Superintending Engineer (Mm), ... vs M/S Elektrolites (Power) Pvt Ltd
2022 Latest Caselaw 7799 Raj/2

      HIGH COURT OF JUDICATURE FOR RAJASTHAN
                  BENCH AT JAIPUR

             D.B. Special Appeal Writ No. 732/2019
Superintending Engineer (Mm), Ajmer, Vidyut Vitran Nigam Ltd.,
Vidyut Bhawan, Panchsheel Nagar, Makaewali Road, Ajmer.
                                                                   ----Appellant
                                   Versus
1.   M/s Elektrolites (Power) Pvt Ltd, S-758, A Road No. 9 F, Vki
     Area, Jaipur-302013
2.   Micro And Small Enterprises Facilitation Council, Office Of
     The Commissioner Of Industries, Udyog Bhawan, Tilak
     Marg, Jaipur-302005.
                                                                ----Respondents

D.B. Special Appeal Writ No. 734/2019 Superintending Engineer Mm, Ajmer Vidyut Vitran Nigam Ltd., Vidyut Bhawan, Panchsheel Nagar, Makaewali Road, Ajmer.

----Appellant Versus

1. M/s Elektrolites Power Pvt Ltd, S-758, A Road No. 9 F, Vki Area, Jaipur-302013

2. Micro And Small Enterprises Facilitation Council, Office Of The Commissioner Of Industries, Udyog Bhawan, Tilak Marg, Jaipur-302005.

                                                                ----Respondents


For Appellant(s)         :     Mr. Amit Kuri, Adv.
For Respondent(s)        :     Mr. Sunil Nath, Adv. with Mr. Akash
                               Shrivastava, Adv.
                               Ms. Sejal Sharma, Adv.
                               Mr. Pankaj Choudhary, Adv. on behalf
                               of Mr. Rohit Choudhary, Dy.G.C.

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 6) [SAW-732/2019]

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

impugned order dated 05.03.2019. In the said order, the issue for

consideration before the learned Single Judge pertained to the

maintainability of writ petitions against the order dated

28.06.2017, passed by the Micro and Small Enterprises Facilitation

Council (hereinafter referred to as "the Council"), established

under Section 18 of the Micro, Small and Medium Enterprises

Development Act, 2006 (hereinafter referred as "MSME Act").

While disposing of the writ petition, the Court held that the writ

petition challenging the award passed by the Council would not be

maintainable due to the adequate alternative remedy of appeal

available under Arbitration & Conciliation Act of 1996 (hereinafter

referred as "Act of 1996") read with Section 19 of MSME Act.

Aggrieved by the said order, the appellants have approached this

Court by way of filing this appeal.

FACTS

2. The relevant facts of the instant matter reflect that

respondent No.1 submitted a reference before respondent No.2

i.e. the Council, under Section 18 of MSME Act. The dispute

between the parties allegedly pertained to a delayed payment on

part of the appellants towards the performance of the contract by

respondent No.1. The appellant filed their reply and denied all the

averments made by the respondent No.1 in the claim filed before

the Council. However, the Facilitation Council, vide order/award

dated 28.06.2017, accepted the claim filed by the respondent

No.1 and directed the appellant to make a payment to respondent

No.1 totaling Rs.78,03,217/- and Rs 23,28,383/- within a period

of one month towards the interest as well as the principal amount.

(3 of 6) [SAW-732/2019]

SUBMISSIONS OF APPELLANT

3. Learned counsel for the appellant has submitted that in the

instant matter, the Council, prior to taking up the matter by itself

for making of the award, acted in total contravention of the

mandate of sub-Sections (2) and (3) of Section 18 of the MSME

Act and did not follow the procedure required for conciliation as

prescribed under the statute. Furthermore, learned counsel for the

appellant argued that the Council passed the award without

conducting statutory arbitration as well. Thus, it was argued that

in a case where there is no conciliation and/or arbitration, the

order of adjudication would not amount to an 'Award' and to

challenge the same, procedure laid down in Section 34 of the Act

of 1996 would not be required to be followed. It was contended

that since the Council passed the order dated 28.06.2017 in

excess of its jurisdiction without following due procedure and

mandate of law, recourse to writ jurisdiction would not be ousted.

4. Learned counsel has also relied upon the judgment of Hon'ble

Apex Court in the case of Jharkhand Urja Vikas Nigam 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

(4 of 6) [SAW-732/2019]

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 impugned order dated 05.03.2019 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.

SUBMISSIONS 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 only on limited grounds as contained in 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 Section 18 of the MSME Act is amply covered within

the scope of Section 19 of the said Act of 2006. 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

(5 of 6) [SAW-732/2019]

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

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.

...

(6 of 6) [SAW-732/2019]

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 05.03.2019 is set aside. Further, the

Council Order(s)/Award(s) dated 28.06.2017 is/are also quashed

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

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/31-32









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