Karnataka High Court

M/S Oriental Foundary Pvt.Ltd vs M/S Shrinivas Fabricators on 21 January, 2022

Bench: R Natarajpresided Byrnj

                            :1:


          IN THE HIGH COURT OF KARNATAKA
                  DHARWAD BENCH

     DATED THIS THE 21st DAY OF JANUARY, 2022

                         BEFORE

       THE HON'BLE MR. JUSTICE R. NATARAJ

      WRIT PETITION NO.110127/2017 (GM-RES)

BETWEEN

M/S ORIENTAL FOUNDARY PVT.LTD
SURVEY NO.442, VILLAGE:CHOPADAVA,
TALUKA:CHACHAU, DIST:KUTCH-370140,
GUJARAT STATE.
REPRESENTED BY ITS
AUTHORIZED SIGNATORY,
JOHN LOBO S/O. LATE R S LOBO,
AGE:ABOUT 53 YEARS,
R/O:NO.15, MALLESHWARA EXTENSION,
TQ and DIST:RAMANAGARAM.
                                          ...PETITIONER
(By SRI.VIJAY S CHINIWAR, ADV.)


AND
1.    M/S SHRINIVAS FABRICATORS,
      KHANAPUR ROAD, PIRANWADI,
      BELGAUM-590014.
      REPRESENTED BY ITS PROPRIETOR,
      VELLACHUDI PURUSHOTTAM,
      AGE: 52 YEARS, OCC:BUSINESS,
      R/O:KHANAPUR ROAD,
      PIRANWADI, BELGAUM-590014.

2.    THE KARNATAKA MICRO & SMALL
      ENTERPRISES FACILITATION COUNCIL,
      BELGAVI.
                               :2:


      REPRESENTED BY ITS JOINT DIRECTOR/MEMBER
      SECRETARY.

3.   THE KARNATAKA MICRO & SMALL
     ENTERPRISES FACILITATION COUNCIL, (MSEFC).
     BELAGAVI
     REPRESENTED BY ITS
     CHAIRMAN AND REGIONAL COMMISSIONER.
                                          ....RESPONDENTS
(BY SRI.SURAJ MUTNAL, ADV. FOR R1;
 SRI.SHIVAPRABHU S HIREMATH, AGA FOR R2 AND R3)

     THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227
OF THE CONSTITUTION OF INDIA, PRAYING TO 1. QUASH THE
IMPUGNED     AWARD     DATED     03.04.2017  PASSED    IN
NO.07/16.02.2016 PASSED BY RESPONDENT NO.2 AND 3
PRODUCED AT ANNEXURE-'F' CONSEQUENTLY DIRECTING THE
RESPONDENT NO.2 AND 3 TO HEAR THE PETITIONER COMPANY
AFRESH AND TO PASS NECESSARY ORDER/AWARD ACCORDING
TO LAW; 2. DIRECT THE RESPONDENT NO.2 & 3 TO FURNISH THE
CERTIFIED/ATTESTED COPIES OF THE DOCUMENTS SOUGHT FOR
BY THE PETITIONER/COMPANY UNDER APPLICATION DATED
04.10.2017 AND 06.10.2017 (RTI APPLICATION).

    THIS PETITION COMING ON FOR ORDERS, THIS DAY, THE
COURT MADE THE FOLLOWING:

                            ORDER

The petitioner has challenged the award dated 03.04.2017

passed by the respondent Nos.2 and 3 in No.7/16.02.2016. The

petitioner has not press the relief of mandamus sought for in the

petition.

2. It is stated that a claim was made by the respondent

No.1 herein before the respondent Nos.2 and 3, which is the

facilitation council constituted to settle claims amongst the micro,

small and medium enterprises. The petitioner contends that it had

engaged the services of respondent No.1 for fabricating work for

their new workshop at Gandhidham (Kutch), Gujarat State in

terms of the purchase order dated 29.11.2014. It is claimed that

the payments were made to the respondent No.1 based on the

inspection report of the supervisor. The petitioner alleged that

certain works executed by respondent No.1 were found to be

defective and the respondent No.1 was called upon to rectify the

defects. Respondent No.1 agreed to rectify the defects but

surprisingly abandoned the work place with his workers and thus

there was deficiency in the services provided by the respondent

No.1. The petitioner alleged that though respondent No.1 failed to

rectify the defects pointed out, he lodged a claim before the

respondent Nos.2 and 3 under the provisions of the Micro, Small

and Medium Enterprises Development Act, 2006 (for short, 'the

Act, 2006'). The petitioner received the notice dated 18.05.2016 to

make payment or to file written objection to the claim petition. The

petitioner contends that it filed objections on 01.09.2016.

Thereafter, the petitioner claimed that it did not receive any

further communication or notice until receipt of the award dated

03.04.2017. The petitioner alleges that it obtained information

from the respondent Nos.2 and 3 about the proceedings in respect

of the adjudication of the claim. It saw that a notice dated

27.03.2017 was posted by the respondent No.2 on 30.03.2017,

fixing the date of appearance on 03.04.2017. It is further stated

that the petitioner is operating in Gujarat and therefore, it was

impossible for the notice to be served in less than 3 days and it

was impossible for the petitioner to appear. He therefore

submitted that the impugned award is passed without following the

principles of natural justice.

3. Learned counsel submits that in order to demonstrate

its bonafides, it has deposited a sum of Rs.11,15,000/- before this

Court. He therefore, prayed that the impugned award be set aside

and respondent Nos.2 and 3 be directed to reconsider the case

after providing opportunity to the petitioner.

4. Learned counsel for the respondent No.1 on the other

hand submitted that the petitioner is bound to deposit 75% of the

award amount in view of Section 19 of the Act, 2006. He also

submits that the petitioner was aware of the proceedings before

the respondent Nos.2 and 3 and therefore cannot feign ignorance

of the proceedings. He also contends that the respondent No.1 is a

Small Scale Industry and the petitioner has delayed making

payment, which has resulted in causing untold financial loss to the

respondent No.1. He therefore prays that the impugned award

may not be interfered with.

5. I have considered the submissions of the learned

counsel for the parties.

6. It is seen that the respondents 2 and 3 had issued

notice to the petitioner on 18.05.2016. Following the notices, the

petitioner had filed its written objections. Further, a notice was

issued on 22.12.2016. Thereafter, on 27.03.2017 another notice

was issued on 30.03.2017, fixing the date of hearing as

03.04.2017. Therefore, it cannot be said that the notice dated

27.03.2017 could have been served upon the petitioner. It is

needless to state that respondent Nos.2 and 3 passed the award

holding that the petitioner had not participated in the proceedings.

In that view of the matter, the impugned award is passed without

complying the principles of natural justice (Annexure-C).

7. In so far as the claim that this writ petition is not

maintainable, the Apex Court in Commissioner of Income Tax

and others Vs. Chhabil Dass Agarwal, (2014) 1 SCC 603 has

held at paragraph 19 as follows:

"19. Thus, while it can be said that this Court has recognized some exceptions to the rule of alternative remedy, i.e., where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case, Titagarh Paper Mills case and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation."

8. In the case on hand, the respondent Nos.2 and 3 have

though taken steps to notify the petitioner, but yet, the record

indicates that the petitioner was not served with the notice dated

27.03.2017 before the date fixed for hearing of the dispute. In that

view of the matter, the impugned award is passed without

following the principles of natural justice and therefore, the

impugned award deserves to be set aside on this short ground.

9. Consequently, the writ petition is allowed. The

impugned award is set aside and the case is remitted before the

respondent No.2. The petitioner and respondent No.1 shall appear

before the respondent Nos.2 and 3 on 15.02.2022 at 11.00 a.m.

The respondent Nos.2 and 3 shall consider the case in accordance