M/S. Ankit Metal & Power Limited & ... vs West Bengal State Micro Small ...
2022 Latest Caselaw 926 Cal

01.03.2022.
Item No. 22.
Court No.13
   ap                      W.P.A. No. 3239 of 2020
                         (Through Video Conference)

                 M/s. Ankit Metal & Power Limited & Anr.
                                  Versus
                 West Bengal State Micro Small Enterpise
                  Facilitation Council (WBMSEFC) & Ors.

                 Mr.   Ratnanko Banerji, ld. Sr. Advocate,
                 Mr.   Suddhasatva Banerjee,
                 Mr.   Shashwat Nayak,
                 Mr.   Anirudhya Dutta.
                                               ..For the petitioners.

                 Md. T. M. Siddiqui,
                 Mr. Nilotpal Chatterjee.
                                                    ...For the State.
                 Mr. Mohit Gupta,
                 Mr. A. Chakraborty.
                                         ...For the respondent no.7.

The writ petitioners are aggrieved by an Award

dated 25th September, 2019 under Article 226 of the

Constitution of India. The principal grounds urged for

approaching the Writ Court, as opposed to carrying

the Award under Section 34 of the Arbitration and

Conciliation Act, 1996 is that there is no violation of

natural justice and statutory provisions.

It is submitted that the Arbitration which is

conducted under the Micro, Small and Medium

Enterprises Development Act, 2006 (in short MSME

Act, 2006), was in violation of the principles of the said

Act, as interpreted by the Hon'ble Supreme Court of

India in various judgments.

The sum and substance of the petitioners'

grievance is that they had a substantial counterclaim

against the private respondent, which is the supplier

unit (seller) of the goods purchased by the writ

petitioners/buyers. The award is bad since the

petition was not called upon to file written statement

and therefore could not file counter claim.

The Award indicates that the Authorities under

the MSME Act, 2006 launched into action, pursuant to

an application filed by the private respondent for a

claim of a sum of Rs.17,02,838/- from the petitioner

towards price of goods sold and delivered. The defence

urged against such non-payment is the counterclaim

and other contracts between the parties.

This Court is first concerned as to whether the

need of approaching the Writ Court, as opposed to

invoking alternative remedy, exists.

It appears from the records and the Award itself

and the mandatory conciliation between the parties in

terms of the MSME Act, went on from June, 2016 upto

July, 2018. The writ petitioner/buyer were present on

most occasions except one. Failure of the termination

process was duly notified to the parties.

Upon failure of the conciliation, the Council

commenced the arbitration proceedings. On 5th July,

2018, both the parties were represented and statement

of facts supporting the claim before the Council, was

invited from the respondent no.7. The defence to such

statement was also required to be submitted

thereafter.

The respondent no.7 submitted all the

documents regarding supply of materials, copies of the

purchase order issued by the writ petitioners including

invoices and challans etc. The buyers/writ petitioners

did not file any written statement of defence. The

question of any counterclaim or against the

respondent no.7 before the Council, therefore, did not

and cannot arise. On 20th March, 2019, both the

parties were once again represented by their

Advocates.

Counsel for the Buyer Unit questioned the

jurisdiction of the Council and also submitted that

there was no scope of raising any claim before the

Council. Except for a bald statement to that effect,

even in the writ petition, there was no document or

communication addressed to the Council or the

respondent no.7 suggesting any figure towards such

counterclaim.

This Court is, therefore, of the view that the

repeated assertion and challenge to the jurisdiction of

the Council by the writ petitioners, was just a ruse to

escape the rigours of MSME Act, 2006 and the

Arbitration process thereunder.

On the very same day i.e. 28th March, 2019 a

second opportunity was given to the writ petitioners to

file a written statement of defence which was not

availed. The writ petitioners, should at least have filed

a statement and indicated a counterclaim therein. The

writ petitioners did not even bother to attend the

hearing before the Council thereafter.

It is now settled law that the arbitration process

under the MSME Act, 2006, would have precedence

and prevail over the general law which is the

Arbitration and Conciliation Act, 1996 (refer to the

decision of the Hon'ble Supreme Court of India in the

case of Silpi Industries Etc. -Vs. - Kerala State

Road Transport Corporation & Another reported in

2021 SCC OnLine SC 439).

There can therefore be no private Arbitration in

a contract cover and under the MSME Act. Counter

claims are however permitted even under an

Arbitration under the MSME Act in terms of the Silpi

decision (supra). Far from a counter claim the

petitioner has not even filed a written statement of

defense before the MSME Authorities.

In the above facts and circumstances, the dicta

of the Hon'ble Supreme Court of India, in the case of

Jharkhand Urja Vikas Nigam Limited - Vs. - State

of Rajasthan & Ors. reported in 2021 SCC OnLine

SC 1257 cited by the Counsel for the writ petitioners,

would have little or no application.

Indeed, there is a procedure required to be

followed for the purpose of a dispute resolution even

under an ADR process. The Arbitration and

Conciliation Act, 1996, specifies the procedure

therefor. The MSME Act, 2006 while not stipulating

distinct and water tight procedure, follows the

principles of natural justice, in the process of

adjudication.

The writ petitioners had been given two

opportunities before the Council to demonstrate their

defence and to raise counterclaim which was not done.

Not having filed the written statement or raised any

counterclaim before the Council, a mere bald assertion

of any lacuna in the Statute is but mere a ruse to

assail the award.

This Court is, therefore, of the view that there is

no procedural irregularity or violation of principles of

natural justice, in the proceedings conducted by the

MSME Council in arriving at the impugned award.

In the facts and circumstances of the present

case, the writ petition must therefore fail and is hereby

dismissed.

There will be no order as to costs.

All parties are directed to act on a server copy of

this order duly downloaded from the official website of

this Court.

(Rajasekhar Mantha, J.)