Mandatory pre-deposit under MSME law cannot be waived; court may only regulate the mode of payment in instalments.

Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006 makes a seventy-five per cent pre-deposit a mandatory condition for entertaining an application to set aside an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996. The court has no discretion to waive or reduce that statutory deposit; its limited discretion is confined to directing the manner of payment, including instalments where appropriate. The expression "in the manner directed by such court" was read as regulating the mode of deposit only, not diluting the statutory threshold. The Supreme Court therefore affirmed that the pre-deposit requirement is compulsory, while the earlier interim arrangement was treated as case-specific.

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Issues: Whether, in an application under Section 34 of the Arbitration and Conciliation Act, 1996 read with Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006, the court has discretion to waive or reduce the statutory pre-deposit of seventy-five per cent of the awarded amount, and whether such deposit may be permitted in instalments.

Analysis: Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006 requires that an application for setting aside an award shall not be entertained unless the appellant deposits seventy-five per cent of the amount awarded. The requirement is mandatory. The expression "in the manner directed by such court" was construed as conferring limited discretion only to regulate the mode of deposit, including permitting payment in instalments where undue hardship is shown, and not as power to dispense with or dilute the statutory condition. The prior order directing a reduced deposit was therefore treated as an exercise of discretion confined to the interim arrangement in that case.

Conclusion: The statutory pre-deposit of seventy-five per cent is mandatory, and the court has no discretion to deviate from it except to permit instalments. The question was answered against the appellant.

Final Conclusion: The appeal was disposed of with the law laid down on the mandatory nature of the pre-deposit requirement, while the earlier interim arrangement was continued until the pending proceeding was finally concluded.

Ratio Decidendi: Under Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006, deposit of seventy-five per cent of the award amount is a mandatory condition for entertaining a challenge to the award, and judicial discretion extends only to the manner of payment, not to waiver or reduction of the statutory pre-deposit.

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