And Anr vs W.B. State Micro Small Enterprise
2022 Latest Caselaw 2337 Cal

2   26.04.2022
                                          MAT/413/2022
                                        IA NO: CAN/1/2022
    gd/ssd
                               M/S. ANKIT METAL AND POWER LIMITED
                                             AND ANR.
                                                VS
                               W.B. STATE MICRO SMALL ENTERPRISE
                               FACILITATION COUNCIL (WBSMSEFC) AND
                                                ORS.


                         Mr.   Ratnanko Banerjee,
                         Mr.   Sudhasatya Banerjee,
                         Mr.   Ratnesh Rai,
                         Mr.   Ambar Rai,
                         Mr.   Sachhida Nand Pandey
                                                         ..for the Appellants.



                         Md. T.M. Siddiqui,
                         Mr. N. Chatterjee
                                              ..for the Respondent No.1 & 2.

Mr. Mohit Gupta, Mr. A. Chakraborty ..for the Respondent No.7.

This appeal is directed against the order of the

learned Single Judge dated 1st March, 2022 whereby

WPA 3239 of 2020 raising a challenge to the award

passed by W.B. State MSME Facilitation Council, has

been dismissed.

The facts in nutshell are that on account of

certain dispute in respect of non-payment as against

the goods supplied by the respondent no.7, the

conciliation proceedings under the Micro, Small and

Medium Enterprises Development Act, 2006 (MSME)

were initiated and in those proceedings both the parties

had participated and the conciliation proceedings had

failed on 05.07.2018. Thereafter the arbitration

proceedings had started in which the appellants had

appeared on 28.03.2019 but had failed to appear on the

subsequent date i.e. on 29.05.2019 which resulted into

passing of an ex parte award by the MSME council,

which was subject matter of challenge by the appellants

before the learned Single Judge in a writ petition under

Article 226 of the Constitution. The said petition has

been dismissed.

Submission of learned counsel for the appellants

is that the MSME council had clubbed the arbitration

and conciliation proceedings, therefore, in view of the

judgment of the Supreme Court in the matter of

Jharkhand Urja Vikas Nigam Limited v. State of

Rajasthan and Others reported in 2021 SCC Online SC

1257, the award cannot be sustained. He has further

submitted that in terms of Section 23 of the Arbitration

Act, the statement of claim was not submitted by the

respondent no.7, therefore, there was no opportunity to

the appellants to submit the written statement. He has

further submitted that the provisions contained in

Section 23 of the Arbitration Act are mandatory

provisions. Hence, the award could not have been

passed. He has also submitted that the MSME council

could not have taken up the arbitration proceedings

and the independent arbitrator ought to have been

appointed after failure of conciliation and therefore,

learned Single Judge has committed an error in

dismissing the petition.

Learned counsel for the respondent nos.1 and 2

i.e. MSME council has supported the award and has

submitted that in terms of the provisions of the MSME

Act, the council is competent to take up the conciliation

proceedings and thereafter, on failure of the conciliation

to take up the arbitration proceedings. He has further

submitted that due notice of the second date was also

given to the appellants and since the appellants did not

appear, therefore, ex parte award was passed.

Learned counsel for the respondent no.7 has

opposed the appeal and has submitted that the

statement of claim was duly filed in the arbitration

proceedings and, therefore, there was compliance of

Section 23 of the Arbitration Act. He has further

submitted that in terms of Section 24, MSME Act has

overriding effect and that no error has been committed

by the learned Single Judge in dismissing the petition.

Having heard the learned counsel for the parties

and on perusal of the record, it is noticed that

undisputedly against the award passed by the MSME

council, the appellants has remedy under Section 34 of

the Arbitration Act. In terms of Section 5 of the

Arbitration Act, the judicial intervention in the arbitral

proceedings is required to be minimal and that once the

Arbitration Act provides for remedy to challenge the

award on the ground specified under Section 34 of the

Act, then unless some exceptional case is made out, no

interference in exercise of writ jurisdiction under Article

226 of the Constitution is required.

On perusal of the record in the present case, it is

noticed that after failure of the conciliation proceedings

on 05.07.2018, the MSME council had initiated the

arbitration proceedings and due notice of the same was

given to the appellants and in the arbitration

proceedings, appellants had appeared on 28.03.2019.

The respondent no.7 has produced before this Court the

statement of fact dated 10.12.2018 which was

submitted by him in the arbitral proceedings and the

said document produced by the respondent nos.1 and 2

along with the affidavit also reveals that the statement

of fact was duly served upon the appellants on

17.12.2018. The arbitral proceedings dated 28.03.2019

reveals that the appellants were granted opportunity to

file the written statement when they were duly

represented and at that time no such objection was

raised about non-filing of statement of fact by the

appellants. So far as the next date i.e. on 29.05.2019 is

concerned admittedly appellants had come to know

about it two days prior to the said date yet they had not

appeared, therefore, an ex parte award was passed by

the MSME council.

Hence, in the aforesaid facts of the case, we are of

the opinion that no exceptional circumstances exist for

entertaining the writ petition against the impugned

award.

So far as the judgment in the case of Jharkhand

Urja Vikas Nigam Limited (supra) relied upon by the

learned counsel for the appellants is concerned, in that

case the MSME had started the conciliation proceedings

on 06.08.2012 and on the very same day on failure of

the conciliation proceedings an award was passed,

therefore, the Hon'ble Supreme Court had expressed

that the conciliation proceedings and arbitration

proceedings cannot be clubbed up. But in the present

case, the two proceedings have been separately taken

up by the MSME council. Hence, we are of the opinion

that the appellants are not entitled to the benefit of the

judgment of the Supreme Court in the case of

Jharkhand Urja Vikas Nigam Limited.

So far as the argument advanced by the learned

counsel for the appellants that the MSME council

cannot take up the arbitral proceedings and the

independent arbitrator should have been appointed,

Section 18(3) of the MSME Act is clear, which empowers

the counsel to take up the dispute for arbitration itself

or to refer it to any other independent institution.

Section 24 of the MSME Act gives overriding effect to

the provisions of Sections 15 to 23 of the Act. Hence,

such a submission cannot be accepted.

In these circumstances, we find that no error has

been committed by the learned Single Judge in

dismissing the petition. Hence, no ground is made out

to allow this appeal, which is, accordingly, dismissed.

However, we make it clear that in case, if the

appellants take recourse to the remedy under Section

34 of the Arbitration Act, then any observation made by

this Court or by the learned Single Judge will not come

in their way.

(Prakash Shrivastava, C.J.)

(Rajarshi Bharadwaj, J.)

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