Madhya Pradesh High Court
Rotomac Electricals Private ... vs The State Of Madhya Pradesh on 13 April, 2023
Author: Maninder S. Bhatti
1
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE MANINDER S. BHATTI
ON THE 13 th OF APRIL, 2023
WRIT PETITION No. 7921 of 2023
BETWEEN:-
ROTOMAC ELECTRICALS PRIVATE LIMITED A
COMPANY WITHIN THE MEANING OF CAMPANIES ACT
2015 THROUGH ITS DEPUTY MANAGING DIRECTOR
TAPAS MULA S/O KRISHNA MOHAN MULA AGED 47
YEARS HAVING ITS REGITERED OFICE AT 105 PARK
STEET KOLKATA, R/O 45/9 MAHENDRA BANERJI ROAD
(WEST BENGAL)
.....PETITIONER
(BY SHRI ABHIRUP CHAKRABORTY AND SMT. NIRMALA NAYAK -
ADVOCATES )
AND
1. THE STATE OF MADHYA PRADESH THROUGH
SECRETARY DIRECTORATE OF INDUSTRIES
VINDHYACHAL BHAWAN BHOPAL (MADHYA
PRADESH)
2. MADHYA PRADESH MICRO AND SMALL SCALE
FACILITATION COUNCIL, BHOPAL HAVING ITS
OFFICE AT 4TH FLOOR, DIRECTOR OF
INDUSTRIES, VINDHYACHAL BHAWAN, BHOPAL
(MADHYA PRADESH)
3. CHAIRMAN, MADHYA PRADESH MICRO AND
SMALL SCALE FACILITATION COUNCIL HAVING
ITS OFFICE AT 4TH FLOOR, DIRECTOR OF
INDUSTRIES, VINDHYACHAL BHAWAN, BHOPAL
(MADHYA PRADESH)
4. NARMADA EQUIPMENT PRIVATE LIMITED, A
COMPANY WITHIN THE MEANING OF
COMPANIES ACT 2013 HAVING ITS REGISTERED
OFFICE AT 2/3, INDUSTRIAL ESTATE,
GOVINDPURA, BHOPAL (MADHYA PRADESH)
.....RESPONDENTS
Signature Not Verified
Signed by: AJAY KUMAR
CHATURVEDI
Signing time: 4/18/2023
12:20:39 PM
2
(BY SHRI ANSHUL TIWARI - PANEL LAWYER FOR THE STATE )
This petition coming on for admission this day, th e court passed the
following:
ORDER
Challenge in this petition is to an award dated 27-01-2023 passed in Case
No.MSEFC 1494 of 2021 passed by the Madhya Pradesh Micro and Small
Enterprises Facilitation Council, Bhopal [hereinafter referred to as "the
Facilitation Council"].
2. Learned counsel for petitioner contends that the petitioner herein,
placed a purchase order dated 30-10-2018 with the respondent No.4 for supply
of fabricated and machined magnet frames along with its components. The said
transaction ultimately, resulted into a dispute.
3. The respondent No.4 filed an application before the Facilitation
Council claiming interest on delayed payment. The said application was replied
by the petitioner stating inter alia, that conciliation proceedings ought to have
been declared failed and thereafter the Facilitation Council should have taken
recourse to Clause 18(3) of the Micro, Small & Medium Enterprises
Development Act, 2006 [for brevity "the Act of 2006"]. But, the Facilitation
Council without recording the failure of conciliation proceedings directly
proceeded to pass an award dated 27-01-2023 which is impugned in the present
petition.
4. Learned counsel for the petitioner vehemently argued that the
present writ petition is maintainable before this Court, particularly in view of the
law laid down by the Apex Court in Jharkhand Urja Vikas Nigam Limited
vs. State of Rajasthan and others, 2021 SCC OnLine SC 1257. Learned
counsel for the petitioner contends that unless and until, conciliation
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Signed by: AJAY KUMAR
CHATURVEDI
Signing time: 4/18/2023
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proceedings are terminated or declared to be failed, the Facilitation Council
could not have proceeded to pass an award within the meaning of Arbitration
and Conciliation Act, 1996 [for short "the Act of 1996"].
5. Learned counsel for the petitioner further placed reliance on the
decision of the Apex Court in Union Bank of India and others vs.
Mahendra Singh, 2022 SCC OnLine SC 909. It is contended by the
learned counsel that when a statute provides for a thing to be done in a
particular manner, the same is required to be done in that manner itself and not
in other manner. Learned counsel argued that since in the present case
arbitration award has not been passed in terms of Section 18 of the Act of
2006, therefore, the same is unsustainable and deserves to be quashed.
6. Learned counsel for the petitioner also relied upon the decision of
the Calcutta High Court reported in 2013 SCC OnLine Cal 22786 -
Agricultural Finance Co. Ltd. vs. Micro & Small Enterprises Facilitation
Council and contended that, even if the award is assailable under Section 34 of
the Act of 1996, the said alternative remedy is not a bar in exercise of
extraordinary jurisdiction under Article 226 of the Constitution of India.
Accordingly, the learned counsel for petitioner submits that the impugned award
deserves to be quashed.
7. Heard the submissions advanced on behalf of the petitioner and
perused the records.
8. In order to deal with the submissions advanced on behalf of the
petitioner, it is apt to take into consideration the provisions of the Act of 2006
which has been enacted to provide for facilitation the promotion and
development and enhancing the competitiveness of micro, small and medium
enterprises and for matters connected therewith or incidental thereto.
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Signed by: AJAY KUMAR
CHATURVEDI
Signing time: 4/18/2023
12:20:39 PM
9. In terms of Section 18 of the Act of 2006, if there is a dispute
pertaining to supply of goods between the supplier and buyer, the same can be
referred to the Facilitation Council. The Facilitation Council before whom the
dispute is raised, is required to conduct conciliation proceedings and if
conciliation proceedings are not successful or terminated without any settlement
between the parties, the Facilitation Council itself can take up the dispute for
arbitration or may refer it to another institution providing alternative dispute
resolution as per the provisions of the Act of 1996. The relevant provisions of
Section 18 of the Act of 2006 is extracted hereunder :
"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
s h a l l 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
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CHATURVEDI
Signing time: 4/18/2023
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Arbitration and Conciliation Act, 1996 (26 of 1996) shall then apply to
the disputes as if the arbitration was in pursuance of an arbitration
agreement referred to in sub-section (1) of Section 7 of that Act.
A bare perusal of the aforesaid section makes it crystal clear that the
Facilitation Council can act as an Arbitrator and also can refer the dispute to
any other institution to decide such arbitration dispute.
10. Section 19 of the Act of 2006 which deals with application for
setting aside decree, award or order, being relevant is reproduced hereunder :
"19. Application for setting aside decree, award or order. - No
application for setting aside any decree, award or other order made
either by the Council itself or by any institution or centre providing
alternate dispute resolution services to which a reference is made by the
Council, shall be entertained by any court unless the appellant (not
being a supplier) has deposited with it seventy-five per cent of the
amount in terms of the decree, award or, as the case may be, the other
order in the manner directed by such court :
Provided that pending disposal of the application to set aside the
decree, award or order, the court shall order that such percentage of the
a mo u n t deposited shall be paid to the supplier, as it considers
reasonable under the circumstances of the case, subject to such
conditions as it deems necessary to impose.
11. As per Section 19 of the Act of 2006, an application for setting
aside any decree or award or an order made by the Council, will not be
maintainable, unless the appellant has deposited seventy-five per cent of the
amount in terms of the decree or award. Therefore, section 18 of the Act of
2006 in unequivocal terms, reflects that the Facilitation Council can act as an
Arbitrator in terms of the provisions envisaged in the Act of 1996. And, an
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CHATURVEDI
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award which is passed by the Facilitation Council is subject to challenge by
filing an application for setting aside the award.
12. Applicability of the Act of 1996 is conspicuous which is evident
from perusal of Sub-section (2) of Section 18 of the Act of 2006. In terms of
Section 34 of the Act of 1996, an award can only be assailed by filing an
application under Section 34 of the Act of 1996.
13. It is also required to appreciate that by virtue of Section 5 of the
Act of 1996, judicial intervention is barred, except for the matters so provided
in Part I of the Act of 1996. Section 5 of the Act of 1996 reads thus :
"5. Extent of judicial intervention, - Notwithstanding anything
contained in any other law for the time being in force, in matters
governed by this Part, no judicial authority shall intervene except where
so provided in this Part."
14. A perusal of Section 5 of the Act of 1996 describes that judicial
intervention is only permitted in the matters which are provided under different
sections of Part I of the Act of 1996. Therefore, in terms of the provisions of
Part I of the Act of 1996, judicial intervention with an award is only permissible
in terms of Section 34 of the Act of 1996. The aspect of judicial intervention
by Court, while entertaining petitions under Articles 226 and 227 of the
Constitution of India, was taken into consideration by the Hon'ble Supreme
Court in the case of SBP & Co. Vs. Patel Engineering Ltd. and another,
(2005) 8 SCC 618 wherein paras 45 and 46 it is ruled thus:
"45. It is seen that some High Courts have proceeded
on the basis that any order passed by an Arbitral Tribunal
during arbitration, would be capable of being challenged
under Article 226 or 227 of the Constitution. We see no
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CHATURVEDI
Signing time: 4/18/2023
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warrant for such an approach. Section 37 makes certain
orders of the Arbitral Tribunal appealable. Under Section
3 4 , the aggrieved party has an avenue for ventilating its
grievances against the award including any in-between
orders that might have been passed by the Arbitral Tribunal
acting under Section 16 of the Act. The party aggrieved by
any order of the Arbitral Tribunal, unless has a right of
appeal under Section 37 of the Act, has to wait until the
award is passed by the Tribunal. This appears to be the
scheme of the Act. The Arbitral Tribunal is, after all, a
creature of a contract between the parties, the arbitration
agreement, even though, if the occasion arises, the Chief
Justice may constitute it based on the contract between the
parties. But that would not alter the status of the Arbitral
Tribunal. It will still be a forum chosen by the parties by
agreement. We, therefore, disapprove of the stand adopted
by some of the High Courts that any order passed by the
Arbitral Tribunal is capable of being corrected by the High
Court under Article 226 or 227 of the Constitution. Such an
intervention by the High Courts is not permissible.
4 6 . The object of minimising judicial intervention
while the matter is in the process of being arbitrated upon,
will certainly be defeated if the High Court could be
approached under Article 227 or under Article 226 of the
Constitution against every order made by the Arbitral
Tribunal. Therefore, it is necessary to indicate that once the
arbitration has commenced in the Arbitral Tribunal, parties
have to wait until the award is pronounced unless, of course,
a right of appeal is available to them under Section 37 of the
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Signed by: AJAY KUMAR
CHATURVEDI
Signing time: 4/18/2023
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Act even at an earlier stage."
15. The Apex Court in the case of CDC Financial Services
(Mauritius) Ltd. vs. BPL Communications Ltd. and others, (2003)12
SCC 140 in para 14 has held as under :
"14. Wh a t e v e r may be the merits of the writ
application, we are of the view and it has been fairly
conceded by the learned Senior Counsel appearing on behalf
of Respondent 1 that the High Court should have had regard
to Section 5 of the 1996 Act before granting the reliefs it did.
Under Section 5 of the 1996 Act, courts are restrained from
interfering with arbitration except in the manner provided in
the 1996 Act. That the orders passed by the High Court
would amount to a violation of this mandate is not seriously
disputed by the respondents. We, accordingly, set aside the
orders of the High Court without expressing our views on the
merits of the contentions of the parties in any manner
whatsoever. The orders dated 4-7-2002 and 23-7-2002 are
accordingly, set aside. The respondents are restrained from
moving any applications in the pending writ petition which
would have the effect of interfering with the continuance and
conclusion of the arbitration proceedings. The appeal of
Respondent 1 before the Division Bench being preferred
from the refusal to grant an interim order, does not survive
and is accordingly dismissed. The matter shall now be heard
by the learned Single Judge and disposed of in accordance
with law."
16. Thus, the provisions of Section 5 of the Act of 1996 makes it
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Signed by: AJAY KUMAR
CHATURVEDI
Signing time: 4/18/2023
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abundantly clear that judicial intervention is not permitted, except in the matters
so provided in Part I of the Act of 1996. Section 34 of the Act of 1996 is
included in Part I of the Act of 1996.
17. If the case in hand is examined on the touchstone of the
aforesaid statutory provisions, it is apt to refer the relevant para at internal page
6 of the impugned award passed by the Facilitation Council, where in para it is
observed as under :
^^blds i'pkr izdj.k lquokbZ fnukad 09-12-2022 dks [email protected]
gsrq fu;r fd;k x;kA vukosnd }kjk vkosnd ds foyac ls izkIr Hkqxrku
(Delayed Payment) ij] C;kt jkf'k dk nkok dks vLohdkj djrs gq,]
vkosnd dk nkok vkosnu fujLr djus gsrq fuosnu fd;k x;kA vr% mHk;i{kksa
ds e/; lqyg dh dk;Zokgh vlQy jghA**
18. In the present case, failure of conciliation proceedings was
recorded by the Facilitation Council in terms of Section 18(3) of the Act of
2006. Therefore, the judgement relied upon by the learned counsel for
petitioner in Jharkhand Urja Vikas Nigam Limited (supra) is
distinguishable, inasmuch as in that case, failure of conciliation proceedings was
not recorded by the Facilitation Council and the Council directly proceeded to
pass the award. Therefore, the condition precedent of terminating the
conciliation proceedings was absent in the said case.
19. In the present case, the Facilitation Council recorded the finding
that the conciliation proceedings were declared unsuccessful and accordingly,
proceeded to take recourse to the Act of 1996. Reliance placed upon by the
learned counsel for the petitioner in the case of Union Bank of India and
others vs. Mahendra Singh (supra) is also of no assistance to the petitioner,
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Signed by: AJAY KUMAR
CHATURVEDI
Signing time: 4/18/2023
12:20:39 PM
inasmuch as in the case in hand, after recording the conciliation proceedings to
be unsuccessful, the Facilitation Council has passed the impugned award in
terms of the Act of 1996.
20. So far as the judgment placed reliance upon by the learned
counsel by the Calcutta High Court in Agricultural Finance Co. Ltd. vs.
Micro & Small Enterprises Facilitation Council (supra) is concerned, the
same does not deal with the provisions of Section 5 of the Act of 1996.
21. Accordingly, as the petitioner has the remedy to approach the
competent court under Section 34 of the Act of 1996, assailing the impugned
award dated 27-01-2023, contained in Annexure-P/21, the present petition is not
maintainable, in view of the specific bar contained under Section 5 of the Act of
1996.
22. In view view of aforesaid enunciation of law, the present
petition deserves to be and is hereby dismissed, while reserving liberty with the
petitioner to take recourse to Section 34 of the Act of 1996.
(MANINDER S. BHATTI)
JUDGE
ac
Signature Not Verified
Signed by: AJAY KUMAR
CHATURVEDI
Signing time: 4/18/2023
12:20:39 PM
