and Remembrancer of Legal Affairs to Govt. of
West Bengal v. Abani Maity (1979) 4 sec 85, relied on.
Nokes v. Doncaster Collieries All ER 1940 HL 549,
D referred to
2.10. Section 19 of 2006 Act, no doubt, requires the
deposit to be made before an application u/s 34 of the
Arbitration Act is filed. However, this provision of a
E subsequent legislation cannot be read into the provision
in question. While the appellant-company urged that the
Legislature had used the terms 'appeal' and 'application'
interchangeably, the same cannot be inferred
conclusively. Use of the term 'application' in Section 19
F appears to be in the context of the dispute resolution
mechanism provided for uls 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
G 2006. Indeed, it might have contemplated a change in the
legal position while enacting the Act of 2006, but that
change cannot be applied retrospectively. A subsequent
enactment cannot be read into an Act which was
repealed by the former. [Para 55] (106-F-H; 107-A-B]
H
SNEHADEEP STRUCTURES PRIVATE LTD. v. MAHARASHTRA
83
SMALL SCALE INDUS. DEVELOPMENT CORPN. LTD.
Case Law Reference:
A
(1984) 2 sec 534
Referred to.
Para 21
2009 (3) SCR 735
Referred to.
Para 21
(1976) 4 sec 190
Referred to.
Para 21
B
(2003) 8 s~c 50
Referred to.
Para 23
AIR 1932 PC 165
Relied on
Para 24
AIR 1954 SCR 384
Relied on.
Para 25
c
CIT AIR 1956 SC 367
Relied on.
Para 26
AIR 1921 Cal 415
Referred to.
Para 27
(1969) 2 sec 74
Relied on.
Para 28
(2004) 5 sec 1
Relied on.
Para 29
D
(2006) 8 sec 677
Referred to.
Para 33
AIR 2007 SC 683
Relied on.
Para 37
AIR 1958 SC 947
Referred to.
Para 39
E
(2006) 5 ALT 647
disapproved. ·
Para 43
AIR 2008 AP 123
held inapplicable Para 48
(2001) 3 sec 341
referred to.
Para 50
F
(2007) 1 sec 467
relied on.
Para 52
All ER 1940 HL 549
relied on.
Para 55
(1979) 4 sec B5
relied on.
Para 56
1978 1 sec 552
referred to.
Para 57
G
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 10
of 2010.
H
84
SUPREME COURT REPORTS
[2010] 1 S.C.R.
A
From the Judgment & Order dated 5.2.2008 of the High
Court of Judicature at Bombay in Appeal No. 485 of 2006.
Vinod Bobde, Shyam Mudaliar, Arjun V. Bobde,
Hrishikesh Baruah, Arjun Singh Bawa, Balvir Dosanjh, Jagjit
8 Singh Chhabra for the Appellant.
c
S.K. Dholakia, M.P. Rao, AK. Mishra, Abhay Chandrakant
Mahimkar for the Respondent
The Judgment of the Court was delivered by
TARUN CHATTERJEE, J. 1. i..eave granted.
2. This appeal by Special Leave arises from a judgment
and order dated 5th of February, 2008 of the High Court of
Bombay in Appeal No. 485 of 2006 whereby the Division
D Bench of the High Court had set aside the order dated 25th of
January, 2006 of the learned Single Judge of the same High
Court dismissing an Arbitration Petition being Arbitration
Petition No.499/2003 filed by the respondents.
E
F
3. The crucial question that arises for our consideration is
with respect to the interpretation of the term 'appeal' appearing
in Section 7 of the Interest on Delayed Payments to Small Scale
and Ancillary Undertakings Act, 1993 (hereinafter referred to
as 'the Interest Act').
4. The facts of the case can be summarised as follows:
The appellant company is a Small Scale Industrial
Undertaking for the purposes of the Interest Act. The
Maharashtra State Electricity Board (in short 'MSES') issued
G a Work Order dated 27th of March, 1995 in favour of
Maharashtra Small Scale Industries Development Corporation
(hereinafter referred to as 'the Corporation'). The order was for
supply of pipeline, bends and fixtures to be used for laying a
slurry pipeline at the Chandarpur Thermal Power Station. The
H Corporation, in their turn, issued a Supply Order dated 30th of
SNEHADEEP STRUCTURES PRIVATE LTD. v. MAHARASHTRA SMALL 85
SCALE INDUS. DEVELOPMENTCORPN. LTD. [TARUN CHATIERJEE, J.]
March, 1995 in favour of the appellant-company. The work was
A
completed and the bills were duly submitted by the appellantcompany. However, there was a huge delay on the part of the
Corporation in paying the said bills to the appellant company
and no reasonable cause was shown. Resultantly, the appellant
company demanded interest on delayed payment under the
B
Interest Act by a letter dated 7th of December, 1999. The claim
was allegedly denied by the Corporation by a letter dated 24th
of April, 2000. On 21st of December, 2001, the appellantcompany served a notice on the Corporation pointing out that
the refusal of the Corporation to pay interest as demanded by
C
the appellant company has given rise to a dispute which shall
be referred to the Chairman of the Corporation/his nominee in
accordance with clause 27 of the Supply Order, within 15 days
from the date of service of notice. Though the Corporation
acknowledged the delay and claim for interest vide a letter
dated 05th of February, 2002,.it held the view that the liability
D
to pay the interest lay on MSEB, which was the buyer, and not
on the Corporation. Therefore, the letter stated that reference
to arbitration at that stage was not warranted. Aggrieved by the
refusal of the respondent to refer the matter to arbitration, the
appellant-company preferred an Arbitration Application under
E
Section 11 of the Arbitration and Conciliation Act, 1996 (for
short the 'Arbitration Act') before the High Court of Bombay.
The High Court appointed a former Judge of the High Court
Mr. Justice S.W. Puranik as the Sole Arbitrator. The Arbitrator
by his Award dated 30th of June, 2003 directed the
F
Corporation to pay a sum of Rs.78, 19,540.73 to the Appellant
company.
'
5. Aggrieved, the Corporation filed an application under
section 34 of the Arbitration Act before the High Court of G
Bombay for setting aside the award which came to be
numbered as Arbitration Petition No. 499 of 2003. During the
pendency of these proceedings the Appellant company pointed
out that under section 7 of the Interest Act the Corporation has
H
86
SUPREME COURT REPORTS
[2010] 1 S.C.R.
A to deposit 75 % of the amount awarded by Arbitrator under the
Award.
6. The Learned Single Judge of the High Court, vide his
order dated 23rd of August, 2005 dismissed the application
filed under Section 34 of the Arbitration Act for setting aside
8 the award of the Arbitrator. It was found that despite the
statement ma® on behalf of the Corporation that a Bank
Guarantee would be furnished to comply with Section 7 of the
Interest Act recorded on 9th of August, 2005, they had not done
so; nor have they asked for any extension of time. Hence, it was
C held that the petition under Section 34 of the Arbitration Act was
liable to be dismissed.
7. On appeal preferred against the said order by the
Corporation, which came to be registered as Appeal No. 855
o of 2005, the Division Bench of the High Court, by its order
dated 17th of November, 2005 had set aside the judgment and
order of the learned Single Judge and restored the Arbitration
Petition for consideration of the issue whether Section 7 of the
Interest Act was applicable in the instant case.
E
8. The Learned Single Judge vide his judgment and Order
dated 25th of January, 2006 held that an application made
under Section 34 of the Arbitration Act is an 'appeal' for the
purpose of Section 7 of the Interest Act. The learned Single
Judge had taken into consideration the fact that the Interest Act
F was a beneficial piece of legislation. Since the term 'appeal'
takes colour from its context, it must be given the widest
meaning for the purposes of the case at hand. A learned Single
Judge relied on a decision of this Court in the case of State of
Gujarat v. Salimbhai Abdul Gaffar Shaikh, [(2003) 8 SCC 50)
G to understand the meaning of the word 'appeal' and held that
the word 'appeal for the purposes of Section 7 of the Interest
Act shall include an application filed under Section 34 of the
Arbitration Act. The prerequisite to an appeal in form of deposit,
hence, was held applicable. Admittedly, no deposit was made.
H Therefore, it was held that the application for setting aside the
SNEHADEEP STRUCTURES PRIVATE LTD. v. MAHARASHTRA SMALL 87
SCALE INDUS. DEVELOPMENT CORPN. LTD. [TARUN CHATTERJEE, J.]
award under Section 34 of the Arbitration Act could not be A
entertained. The Learned Single Judge also found that the
conditions in the Supply Order dated 30th of March, 1995
established the buyer-supplier relationship between the
Corporation and the Appellant company and hence the liability
to pay interest also lay on the Corporation.
8
9. The Corporation preferred an appeal before the Division
, Bench of High Court of Bombay, which came to be numbered
as Appeal No. 485 of 2006. The Division Bench of the High
Court by the impugned order dated 5th of February, 2008 C
allowed the appeal and directed that the Arbitration Petition
filed by the Corporation shall be heard. The High Court was of
the opinion that the expression 'appeal' in Section 7 of the
Interest Act cannot include an application under Section 34 of
the Arbitration Act. The term 'appeal' is in the context of a
decree and can only include 'a judicial determination by a D
Regular Civil Court considering the hierarchy of Courts'. After
considering the general scheme of awards and.appeals under ... ~,
the Arbitration Act, 1940 and under the Arbitration Act, 1996,
the Division Bench of the High Court was of the view that an
order passed under Section. 34 of the Arbitration Act is an order E
setting aside or refusing to set aside an arbitral award.
Therefore, the decision of the competent court under Section
34 is neither a judgment nor a decree. The order so passed is
appealable under Section 37(1)(b) of ttie Arbitration Act.
Remedy by way of appeal, therefore, is provided under the
F
Arbitration Act itself. The Arbitration Act, therefore, in respect
of an arbitral award makes a distinction between a challenge
to an award and an appeal against an order refusing to set
aside or setting aside an award in a Petition filed under section
34(2) of the Arbitration Act. Under the Arbitration Act, in case, G
the award is not set aside under Sectio~ 34, an appeal can be
preferred against that order under Section 37. The provisions
of Section 7 may apply to such an app~~i. Uncier section 34,
the Court hearing the challenge ha~ no power to issue
alternative decisions binding on ttie for4m below.
•,
\
·'
H
88
SUPREME COURT REPORTS
[2010] 1 S.C.R.
A
10. The High Court further held that Section 19 of the Micro
Small and Medium Enterprises Development Act, 2006 (in short
'the Act of 2006') cannot be made applicable to the present
case as the reference to arbitration was not in terms of Section
19 of the Act of 2006. At the time when the challenge of pre
B deposit under section 7 of the Interest Act was heard by the
learned Single Judge of the High Court, the Act of 2006 was
not in force.
11. The Division Bench of the High Court after considering
C various decisions cited by both the parties before us and some
of the dictionaries dealing with the term 'appeal', held:
"Applying these principles, in our opinion and considering
the history of the Act and the Legislation which were in
force when the Interest Act was enacted, it would be clear
D
that the application to challenge the award under Section
34 apart from it not being a judicial proceedings or
emanating from the court, cannot be considered as an
appeal within the meaning of Section 7 of the Act."
E
12. As regards the question, whether the respondents
were buyers, and not suppliers, the High Court was of the
opinion that the said issue would have to be decided when the
challenge to the award under Section 34 will be heard and
finally disposed of. In sum, the High Court allowed the appeal
and ordered that the pending petition to challenge the award
F be disposed of according to law, as the preliminary objection
in terms of the requirement of pre-deposit of interest awarded
was ruled out.
13. It is this order of the High Court dated 5th of February,
G 2008 which is challenged before us by way of this special leave
petition which on grant of leave was ·heard by us in presence
of the learned Counsel for the parties.
14. The only question that arises for our consideration is:
H Whether the expression 'appeal' used in Section 7 of the
SNEHADEEP STRUCTURES PRIVATE LTD. v. MAHARASHTRA SMALL 89
SCALE INDUS. DEVELOPMENT CORPN. LTD. [T ARUN CHATTERJEE, J.]
Interest Act includes an application to set aside the arbitral
A
award filed under Section 34 of the Arbitration Act, 1996 ?
It may be pertinent to reproduce Section 7 of the Interest
Act, before we proceed to interpret the word 'appeal'.
Section 7 of the Interest Act reads as under:
8 ·
"Appeal- No appeal against any decree, award or other
order shall be entertained by any court .or other authority
unless the appellant company (not being a supplier) has
deposited with it seventy-five per cent of the amount in
C
terms of the decree, award or, as the case may be, other
order in the manner directed by such court, or, as the case
may be, such authority."
15. The learned counsel for the app.ellant company
strenuously, contended before us that the term 'appeal' in the
aforementioned section shall include an application under
section 34 of the Arbitration Act and hence deposit of 75 % of
the amount awarded was a pre requisite for entertaining the
application filed by the respondent corporation to set aside the
award passed by the learned arbitrator.
16. The learned counsel for the corporation hotly contested
this submission and argued that an "appeal" within the meaning
D
"-'
E
of section 7 of the Interest Act cannot include an application
filed under section 34 of the Arbitration Act and hence the
F
corporation was not liable to deposit 75 % of the amount
awarded by the learned arbitrator for entertaining the
application filed under section 34 of the Arbitration Act.
17. According to the learned counsel for the appellant
G
company, no term can have a definite meaning independent
of its context. The exercise of appellate jurisdiction can take
various forms. There is no reason to read 'appeal' in a narrow
sense as being an appeal under Section 96 of the Code of Civil
Procedure (in short 'the Code') against a decree or against an
order under Section 4 of the Code. The learned counsel further
H
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SUPREME COURT REPORTS
[2010] 1 S.C.R.
A argued that the word 'award' in Section 7 cannot be ignored,
nor can it be rendered meaningless and hence an "appeal"
within the meaning of the said section could lie from an arbitral
award as well.
8
18. The respondents, on the other hand, submit that when
a statutory provision is clear and unambiguous, the Court is not
empowered to read anything extraneous to the Statute into it.
The words of the Statute shall be given effect to, irrespective
of the consequences.
C
19. The contention of the appellant company that while.
interpreting a statutory provision, its context and the object
behind the same cannot be lost view of, is no doubt, correct.
At the same time, the contention of the respondents that when
a term appearing in the Statute is clear and unambiguous, only
D the literal rule of interpretation will apply, must also be accepted.
What then has to be seen is whether the term 'appeal' is one
of clear and definite meaning. If it is so, that meaning shall be
given effect to irrespective of the consequences of such
construction. If, on the other hand, the meaning of the 'appeal'
E is ambiguous, the interpretation that advances the object and
purpose of the legislation, shall be accepted.
20. Before we proceed to consider the true meaning of the
word 'appeal', we may note the contention of the learned
F counsel for the appellant company that no expression can have
a meaning independent of its context. The Appellant company
relied on a number of decisions in support of the proposition
that: ''A word is not a crystal, transparent and unchanged; it is
the skin of a Jiving thought and may vary greatly in color and
content according to the circumstances and the time in which
G it is used."
21. In Gramophone Company of India vs. Birendra
Bahadur Pandey & Ors. [(1984) 2 SCC 534], while interpreting
the term 'import', this Court observed that the dictionary was
H not helpful where word of common parlance with varied
SNEHADEEP STRUCTURES PRIVATE LTD. v. MAHARASHTRA SMALL 91
SCALE INDUS. DEVELOPMENT CORPN. LTD. [TARUN CHATTERJEE, J.J
meanings is to be construed and it was held that such word
A
shall be construed in the context in which it appears. Similarly
in Central Bank of India v. State of Kera/a, (in Civil Appeal
no. 95 of 2005, decided on 27th of February, 2009) while
interpreting the term 'debt' and 'security interest', this Court has
followed the principle as mentioned herein above. Similar view
B
was also expressed in Santa Singh v. State of Punjab, (1976)
4 sec 190 while dealing with the ambit of the expression 'shall
hear' appearing in Section 235 of the Code of Criminal
Procedure.
22. At this stage, we may now deal with the decisions cited
C
by the le_arned counsel for the appellant in which the meaning
of the word 'appeal' was an issue.
23. The case of State of Gujarat v. Salimbhai Abudul
Gaffar Shaikh and others, [(2003) 8 SCC 50] on which the
D
Single Judge of the High Court relied on while delivering his
judgment, which was set aside by the Division bench of the
High Court by the impugned order, had categorically held that
the term 'appeal' cannot have a universal meaning fitting all
contexts and purposes.
·
E
24. In the case of Nagendra Nath v. Suresh, [AIR 1932
PC 165], their Lordships of the Privy Council were concerned
with the construction of Article 182 Schedule 1 of the Limitation
Act, 1908. The time of limitation under this provision would run
from the date of the final decree or order of the appellate Court,
if there was an appeal. However, in an application purported
to be an appeal filed by one Madan Mohan, only the decree
holders, not the judgment debtors, were made parties. Further,
F
it was incorrectly stated that no decree was drawn up and the
'appeal' was purported to be from the 'order' of the Court
G
below. It was contended that the application was not 'an
appeal', but a merely abortive attempt to mean 'appeal' as not
all necessary parties were made a party to it, and also because
it did not imperil the whole decree. The Court held that: "any
application by a party to an appellate Court, asking it to set
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SUPREME COURT REPORTS
[2010] 1 S.C.R.
A aside or revise a decision of a subordinate court, is an "appeal"
within the ordinary acceptation of the term, and that it is no less
appeal because it is irregular or incompetent." Their Lordships,
in that case, adopted the literal meaning of the term 'appeal'
and held that it was not open for them to read into the Statute
B any qualification as to the character of the appeal or as to the
parties to it.
25. In the case of Raja Kulkarni v. State of Bombay, [AIR
1954 SCR 384], a similar question was raised in the context
of Industrial Tribunals (Appellate Tribunal) Act, 1950 which
C prohibited a workman from going on a strike during the
pendency of an appeal. Relying on the decision of Nagendra
Nath (supra), this Court held that it was not necessary that such
pending appeal should be a valid and competent appeal. This
Court, however, unlike the Privy Council, looked into the object
D of the Act i.e. industrial peace should not be disturbed so long
as the matter was pending in the Court of appeal, irrespective
of the fact whether such an appeal was competent in law.
26. The case of Mela Ram v. CIT, [Al R 1956 SC 367] was
E also relied on as it was pertinent to the issue. In this case, it
was held that an appeal presented out of time is an appeal,
and an order dismissing it, as time barred is one passed in
appeal.
F
G
27. In the case of Promotho Nath Roy v. WA. Lee (AIR
1921 Cal 415), an order dismissing an application as barred
by limitation after rejecting an application under Section 5 of
the Limitation Act to excuse the delay in presentation was held
to be one 'passed on appeal' within the meaning of Section
109 of the Code.
28. The learned senior counsel for the appellant-company
further argued that an appeal may not necessarily always lead
to the review of the impugned judgment on questions of fact
and law. It may be an application for possible reversal of the
H impugned order or award on the ground of illegality or improper
SNEHADEEP STRUCTURES PRIVATE LTD. v. MAHARASHTRA SMALL 93
SCALE INDUS. DEVELOPMENT CORPN. LTD. [TARUN CHATIERJEE, J.]
proceedings. Hence, an application under section 34 of the
A
Arbitration Act which empowers the Court to set aside the
arbitral award on limited grounds enumerated therein, can also
be an appeal. In the case of S.R.Abhayankar v. K.D. Bapat,
[(1969) 2 SCC 74], the question was whether the High Court
could interfere under Articles 226 and 227 of the Constitution
B
with the order of the Appellate Court in proceedings under an
Act, when a petition for revision under Section 115 of the Code
against the same order had been previously dismissed by a
learned Single Judge of the High Court. The following
paragraphs from the judgment are apposite to the issue. c
(Paragraphs 5 & 6)
"5. It would appear that their lordships of the Privy Council
regarded the revisional jurisdiction to be a part and parcel
of the appellate jurisdiction of the High Court. This is what
was said in Nagendra Nath. Dey v. Suresh Chandra Dey D
59 l.A.283
There is no definition of appeal in the CPC, but their
Lordships have no doubt that any application by a party
to an Appellate Court, asking it to set aside or revise a
E
decision of a subordinate Court, is an appeal within the
ordinary acceptation of the term ....
Similarly in Raja of Ramnad v. Kamid Rowthen and Ors.
53 l.A.74 a civil revision petition was considered to be an
F
appropriate form of appeal from the judgment in a suit of.
small causes nature. A full bench of the Madras High Court
in P.P.P. Chidambara Nadar v. C.P.A. Rama Nadar and
Ors. A.l.R.1937 Mad. 385 had to decide whether with
reference to Article 182(2) of the Limitation Act, 1908 the
term "appeal" was used in a restrictive sense so as to
G
exclude revision petitions and the expression "appellate
court" was to be confined to a court exercising appellate,
as opposed to, revisional powers. After an exhaustive
examination of the case law including the decisions of the
Privy Council mentioned above the full bench expressed
H
A
B
c
D
E
F
G
H
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[2010] 1 S.C.R.
the view that Article 182(2) applied to civil revisions as well
and not only to appeals in the narrow sense of that term
as used in the Civil Procedure Code ... [right of appeal]
was one of entering a superior Court and invoking its aid
and interposition to redress the error of the court below.
Two things which were required to constitute appellate
jurisdiction were the existence of the relation of superior
and inferior Court and the power on the part of the former
to review decisions of the latter. In the well known work of
Story on Constitution (of United States) vol. 2, Article 1761,
it is stated that the essential criterion of appellate
jurisdiction is that it revises and corrects the proceedings
in a cause already instituted and does not create that
cause. The appellate jurisdiction may be exercised in a
variety of forms and, indeed, in any form in which the
legislature may choose to prescribe. According to Article
1762 the most usual modes of exercising appellate
jurisdiction, at least those which are most known in the
United States, are by a writ of error, or by an appeal, or
by some process of removal of a suit from an inferior
tribunal. An appeal is a process of civil law origin and
removes a cause, entirely subjecting the fact as well as the
law, to a review and a retrial. A writ of error is a process
of common law origin, and it removes nothing for reexamination but the law. The former mode is usually
adopted in cases of equity and admiralty jurisdiction; the
latter, in suits at common law tried by a jury.
6. Now when the aid of the High Court is invoked on the
revisional side it is done because it is a superior court and
it can interfere for the purpose of rectifying the error of the
court below. Section 115 of the CPC circumscribes the
limits of that jurisdiction but the jurisdiction which is being
exercised is a part of the general appellate jurisdiction of
the High Court as a superior court. It is only one of thA
modes of exercising power conferred by the Statute;
basically and fundamentally it is the appellate jurisdiction
SNEHADEEP STRUCTURES PRIVATE LTD. v. MAHARASHTRA SMALL 95
SCALE INDUS. DEVELOPMENT CORPN. LTD. [TARUN CHATIERJEE, J.]
of the High Court which is being invoked and exercised in
A
a wider and larger sense. We do not, therefore, consider
that the principle of merger of orders of inferior Courts in
those of superior Courts would be affected or would
become inapplicable by making a distinction between a
petition for revision and an appeal".
B
29. The decision in the case of Tirupati Balaji v. State of
Bihar, [(2004) 5 sec 1] may also be taken note of:
"Appeal implies in its natural and ordinary meaning the
removal of a cause from any inferior Court or tribunal to C
a superior one for the purpose of testing the soundness
of decision and proceedings of the inferior court or
tribunal. The superior forum shall have jurisdiction to
reverse, confirm, annul or modify the decree or order of
the forum appealed against and in the event of a remand
D
the lower forum shall have to rehear the matter and
comply with such directions as may accompany the order
of remand."
30. The High Court had considered this decision while
E
delivering the impugned judgment and order.
31. It is the contention of the learned counsel for the
respondent- corporation, on the other hand, that Section 7 is
applicable only when an appeal is filed from a decree or order,
under which the entire matrix of facts and law could be reF
agitated. Section 34(2) of the Arbitration Act enumerates the
limited grounds of challenge under Section 34 and such a
challenge is not an "appeal".
32. On a perusal of the plethora of decisions
G
aforementioned, 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 re-agitation of entire matrix of facts and law. We have
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[2010] 1 S.C.R.
A already seen in the case of Abhayankar (supra) that even an
order passed by virtue of limited power of revision under
Section 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. Given the weight of authorities in
B favour of giving such a wide meaning to the term 'appeal', we
are constrained to disagree with the contention of the learned
counsel for the respondent-corporation that appeal shall mean
only a challenge to a decree or order where the entire matrix
of law and fact can be re-agitated with respect to the impugned
C order/decree. 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 under
section 34 outside the ambit of an appeal especially when even
a power of revision is treated as an exercise of appellate
0 jurisdiction by this Court and the Privy Council.
33. According to the learned counsel for the respondentCorporation, Arbitration Act treats 'appeals' and 'applications'
separately under two distinct chapters: Chapter VI II and
Chapter IX respectively. It was also strenuously contended by
E the learned counsel for the respondent that the Arbitration Act
contains specific provisions for awarding interest and that Act
being a special enactment will prevail over the Interest Act. He
relied on the case of Jay Engineering Works v. Industry
Facilitation Council & Anr., [2006 (8) SCC 677] to show that
F against the provisions of Interest Act, the provisions of
Arbitration Act will prevail, as the latter is a complete code in
itself. The Interest Act will apply only when the party prefers a
suit to arbitration.
G
34.