M/S Deepak Printers & Publishers vs State Project Director
2025 Latest Caselaw 1964 Jhar

Jharkhand High Court

M/S Deepak Printers & Publishers vs State Project Director on 24 January, 2025

Author: Gautam Kumar Choudhary

Bench: Gautam Kumar Choudhary

        IN THE HIGH COURT OF JHARKHAND AT RANCHI
                              C.M.P. No. 836 of 2022
                                    ------
        M/s Deepak Printers & Publishers, Bareily Road, Haldwani, Janpat, P.O.
        & P.S. Mukhani, District Nainital (Uttarakhand) and having its present
        address as Bareilly Road, Haldwani, P.O. & P.S. Mangal Parao, District
        Nainital (Uttarakhand)- 263139; through its Proprietor Sri Deepak Kumar
        Agarwal, aged about 52 years son of Late Pooranmal Agarwal, resident
        of Kaladungi Road, Haldwani, P.O. & P.S. Mukhani, District Nainital
        (Uttarakhand)                             ....  .... .... Petitioner
                              Versus
        State Project Director, Jharkhand Education Project Council, having its
        registered office at Near JSCA Stadium, Jagarnathpur, P.O. Dhurwa, P.S.
        Jagarnathpur District Ranchi (Jharkhand)
                                           ....   .... ....  Opposite Party
                                        With
                              C.M.P. No. 837 of 2022
                                     ------
        M/s Raj Enterprises, Kaladungi Road, Haldwani, P.O. Jail Road,
        Mukhani, P.S. Mukhani, District Nainital (Uttarakhand) having present
        address as 3, PCF Godown, near Abdullah Building, Bareilly Road,
        Haldwani, P.O. Abdullah Building, P.S. Bareilly Road, Haldwani, District
        Nainital- 263139 (Uttarakhand) through its Proprietor Sri Hari Mohan
        Agarwal aged about 54 years son of Late Chhote Lal Agarwal, resident of
        CGIC, Kaladungi Road, Haldwani, P.O. Jail Road, Mukhani, P.S.
        Mukhani, District Nainital (Uttarakhand) having present address at House
        No.44, Ganpati Vihar, Phase-1, Dhariya, Haldwani, P.O. Pilikothi, P.S.
        Mukhani, District Nainital (Uttarakhand)- 263139
                                             .... .... .... Petitioner
                              Versus
        State Project Director, Jharkhand Education Project Council, having its
        registered office at Near JSCA Stadium, Jagarnathpur, P.O. Dhurwa, P.S.
        Jagarnathpur District Ranchi (Jharkhand)
                                            ....  .... .... Opposite Party

        CORAM:    HON'BLE THE CHIEF JUSTICE
             HON'BLE MR. JUSTICE GAUTAM KUMAR CHOUDHARY

        For the Petitioner      : Mr. Pandey Neeraj Roy, Advocate
                                  Mr. Rohit Ranjan Sinha, Advocate
        For the Respondent-JEPC : Mr. Krishna Murari, Advocate

        Reserved on: 09.01.2025                 Pronounced On: 24.01.2025

                              ------
Gautam Kumar Choudhary, J. (Oral)

Both these Civil Miscellaneous Petitions have been preferred against order dated 19.08.2019 passed by the Presiding Officer, Commercial Court, Ranchi by which the arbitral award dated 11.07.2016 published by MSME Facilitation Council, has been set aside in execution case.

2. Both these cases raise common question of law and therefore, have been heard together and will be disposed of by the common order.

3. A tender was floated by Jharkhand Education Project Council (hereinafter in short 'JEPC') in the year 2012 for printing and supply of Textbooks (2013-14) for Class I - VIII and other ancillary items. Both these petitioners successfully participated in the tender process and an agreement was entered by both these petitioners on 25.09.2012 with the respondent for supply of the respective items detailed in the agreement and the work order was issued.

4. Petitioners claim to have supplied the items as per the term of agreement, and part payment was made, but dispute arose regarding payment of the balance amount. Consequently, on 13.04.2015, petitioners approached Uttarakhand State Micro and Small Enterprises Facilitation Council at Dehradun, Uttarakhand (hereinafter in short 'Council') by filing reference for recovery of principal amount along with interest as per the provisions of Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter in short '2006 Act').

5. The Council held sitting on various dates after completing the formalities of notices etc. to the parties to the dispute.

6. The Council passed an award on 11.07.2016 on contest in Case No.108 in favour of M/s Deepak Printers and Publishers (petitioner in C.M.P. No.836 of 2022) for an amount of Rs.19,90,18,981/- with interest. The Council also passed an award in favour of M/s Raj Enterprises, Kaladungi Road, Haldwani (petitioner in C.M.P. No.837 of 2022) on 11.07.2016 for an amount of Rs.19,19,23,446/- with interest.

7. The award was not challenged as per provision under Section 34 of Arbitration and Conciliation Act, 1996 (hereinafter in short '1996 Act'), instead Writ Petition (M/S) Nos.65-66 of 2017 was filed before the Uttarakhand High Court by the Council on the ground of want of jurisdiction of the Facilitation Council. Both these writ petitions were dismissed vide order dated 01.05.2017 and the order attained its finality on the Intra Court Appeal being dismissed.

8. For execution of the award passed by the Council, Arbitration Execution Case No.129/2016 and Arbitration Execution Case No.130/2016 were filed by the petitioners in the Court of District Judge, Dehradun, which was transferred to Ranchi and numbered as Execution Case No.269/2017 and Execution Case No.270/2017 respectively.

9. Respondent/Judgment Debtor filed a petition under Section 47 of the CPC to declare the award as null and void. The learned Executing Court dismissed the Execution Case for execution of the award published by the Council on the ground of non-compliance of Section 21 of 2006 Act as the third member was present in the arbitration proceedings, but no reason had been assigned for his not signing the award.

10. It is argued by the learned counsel on behalf of petitioners and it was not within the jurisdiction of the Executing Court to enter into the merit of the award, when it was not even challenged in an appeal under Section 34 of the 1996, Act. Law is settled that the Executing Court cannot go behind award and enter into questions not relating to execution, discharge or its satisfaction.

11. It is further argued that the mandate of Section 31(2) of the 1996 Act, has been complied with as the two members of the Arbitral Tribunal (Dr. R. Rajesh Kumar, Chairman and H.P. Vyas, Member) had signed the award. Further, the arbitral award can be passed by majority and therefore, absence of the signature of the third member, will have no bearing and precisely for this reason, neither the 1996 Act nor the 2006 Act provides any consequence for it. The 2006 Act nowhere lays down a requirement of a quorum or any consequence for its violation.

12. On facts, it is urged that vide letter dated 12.11.2018, Presenting Officer, MSME Council, issued letter of confirmation of full quorum in the decision making on 14.06.2016 on the basis of which arbitral award was issued on 11.07.2016. Copy of letter has been annexed with the writ petition as Annexure- 8.

13. Learned counsel on behalf of the opposite parties argued that absence of signature of the third member of the Arbitral Tribunal goes to the root of the matter and therefore, cannot be termed as "award" within the meaning of 21 of the 2006 Act or under 31 of the 1996 Act. The dispute between the parties was non-arbitrable as required exhaustive evidentiary process. Neither Union of India nor JEPC was impleaded as party before the Council. FINDING

14. Following questions of law has been urged before this Court: -

I. Can an arbitral award made by the Council be assailed in an execution proceeding under Section 47 of the CPC, without preferring an appeal under Section 34 of the Arbitration and Conciliation Act, 1996?

II. If the arbitral award was vitiated under Section 31 of the Arbitration and Conciliation Act, 1996 on account of absence of the signature of one of the members of the Council on the award, and no reasons having been assigned for the said omission?

15. This is yet another case where the salutary provisions of the Commercial Courts Act, 2015, the MSME Act, 2006 and the Arbitration and Conciliation Act, 1996 to expedite the process of commercial dispute resolution, has been given a complete go by, in the teeth of the express provisions of the Act. The object of Commercial Courts Act was to simplify the procedure for speedy settlement of commercial dispute and facilitate ease of doing business. Hon'ble Supreme Court observed in Chopra Fabricators & Manufacturers Private Limited v. Bharat Pumps & Compressors Limited & Another, (2023) 2 SCC 481, that delay in disposal of commercial disputes, for whatever reasons, may frustrate the object and purpose of the enactment of the Arbitration Act as well as the Commercial Courts Act.

16. An arbitral award may not be a decree, but it is to be enforced as per the provisions of CPC, 1908. The jurisdiction of Executing Courts under Section 47 of the CPC, is limited to the matters concerning execution, discharge or fulfilment of decree and not about the validity of the decree. In other words, it is confined to the executability of the decree.

17. Arbitration and Conciliation Act, 1996 is a complete code in itself and any challenge to the validity of an arbitral award has to be raised within the mechanism provided by the 1996 Act. Where a party has failed to assail the award passed by the Facilitation Council in an appeal under Section 34 of the 1996 Act, the same cannot be challenged collaterally either in execution proceeding or in writ petition.

18. In a writ petition challenging arbitral award, where it was not challenged under Section 34 of the 1996 Act, Hon'ble Supreme Court affirmed the decision of the High Court rejecting the writ petition (see 2023 SCC OnLine SC 1852). It was held that the appellant failed to avail the remedy under Section 34 as it would have been forced to deposit 70% of the decretal amount and opted to file the writ petition which was impermissible.

19. In the present case as well, bypassing the provision under Section 34 of the 1996, Act, judgment debtor assailed the award before the Executing Court on a technical ground that award was signed by only two members and

the reasons for omission of signature of the third was not assigned in the award. Even if it is assumed that the reasoning was not given, it will not vitiate the award, and in any case, this could not have been raised for the first time before Executing Court. Once the award is not challenged under Section 34, it becomes binding under Section 35 of the 1996, Act.

For the reason discussed above, the impugned order passed by the Executing Court is not sustainable and is accordingly set aside.

Both the Civil Miscellaneous Petitions, are allowed.

(M.S. Ramachandra Rao, C.J.)

(Gautam Kumar Choudhary, J.) NAFR/Anit