Ajmer Vidyut Vitran Nigam Ltd vs M/S Anamika Conductors Ltd
2022 Latest Caselaw 7798 Raj/2

      HIGH COURT OF JUDICATURE FOR RAJASTHAN
                  BENCH AT JAIPUR

                D.B. Special Appeal Writ No. 351/2021

Ajmer Vidyut Vitran Nigam Ltd., Through Its Superintending
Engineer (Mm), Vidyut Bhawan, Panchsheel, Makarwali Road,
Ajmer.
                                                                   ----Appellant
                                    Versus
M/s Anamika Conductors Ltd., Through Its Director Sh. Sharad
Bakliwal, B-70, Upasana House, 2Nd Floor, Rajendra Marg, Bapu
Nagar, Jaipur
                                                                 ----Respondent

CONNECTED WITH D.B. Special Appeal Writ No. 352/2021 Ajmer Vidyut Vitaran Nigam Ltd., Through Its Superintendent Engineer (Mm), Vidyut Bhawan, Panchsheel Nagar, Makarwali Road, Ajmer.

----Appellant Versus M/s Rajasthan Elechem Pvt. Ltd., Through Its Director Sh. Sharad Bakliwal, B-70, Upasana House, 2Nd Floor, Rajendra Marg, Bapu Nagar, Jaipur.

----Respondent

For Appellant(s) : Mr. Rachit Sharma, Adv. on behalf of Mr. Jai Lodha, Adv.

For Respondent(s) : Mr. Sunil Nath, Adv. with Mr. Akash Shrivastava, Adv.

Ms. Sejal Sharma, Adv.

HON'BLE THE CHIEF JUSTICE MR. PANKAJ MITHAL HON'BLE MR. JUSTICE SAMEER JAIN

Judgment

Per: Sameer Jain, J Reserved on 04/11/2022 Pronounced on 14 12/2022

(2 of 7) [SAW-351/2021]

1. By way of present appeals, challenge is made to the order

dated 09.02.2021. In the said impugned order, it was held by

learned Single Judge that the writ petition challenging the award

passed by the Micro and Small Enterprises Facilitation Council

(hereinafter referred to as "the Council") under Section 18 of the

Micro, Small and Medium Enterprises Development Act, 2006

(hereinafter referred as "MSME Act") was not maintainable on

account of the availability of alternate statutory remedy under

Section 19 of the MSME Act, which is akin to Section 34 of the

Arbitration & Conciliation Act of 1996 (hereinafter referred as "Act

of 1996").

FACTS

2. The relevant facts of the instant matter reflect that the

appellant-petitioner (buyer) entered into a contract with the

respondent (supplier) for the supply of certain goods such as

ACSR Rabbit Conductors, ACSR Dog Conductors etc. On account of

some dispute regarding delay in payment to the respondent for

supply of goods under the contract, the respondent filed a claim

petition bearing Nos. 74/2012 and 77/2012 before the Rajasthan

MSME Facilitation Council, Jaipur for claiming interest on the

delayed payment as per the provisions of Part V of the MSME Act.

Thereafter, vide order dated 30.10.2018, the Facilitation Council

passed an ex-parte order in favour of the respondent, as the

appellant-petitioner did not mark his presence on the date fixed by

the Council for hearing i.e. 28.06.2018, for which notices were

issued on 07.06.2018. As a result, the Council allowed the claim

petition filed by the respondents and held that on account of delay

in payment by the appellant, the respondent is entitled for

(3 of 7) [SAW-351/2021]

cumulative interest as per provisions of Section 16 of the MSME

Act, which is three times of the prevalent rate as per the Reserve

Bank of India. Thus, a total sum of Rs.2,14,46,972/- (in Claim

Petition No 74/2012) and Rs 52,87,309 (in Claim Petition No.

77/2012) was awarded to the respondent by the Council towards

interest for the delayed payment.

SUBMISSION OF APPELLANT

3. Learned counsel for the appellant has submitted that the

Council erred in the application of the provisions of the MSME Act .

It was argued that prior to making an award under Section 18 of

the Act, the Council must comply with sub-section (2) of Section

18 and conduct conciliation by itself or by seeking assistance of

any institution or centre providing alternate dispute resolution

services, in terms of the provisions of Sections 65-81 of the

Arbitration & Conciliation Act, 1996 (hereinafter referred as "Act of

1996"). However, while deciding the dispute brought before it, the

Council did not comply with the mandate of sub-section (2) of

Section 18 of the Act and did not follow anything in the terms as

provided under Section 65 to 81 of the Act of 1996. Hence, the

findings of the Council are liable to be quashed as they did not

comply with the mandatory provisions and legal procedure as laid

down under the MSME Act, 2006. Qua not attending the meeting

scheduled on 28.06.2018, the appellant submitted that vide Notice

dated 21.06.2018, they were informed that the meeting of

28.06.2018 was rescheduled and the new date fixed for the

meeting was 10.07.2018.

4. Learned counsel has also relied upon the judgment of

Hon'ble Apex Court in the case of Jharkhand Urja Vikas Nigam

(4 of 7) [SAW-351/2021]

Ltd. Vs. The State of Rajasthan and Ors. (Civil Appeal

No.2899/2021). In the said case, the Supreme Court set aside

the order of the Council because the mandatory provisions of

Sections 18(2) and 18(3) were not followed. It was specifically

held that the matter can be referred to and adjudicated by

arbitration only after conducting conciliation as per provisions of

Sections 65 to 81 of the Act of 1996. It was also held that

conciliation & arbitration cannot be clubbed together and if any

award is passed without conducting conciliation, then that order is

patently illegal and is not a valid Arbitral Award and therefore,

recourse to Section 34 of the Act of 1996 is not necessary.

5. Assailing the order dated 09.02.2021 passed by the learned

Single Judge, the learned counsel contends that the learned Single

Judge ought to have considered the judgment of co-ordinate

bench dated 23.02.2018 in SBCWP No 20158/2013 and other

connected matters (titled as Rajasthan Rajya Vidyut Prasaran

Nigam Limited & Ors. vs. M/s Narmada Transmission

Private Limited) as in the said case, in similar facts and

circumstances, co-ordinate bench had held that Writ Petition

against a non-est order of the Council would be maintainable.

SUBMISSION OF RESPONDENT

6. Per contra, learned counsel for the respondent has argued

that it is a settled position of law that an Arbitral Award can be

challenged by way of Section 34 of the Act of 1996 and

accordingly, the legislation in its own wisdom incorporated Section

19 in the MSME Act, which is akin to Section 34 of the Act of

1996. Thus, challenge to an arbitral award on the grounds of

jurisdiction or non compliance of procedure as laid down under

(5 of 7) [SAW-351/2021]

Section 18 of the MSME Act is amply covered within the scope of

Section 19 of the MSME Act. Therefore, the remedy of statutory

appeal is available to all the persons aggrieved by the arbitral

award and thus, resorting to writ jurisdiction is unwarranted and

contrary to the provisions of law. Moreover, it was argued that the

MSME Act is a beneficial piece of legislation which provides for an

alternate statutory remedy. However, it is only to circumvent the

condition of pre-deposit of 75% of the amount, that the appellants

have approached the Writ Court. Hence, the writ petition should

be non maintainable on account of availability of an alternate

statutory remedy. Learned counsel has relied also relied upon

Supreme Court judgments of Gujarat State Disaster

Management Authority Vs. Aska Equipments Limited

reported in (2022) 1 SCC 61 and Tirupati Steels vs. Shubh

Industrial Component and Ors. reported in (2022) 7 SCC

429.

ANALYSIS

7. Heard the arguments advanced by learned counsels

appearing for the respective sides, thoroughly scanned record of

present appeals, and carefully considered the judgments cited by

the learned counsels.

8. The question of maintainability of writ petition against a

MSME Facilitation Council Order/Award passed under Section 18 of

MSME Act, without following mandatory condition of Section

18(2), is no more res integra in view of the judgment passed in

DBSAW 708/2018 titled as M/s Narmada Transmission

Private Limited vs. Rajasthan Rajya Vidyut Prasaran Nigam

(6 of 7) [SAW-351/2021]

Limited & Ors, wherein this court, while distinguishing the

judgments of Aska Equipments (supra) and Tirupati Steels

(supra) and relying upon the judgment of Jharkhand Urja

(supra), has observed and held as under:

"23. ...

Nevertheless, since the mandate of Section 18(2) was not followed, the order of adjudication would not amount to decree, award or order and it would not be required to challenge the same under Section 34 of the Act of 1996, read with Section 19 of MSME Act, as the decree, order or award cannot be said to be proper or legal.

...

25. Further, none of the authorities relied upon by the learned counsel for the appellant deal with the issue of non-compliance of Section 18(2) of MSME Act or the issue of alternative statutory remedy of appeal under Section 19 of MSME Act being efficacious when mandatory Conciliation proceedings are not carried out and are therefore, distinguishable.

26. For the aforesaid reasons, we are of the considered view that the Council Order(s)/Award(s) is/are non est, for not complying with necessary and mandatory provision of Section 18(2) of MSME Act. The award passed, without following mandatory due procedure, was wholly without jurisdiction and deserves to be quashed and set aside and was also rightly quashed and set aside by the learned Single Judge in the impugned judgment dated 23.02.2018.

27. Therefore, in view of the aforesaid, without commenting upon the merit of the Council Awards/Orders, we deem it appropriate to remand the matter back to the Council for afresh consideration, after following due procedure of law and mandate of Sections 18(2) and 18(3). The Council is directed to dispose of the claim as expeditiously as possible, preferably within 90 days."

DIRECTIONS

9. In view of the above, and following principles of judicial

discipline, the present appeals are allowed. The impugned

judgment/order dated 09.02.2021 is set aside. Further, the

Council Order(s)/Award(s) dated 30.10.2018 is/are also quashed

and set aside. The matter is remanded back to the Council for

(7 of 7) [SAW-351/2021]

afresh consideration. The Council is directed to dispose of the

claim as expeditiously as possible, preferably within 90 days, after

following due procedure of law and mandate of Sections 18(2) and

18(3) of MSME Act.

10. Pending applications, if any, stands disposed of.

                                    (SAMEER JAIN),J                                                 (PANKAJ MITHAL),CJ

                                   Arun/24 & 34









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