Nbcc (India) Ltd vs The State Of West Bengal & Ors
2022 Latest Caselaw 1628 Cal/2

               IN THE HIGH COURT AT CALCUTTA
                CIVIL APPELLATE JURISDICTION
                         (Original Side)



                                        A.P.O No. 11 of 2022
                                                With
                                     W.P.O No. 1231 OF 2021
                                       IA No.: GA 1 of 2022

                                     (Through Video Conference)

                                  Reserved on  : 08.04.2022
                                  Pronounced on: 18.05.2022



   NBCC (India) Ltd..
                                                 ...Appellant

                              -Vs-

   The State of West Bengal & Ors.              ...Respondents

Present:-

Mr. Arnab Chakraborty, Ms. Pragya Bhowmick, Advocates .... for the Appellant

Mr. Samrat Sen, Sr. Advocate, Mr. Soumitra Mukherjee, Advocate ..... for the State of WB

Mr. Jishnu Chowdhury, Mr. Samim Ahmed, Md. Danish Taslim, Mr. Shahrukh Raja, Mr. Souradeep Banerjee, Ms. Somashree Dey, Advocates

Coram: THE HON'BLE JUSTICE PRAKASH SHRIVASTAVA, CHIEF JUSTICE THE HON'BLE JUSTICE RAJARSHI BHARADWAJ, JUDGE

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APO 11 OF 2022

Rajarshi Bharadwaj, J:

1. The instant writ petition has been filed in the Original side of this

Hon'ble Court. The appellant/writ petitioner being aggrieved by and

dissatisfied with the order dated 16.12.2021 as modified by another order

dated 24.12.2021 passed by the Hon'ble Justice Rajasekhar Mantha in

WPO No.1231 of 2021 has preferred the instant appeal.

2. The facts in a nutshell are that the appellant/writ petitioner, herein

NBCC (India) Limited, a Government of India enterprise during a time

period of 30.07.2015 to 19.08.2016 had issued four work orders of

different values, inter alia, awarding respondent no.4, herein Saket Infra

Developers Private Limited for undertaking the same. Again, on

15.09.2017, the appellant awarded the work contract of MSTC Building

at New Town to respondent no.4.

3. On 19.11.2016, the respondent no.4 registered itself as a small

enterprise under the Micro, Small and Medium Enterprises Development

(MSMED) Act, 2006. Amongst the five work orders undertaken by

respondent no.4, two have been terminated for breach of contract by the

respondent no.4 and the work has been taken up by new agencies at the

risk and cost of the respondent no.4. However, two project works are still

continuing and one has been completed. Furthermore, some disputes and

discords have arisen between the appellant and the respondent no.4 in

connection with the aforesaid five contracts out of which the MSTC

Limited's project work has already culminated into a commercial suit

before the Commercial Court at Rajarhat. The respondent no.4 in

connection with all the aforementioned five projects, had lodged a claim

before the respondent no.2, herein the Chairman of the West Bengal

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APO 11 OF 2022

State Micro and Small Enterprise Facilitation council under the

MSMED Act to which the appellant objected on the ground of

maintainability and also made representation for recalling of the order of

reference on jurisdictional grounds. However, upon the receipt of the

claim the authorities took cognizance and on failure of the conciliation

sought to initiate statutory arbitration.

4. On 22.09.2021, the respondent no.2 issued a notice fixing the first

date of arbitration under the said MSMED Act, referring disputes and

differences to Arbitration under five several contracts with the respondent

no.4 under Section 18(2) and 18(3) of the MSMED Act, 2006 which states

:

"18. Reference to Micro and Small Enterprises Facilitation Council.--

(1) Notwithstanding anything contained in any other law for the time

being in force, any party to a dispute may, with regard to any

amount due under section 17, make a reference to the Micro and

Small Enterprises Facilitation Council. (2) On receipt of a reference

under sub-section (1), the Council shall either itself conduct

conciliation in the matter or seek the assistance of any institution or

centre providing alternate dispute resolution services by making a

reference to such an institution or centre, for conducting conciliation

and the provisions of sections 65 to 81 of the Arbitration and

Conciliation Act, 1996 (26 of 1996) shall apply to such a dispute as if

the conciliation was initiated under Part III of that Act. (3) Where the

conciliation initiated under sub-section (2) is not successful and

stands terminated without any settlement between the parties, the

Council shall either itself take up the dispute for arbitration or refer it

to any institution or centre providing alternate dispute resolution

services for such arbitration and the provisions of the Arbitration and

Conciliation Act, 1996 (26 of 1996) shall then apply to the dispute as

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APO 11 OF 2022

if the arbitration was in pursuance of an arbitration agreement

referred to in sub-section (1) of section 7 of that Act."

5. However, the appellant again objected on some elementary issue

stating that the respondents cannot proceed under the MSMED Act and

further, on the date of the awarding of the four work contracts, the

respondent no.4 was not registered under the said act and thus, as per

the decision of the Hon'ble Supreme Court, the MSME Authorities cannot

proceed under the said Act. By a letter dated, 30.09.2021, it was further

requested by the appellant to the respondents to not proceed, till the date

the impugned order has not been recalled. Owing to which the

respondent no.4 filed a rejoinder against the letter dated 30.09.2021.

6. The appellant/writ petitioner preferred an application under

Section 226 of the Constitution of India with the following prayers:

(a) A Writ of or in the nature of Mandamus do issue

directing the respondent No.2 and 3 and each one of them,

their men, agents, assigns or sub-ordinates to recall the

order dated 19.01.2021 (being Annexure "P-5") and

22.09.2021 (being Annexure "P-9") and to set aside

and/or rescind the order by which they assumed the role

of arbitrator in the present case for want of requisite

jurisdiction;

(b) A Writ of or in the nature of Certiorari do issue

commanding the respondent No.2 and 3 and each one of

them, their men, agents, assigns, sub-ordinates to certify

and transmit all documents pertaining to the orders dated

19.01.2021 (being Annexure "P-5") and 22.09.2021 (being

Annexure "P-9") by which the respondent authorities have

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APO 11 OF 2022

tried to enter into an Arbitral reference under the said

MSMED Act, 2006, before this Hon'ble Court so that

conscionable justice may be administered by quashing the

said orders and/or decisions stated in the order dated

19.01.2021 and 22.09.2021;

(c) A Writ of or in the nature of Mandamus do issue

directing the respondents specifically respondent No.2 to

decide on the preliminary objections regarding the

maintainability and the jurisdictional issues as raised by

the petitioner, before entering into any arbitral reference in

the matter;

(d) A Writ of or in the nature of Prohibition do issue

prohibiting the respondents especially the respondent No.2

and 3 and each one of them, their men, agents and

sub-ordinates etc. from continuing with the reference of

arbitration which has been sought to be commenced by

the letter 19.01.2021 upon termination of the purported

conciliation proceeding and further prohibit them from

taking any coercive steps or passing any penal order or

impose any order against the petitioner;

(e) A Writ of or in the nature of Mandamus do issue

directing the respondent No.2 and 3 and each one of them

to consider the jurisdictional issue and objection raised by

the defendant before proceeding any further with the

reference upon giving the petitioner an opportunity of

personal hearing without taking the same as a proceeding

before the Arbitral Tribunal;

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                                                           APO 11 OF 2022

7. After hearing all the parties, the Learned Single Judge passed his

order on 16.12.2021. Thus, being aggrieved by the Order and Judgment

of the Learned Single Judge as modified by the order dated 24.12.2021,

the instant petition has been filed. The appellant raised a preliminary

objection regarding the jurisdiction of the Facilitation council and the

maintainability of the entire proceeding under the MSMED Act. From the

very inception, the appellant has categorically taken its preliminary

objection that no proceeding is maintainable before the Facilitation

Council constituted under the MSMED Act so far as the work contract

between the parties is concerned. It was contended that the MSMED Act,

2006 has no manner of application apropos the 'Work Contract' since

neither section 11 nor the Public Procurement Policy, 2012 envisages a

composite and distinct category of contracts such as work contract.

8. It was held in Kone Elevator India Private Limited v. State of Tamil

Nadu reported in 2014(7) SCC 1 that " the work contract is an individual

contract but, by legal fiction, is divided into two parts, one for sale of

goods and the other for supply of labour and services."

9. As held in Principal Chief Engineer vs M/S Manibhai and Bros

(Sleeper) reported in MANU/SCOR/24287/2017, The Supreme Court

upheld the Gujarat High Court's judgment on the interpretation of

Section 18 of the Act. The High Court held that since the Act is a special

legislation and has an overriding effect, the parties governed by it are

bound to follow the mechanism provided under Section 18 of the Act. It

was further reiterated in Mackintosh Burn Limited v. Micro and Small

Enterprises Facilitation Council reported in 2020 (209) AIC323.

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                                                             APO 11 OF 2022

10. The Learned Single Judge rightly observed that "without prejudice

to any of the rights and contentions of the writ petitioner, the petitioner

shall participate in arbitration and that the Tribunal shall decide on its

jurisdiction on inter alia the questions raised by the writ petitioner before

entering into other questions."

11. We are not interferring with the order of the Learned Single Judge

and the appeal is dismissed. All other applications connected thereto are

also dismissed.

(PRAKASH SHRIVASTAVA) CHIEF JUSTICE

(RAJARSHI BHARADWAJ) JUDGE

Kolkata 18.05.2022 PA(BS)