Bombay High Court
Dhule Municipal Corporation ... vs Microvision Technologies ... on 18 August, 2021
Bench: V.K. Jadhav
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-1-
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
WRIT PETITION NO. 10764 OF 2015
Dhule Municipal Corporation,
Through its Commissioner,
C/o. Dhule Municipal Corporation ...Petitioner
Dhule, Taluka and District Dhule (Ori. Respondent)
versus
1. Microvision Technologies
Through its Proprietor
Shri Atul Nemichand Dhadiwal,
Age 39 years, Occ. Business
R/o. 9, Suraj Enclave, B/h Thomas
Cook, Near ABB Circle,
Mahatma Nagar, Nashik
District Nashik (Ori. Applicant)
2. The State of Maharashtra
Through the Secretary,
Commerce, Energy and Labour
Department, Mantralaya
Mumbai.
(Copies to be served on the
Government Pleader,
High Court at Aurangabad) ...Respondents
.....
Mr. Amol S. Sawant, advocate for the petitioner
Mr. A. S. Bajaj, advocate for respondent No.1
Mr. S. B. Pulkundwar, A.G.P. for respondent No.2-State
.....
CORAM : V. K. JADHAV, J.
Date of Reserving
the Judgment :29.04.2021
Date of pronouncing
the Judgment : 18.08.2021
JUDGMENT :-
1. Rule. Rule returnable forthwith. By consent of the parties,
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heard finally at admission stage.
2. By this writ petition, the petitioner Dhule Municipal Corporation
(hereinafter for the sake of brevity referred to as the "Corporation") is
challenging the legality, validity and propriety of the judgment and
award dated 13.2.2015 passed by the Micro and Small Enterprise
Facilitation Council in petition No. 8 of 2011 whereby the petitioner is
directed to pay Rs.3,40,804/- alongwith compound interest towards
59th bill for operation period 7.4.2011 till the realization of the
decreetal amount and Rs.3,60,034/- alongwith compound interest
towards 60th bill for operation period 1.6.2011 till the realization of the
decreetal amount to the present respondent No.1-Microvision
Technologies (hereinafter for the sake of brevity referred to as the
"Enterprise").
3. Brief facts giving rise to the present writ petition are as follows:-
a) Respondent No.1-Enterprise claims to be the
registered micro enterprise name and style as Microvision
Technologies and it provides various engineering services
in electronics and electrical field. The petitioner Corporation
had invited tender for installation and operation of the
energy saving units within the limits of Dhule city from the
point of view of saving energy, maximum utility of the
resources and for maintenance of ecological balance. It
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was also with a view to save the Government exchequer by
minimizing electricity bill of the streetlights.
b) On 11.10.2005, the petitioner Corporation and
respondent No.1 Enterprise entered into an agreement. In
terms of the said agreement, respondent No.1 Enterprise
was to install solar panels/energy saving units (89 in
numbers) in the city of Dhule. The said contract was to
operate for a period of five years. In terms of the said
contract, the profit earned by the Corporation due to saving
of electricity was to be distributed in the ratio of 48% to
respondent No.1 Enterprise and 52% to the petitioner
Corporation. In terms of the said agreement, respondent
No.1 Enterprise was allotted the work of installation of
energy saving panels on Built, Own, Operate and Transfer
(BOT) basis for a period of five years i.e. 60 months from
the date of contract agreement i.e. from 11.10.2005.
Pursuant to the said agreement, respondent No.1
Enterprise was allotted 48% share while the petitioner
Corporation was entitled to retain 52% share in the total
amount of saving in consumption of electrical units. In
terms of the said agreement dated 11.10.2005, respondent
No.1 Enterprise was required to provide/install the energy
saving units for the street lights in Dhule Municipal
Corporation area. The cost of 48% share of respondent
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No.1 Enterprise was agreed to be commenced immediately
after completion of the work, on month-to-month basis. The
respondent No.1 Enterprise was entitled to receive the
payment w.e.f. April, 2006.
c) It is the case of respondent No.1 Enterprise that
though bills were submitted with the petitioner Corporation
for release of amount on month to month basis, the
petitioner allegedly did not release the said payment.
According to the petitioner Corporation, respondent No.1
Enterprise had committed beach of the terms and
conditions of the agreement. The petitioner Corporation
received number of complaints about non working of the
said panels/energy saving units and as a result of the said
deficiencies, the petitioner Corporation could not earn any
profit whatsoever.
d) In consequence of which respondent No.1
Enterprise had instituted R.C.S. No. 160 of 2007 before
Civil Judge, Junior Division, Dhule seeking relief of
injunction restraining the petitioner Corporation to act in
violation of the terms of the contract agreement. However,
the said suit was disposed of by order dated 29.6.2012
passed by the 8th Joint C.J.J.D. Dhule as withdrawn.
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e) Further, respondent No.1 Enterprise had also filed
writ petition No. 3516 of 2007 before the Division Bench of
this Court seeking directions against the petitioner to pay
the amount together with interest at the rate of 15% p.a. in
respect of the work done by respondent No.1 Enterprise for
installation and operation of energy saving units pursuant
to the agreement dated 11.10.2005. In the said writ
petition, since the petitioner Corporation accepted its
liability to the extent of Rs.16,00,000/-, respondent No.1
Enterprise sought permission to withdraw the writ petition
with liberty to avail alternate remedy of filing a civil suit for
recovery of the amount. By order dated 11.8.2008 the
Division Bench of this Court granted leave to withdraw the
writ petition with liberty as prayed for by respondent No.1
Enterprise and dismissed the writ petition as withdrawn.
f) Respondent No.1 Enterprise had thereafter instituted
Special Civil Suit No. 127 of 2008 for settlement of
accounts. The learned Civil Judge, Senior Division, Dhule,
by judgment and decree dated 3.4.2010 decreed the said
suit with costs and thereby directed the petitioner
Corporation to settle the account in respect of the profit
earned due to installation of energy saving units by
respondent No.1 Enterprise as per the work order allotted
and also directed that Court Commissioner shall be
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appointed to take and settle the account.
g) Respondent No.1 Enterprise had filed final decree
application No. 2 of 2010 before Civil Judge, Senior
Division, Dhule in terms of the decree passed in Special
Civil Suit No. 127 of 2008. Learned Civil Judge, Senior
Division, Dhule, by judgment and decree dated 22.7.2011
allowed the said application and directed the petitioner
Corporation to pay Rs.84,15,444.06 (Rupees eighty four
lakh fifteen thousand four hundred forty four and paise six
only) to respondent No.1 Enterprise alongwith interest
from the date of suit till realization of the decreetal amount
alongwith interest @ 11% p.a. on the said amount. The
final decree was directed to be drawn after the payment of
proper court fees.
h) The petitioner Corporation, being aggrieved by the
same, has preferred First Appeal No. 3611 of 2011 before
this Court challenging the aforesaid judgment and decree
passed in the said suit and the said appeal is pending for
final hearing. During pendency of the said appeal, the
Division Bench of this Court has directed the petitioner
Corporation to deposit certain amount. The Division Bench
of this Court has also recorded that the parties agreed that
the energy saving panels shall be installed within a period
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of eight week under the supervision and control of two
experts and accordingly gave directions to that effect.
i) Further, during pendency of the said Special Civil
Suit No. 127 of 2008, respondent No.1 Enterprise had filed
application No. 8 of 2011 under the provisions of The
Micro, Small and Medium Enterprises Development Act,
2006 (hereinafter for the sake of brevity referred to as the
"MSMED Act, 2006") before the Micro and Small
Enterprises Facilitation Council, Nasik (hereinafter for the
sake of brevity referred to as the "Facilitation Council")
alleging therein that the petitioner Corporation has not paid
the bill for the month of February 2011 (59 th bill) and also
the bill for the month of March, 2011 (60th bill) and
accordingly claimed the amount of Rs.7,88,481.66 with
interest. The petitioner Corporation appeared before the
Facilitation Council and resisted the application by filing
written statement raising various issues. It was contended
that the Facilitation Council has no jurisdiction to try and
decide the dispute. It was also contended that the original
suit of respondent No.1 Enterprise is for rendition of
account and therefore, it is improper to say that the dispute
was restricted only to the extent of 59 th bill. It was also
contended that the agreement had taken place between
the parties and the same is not governed by the provisions
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of the MSMED Act, 2006.
j) By judgment and order dated 30.02.2015, the
Facilitation Council has allowed the said application No. 8
of 2011 with costs and directed the petitioner Corporation
to pay Rs.3,40,804/- alongwith compound interest with
monthly rests to respondent No.1 Enterprise from
24.3.2011 at three times of the bank rate notified by the
Reserve Bank towards 59th bill for operation period
7.4.2011 till the realization of the decreetal amount. In
addition to the 59th bill, the petitioner Corporation is also
directed to pay Rs.3,60,034/- alongwith compound interest
with monthly rests to the respondent No.1 Enterprise from
18.4.2011 at three times of the bank rate notified by the
Reserve Bank towards 60th bill for operation period
1.6.2011 till the realization of the decreetal amount. It is
also directed that the petitioner Corporation to pay the full
decreetal amount within four weeks. Being aggrieved by
the same, the petitioner Corporation has preferred this writ
petition on various grounds.
4. Learned counsel for the petitioner Corporation submits that the
petitioner has filed preliminary objection on 25.6.2012 in petition No.
8 of 2011 before the Facilitation Council about maintainability of the
petition due to lack of jurisdiction. Respondent No.1 Enterprise has
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filed memorandum of enterprise as per Section 8 of MSMED Act,
2006 before the authority notified by the State Government on
3.7.2014. In terms of the provisions of MSMED Act, 2006, the
supplier is entitled to invoke the provisions if the memorandum is
filed with the authorities referred to in sub-section (1) of Section 8 of
MSMED Act, 2006. Learned counsel submits that in terms of Section
8 of MSMED Act, 2006, the small scale industry is required to file
memorandum of enterprise within stipulated period in accordance
with the provisions of the MSMED Act, 2006. Further, in terms of the
provisions of Maharashtra Micro and Small Enterprises Facilitation
Council Rules, 2007, the application filed by the aggrieved enterprise
supplier shall contain the particulars of transaction as well as an
authentic copy of acknowledged receipt of Entrepreneurs
Memorandum (part-II) is also required to be submitted. Learned
counsel for the petitioner submits that the agreement between the
Corporation and respondent No.1 Enterprise was executed on
11.10.2005 for the period commencing from April, 2006 to March,
2011. On the date of agreement, respondent No.1 Enterprise did not
file memorandum as per Section 8 of MSMED Act, 2006.
Respondent No.1 Enterprise is not the supplier as per the provisions
of MSMED Act, 2006 and accordingly is not entitled to invoke the
provisions of MSMED Act, 2006. Respondent No.1 Enterprise has
filed petition in the month of August, 2011 before the Facilitation
Council and submitted memorandum before the competent authority
on 3.7.2014. Thus, on the date of agreement and on the date of
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filing petition before Facilitation Council, respondent No.1 Enterprise
was not a supplier within the meaning of Section 2(n) of MSMED Act,
2006. Respondent No.1 Enterprise is not entitled to invoke the
provisions of MSMED Act, 2006 by filing memorandum subsequently
with the authorities. Learned counsel submits that in view of the
same, the Facilitation Council has no jurisdiction to entertain the
reference petition filed under Section 18 of MSMED Act, 2006.
5. Learned counsel for the petitioner Corporation, in order to
substantiate his contentions, placed reliance on the judgment in the
case of Scigen Biopharma Pvt. Ltd. vs. Jagtap Horticulatuer Pvt.
Ltd, reported in AIR Online 2019 BOM 2080. Learned counsel
submits that considering the same, the impugned judgment and
award passed by the Facilitation Council is without jurisdiction and as
such, the writ petition filed before this Court is also maintainable.
Learned counsel submits that if the writ petition is being filed, where
the order or proceedings are wholly without jurisdiction, the writ
petition is maintainable in spite of alternate statutory remedy.
6. Learned counsel for the petitioner submits that as per the
terms of agreement dated 11.10.2005 between the petitioner
Corporation and respondent Enterprise, it is an agreement of
partnership for sharing the profit. It is not disputed that the share of
respondent No.1 Enterprise is 48% in the profit in terms of the
agreement. Thus, respondent No.1 Enterprise claims to be a
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partner. Even it cannot claim to be a supplier. The concepts of
partner and supplier are mutually exclusive.
7. Learned counsel for the petitioner Corporation submits that the
impugned order/award dated 13.2.2015 is signed by only four
arbitrators out of five and signature of one arbitrator is missing. In
terms of provisions of Arbitration and Conciliation Act, 1996, the
award is required to be signed by all members of the Arbitral
Tribunal. If the award is not signed by any of the members, then the
reason for such omission is required to be stated in the award. In the
present case, no reasons have been mentioned in the award for the
omission of signature of one member of the Facilitation Council
(Tribunal). Thus, the impugned award is not enforceable in law.
8. Learned counsel for the petitioner Corporation submits that
respondent No.1 Enterprise is claiming to be a registered SSI Unit
with D.I.C. and therefore, it is not required to file memorandum as per
the MSMED Act, 2006. Learned counsel submits that factually the
certificate of registration of respondent No.1-Enterprise is as a tiny
enterprise and valid up to 05.05.2008. Therefore, after 05.05.2008,
there is no valid registration certificate in favour of respondent No.1
Enterprise. Learned counsel submits that apart from this, after filing
of memorandum on 3.7.2014 for the first time, respondent No.1
Enterprise is classified as small enterprise considering the
investment in plant and machinery. Prior to 3.7.2014, respondent
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No.1 Enterprise was never classified as small enterprise. Thus, the
provisions of MSMED Act 2006 could not have been made applicable
retrospectively after filing of the memorandum by respondent No.1
Enterprise. Learned counsel submits that in terms of clause Nos. 4
and 11 of the agreement, no additional payment will be given to
respondent No.1 Enterprise and the entitlement of respondent No.1
Enterprise is only restricted for sharing of profit. The petitioner
Corporation is supplier of the electric polls and respondent No.1
Enterprise is supplier of energy saving units. Therefore, there is no
subsisting relationship of buyer and supplier. In terms of clauses 4
and 5 of the agreement, the share in the profit is also quantified.
Learned counsel submits that as per the pleadings of respondent
No.1 Enterprise in para 2 of injunction suit No. 160 of 2007, it is
mentioned that share of respondent No.1 Enterprise out of profit is to
the extent of 48%. In para 3 it is stated that the work of installation of
energy saving units is at the cost of respondent No.1 Enterprise.
Thus, considering the same, it is crystal clear that no consideration
was parted with by the petitioner Corporation for installation. In terms
of provisions of Section 2(d) of the MSMED Act 2006, the buyer
means who receives services from a supplier for consideration. In
the present case, no consideration was paid for installation of energy
saving units. Hence, the petitioner Corporation is not a buyer as per
the said definition. Learned counsel submits that the judgment and
order passed in final decree application No. 2 of 2010 dated
22.7.2011 is already objected by the petitioner Corporation by
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preferring first appeal No. 3611 of 2011 and the said first appeal is
still pending before this Court. The petitioner Corporation has raised
various substantial grounds in the first appeal.
9. Learned counsel for the petitioner Corporation, in order to
substantiate his submissions, placed reliance on the following
cases:-
i) Whirlpool Corporation vs Registrar of Trademarks, Mumbai
and others, reported in (1998) 8 SCC 1,
ii) Harbanslal Sahnia and another vs. Indian Oil Corporation Ltd.
and others, reported in 2003 (2) SCC 107.
iii) Chief Engineer, Hydel Project and others vs. Ravinder Nath
and others, reported in (2008) 2 SCC 350
iv) Union of India vs. Popular Construction Co. reported in (2001)
8 SCC 470
v) Maharashtra State Electricity Distribution Company Ltd. and
others vs. Deltron Electronics, reported in 2017 (2) Mh.L.J.
605.
vi) Scigen Biopharma Pvt. Ltd. Vs Jagtap Horticulatuer Pvt. Ltd.
Reported in AIR Online 2019 Bom 2080.
vii) Judgment of Gujarat High Court in the case of M/s. Easun
Reyrolle Limited vs. M/s. Nik San Engineering Co. Ltd. In
Special Civil application No. 6265 of 2018 dated 18.1.2019.
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viii) Principal Chief Engineer vs. Manibhai and Brothers (Sleeper)
and Anr. reported in AIR 2012 Gujarat 44.
10. Learned counsel for respondent No.1 Enterprise submits that
the petitioner Corporation has directly challenged the award passed
by the Facilitation Council by filing the present writ petition. Learned
counsel submits that in terms of the provisions of Section 18 of the
MSMED Act, 2006, the Facilitation Council can itself conduct
conciliation. In terms of the provisions of sub-Section (3) of Section
18, if the conciliation initiated is not successful and stands terminated
without any settlement between the parties, the Facilitation Council
shall either itself take up the dispute for arbitration or refer it to any
institution or center providing alternate dispute resolution services for
such arbitration and the provisions of the Arbitration and Conciliation
Act, 1996 shall then apply to the dispute as if the arbitration was in
pursuance of an arbitration agreement referred to in sub-section (1)
of Section 7 of that Act. Learned counsel submits that the Facilitation
Council has been statutorily conferred the power to act as an
arbitrator. Learned counsel submits that in terms of section 2(4) of
the Arbitration and Conciliation Act, 1996, the manner in which
arbitration under various statutes is prescribed. Learned counsel for
respondent No.1 Enterprise submits that Section 34(3) of the Act of
1996 mandates that the application for setting aside an award is to
be filed within a period of 90 days from the date of passing of award
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and the power to condone delay is restricted to further period of 30
days and not thereafter. Learned counsel submits that in the present
case, the award was passed on 13.2.2015 and the present writ
petition was filed on 12.10.2015 i.e. after 241 days. Learned counsel
submits that the only recourse that can be had against the award is
as per Section 34 of the Arbitration and Conciliation Act, 1996.
Learned counsel submits that remedy which has been directly barred
under Section 34 of the Arbitration and Conciliation Act cannot be
permitted to be indirectly raised by presentation of writ petition. In
view of the same, as the award has attained finality in terms of
Section 35 of the Arbitration and Conciliation Act 1996, present writ
petition questioning correctness of the same is not maintainable.
11. Learned counsel for respondent No.1 Enterprise submits that
respondent No.1 Enterprise was already registered under the
provisions of Interest on Delayed Payments to Small Scale and
Ancillary Industrial Undertakings Act, 1993 on 6.5.2003 and in view
of the provisions of Section 32(2) of MSMED Act, 2006, such
registration is deemed to have been valid. Learned counsel submits
that since registration requirement arises out of the manual of
departmental functions and procedure, such requirement is not
statutory. Further, the objection regarding registration was not raised
before the Facilitation Council at any point of time. As a matter of
fact, petitioner Corporation was aware of such registration and
therefore, objection regarding the same was not raised prior to filing
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of the present writ petition. Learned counsel submits that the
registration certificate was also submitted alongwith the tender.
Learned counsel for respondent No.1 Enterprise submits that in
terms of the provisions of Section 8 of MSMED Act 2006, the
memorandum is mandatory only for the persons, who intend to
establish a micro, small or medium enterprise and not for already
registered entities before coming into force the MSMED Act, 2006.
12. Learned counsel for respondent No.1 Enterprise submits that
in terms of the provisions of Section 4 of the Arbitration and
Conciliation Act, the objection as to the jurisdiction is required to be
raised on the first date of hearing. In the instant case, said objection
was raised later than the first date of hearing i.e. on 25.6.2012,
though the petitioner Corporation has appeared before the
Facilitation Council on 22.11.2011. Learned counsel submits that the
petitioner Corporation has filed an application Exh.27 before the
executing court praying therein for installments to satisfy the award.
As such, the request made by the petitioner Corporation clearly
indicates that the petitioner Corporation has accepted the award and
decided not to challenge the same. In view of its own conduct, the
petitioner Corporation cannot turn back and question the legality of
the award in writ jurisdiction of this Court. Further, in view of the
lapse of period of limitation in terms of Section 34(3) of the Arbitration
and conciliation Act, 1996, the petitioner Corporation is now
estopped from questioning legality of the award. The petitioner
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Corporation has never raised any proper objection to the locus of
respondent No.1 as micro enterprise and supplier.
13. Learned counsel for respondent No.1 Enterprise submits that
the Arbitration and Conciliation Act, 1996 is a complete Code in itself
and judicial intervention in the said proceeding is not permissible in
view of the provisions of Section 5 of said Act. The petitioner
Corporation has made omnibus arguments on the issues which could
not be raised in the arbitration proceeding. Thus, the forum
prescribed by the Arbitration and Conciliation Act, 1996 cannot be
altered by filing writ petition. The petitioner Corporation has raised
various disputed questions of facts regrading registration, territorial
jurisdiction etc. which require appreciation of evidence and for that
purpose writ petition is not maintainable.
14. Learned counsel for respondent No.1 Enterprise submits that
as per the website of Government of India, Ministry of Micro, Small
and Medium Enterprise, respondent No.1 Enterprise is registered
w.e.f. 28.10.2002 and a certificate to that effect is produced at page
192 of the compilation on behalf of the respondent. Learned counsel
submits that so far as the issue of signatures of all five members on
the award in terms of Section 21 of MSMED Act, 2006, the
Facilitation Council shall consist not less three but not more than five
members. Therefore, any order passed and signed by quorum would
be considered as valid order passed under Section 18 of the MSMED
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Act, 2006. The impugned award has been signed by four members
which comply with the statutory requirements. Additionally, as per
Section 24 of the MSMED Act 2006, the said Act has overriding
effect even on Section 31 of the Arbitration and Conciliation Act,
1996.
15. Learned counsel for respondent No.1 Enterprise submits that
the agreement between the parties is to be read as a whole. The
very first page of the agreement states that the bid was for BOT
(Built, Operate and Transfer) basis. Para 2 of the agreement states
about issuing of work order. Respondent No.1 Enterprise is termed
only as a contractor in the said agreement. The said agreement is in
respect of supply of energy saver units and of providing services for
maintaining those units. Learned counsel for respondent No.1
Enterprise submits that the consideration, which the petitioner
Corporation is required to pay to respondent No.1 Enterprise for the
work done is calculated in terms of saving in the energy bill required
to pay to the MSEDCL. The mentioning of word "share" is only a
formula adopted for defining the consideration to be paid towards the
supply of units and services to be rendered to the petitioner
Corporation. Learned counsel submits that if the agreement is read
as a whole, the status of respondent No.1 Enterprise was always as
a supplier. The petitioner Corporation has already charged and paid
the Sales Tax/work contract Tax/VAT etc. which has also been
referred to in the judgment and award passed in final decree
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application No. 2 of 2010.
16. Learned counsel for respondent No.1 Enterprise has
elaborately made submissions as to how the judgments relied upon
by learned counsel for the petitioner Corporation are not applicable
and those submissions will be dealt with at the appropriate stage.
17. Learned counsel for respondent No.1 Enterprise in order to
substantiate his contentions, placed reliance on the following cases:-
i) Order dated 27.10.2020 passed by the Division Bench of this
Court (Principal Seat at Bombay) in Writ petition (L) No. 4049
of 2020;
ii) Bhavan Construction vs. Executive Engineer, Sardar Sarovar
Narmada Nigam Ltd. and Another, reported in 2021 SCC
Online SC 8.
iii) Judgment of Supreme Court dated 18.09.2020 in SLP (C) No.
8482 of 2020 (Punjab State Power Corporation Ltd. vs. Emta
Coal Ltd. And Another,);
iv) Judgment of Supreme Court in Civil Appeal No. 9106 of 2019
(Deep Industries Ltd. Vs Oil and Natural Gas Corporation
Limited and Another)
v) Union of India v. Popular construction Co., reported in (2001) 8
SCC 470;
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vi) Oil and Natural Gas Corporation Ltd. vs. Gujarat Energy
Transmission Corporation Ltd. and Ors. reported in (2017) 5
SCC 42;
vii) Tharsingh Nathmal and Others vs. Superintendent of Taxes,
Dhubri and Others, reported in AIR 1964 SC 1419;
viii) Karnataka State Pollution Control Board vs B. Heera Naik and
Ors. Etc., reported in AIR 2020 SC 200;
ix) Judgment of this Court dated 21.12.2020 in Civil Writ Petition
(St.) No. 8056 of 2019 (Airports Authority of India v. M/s.
Reliance Electronics & Anr.);
x) Modern Industries vs. Steel Authority of India Ltd. and others
reported in (2010) 4 MLJ 416 (SC);
xi) Judgment of this Court in civil writ petition (St) No. 8056 of
2019 dated 19.10.2020 (Airports Authority of India vs. M/s
Reliance Electronics and Anr);
xii) Sterling Industries vs. Jayprakash Associates Ltd. and others,
reported in AIR 2019 SC 3558;
xiii) Nivedita Sharma vs. Cellular Operators Association of India
and others, reported in (2011) 14 SCC 337;
xiv) SBP and Co. vs. Patel Engineering Ltd. and Anr, reported in
(2005) 8 SCC 618
18. I have carefully considered the submissions advanced by
learned counsel for the respective parties. With their able assistance,
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I have perused the pleadings, grounds taken in the petition,
annexures thereto and reply filed by the concerned respondents.
19. The case of the petitioner Corporation can be summarised as
below:-
i) The petitioner corporation has raised preliminary objection on
25.6.2012 in petition No. 8 of 2011 before the Facilitation
Council about maintainability of the petition due to lack of
jurisdiction. According to the petitioner Corporation,
respondent No.1 Enterprise has filed memorandum of
enterprise as per the provisions Section 8 of MSMED Act,
2006 before the authority notified by the State Government on
3.7.2014. In terms of the provisions of Section 8 of MSMED
Act, 2006, the small scale industry is required to file
memorandum of enterprise within stipulated period. The
agreement between the petitoner Corporation and respondent
No.1 Enterprise was executed on 11.10.2005 for the period
commencing from April, 2006 to March, 2011. On the date of
agreement, respondent No.1 Enterprise did not file
memorandum as per Section 8 of MSMED Act, 2006.
Respondent No.1 Enterprise is not the supplier as per the
provisions of MSMED Act, 2006 and accordingly is not
entitled to invoke the provisions of MSMED Act, 2006.
Respondent No.1 Enterprise has filed petition in the month of
August, 2011 before the Facilitation Council and submitted
memorandum before the competent authority on 3.7.2014.
Thus, on the date of agreement and on the date of filing
petition before Facilitation Council, respondent No.1
Enterprise was not the supplier within the meaning of Section
2(n) of MSMED Act, 2006. Respondent No.1 Enterprise is not
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entitled to invoke the provisions of MSMED Act, 2006 by filing
memorandum subsequently with the authorities. Thus, the
Facilitation Council has no jurisdiction to entertain the
reference petition filed under Section 18 of MSMED Act,
2006.
ii) According to the petitioner Corporation, as per the terms of
agreement dated 11.10.2005 executed between the petitioner
Corporation and respondent Enterprise, it is an agreement of
partnership for sharing the profit. It is not disputed that the
share of respondent No.1 Enterprise is 48% in the profit in
terms of the agreement. Thus, respondent No.1 Enterprise
cannot claim to be the supplier.
iii) The impugned order/award dated 13.2.2015 is signed by only
four arbitrators out of five and signature of one arbitrator is
missing. Thus, the impugned award is not enforceable in
law.
20. The case of respondent No.1 Enterprise can be summarised
as below:-
i) In terms of provisions of Section 18 of the MSMED Act, 2006,
the Facilitation Council can itself conduct conciliation. In terms
of provisions of sub-Section (3) of Section 18, if the conciliation
initiated is not successful and stands terminated without any
settlement between the parties, the Facilitation Council shall
either itself take up the dispute for arbitration or refer it to any
institution or center providing alternate dispute resolution
services for such arbitration and the provisions of the
Arbitration and Conciliation Act, 1996 shall then apply to the
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dispute. In terms of provisions of Section 34(3) of Arbitration
and Conciliation Act, 1996 the application for setting aside an
award is to be filed within a period of 90 days from the date of
passing of award and the power to condone the delay is
restricted to further period of 30 days and not thereafter. The
impugned award has attained finality in terms of Section 35 of
the Arbitration and Conciliation Act 1996. Thus, the writ
petition questioning correctness of the same is not
maintainable.
ii) Respondent No.1 Enterprise was already registered under the
provisions of Interest on Delayed Payments to Small Scale and
Ancillary Industrial Undertakings Act, 1993 on 6.5.2003 and in
view of the provisions of Section 32(2) of MSMED Act, 2006,
such registration is deemed to have been valid. Further, the
objection regarding registration was not raised before the
Facilitation Council at any point of time. In terms of the
provisions of Section 8 of MSMED Act 2006, the memorandum
is mandatory only for the persons, who intend to establish a
micro, small or medium Enterprise and not for already
registered entities before coming into force the MSMED Act,
2006.
iii) In terms of the provisions of Section 4 of the Arbitration and
Conciliation Act, the objection as to the jurisdiction is required
to be raised on the first date of hearing.
iv) The Arbitration and Conciliation Act, 1996 is a complete Code
in itself and judicial intervention in the said proceeding is not
permissible in view of the provisions of Section 5 of said Act.
Thus, the forum prescribed by the Arbitration and Conciliation
Act, 1996 cannot be altered by filing writ petition. The
Facilitation Council shall consist not less three but not more
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than five members. Therefore, any order passed and signed by
quorum would be considered as valid order passed under
Section 18 of the MSMED Act, 2006. The impugned award
has been signed by four members which comply with the
statutory requirements. Additionally, as per Section 24 of the
MSMED Act 2006, the said Act has overriding effect even on
Section 31 of the Arbitration and Conciliation Act, 1996.
v) Respondent No.1 Enterprise is a supplier within the meaning of
Section 2 of MSMED Act, 2006. The mentioning of word
"share" is only a formula adopted for defining the consideration
to be paid towards the supply of units and services to be
rendered to the petitioner Corporation.
21. In terms of provisions of Section 2(n) of MSMED Act, 2006, the
"supplier" means a micro or small enterprise, which has filed a
memorandum with the authority referred to in sub-sections (1) of
Section 8 of MSMED Act, 2006. The provisions of Section 8 of
MSMED Act, 2006 reads as under:-
"8. Memorandum of micro, small and medium
enterprises.--
(1) Any person who intends to establish,--
(a) a micro or small enterprise, may, at his discretion; or
(b) a medium enterprise engaged in providing or rendering
of services may, at his discretion; or
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(c) a medium enterprise engaged in the manufacture or
production of goods pertaining to any industry specified in the
First Schedule to the Industries (Development and Regulation)
Act, 1951,
shall file the memorandum of micro, small or, as the case may
be, of medium enterprise with such authority as may be
specified by the State Government under sub-section (4) or
the Central Government under sub-section (3):
Provided that any person who, before the
commencement of this Act, established-
(a) a small scale industry and obtained a registration
certificate, may, at his discretion; and
(b) an industry engaged in the manufacture or production of
goods pertaining to any industry specified in the First
Schedule to the Industries (Development and Regulation) Act,
1951, having investment in plant and machinery of more than
one Crore rupees but not exceeding ten Crore rupees and, in
pursuance of the notification of the Government of India in the
erstwhile Ministry of Industry (Department of Industrial
Development) number S.O. 477(E), dated the 25th July, 1991
filed an Industrial Entrepreneur's Memorandum,
shall within one hundred and eighty days from the
commencement of this Act, file the memorandum, in
accordance with the provisions of this Act.
(2) The form of the memorandum, the procedure of its filing
and other matters incidental thereto shall be such as may be
notified by the Central Government after obtaining the
recommendations of the Advisory Committee in this behalf.
(3) The authority with which the memorandum shall be filed by
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a medium enterprise shall be such as may be specified, by
notification, by the Central Government.
(4) The State Government shall, by notification, specify the
authority with which a micro or small enterprise may file the
memorandum.
(5) The authorities specified under sub-
sections (3) and (4) shall follow, for the purposes of this
section, the procedure notified by the Central Government
under sub-section (2).
22. In terms of sub-section (1) of Section 8 of the MSMED Act,
2006, any person who intends to establish the enterprise as detailed
in clause (a) and (b), may, at his discretion; shall file the
memorandum of micro, small or, as the case may be, of medium
enterprise with such authority as may be specified by the State
Government under sub-section (4) or the Central Government under
sub-section (3): In terms of the proviso if any person who, before
commencement of the Act, established (a) a small scale industry and
obtained a registration certificate, may, at his discretion; file
memorandum in accordance with the provisions of this Act. So far as
clause (b) of the proviso which contemplates filing of memorandum is
mandatory within 180 days from the commencement of this Act, for
the industries as detailed in the said clause (b).
23. In view of the provisions of Section 32(2) of the MSMED Act,
2006, such registration also deemed to have been valid. Section 32
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of the MSMED Act, 2006 is reproduced herein below:-
"32. Repeal of Act 32 of 1993.
(1) The Interest on Delayed Payments to Small Scale and
Ancillary Industrial Undertakings Act, 1993 is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action
taken under the Act so repealed under sub-section (1), shall
be deemed to have been done or taken under the
corresponding provisions of this Act."
24. Learned counsel for respondent No.1 Enterprise submits that
respondent No.1 Enterprise was already registered under the
provisions of Interest on Delayed Payments to Small Scale and
Ancillary Industrial Undertakings Act, 1993 on 6.5.2003. Thus, in
view of the provisions of Section 32(2) anything done or any action
taken under repealed Act under sub-section (1) of Section 32 of the
MSMED Act, 2006 shall be deemed to have been done or taken
under the corresponding provisions of this Act.
25. Learned counsel for the petitioner Corporation has pointed
out certain dates, which are as follows:-
Sr. No. Date Particulars
1 11.10.2005 Agreement entered into between the
petitioner Corporation and respondent
No.1 Enterprise.
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2 August, 2011 Petition filed before the Facilitation
Council.
3 03.07.2014 Respondent No.1 has filed memorandum
in terms of Section 8 of the MSMED Act,
2006.
It is therefore, contended that as on the date of agreement,
entered into, respondent No.1 Enterprise is not supplier due to non
filing of memorandum with the authority.
26. Learned counsel for the petitioner Corporation further
submitted that till completion of the period of agreement, no
memorandum of enterprise came to be filed, hence, subsequent filing
of the memorandum would not confer the status of the supplier
relating back when the parties entered into the contract. Learned
counsel submitted that the said issue is no more res-integra and in
terms of the judgment delivered by this Court in the case of Scigen
Biopharma Pvt. Ltd. vs. Jagtap Horticulatuer Pvt. Ltd, (supra),
subsequent filing of memorandum under Section 8 of the MSMED
Act, 2006 would not confer the status merely the enterprise
retrospectively relating back to the date when the parties entered into
the contract in question. This Court (Coram: G.S. Kulkarni, J.) at
Principal Seat in para 33 has made the following observations:-
"33. I am thus of the clear opinion that the respondent was
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not entitled to invoke the provisions of Chapter V and seek
reference to arbitration under Section 18 of the MSMED Act
as on the day on which the contract was entered into on 18
January 2008, the respondent was not a supplier within the
meaning of MSMED Act and subsequent filing of
memorandum under Section 8 on 25 October 2012, would
not confer status of small enterprise retrospectively relating
back to 18 January 2008 when the parties entered into the
contract in question. The Arbitral Tribunal as constituted
under Section 18 of the Act has clearly held that the date on
which the contract was entered into between the parties, the
respondent had not filed the memorandum as per the
provisions of Section 8 of the Act and hence the respondent
would not be entitled to benefits under Chapter V of the
MSMED Act and accordingly, rejected the arbitration
reference petition as filed by the respondent. In my opinion,
the arbitral tribunal was correct in coming to this conclusion.
The learned District Judge, in my opinion, was not correct in
interfering with the award of the arbitral tribunal in the
absence of any legal perversity. The provisions of the Act are
also not applied in their correct perspective."
27. In the facts of the case cited above, the appellant approached
the respondent some time in the year 2008 for providing services of
landscaping. On 18.01.2008 the appellant placed order on the
respondent for the said work. As the payment remained outstanding,
on 28.9.2011 the respondent issued legal notice to the appellant
demanding outstanding payment. Respondent thereafter took steps
to approach the District Industries Center on 25.10.2012, by filing an
entrepreneur memorandum stated to be filed under Section 8 of the
MSMED Act, 2006 which specified that the initial date of production
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of the business of applicant was on 8.4.3006. By virtue of the
respondent filing the memorandum, the respondent considered itself
eligible to avail benefits under the MSMED Act, 2006. The
respondent accordingly by invoking the provisions of the Act read
with the Maharashtra Micro and Small Enterprises Facilitation
Council Rules 2007, filed an application before the Facilitation
Council making the claim of outstanding amount. This court set aside
the impugned judgment and award passed by the District Judge in
the arbitration application preferred against the award passed by the
Facilitation Council.
28. Learned counsel for respondent No.1 Enterprise submits that
in the case cited above, the provisions of MSMED Act, 2006 in
relation to the industry established after commencement of the
MSMED Act, 2006 are considered. In the instant case, respondent
No.1 Enterprise is existing from the year 2002 and also registered
under the provisions of Interest on Delayed Payments to Small Scale
and Ancillary Industrial Undertakings Act, 1993, on 6.5.2003. Photo
copy of said certificate of registration which is valid up to 5.5.2008 as
a tiny enterprise is placed on record without there being any
application for production of document. The said certificate of
registration was also not filed before the Facilitation Council. It is not
clear from the said certificate of registration that the same has been
issued to respondent No.1 Enterprise. Further, the original is also not
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produced before this court. Even assuming for the sake of discussion
that respondent No.1 Enterprise was registered as tiny enterprise,
however, there is no provision in the Interest on Delayed Payments
to Small Scale and Ancillary Industrial Undertakings Act, 1993 for
registration of any industrial undertaking as tiny enterprise.
29. Respondent No.1 Enterprise was registered as tiny enterprise
valid up to 5.5.2008. After filing of the memorandum on 3.7.2014,
for the first time, respondent No.1 Enterprise is classified as small
enterprise considering the investment in the plant and machinery and
prior to it, respondent No.1 Enterprise was not classified as small
enterprise. I find much substance in the contentions raised by the
petitioner Corporation that at the time of agreement dated
11.10.2005, respondent enterprise was not supplier and the
petitioner Corporation was not buyer.
30. In terms of the provisions of Section 2(e) of the Delayed
Payments to Small Scale and Ancillary Industrial Undertakings Act,
1993, a "small scale industrial undertaking" has the meaning
assigned to it by clause (j) of Section 3 of the Industries
(Development and Regulations) Act, 1951 (hereinafter for the sake of
brevity referred to as the "Act of 1951"). In Section 3(j) of the Act of
1951, the "small scale industrial undertaking" is defined. The
provisions of Section 2(e) of the Delayed Payments to Small Scale
and Ancillary Industrial Undertakings Act, 1993 and Section 3(j) of
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the Act of 1951 are reproduced herein-below:-
Section 2(e) of Delayed Payments to Small Scale and
Ancillary Industrial Undertakings Act, 1993
"2. Definitions.- In this Act, unless the context otherwise
requires.-
(a) to (d) --------
(e) "small scale industrial undertaking" has the meaning
assigned to it by clause (j) of section 3 of the Industrial
(Development and Regulation) Act, 1951."
Section 3(j) of the Act of 1951.
"3. Definitions.- In this Act, unless the context otherwise
require.-
(a) to (i).-------
(j) "small scale industrial undertaking" means an
industrial undertaking which, in accordance with the
requirements specified under sub-section (1) of Section
11B, is entitled to be regarded as a small scale industrial
undertaking for the purposes of this Act;"
Section 11B of the Act of 1951 empowers the Central
Government to specify the requirements which shall be complied with
by the small scale industrial undertaking. It appears that respondent
No.1 Enterprise has given temporary registration as a tiny enterprise
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valid upto 5.5.2008. Respondent No.1 Enterprise is not a small scale
industrial undertaking in accordance with the requirements as
specified under Section 11B of the Act of 1951.
31. I find no substance in the submissions made on behalf of
respondent No.1 Enterprise that in terms of the provisions Section 8
of the MSMED Act, 2006 filing of memorandum is mandatory only for
the person who intend to establish a micro, small or medium
Enterprise and not for already registered entities before coming into
force the MSMED Act, 2006. Thus, on the date on which the
contract was entered into between the parties, respondent No.1
Enterprise had not filed memorandum as per the provisions of
Section 8 of the MSMED Act, 2006 and hence, respondent No.1
Enterprise would not be entitled for the benefit under Chapter V of
the MSMED Act, 2006.
32. On 11.10.2005, the petitioner Corporation and respondent
No.1 Enterprise have entered into an agreement. As per the terms of
the said agreement, respondent No.1 Enterprise was to install solar
panels/energy saving units in the city of Dhule. The purpose of
installation of the said panel was to save the electricity bills of the
Corporation. It was therefore agreed that 48% of the amount of bill
saved by the Corporation as a result of installation of said panels
would be the share of respondent No.1 Enterprise. The period of
service was for five years i.e. upto 60 months. The expenses about
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cables, foundation panel, labour to be incurred by respondent No.1
Enterprise without paying any additional amount. For the said period
of 60 months, as per the agreed terms, it was incumbent upon
respondent No.1 Enterprise to cause repairs and maintain the units
without any charges. It has been specifically referred in the said
agreement that it is a build, operate and transfer agreement (BOT).
After completion of the said period of 60 months, it was obligatory on
the part of the respondent No.1 Enterprise to hand over the energy
saver panels to the petitioner Corporation in good condition. The
said copy of agreement dated 11.10.2005 is annexed with the
petitioner at Exhibit "A". Respondent No.1 Enterprise has not
disputed the same including the clause that it is an agreement based
upon the build, operate and transfer (BOT).
33. In a BOT project, a private company is given a concession to
build and operate a facility that would normally be built and operated
by the Government. The facility might be a power plant, airport, toll
road, tunnel, water treatment plant etc. The private company is also
responsible for financing and designing the project. At the end of the
concession period, the private company returns ownership of the
project to the Government. The public private partnership (PPP) and
build, operate and transfer (BOT) model is extensively used on the
development of public infrastructure project. The concepts of public/
private partnership (PPP) and build operate and transfer (BOT) is a
contractual relations between the private and Government entities.
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The BOT is an innovated approach by earning direct private sector
investment in large scale infrastructure project. The BOT model is
defined as the cooperation between government and the private
entities to provide public infrastructure products and services.
34. The law relating to build, operate and transfer (BOT) in India
has continuously amended several laws for the successful
procurement of the infrastructure projects. For example the law of
Land Acquisition, Rehabilitation and Resettlement (LARA) Act, 2013
was passed to enable the private developers to construct, operate
and maintain the new infrastructure systems and to collect tolls and
to recover the investment cost. Similarly, the National Highways
Development Programme was launched in 1997 to develop the large
road network in a relatively short period of time. This act enabled the
private sectors to construct, operate and maintain the new road
systems and thereafter recover the costs through the collection of
tolls. In the road sector, the National Highway Act, 1956 and the
National Highways Authority of India (NHAI) Act, 1988, was enacted
to allow the government to grant private developers the right to
participate to collect tolls on public roads. Subsequently, the
Electricity Act, 2003 started the participation of private sectors in
open access in the generation and distribution of electricity. In the
current context, several international and national private investors
are engaged under BOT guidelines to submit their competitive bills
for various purposes on revenue sharing basis.
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35. In the instant case, the nature of contract clearly
demonstrates that it is a contract for installation of energy saver
panels where the labour and service elements are involved. The
purpose of installation of said panels was to save the electricity bills
of the petitioner Corporation. The period of services was for five
years i.e. upto 60 months and after completion of the said period, it is
obligatory on the part of respondent enterprise to hand over the
energy saver panels to the petitioner corporation in good condition. It
is also agreed in the agreement that share of respondent No.1
Enterprise out of profit is to the extent of 48% as a result of the
installation of the said panel. It would be thus inappropriate to term
it as contract of sale. It is also difficult to accept that the supply of
labour for installation and services shall only incidental to the supply
of energy saver panels. Thus, the characteristics of the works
contract are satisfied. The intended project work may indicate the
factor for supply of goods and services but it also includes the use of
material and skill in order to execute the project.
36. In Arbitration Appeal (St.) No. 30508 of 2019 in Arbitration
Application (Commercial) No. 7 of 2019 this Court (Coram: A.K.
Menon, J.) at principal seat, Bombay, has dealt with the identical
issue i.e. where in the face of general and special conditions and the
work order, the respondent Corporation can be subjected to the
provisions of MSMED Act, 2006. This Court in para 22 onwards by
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referring the various cases i.e. (i) Shree Gee Enterprises vs. Union of
India Anr. (Writ petiton (C) 7201 of 2015 (Delhi High Court), (ii) Rahul
Singh vs. Union of India and others, (ARA (st.) No. 30508-19 (AS)-
Division Bench of Allahabad High Court), (iii) CCE and Customs vs.
Larsen & Toubro Ltd. (2016) 1 SCC 170, (iv) M/s. Kone Elevators
India Pvt. Ltd. vs. State of Tamil Nadu and othes (2014) 7 SCC 1 has
held that MSMED Act, 2006 could not have been invoked in the case
of Works Contract such as the one in hand. It is also observed that
the contract is of a nature which required continuous suerpvison.
There are multifarious activites to be carried out. In para 32, of the
said order, this court observed as follows:-
32. In the facts at hand, it will be seen that the contract is
of a nature which required continuous supervision. There are
multifarious activities to be carried out. The MSME Act
contemplates supply of goods, purchase of goods, and
rendering an acceptance of services. In the present case,
having coming to the conclusion that it is a works contract
and being indivisible and absent the need to deconstruct the
contract into its components of sale supply and performance
of labour related work it is evident that the MSME Act cannot
be made applicable. For this very reason, expert
determination is contemplated under the auspices of the
Member Secretary or Secretary UDD-2."
37. In the instant matter, considering the nature of the contract,
which is composite in nature, not only involvement, installation and
services but multifarious activities to be rendered, which requires
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skill, continuous supervision and further return of the installed energy
saver panels to the petitioner Corporation on good condition. It is
specifically referred to that the contract is on BOT basis for which the
share to the extent of 48% in the energy saver bills as agreed to be
paid to respondent No.1 Enterprise. By any stretch of imagination, it
cannot be termed as a contract for supply of goods, purchase of
goods and rendering an accptance of services.
38. It is vehemently submitted by learned counsel appearing for
respondent No.1 Enterprise that the petitioner Corporation is
remediless by its own conduct. Learned counsel for respondent No.1
Enterprise has referred the judgment dated 27.10.2020 in the case of
Union of India vs. Maharashtra Steel Fabricators & Erectors ,
rendered by the Division Bench of this Court (Principal Seat at
Bombay) in Writ petition (L) No. 4049 of 2020; wherein in para 10, 13
and 15 the Division Bench of this court has made the following
observations:-
"10. The Petitioner, having not applied under Section 34 of
the Act in time, is seeking to challenge the award by filing a
writ petition under Article 226 and 227 of the Constitution of
India. Second issue therefore is whether the challenge to an
Arbitral Award under article 226 and 227 of the Constitution of
India could be entertained after the limitation period under the
Act is over.
13. Thus, had the Petitioner filed this petition as an
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application under Section 34 of the Act of 1996, admittedly it
would have been beyond the permissible period and the
Court under the Act would be powerless to entertain it. The
Petitioner however contends that the powers of the High
Court are not fettered by the limitation section 34 (3) of the
Act and the High Court is not powerless to grant relief under
its writ jurisdiction.
15. There is no merit in the submission of the Petitioner that it
is rendered remediless which contrary to the Rule of Law.
There is a distinction between nonexistence of remedies in
law and not availing the remedy within limitation period. The
Petitioner falls in the second category. Petitioner is
remediless by its own conduct."
39. Learned counsel for respondent No.1 Enterprise has further
places his reliance on the judgment of the Supreme Court in the case
of Modern Industries vs. Steel Authority of India Ltd. and others
(supra); wherein in para 42, the Supreme court has made the
following observations:-
"42. Lastly, it was submitted by learned senior counsel for
the respondents that IFC's award was delivered ex-parte and
no reasons have been given in support thereof; the award
does not reflect any application of mind. He would submit that
if appeals are allowed and award is sustained that would
cause grave prejudice to the buyer inasmuch as the original
contract was for a sum of Rs. 8.19 lakhs, out of which Rs. 6.07
lakhs have already been paid in July, 1997 and goods worth
balance amount were given to the supplier and yet buyer is
saddled with the liability for an amount of Rs. 24,86,998/- with
interest at the rate of 18 per cent compounded with monthly
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rests from 24.9.1997 which may run into crores of rupees. The
situation in which the buyer has been placed is their own
creation. They chose not to contest the claim of the supplier
before IFC on merits. No written statement was filed despite
opportunity granted by IFC. The buyer did not challenge nor
disputed diverse claims made by the supplier (including
additional work) before IFC. Even before the High Court, no
submission seems to have been made on merits of the award
at all. In the circumstances, the buyer does not deserve any
indulgence from this Court. Pertinently, though 1993 Act
provides a statutory remedy of appeal against the award but
the buyer did not avail of the statutory remedy and instead
challenged the award passed by IFC before High Court in
extraordinary jurisdiction under Article 226 of the Constitution
bypassing statutory remedy which, in our view, was not
justified."
40. Learned counsel for respondent No.1 Enterprise has
vehemently submitted that the Facilitation Council has been
statutorily conferred the power to act as an arbitrator. Furthermore,
the provisions of Arbitration and Conciliation Act, 1996 apply to the
arbitration proceeding. Section 24 of Arbitration and Conciliation Act,
1996, deals with the manner in which arbitrations under various
statutes are required to be conducted. Furthermore, Section 34(3) of
the Arbitration and Conciliation Act, 1996 mandates that the
application for setting aside the award is to be filed within a period of
90 days from the date of passing of the award and power to condone
the delay is restricted to further period of 30 days and not after that.
Learned counsel for the respondent enterprise submitted that the
only recourse that can be available is as per the provisions of Section
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34 of the Arbitration and Conciliation Act 1996.
41. Learned counsel for respondent No.1 Enterprise thus placed
his reliance on the judgment of the Supreme Court in the case of Oil
and Natural Gas Corporation Ltd. vs. Gujarat Energy
Transmission Corporation Ltd. and Ors. (supra). In para 15 of the
said judgment, the Supreme court has made following observations;-
"15. From the aforesaid decisions, it is clear as crystal that
the Constitution Bench in Supreme Court Bar Association
(supra) has ruled that there is no conflict of opinion in
Antulays case or in Union Carbide Corporations case with
the principle set down in Prem Chand Garg v. Excise
Commissioner. Be it noted, when there is a statutory
command by the legislation as regards limitation and there
is the postulate that delay can be condoned for a further
period not exceeding sixty days, needless to say, it is based
on certain underlined, fundamental, general issues of public
policy as has been held in Union Carbide Corporations
case. As the pronouncement in Chhattisgarh State
Electricity Board (supra) lays down quite clearly that the
policy behind the Act emphasizing on the constitution of a
special adjudicatory forum, is meant to expeditiously decide
the grievances of a person who may be aggrieved by an
order of the adjudicatory officer or by an appropriate
Commission. The Act is a special legislation within the
meaning of Section 29(2) of the Limitation Act and,
therefore, the prescription with regard to the limitation has to
be the binding effect and the same has to be followed
regard being had to its mandatory nature. To put it in a
different way, the prescription of limitation in a case of
present nature, when the statute commands that this Court
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may condone the further delay not beyond 60 days, it would
come within the ambit and sweep of the provisions and
policy of legislation. It is equivalent to Section 3 of the
Limitation Act. Therefore, it is uncondonable and it cannot
be condoned taking recourse to Article 142 of the
Constitution.
42. Learned counsel has also placed his reliance on the Judgment
of Supreme Court dated 18.09.2020 in SLP (C) No. 8482 of 2020
(Punjab State Power Corporation Ltd. vs. Emta Coal Ltd. and
Another) (supra) wherein the Supreme court has referred its earlier
decision in the case of Deep Industries Ltd. v. Oil and Natural
Gas Corporation Ltd. & Anr. (2019) SCC Online SC 1602 and by
referring the same, the Supreme Court has made the following
observations:
"We are of the view that a foray to the writ Court from a
section 16 application being dismissed by the Arbitrator can
only be if the order passed is so perverse that the only
possible conclusion is that there is a patent lack in inherent
jurisdiction. A patent lack of inherent jurisdiction requires no
argument whatsoever - it must be the perversity of the order
that must stare one in the face.
Unfortunately, parties are using this expression which is
in our judgment in Deep Industries Ltd., to go to the 227 Court
in matters which do not suffer from a patent lack of inherent
jurisdiction. This is one of them. Instead of dismissing the writ
petition on the ground stated, the High Court would have done
well to have referred to our judgment in Deep Industries Ltd.
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and dismiss the 227 petition on the ground that there is no
such perversity in the order which leads to a patent lack of
inherent jurisdiction. The High Court ought to have
discouraged similar litigation by imposing heavy costs. The
High Court did not choose to do either of these two things. In
any case, now that Shri Vishwanathan has argued this matter
and it is clear that this is not a case which falls under the
extremely exceptional category, we dismiss this special leave
petition with costs of Rs.50,000/- to be paid to the Supreme
Court Legal Services Committee within two weeks."
43. Learned counsel for respondent No.1 Enterprise has relied
upon various cases as referred in the foregoing paras on the similar
issue as discussed above.
44. Learned counsel for the petitioner Corporation on this point has
placed reliance on the judgment in the case of Whirlpool
Corporation vs Registrar of Trademarks, Mumbai and others,
(supra), wherein in para 14 and 15, the Supreme court has made the
following observations:-
"14. The power to issue prerogative writs under Article
226 of the Constitution is plenary in nature and is not limited
by any other provision of the Constitution. This power can be
exercised by the High Court not only for issuing writs in the
nature of habeas corpus, mandamus, prohibition, quo
warranto and certiorari for the enforcement of any of the
Fundamental Rights contained in Part III of the Constitution
but also for "any other purpose".
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15. Under Article 226 of the Constitution, the High Court,
having regard to the facts of the case, has a discretion to
entertain or not to entertain a writ petition. But the High Court
has imposed upon itself certain restrictions one of which is
that if an effective and efficacious remedy is available, the
High Court would not normally exercise its jurisdiction. But
the alternative remedy has been consistently held by this
Court not to operate as a bar in at least three contingencies,
namely, where the writ petition has ben filed for the
enforcement of any of the Fundamental Rights or where there
has been a violation of the principle of natural justice or
where the order or proceeding are wholly without jurisdiction
or the virus of an Act is challenged. There is a plethora of
case law on this point but to cut down this circle of forensic
whirlpool, we would rely on some old decisions of the
evolutionary era of the constitutional law as they still hold the
field."
45. Learned counsel for the petitioner Corporation has placed his
reliance in the case of Harbanslal Sahnia and another vs. Indian
Oil Corporation Ltd. and others, (supra), wherein the Supreme
court in para 4 and 7 held that alternate remedy as per arbitration
clause was available and inspite of availability of alternate remedy,
the High Court has jurisdiction if the orders in the proceeding are
wholly without jurisdiction. Para 4 and 7 of the said judgment are
reproduced herein below:-
"4. The appellants filed a writ petition laying challenge to
the order of termination. The petition has been dismissed by
the High Court on the ground that the relationship between
the parties is contractual and the dealership agreement
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contains an arbitration clause and therefore the appropriate
remedy available to the appellants was to have recourse to
arbitration rather invoking the writ jurisdiction of the High
Court. The appellants sought for a review of the order of the
High Court which prayer has been refused. The appellants
have filed these appeals by special leave.
7. So far as the view taken by the High Court that the
remedy by way of recourse to arbitration clause was available
to the appellants and therefore the writ petition filed by the
appellants was liable to be dismissed, suffice it to observe
that the rule of exclusion of writ jurisdiction by availability of an
alternative remedy is a rule of discretion and not one of
compulsion. In an appropriate case in spite of availability of
the alternative remedy, the High Court may still exercise its
writ jurisdiction in at least three contingencies: (i) where the
writ petition seeks enforcement of any of the Fundamental
Rights; (ii) where there is failure of principles of natural justice
or, (iii) where the orders or proceedings are wholly without
jurisdiction or the vires of an Act and is challenged [See
Whirlpool Corporation v. Registrar of Trade Marks). The
present case attracts applicability of first two contingencies.
Moreover, as noted, the petitioners' dealership, which is their
bread and butter came to be terminated for an irrelevant and
non-existent cause. In such circumstances, we feel that the
appellants should have been allowed relief by the High Court
itself instead of driving them to the need of initiating arbitration
proceedings."
46. Learned counsel for the petitioner Corporation has also placed
reliance on the judgment of Supreme court in the case of Chief
Engineer, Hydel Project and others vs. Ravinder Nath and
others (supra), wherein in para 25, 26 and 28, the Supreme court
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held that the doctrine of coram non judice applied and held that the
order passed is null and void and therefore, issue of jurisdiction can
be agitated at any point of time before the court.
47. In the instant case, I am of the considered opinion that the
proceedings before the Facilitation Council are wholly without
jurisdiction. The respondent No.1 Enterprise cannot be termed as
supplier. Furthermore, the composite work of installation, services
and maintenance for considerable period has been awarded to
respondent No.1 Enterprise after successful bidding process and
admittedly the agreement has been entered into between the parties
on BOT basis. In consequence thereof, respondent No.1 Enterprise
has given share in energy saver bills to the extent of 48%. In view of
the above, this court can exercise writ jurisdiction, as the proceeding
before the Facilitation Council and the impugned order passed in the
said proceedings are wholly without jurisdiction. Thus, in my
considered opinion, further reference to the provisions of Arbitration
and Conciliation Act, 1996 on the point of delay and alternate remedy
as available in terms of the provisions of the said Act may not be
relevant, when the Facilitation Council has entertained the
proceeding and passed order without jurisdiction.
48. In view of the above discussion and the decisions rendered
by the Supreme Court and the High Courts in various cases, as
relied upon by the counsel for the respective parties, I proceed to
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pass the following order:-
ORDER
I. Writ petition is hereby allowed.
II. The judgment and award dated 13.02.2015 passed by Micro,
Small Enterprises Facilitation Council (MSEFC), Nashik
Division, Nashik in petition No. 08 of 2011 (M/s. Microvision
Technologies, Nashik v/s Commissioner, Dhule Municipal
Corporation, Dhule) is hereby quashed and set aside.
III. The petition No. 08 of 2011 (M/s. Microvision Technologies,
Nashik v/s Commissioner, Dhule Municipal Corporation, Dhule)
is hereby dismissed.
IV. The writ petition is accordingly disposed of.
V. Rule is made absolute in the above terms.
(V. K. JADHAV, J.)
rlj/
