The MSMED Act's sharpest tooth is Section 19: no application to set aside a Facilitation Council award can be entertained unless the appellant — where it is the buyer — deposits seventy-five per cent of the awarded amount. Buyers have long probed for routes around it. In Atlantis Agritech Private Limited v. M/s Kendriya Bhandar, Civil Revision Petition No. 1947 of 2026, decided on 2 September 2026 and reported in mid-September, a Division Bench of the Telangana High Court (Justice Moushumi Bhattacharya and Justice Renuka Yara) closed one such route: objections filed under Section 47 of the CPC at the execution stage, framed as questions about the decree's executability, cannot function as a deposit-free challenge to the award.
The execution battle
The supplier had done everything the MSMED Act, 2006 contemplates: a reference under Section 18, an award from the Facilitation Council in June 2024, and then execution when payment did not follow. The buyer\'s response was an application under Section 47 CPC — the provision under which questions relating to the execution, discharge or satisfaction of a decree are decided by the executing court — accompanied by an affidavit of assets that disclosed particulars only in vague percentages, and no Section 19 deposit.
Why the Section 47 route failed
The Division Bench looked past the label to the substance. Objections that attack the award\'s validity or resist its enforcement wholesale are functionally an application against the award, and Section 19\'s command — that a challenge shall not be entertained without a deposit of seventy-five per cent of the amount in terms of the award — cannot be defeated by choosing a different procedural wrapper. As the Bench put it, Section 47 proceedings cannot be said to be independent of the Section 19 mandate, and the buyer "failed to show any statutory basis for delaying the disclosure of assets" pending its objections.
The discretion that survives is narrow and well settled: the court may permit the deposit in instalments where hardship is shown — it cannot waive the deposit.
The disclosure dimension
Execution is an information war, and Order XXI Rule 41(2) CPC arms the decree-holder: where a money decree remains unsatisfied, the court may order the judgment-debtor to file an affidavit stating its assets. The Telangana High Court treated this obligation seriously — a disclosure in percentages, unsigned by the judgment-debtor or unsworn in the prescribed manner, is no disclosure at all. The buyer was ordered to file, within three weeks, a fresh and specific affidavit of receivables from its projects across India.
The scheme at a glance
The practice point
For MSME suppliers holding Council awards, this decision is leverage: meet every execution-stage objection with the Section 19 argument, and move immediately for an Order XXI Rule 41(2) affidavit with project-wise receivables — vagueness is now itself objectionable. For buyers, the corollary is equally plain: the challenge budget must include the deposit, and the realistic negotiation is over instalments and the portion released to the supplier, not over whether the deposit is payable. Delhi practitioners will find the same logic applied by the executing courts and the High Court of Delhi in MSEFC award enforcement.
This article is for general information only and is not legal advice or a solicitation.
Frequently Asked Questions
What was the dispute about?
Atlantis Agritech, a micro/small enterprise supplier of agricultural machinery, held a Facilitation Council award dated 10 June 2024 against Kendriya Bhandar — a principal of ₹41,86,98,166 later quantified with interest at about ₹74,62,22,812. In execution, the buyer filed an application under Section 47 CPC resisting execution without making the Section 19 deposit, and filed an asset-disclosure affidavit with only vague, percentage-based particulars.
What did the High Court hold on Section 47 versus Section 19?
That the Section 47 application was, in substance, a challenge to the award: proceedings under Section 47 "cannot be said to be independent of the mandate in Section 19 of the MSMED Act", and filing such objections does not exempt the award-debtor from depositing 75 per cent of the decretal amount. Courts retain discretion only over instalments of that deposit.
What was directed about the asset-disclosure affidavit?
The Court found the buyer's disclosure deficient and set aside the executing court's order accepting it, directing a fresh affidavit within three weeks specifically detailing all receivables due to the award-debtor, including amounts due from continuing and completed projects across India — the disclosure contemplated by Order XXI Rule 41(2) CPC.
Does the 75 per cent deposit apply to a supplier's challenge too?
No. Section 19 imposes the pre-deposit on an application to set aside an award "by any person other than the supplier" in substance — it is the buyer challenging a supplier-favouring award who must deposit. The provision exists to keep MSME money from being locked up by years of challenge litigation.