Andhra Pradesh High Court – Amravati
Tamil Nadu Electricity Board vs A.P. Micro And Small Enterprises … on 10 January, 2025
1
*HIGH COURT OF ANDHRA PRADESH :: AMARAVATI
+WRIT PETITION Nos.2771, 2778 and 2779/2013
WP No.2771/2013
Between:
#Tamil Nadu Electricity Board ...PETITIONER
AND
$ A P Micro And Small Enterprises Facilitation Council ...RESPONDENT(S)
and Others
JUDGMENT PRONOUNCED ON 10.01.2025
THE HON'BLE DR.JUSTICE K. MANMADHA RAO
1. Whether Reporters of Local newspapers
may be allowed to see the Judgments?
- Yes -
2. Whether the copies of judgment may be marked to Law
Reporters/Journals
- Yes -
3. Whether Their Ladyship/Lordship wish to see the fair
copy of the Judgment?
- Yes -
___________________________________
DR.JUSTICE K. MANMADHA RAO
2
* THE HON'BLE DR.JUSTICE K. MANMADHA RAO
+WRIT PETITION Nos.2771, 2778 and 2779/2013
% 10.01.2025
WP No.2771/2013
# Between:
#Tamil Nadu Electricity Board ...PETITIONER
AND
$ A P Micro And Small Enterprises Facilitation Council ...RESPONDENT(S)
and Others
! Counsel for the Petitioner : Sri C.R. Sridharan
Sri G.V.S. Ganesh
! Counsel for Respondents: Sri O.Manohar Reddy
Sri P. Sri Raghuram
Sri D.V.Sivadarshan
GP for Industries and Commerce
Head Note:
? Cases referred: 1. (1988) 2 Supreme Court Cases 602
2. 2001 (6) ALD 549 (DB)
3. (2001) 6 SCC 356
4. (2006) 5 SCC 752
5. (2014) 7 SCC 340
6. AIR 1986 Supreme Court 626
7. (1999) 8 SCC 122
8. AIR 1958 Supreme Court 86
3
9. AIR 1971 SC 33
10. AIR 1966 SC 197
11. AIR 1986 SC 626
12. (1995) 1 SCC 614
13. AIR 1968 SC 13
14. 1994 (69) ELT 482
15. 1994 (72) ELT 263
16. (2005) 10 SCC 704
17. (2004) 4 SCC 671
18. (2002) 9 SCC 613
19. (2004) 4 SCC 677
20. (1995) 4 SCC 153
21. (1989) 2 SCC 163
22. AIR 1971 SC 740
23. AIR 1980 AP 30
24. (2001) 8 SCC 470
25. (2019) SCC 681
26. WP No.(L) NO.4049 of 2020 dated 27.10.2020
27 2023 SCC OnLine SC 1852
28. 2023 SCC OnLine SC 1852
29. 2024 SCC OnLine 4718
30. (2024) 4 S.C.R 506
31. 2023 SCC OnLine TS 627
32. 2014 (6) ALD 266
33.(2012) 6 SCC 345
34. (2015) 6 SCC 773
35. AIR 2019 SC 3558
4
APHC010506912013
IN THE HIGH COURT OF ANDHRA PRADESH
AT AMARAVATI [3310]
(Special Original Jurisdiction)
FRIDAY ,THE TENTH DAY OF JANUARY
TWO THOUSAND AND TWENTY FIVE
PRESENT
THE HONOURABLE DR JUSTICE K MANMADHA RAO
WRIT PETITION NO: 2771, 2778 and 2779/2013
Between:
Tamil Nadu Electricity Board ...PETITIONER
AND
A P Micro And Small Enterprises Facilitation Council and ...RESPONDENT(S)
Others
Counsel for the Petitioner:
1. G V S GANESH
Counsel for the Respondent(S):
1. D S SIVADARSHAN
2. K S GOPALA KRISHNAN
3. GP FOR INDUSTRIES & COMMERCE
The Court made the following:
COMMON ORDER:
As the issue involved in all these writ petitions is one and the same,
they are being taken up for hearing as well as disposed of by way of this
Common Order.
5
2. All the writ petitions have been filed assailing the orders passed by
A.P. Micro and Small Enterprises Facilitation Council-1st respondent dated
11.11.2011 in Case Nos.180/04, 38/07 and 39/07. In view of the above order,
the 1st respondent Council directed the writ petitioners to pay the amounts to
the 2nd respondent in the writ petitions towards goods said to have been
supplied to the writ petitioners and interest.
3. Since the facts in all the writ petitions are similar and identical,
therefore WP No.2771 of 2013 is taken as lead case, and the facts therein
hereinafter will be referred to for convenience.
4. Brief facts of the case are that, the Tamil Nadu Electricity Board
came into being and has remained the energy provider and distributor. It got
restructured itself into TNSEB. For the purpose of generation of Electricity, it
had established generation plants throughout the State of Tamil Nadu. It is
stated that 1st respondent-Council constituted under the provisions of the
erstwhile repealed The Interest on Delayed Payments to Small Scale and
Ancillary Industries Undertaking Act, 1993. The Petitioner has issued tender
notifications for supply of ACSR/AAA Conductors, i.e., All Aluminum Alloy
Conductor and accordingly, issued Purchase Order The tender bid submitted
by the Respondent No.2 had been accepted by the Petitioner and various
Purchase Orders were placed by the Petitioner with specific terms and
conditions stipulated therein. The Petitioner having purchased the goods
under various purchase orders from R-2 and had paid the entire amount of the
goods. It is further stated that all the bills raised by 2nd respondent have been
6
duly cleared by the Petitioner from time to time after deducting the discounts
as per the mutually agreed terms of the contract. It is further stated that the
2nd respondent has resorted to prefer reference in Form – I claiming the entire
value of the purchase orders amounting to Rs.71,39,442-06 contending that
the Petitioner has illegally deducted the subsidies/liquidated damages though
all the transactions were between 29/12/1997 and 31/10/2000 and 1st
respondent has entertained the claims of the 2nd respondent. Upon receipt of
notices from R-1 Council, the Petitioner filed its Counter Statement. Without
considering the same R-1 Council passed impugned order directing the
Petitioner to pay an amount of Rs.14,17,823/- towards Principal and
Rs.57,21,619/- as interest totaling to Rs.71,39,442/- as on 30/06/2004, being
the price of goods supplied to the Respondent together with interest due from
12/02/1998 to 30/06/2004. Aggrieved by the same, the present writ petition
came to be filed.
5. The pleadings which are cited in WP No.2771 of 2013 the same are
adopted in other writ petitions vide WP No.2778 and 2779 of 2013.
6. This Court, vide order dated 31.01.2013, while issuing Rule Nisi, has
granted interim direction, which reads as under:
WP MP No.3419 of 2013
A perusal of the order challenged in the writ petition discloses that the A.P.
Micro and Small Enterprises Facilitation Council, directed the petitioner to pay a sum
of Rs.70,32,070/- towards principal and Rs.32,19,193/- towards interest. However, in
the claim petition, the relief sought for by the 2nd respondent is only as regards the
interest on account of delayed payments. The matter needs to be examined.
There shall be interim stay as prayed for.
7
7. The counter affidavit has been filed in WP No.2771 of 2013 and the
same are adopted by the 2nd respondent in all other writ petitions. While
denying the allegations made in the petition, inter alia, contended that, The
Micro, Small and Medium Enterprises Development Act, 2006 was legislated
with a intent to save the small enterprises from the teeth of financial crisis and
to ensure their survival and competitiveness in the field of industry. The
Government thus has given support and strength to small enterprises. This
Respondent is one such small scale industry and as such exempted from
making even EMD and Security Deposit as per GO Ms No. 1020 dt. 30-11-
1976 governed by the provisions of The Micro, Small and Medium Enterprises
Development Act, 2006. It is an exclusive self-contained Act creating
exclusive jurisdiction to a class of Micro, Small and Medium Enterprises in the
country. A compendious reading of the provisions of The Micro, Small and
Medium Enterprises Development Act, 2006 makes it clear that the provisions
of Arbitration and Conciliation Act, 1996 is applicable to the proceedings
conducted by the 1st Respondent Statutory Body. Analysising Section 19 of
Micro, Small and Medium Enterprises Development Act, 2006 and provisions
of Arbitration and Conciliation Act, 1996 clearly show that the remedy of the
Writ Petitioner is misconceived and the present writ petition is not
maintainable assailing the Award passed by the 1st Respondent. It is further
stated that whenever the Award of Micro, Small and Medium Enterprises
Development Act 2006 is under challenge and seeks stay of enforcement of
its order, a statutory deposit of 75% is mandatory as per S.19 of the Act. The
8
petitioner cannot bypass this statutory deposit and seeks stay by invoking
Article 226 of the Constitution of India when an efficacious remedy is available
under Arbitration & Conciliation Act, 1996.
8. The reply affidavit has been filed by the petitioners to the counter
affidavit filed by the 2nd respondent. in the reply affidavit, while denying the
allegations made in the counter affidavit, it is stated that, the repeated
allegations of the 2nd respondent pointing out the absurdity on the part of the
petitioner contending that the amount due still subsist until it is cleared and is
well within the limitation period and that the petitioner herein did not insist
upon before the respondent NO.1 are wholly untenable as the law is well
settled and is otherwise. It is further stated that, when piece-meal and
inordinate delayed payments were made by the Petitioner herein the same will
not estoppe the Respondent to make a legitimate claim before the
Respondent No. 1 for the value of the stocks supplied with interest on delayed
payments is as vague as could be and the same is hereby denied particularly
for want of any particulars showing the amounts received and the alleged
balance due, the particulars of which patently lacked either before the
Respondent No. 1 in the claim or before this Hon’ble Court. It is further
stated that the Respondent No. 1 Authority has give a go-by to the mandatory
requirements of the statute and the impugned Order of the Respondent No. 1
Authority is wholly without jurisdiction and as such the Respondent No. 2
herein has not made out any case. Therefore, prayed to allow the writ
petitions.
9
9. Heard Sri C.R. Sridharan, learned Senior Counsel representing Sri
G.V.S Ganesh, learned counsel appearing for the petitioners; Sri O.Manohar
Reddy, learned counsel appearing for the 1st respondent Sri P. Sri
Raghuram, learned Senior counsel representing learned counsel for the 2nd
respondent; Sri D.V. Sivadarshan, learned counsel for the respondent and
learned Government Pleader for Industries and commerce appearing for the
official respondents.
10. On hearing, Sri C.R. Sridharan, learned Senior Counsel appearing
for the petitioners while reiterating the contents made in the petitions, argued
that, though the impugned order of the Respondent No.1 Council was
received by the Petitioner on 29/11/2011, which is a Government organization
and the matter has been placed before the competent authority for the
purpose of taking decision on the further course of action to be initiated on
behalf of the Petitioner. In the said process, sufficient time has been taken to
arrive at a decision to challenge the said order by initiating appropriate legal
proceedings. Accordingly, the Petitioner Board was required to take opinions
of its Standing Counsel at Chennai and who, in turn, advised the Petitioner to
initiate appropriate proceedings in the State of Andhra Pradesh. He submits
that, thereafter, a final decision has been taken to challenge the impugned
orders by filing Writ Petitions as the impugned reference as well as the
consequential order of the Respondent No.1 Council is beyond the purview of
the IDP Act as well as MS & MED Act, 2006 totally lacking in jurisdiction and
the effect of the impugned order directing the Petitioners to pay huge amounts
10
even when the claims of the Respondent No.2 are highly misconceived and
are not maintainable.
11. To support his contentions, learned Senior Counsel has placed
reliance on a catena of decisions reported in (i) A.R Antulay versus R.S
Nayak and another1, wherein the Hon‟ble Apex Court held that :
It appears that when this Court gave the aforesaid directions on 16th February, 1984, for the disposal of
the case against the appellant by the High Court, the directions were given oblivious of the relevant
provisions of law and the decision in Anwar Ali Sarkar’s case (supra).
See Halsbury’s Laws of England, 4th End, Vol. 26, page 297, para 578 and page 300, the relevant notes
8, 11 and 15; Dias on Jurisprudence, 5th Edn., pages 128 and 130; Young v. Bristol Aeroplane Co. Ltd.,
[1944] 2 AER 293 at 300. Also see the observations of Lord Goddard in Moore v. Hewitt, [1947] 2 A.E.R.
270 at 272-A and Penny v. Nicholas, [1950] 2 A.E.R. 89, 92A. “per incuriam” are those decisions given
in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the
Court concerned, so that in such cases some part of the decision or some step in the reasoning on
which it is based, is found, on that account to be demonstrably wrong…
..
It is a settled rule that if a decision has been given per incuriam the court can ignore it.”
(ii) In T. Zakraiah and others v. A.P.S.C. Cooperative Finance
Corporation Limited, Hyderabad and others 2, wherein the High Court of
Judicature of Andhra Pradesh at Hyderabad held that :
“In A.R. Antulay v. R.S. Nayak, , the Apex Court held:
In giving the directions this Court infringed the Constitutional safeguards granted to a citizen or to an
accused and in justice results therefrom. It is just and proper for the Court to rectify and recall that
injustice, in the peculiar facts circumstances of this case.
xx xx xx By reason of giving the directions on 16th February, 1984 this Court had also unintentionally
caused the appellant the denial of rights under Article 14 of the Constitution by denying him the equal
protection of law by being singled out for a special procedure not provided for by law. When these
factors are brought to the notice of this Court, even if there are any technicalities this Court should not
feel shackled and decline to rectify that injustice or otherwise the injustice noticed will remain forever a
blot on justice. It has been said long time ago that “Actus Curiae Nerninern Gravabit” an act of the Court
shall prejudice no man. This maxim is founded upon justice and good sense and affords a safe and
certain guide for the administration of the law.
1
(1988) 2 Supreme Court Cases 602
2
2001 (6) ALD 549 (DB)
11
(iii) In a case of Fuerst Day Lawson Ltd. Versus Jindal Exports
Ltd.,3, wherein the Apex Court held that :
The other argument with emphasis was that the Thyssen judgment is `per incuriam as it was
pronounced ignoring Section 1(3) and the notification bringing Act into force from 22.8.1996. It is useful
to refer to certain decisions of this Court before taking a decision whether the Thyssen judgment is `per
incuriam or not as to the date of commencement of the Act in the given situation.
In Mamleshwar Prasad and Another vs. Kanhaiya Lal (Dead) through L.Rs. (1975 (2) SCC 232)
reflecting on the principle of judgment per incuriam, in paras 7 & 8, this Court has stated thus:-
7. Certainty of the law, consistency of rulings and comity of courts all flowering from the same principle
converge to the conclusion that a decision once rendered must later bind like cases. We do not intend to
detract from the rule that, in exceptional instances, where by obvious inadvertence or oversight a
judgment fails to notice a plain statutory provision or obligatory authority running counter to the
reasoning and result reached, it may not have the sway of binding precedents. It should be a glaring
case, an obtrusive omission. No such situation presents itself here and we do not embark on the
principle of judgment per incuriam.
8. Finally it remains to be noticed that a prior decision of this Court on identical facts and law binds the
Court on the same points in a later case. Here we have a decision admittedly rendered on facts and law,
indistinguishably identical, and that ruling must bind.
This Court in A.R.Antulay vs. R.S. Nayak & Another (1988 (2) SCC 602), in para 42 has quoted the
observations of Lord Goddard in Moore vs. Hewwit [(1947) 2 All.ER 270] and Penny vs. Nicholas [(1950)
2 All.ER 89] to the following effect:-
Per incuriam are those decisions given in ignorance or forgetfulness of some inconsistent statutory
provision or of some authority binding on the court concerned, so that in such cases some part of the
decision or some step in the reasoning on which it is based, is found, on that account to be
demonstrably wrong………………
This Court in State of U.P. & Another vs. Synthetics & Chemicals Ltd. & Another (1991 (4) SCC 139) in
para 40 has observed thus :-
40. `Incuria literally means `carelessness. In practice per incuriam appears to mean per ignoratium.
English courts have developed this principle in relaxation of the rule of stare decisis. The `quotable in
law is avoided and ignored if it is rendered, `in ignoratium of a statute or other binding authority. (Young
v. Bristol aeroplane co. Ltd). ……………
The two judgments (1) Punjab Land Development and Reclamation Corporation Ltd., Chandigarh vs.
President Officer, Labour Court, Chandigarh and Others (1990 (3) SCC
682) and (2) State of U.P. and Another vs. Synthetics and Chemicals Ltd. and Another (1991 (4) SCC
139) were cited in support of the argument. Attention was drawn to paras 40, 41 and 43 in the first
judgment and paras 39 and 40 in the second judgment. In these two judgments no view contrary to the
views expressed in the aforesaid judgments touching the principle of judgment per incuriam is taken.
A prior decision of this court on identical facts and law binds the Court on the same points of law in a
latter case. This is not an exceptional case by inadvertence or oversight of any judgment or statutory
provisions running counter to the reason and result reached. Unless it is a glaring case of obtrusive
omission, it is not desirable to depend on the principle of judgment `per incuriam. It is also not shown
that some part of the decision based on a reasoning which was demonstrably wrong, hence the principle
of per incuriam cannot be applied. It cannot also be said that while deciding Thyssen, the promulgation
of the first Ordinance, which was effective from 25.1.1996, or subsequent Ordinances were not kept in
mind more so when the judgment of Gujarat High Court in Western Shipbreaking Corporation (supra) did
clearly state in para 8 of the said judgment thus:-
3
(2001) 6 Supreme Court Cases 356
12
8. We now come to the arbitration and Conciliation Ordinance, 1996 which was promulgated on
16.1.1996 and brought into force with effect from 25.1.1996. The second Ordinance, 1996 was also
promulgated on 26.3.1991 as a supplement to main Ordinance giving retrospective effect from
25.1.1996. The Ordinance received assent of the President on 16.8.1996 giving the retrospective effect
from 25.1.1996. Thus the Ordinance has now become an Act. All the provisions of the Ordinance as well
as Act are same.
Therefore, the use of word The Ordinance shall also mean the Act and vice versa.
It appears in the portion extracted above there is a mistake as to the date of promulgation of the second
Ordinance as 26.3.1991. But the correct date is 26.3.1996.
(iv) In another case reported in Mayuram Subramanian Srinivasan
versus CBI4, wherein the Apex Court held that :
“Incuria” literally means “carelessness”. In practice per incuriam is taken to mean per
ignoratium. English Courts have developed this principle in relaxation of the rule of stare decisis. The
“quotable in law”, as held in Young v. Bristol Aeroplane Co. Ltd. (1944) 2 All E.R. 293, is avoided and
ignored if it is rendered, “in ignoratium of a statute or other binding authority”. Same has been accepted,
approved and adopted by this Court while interpreting Article 141 of the Constitution of India, 1950 (in
short the ‘Constitution’) which embodies the doctrine of precedents as a matter of law.
(v) In anger case reported in Union of India and others versus R.P.
Singh5, wherein the Apex Court held that :
“….„Per incuriam‟ are those decisions given in ignorance or forgetfulness of some inconsistent statutory provision
or of some authority binding on the court concerned, so that in such cases some part of the decision or some
step in the reasoning on which it is based, is found, on that account to be demonstrably wrong.” At a subsequent
stage of the said decision it has been observed as follows: –
“…. It is a settled rule that if a decision has been given per incuriam the court can ignore it.”
12. Learned Senior Counsel for the petitioners has also placed reliance
on a decision of Hon‟ble Supreme Court reported in (i) M/s Filterco and
another vs. Commissioner of Sales Tax, M.P and another6 , wherein the
Apex Court held that :
“….Further Section 38(3) of the Act requires that a substantial portion of the tax has to be
deposited before an appeal or revision can be filed. In such circumstances we consider that the High
Court ought to have considered and pronounced upon the merits of the contentions raised by the parties
and the summary dismissal of the Writ Petition was not justified. In such a situation, although we would4
(2006) 5 Supreme Court Cases 752
5
(2014) 7 Supreme Court Cases 340
6
AIR 1986 Supreme Court 626
13have, ordinarily, set aside the judgment of the High Court and remitted the case to that Court for fresh
disposal, we consider that in the present case it would be in the interests of both sides to have the
matter finally decided by th.is Court at the present stage itself especially since we have had the benefit
of elaborate and learned arguments addressed by the counsel appearing on both sides.”
(ii) In another case reported in Steel Authority of India Ltd. Versus
J.C Budharaja, Government and Mining Contractor 7 , wherein the Apex
Court held that :
“Contractor not seeking any reference within three years from the date when the
cause of action arose, i.e., from 29-8-1979- Only in 1985 when the dispute arose with regard
to the second agreement, the respondent giving notice on 2-12-1985 to appoint an arbitrator –
Arbitrator appointed with a specific reservation regarding the tenability, maintainability and
validity of reference as also on the ground that the claim was barred by the period of limitation
and it pertained to excepted matters in terms of the general conditions of the contract Held,
the claim before the arbitrator in November-December 1985 was barred by the period of
limitation – Letter written in 1983 by the appellant repudiating the respondent’s claim on
account of damages or losses sustained by him would not give a fresh cause of action as on
that date the cause of action for recovering the said amount was barred by the period of three
years prescribed under Article 137 of the Limitation Act, 1963-Under S.3 of the Limitation Act,
it was the duty of the arbitrator to reject the claim as it was on the face of it, barred by the
period of limitation…”
“The Court also referred to the earlier decision in Panchu Gopal Bose Vs. Board of Trustees for Port of
Calcutta [1993(4) SCC 338], where the Court observed as under: –
The Period of limitation for commencing an arbitration runs from the date on which the cause of
arbitration accrued, that is to say, from the date when the claimant first acquired either a right of action or
a right to require that an arbitration takes place upon the dispute concerned.
Therefore, the period of limitation for the commencement of an arbitration runs from the date on which,
had there been no arbitration clause, the cause of action would have accrued. Just as in the case of
actions the claim is not to be brought after the expiration of a specified number of years from the date on
which the cause of action accrued, so in the case of arbitrations, the claim is not to be put forward after
the expiration of the specified number of years from the date when the claim accrued.
Applying the aforesaid ratio in the present case, right to refer the dispute to the arbitrator arose in 1979
when Contractor gave a notice demanding the amount and there was no response from the appellant
and the amount was not paid. The cause of action for recovery of the said amount arose from the date of
the notice. Contractor cannot wait indefinitely and is required to take action within the period of limitation.
In the present case, there was supplementary agreement between the parties. Supplementary
agreement nowhere provides that so-called right of the contractor to recover damages was in any
manner saved. On the contrary, it specifically mentions that contractor was yet to execute a considerable
portion of the work more particularly described in the schedule to the agreement. And that the contractor
has agreed to complete the said balance work on the terms and conditions enumerated in the
agreement. Now, in this set of circumstances, contractor cannot wait and approach the authority or the
court for referring the dispute to the arbitrator beyond the period of limitation. Section 37 of the
Arbitration Act specifically provides that provisions of the Indian Limitation Act shall apply to the
arbitrations as they apply to proceedings in the Court.”
7
(1999) 8 Supreme Court Cases 122
14
13. Learned Senior Counsel for the petitioners has also placed reliance
on decisions of Hon‟ble Supreme Court reported in (i) State of U.P v.
Mohammad Nooth8; (ii) Hirday Naraiah vs. Income Tax Bareily9 ; (iii) In
M.G Abrol vs Shantilal Chhotelal and Co10; (iv) In Filterco & another vs.
Commissioner of Sales Tax, MP11; (v) In another case reported in Dr. Bala
Krishna Agarwal vs. State of U P & Others12; (vi) In Collector of Customs
and Excise vs. A.S Bava13; (vii) In a case of Bhadrachalam Paper boards
Ltd vs Union of India14; (viii) In another case reported in Reckitt & Colman
of India Ltd., vs Asst. Collr. Of C.Ex. Hyderabad 15 ; (IX) In Shree
Subhlaxmi Fabrics (P) Ltd vs Chand Mal Baradia & others16; (x) In Hanil
Era Textiles Ltd vs Puromatic Filters (P) Ltd17; (xi) In Shriram City Union
Finance Corporation Ltd vs. Rama Mishra18; (xii) In New Moga Transport
Insurance Co Ltd vs. United India Insurance Co. Ltd 19 ; (xiii) In Angil
Insultations vs Davy Ashmore India Ld 20; (xiv) In ABC Laminart Pvt Ltd
vs A P Agenices, Salem21; (xv) In Hakam Singh vs Gammon (India ) Ltd22
and in EID Parry (India) Limited vs Savani Transports Pvt Ltd 23
8
AIR 1958 Supreme Court 86
9
AIR 1971 SC 33
10
AIR 1966 SC 197
11
AIR 1986 SC 626
12
(1995) 1 SCC 614
13
AIR 1968 SC 13
14
1994 (69)ELT 482
15
1994 (72) ELT 263
16
(2005) 10 SCC 704
17
(2004) 4 SCC 671
18
(2002) 9 SCC 613
19
(2004) 4 SCC 677
20
(1995) 4 SCC 153
21
(1989) 2 SCC 163
22
AIR 1971 SC 740
23
AIR 1980 AP 30
15
14. Learned Senior Counsel for the petitioners while relying on the
above decisions, submits that, being the position in law, the respondent No.1-
Council constituted under the aforesaid IDP Act had no jurisdiction
whatsoever to entertain any claim arising out of any transaction which are
beyond the period of limitation. Therefore, the Council has, totally without any
authority of law and jurisdiction, entertained the claim filed by the respondent
No.2 on 2.8.2004 nearly after 9 months from the last date of such transaction
and thus, there is a palpable assumption of non-existent jurisdiction.
Therefore, learned Senior counsel submits that, without prejudice, viewed
from any angle, the impugned order is wholly unsustainable in the eye of law
as the same is rendered without any reasons much less, valid reasons
whatsoever and therefore prayed to allow the writ petitions.
15. Per contra, Sri O. Manohar Reddy, learned counsel for the 1st
respondent vehemently opposed for allowing the writ petitions, as the writ
petitions filed under Article 226 of the Constitution of India challenging the
Award after the stipulated time limit under Section 34 of the Act is over, cannot
be entertained and prayed to dismiss the writ petitions.
16. To support his contentions, Sri O. Manohar Reddy, learned counsel
has placed reliance on a catena of decisions reported in (i) Union of India
versus Popular Construction Co.24, wherein the Hon‟ble Apex Court held
that :
24
(2001) 8 Supreme Court Cases 470
16As for as the language of Section 34 of the 1996 Act is concerned, the crucial words are ‘but
not thereafter’ used in the proviso to sub-section (3). In our opinion, this phrase would
amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and
would therefore bar the application of Section 5 of that Act. Parliament did not need to go
further. To hold that the Court could entertain an application to set aside the Award beyond
the extended period under the proviso, would render the phrase ‘but not thereafter’ wholly
otiose. No principle of interpretation would justify such a result.
Apart from the language, ‘express exclusion’ may follow from the scheme and object of the
special or local law. “Even in a case where the special law does not exclude the provisions
of Sections 4 to 24 of the Limitation Act by an express reference, it would nonetheless be open
to the Court to examine
3. [1974] 2 SCC 133.
4. Patel Naranbhai Marghabhai v. Deceased Dhulabhai Galbabhai, [1992] 4 SCC 264. whether
and to what extent the nature of those provisions or the nature of the subject-matter and
scheme of the special law exclude their operation”.5 Here the history and scheme of the 1996
Act support the conclusion that the time limit prescribed under Section 34 to challenge an
Award is absolute and unextendable by Court under Section 5 of the Limitation Act. The
Arbitration and Conciliation Bill, 1995 which preceded the 1996 Act stated as one of its main
objectives the need “to minimise the supervisory role of courts in the arbitral process”.6 This
objective has found expression in Section 5 of the Act which prescribes the extent of judicial
intervention in no uncertain terms :
“5. Extent of judicial intervention. – Notwithstanding anything contained in any other law for
the time being in force, in matter governed by this Part, no judicial authority shall intervene
except where so provided in this Part.”
The ‘Part’ referred to in Section 5 is Part I of the 1996 Act which deals with domestic
arbitrations. Section 34 is contained in Part I and is therefore subject to the sweep of the
prohibition contained in Section 5 of the 1996 Act.
Furthermore, section 34(1) itself provides that recourse to a court against an arbitral award
may be made only by an application for setting aside such award “in accordance with”
sub Section 2 and sub Section 3. Sub Section 2 relates to grounds for setting aside an award
and is not relevant for our purposes. But an application filed beyond the period mentioned in
Section 34, sub section (3) would not be an application “in accordance with” that sub section.
Consequently by virtue of Section 34 (1), recourse to the court against an arbitral award
cannot be made beyond the period prescribed. The importance of the period fixed under
Section 34 is emphasised by the provisions of Section 36 which provide that “where the time
for making an application to set aside the arbitral award under Section 34 has expired…….the
award shall be enforced and the Code of Civil Procedure, 1908 in the same manner as if it
were a decree of a court”. This is a significant departure from the provisions of the Arbitration
Act, 1940. Under the 1940 Act, after the time to set aside the award expired, the court was
required to “proceed to pronounce judgment according to the award and upon (he judgment so
pronounced a decree shall follow”. Now the consequence of the time expiring under Section 34
of the 1996 Act is that the award becomes immediately enforceable without any further act of
the Court.
5. Hukum Narain Yadav v. Lalit Narain Mishra (supra)
6. 4(v) of the Statement of Objects and Reasons of the Arbitration and Conciliation Act, 1996.
If there were any residual doubt on the interpretaion of the language used in Section 34, the
scheme of the 1996 Act would resolve the issue in favour of curtailment of the Court’s powers
by the exclusion of the operation of Section 5 of the Limitation Act.
17
(ii) In another case reported in Assistant Commissioner (CT) LTU,
Kakinada and others versus Glaxo Smith Kline Consumer Health Care
Limited25, wherein the Apex Court held that :
In the backdrop of these facts, the central question is:
whether the High Court ought to have entertained the writ petition filed by the respondent? As regards the power
of the High Court to issue directions, orders or writs in exercise of its jurisdiction under Article 226 of the
Constitution of India, the same is no more res integra. Even though the High Court can entertain a writ petition
against any order or direction passed/action taken by the State under Article 226 of the Constitution, it ought not
to do so as a matter of course when the aggrieved person could have availed of an effective alternative remedy
in the manner prescribed by law (see Baburam Prakash Chandra Maheshwari vs. Antarim Zila Parishad now Zila
Parishad, Muzaffarnagar8 and also Nivedita Sharma vs. Cellular Operators Association of India &
Ors.9). In Thansingh Nathmal & Ors. vs. Superintendent of Taxes, Dhubri & Ors.10, the Constitution Bench of
this Court made it amply clear that although the power of the High Court under Article 226 of the Constitution is
very wide, the Court must exercise selfimposed restraint and not entertain the writ petition, if an alternative
effective remedy is available to the aggrieved person. In paragraph 7, the Court observed thus: “7. Against the
order of the Commissioner an order for reference could have been claimed if the appellants satisfied the
Commissioner or the High Court that a question of law arose out of the order. But the procedure provided by the
Act to invoke the jurisdiction of the High Court was bypassed, the appellants moved the High Court challenging
the competence of the Provincial Legislature to extend the concept of sale, and invoked the extraordinary
jurisdiction of the High Court under Article 226 and sought to reopen the decision of the Taxing Authorities on
question of fact. The jurisdiction of the High Court under Article 226 of the Constitution is couched in wide terms
and the exercise thereof is not subject to any restrictions except the territorial restrictions which are expressly
provided in the Articles.
(iii) In another case reported in Union of India through Chief
Administrative Officer (construction) Central Railway, Mumbai CSMT
versus Maharashtra Steel Fabricators & Erectors26, wherein the High Court
of Judicature at Bombay Ordinary Original Civil Jurisdiction, held that :
The respondent urged that the High Court had ample power to grant relief under Article 226 of the
Constitution of India. The Supreme Court rejected the contention and laid down the following position of law. The
powers of the High Court under Article 226 of the Constitution are no doubt wide, but not wider than the powers
under Article 142 of the Constitution. There is a distinction between the powers of the High Court under Article
226 and of the power of the Supreme Court under Article 142 of the Constitution of India to do complete justice
between the parties. If the Supreme Court may not issue certain directions in exercise of powers under Article
142 of the Constitution, it cannot be that the High Court can take a different approach under Article 226 of the
Constitution. The High Court cannot not disregard the statutory period. The High Court should not issue a writ
inconsistent with the legislative intent. Doing so would frustrate the legislative scheme and intention behind the
statutory provisions. The law laid down Assistant Commissioner (CT) LTU, Kakinada squarely applies to the
present case. If the legislative intent is to close the challenge to an arbitral Award after a particular period of time,
then it must be adhered to. Therefore this writ petition filed under Article 226 and 227 of the Constitution of India
challenging arbitral award after the stipulated time limit under the section 34 of the Act is over, cannot be
entertained.
25
(220)19 Supreme Court Cases 681
26
WP No.(L) No.4049 of 2020 dated 27.10.2020
18
17. Learned Counsel for the 1st respondent has also placed reliance on
a decision of Hon‟ble Supreme Court reported in India Glycols Limited and
another versus Micro and Small Enterprises Facilitation Council,
Medchal27, wherein the Apex Court held that:
Section 19 provides recourse against an award of the Facilitation Council in the following terms:
“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 amount deposited shall be paid to the supplier, as it considers
reasonable under the circumstances of shall then apply to the dispute as if the arbitration was in
pursuance of an arbitration agreement referred to in sub-section(1) of section 7 of that Act.
(4) Notwithstanding anything contained in any other law for the time being in force, the Micro and Small
Enterprises Facilitation Council or the centre providing alternate dispute resolution services shall have
jurisdiction to act as an Arbitrator or Conciliator under this section in a dispute between the supplier
located within its jurisdiction and a buyer located anywhere in India.
(5) Every reference made under this section shall be decided within a period of ninety days from the date
of making such a reference.
the case, subject to such conditions as it deems necessary to impose.” 10 In terms of Section 19, an
application for setting aside an award of the Facilitation Council cannot be entertained by any court
unless the appellant has deposited seventy-five per cent of the amount in terms of the award. In view of
the provisions of Section 18(4), where the Facilitation Council proceeds to arbitrate upon a dispute, the
provisions of the Act of 1996 are to apply to the dispute as if it is in pursuance of an arbitration
agreement under sub-section (1) of Section 7 of that Act. Hence, the remedy which is provided
under Section 34 of the Act of 1996 would govern an award of the Facilitation Council. However, there is
a super added condition which is imposed by Section 19 of MSMED Act 2006 to the effect that an
application for setting aside an award can be entertained only upon the appellant depositing with the
Council seventy-five per cent of the amount in terms of the award. Section 19 has been introduced as a
measure of security for enterprises for whom a special provision is made in the MSMED Act by
Parliament. In view of the provisions of Section 18(4), the appellant had a remedy under Section 34 of
the Act of 1996 to challenge the award which it failed to pursue. 11 In the judgment of this Court
in Gujarat State Civil Supplies Corporation Limited (supra), a two-Judge Bench of the Court has
observed, in the course of drawing its conclusions, that:
“The proceedings before the Facilitation Council/institute/centre acting as an arbitrator/Arbitral
Tribunal under Section 18(3) of the MSMED Act 2006 would be governed by the Arbitration Act, 1996.”
12 The appellant failed to avail of the remedy under Section 34. If it were to do so, it would have been
required to deposit seventy-five per cent of the decretal amount. This obligation under the statute was
sought to be obviated by taking recourse to the jurisdiction under Articles 226/227 of the Constitution.
This was clearly impermissible.
13 For the above reasons, we are in agreement with the view of the Division Bench of the High Court
that the writ petition which was instituted by the appellant was not maintainable.
27
2023 SCC OnLine SC 1852
19
18. Learned counsel for the 1st respondent while relying on the above
decisions submits that Section 19 has been introduced as a measure of
security for enterprises for whom a special provision is made in the MSMED
Act by parliament. In view of the provisions of Section 18(4), the petitioners
had a remedy under Section 34 of the Act of 1996 to challenge the award
which it failed to pursue. Therefore, prayed to dismiss the writ petitions.
19. Learned Government Pleader appearing for the official respondent
vehemently opposed for allowing the writ petitions and prayed to dismiss the
same.
20. On the other hand, Sri P. Sri Raghuram, learned Senior counsel
appearing for the 2nd respondent while denying the contents made by the
petitioners, submits that the petitioner is the respondent before the AP Micro
and Small enterprises Facilitation counsel (APMSEFC). The 2nd respondent
filed claim petition before the Council arising out of purchase orders by which
goods were supplied to the petitioner by the 2nd respondent claiming the
arrears of amount due on the invoices raised by the respondent. the claim
was raised when the petitioners failed to make payment by the appointed date
and thus incurred a penalty by way of interest and contemplated under the
Micro small and medium enterprises development Act 2006. He submits that
the amount claimed in the claim petition consist of claim, which arises out of
Section 15, 16 and 17 of MSMED Act 2006, which reads as under:
15. Liability of buyer to make payment.–
20
Where any supplier, supplies any goods or renders any services to any buyer, the
buyer shall make payment therefor on or before the date agreed upon between him and the
supplier in writing or, where there is no agreement in this behalf, before the appointed
day:Provided that in no case the period agreed upon between the supplier and the buyer in
writing shall exceed forty-five days from the day of acceptance or the day of deemed
acceptance.
SEC 16: DATE FROM WHICH AND RATE AT WHICH INTEREST IS PAYABLE:
where any buyer fails to make payment of the amount to the supplier, as required
under Sec 15, the buyer shall, notwithstanding anything contained in any agreement between
the buyer and the supplier are in any law for the time being in force, be liable to pay
compound interest with monthly rests to the supplier on that amount from the appointed day or
as the case may be, from the date immediately following the date agreed upon, at three times
of the bank rate notified by the Reserve Bank.
SEC 17: RRECOVERY OF AMOUNT DUE: for any goods supplies or services
rendered by the supplier, the buyer shall be liable to pay the amount with interest thereon as
provided under SEC. 16.
SEC.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 sec. 17, make a
reference to the micro and small enterprises facilitation council.
(2) on receipt of a reference under sub-Sec. 1, the council shall 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 Sec 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.
21. Learned Senior Counsel submits that, in the instance case, there is
no dispute this respondent is a small scale industry. There is also no dispute
that were purchase orders between the parties and there was liability to make
payment on the supplies made by the respondent to the petitioner. However,
according to the MSMED Act, 2006, the movement there is a delay in
payment of the amounts due beyond the appointed date, the penalty in the
form of interest as stipulated under Sec. 15, 16 and 17 will be fastened and
the buyer is liable to make this payment as penalty and the total amount
becomes due and there will not be any distinction between the principle
amount and the interest a it is by way of penalty. He further submits that the
21
petitioner has placed 6 purchase orders on this respondent. The purchase
orders vide the P.O. No. 93, dt.26.10.1998 P.O No.98 dated 28.10.1998 and
all the material were supplied and the claim petitions were filed by the 2 nd
respondent before 1st respondent are on 01.09.2005 and 01.06.2005 i.e.,
within three years therefore the contention of the petitioner that the claims are
barred by the limitation is untenable. Learned Senior Counsel further submits
that, the petitioners have not paid the due amounts to the 2nd respondent. .
22. Learned Senior Counsel further submits that the award was passed
by the 1st respondent on 11.11.2011 and the petitioners have filed writ
petitions of 22.01.2013. It is only to avoid 75% of the awarded amount under
Section 19 of the 2006 Act, the present writ petitions were filed. If really,
aggrieved by the award of the 1st respondent, immediately thereon, the
petitioners ought to have approached competent court. As per section 34 of
the Arbitration and Conciliation Act, an appeal before the competent court, can
be filed before expiry of 90 days. But, in the instant case, the writ petitioners
without approaching the competent court, within the time, approached this
Hon’ble Court after lapse of 14 months. No explanation offered by the
petitioners to that extent. Learned Senior Counsel further submits that the
writ petitioners never challenge the interim order dated 07.11.2009 passed by
the 1st respondent. In view of the doctrine of principle of merger, the interim
order dt.07.11.2009 is no longer as on date, as it is merged in the final order.
23. It is settled that originally the relief under Article 226 of the
Constitution of India, is not available if an efficacious remedy available under
22
the statute itself. Admittedly statue provide, an appeal this award passed by
the 1st respondent. the petitioners utterly failed to explain the reasons for not
approaching the competent Civil Court which provided under the statue. He
submits that the liability is a continue liability as per Section 22 of 2006 Act.
Therefore the buyer/petitioners statutorily bound to acknowledge the liability,
year after year, in their public accounts, question of any limitation arising out
of such transaction could not arise
24. To support his contentions, learned Senior Counsel has placed
reliance on a catena of decisions reported in India Glycols Limited and
another versus Micro and Small Enterprises Facilitation Council,
Medchal-Malkajgiri and others28, wherein the Hon‟ble Apex Court held that :
9 Section 19 provides recourse against an award of the Facilitation Council in the following terms:
“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 amount deposited shall be paid to the supplier, as it considers
reasonable under the circumstances of shall then apply to the dispute as if the arbitration was in
pursuance of an arbitration agreement referred to in sub-section(1) of section 7 of that Act.
(4) Notwithstanding anything contained in any other law for the time being in force, the Micro and Small
Enterprises Facilitation Council or the centre providing alternate dispute resolution services shall have
jurisdiction to act as an Arbitrator or Conciliator under this section in a dispute between the supplier
located within its jurisdiction and a buyer located anywhere in India.
(5) Every reference made under this section shall be decided within a period of ninety days from the date
of making such a reference.
the case, subject to such conditions as it deems necessary to impose.” 10 In terms of Section 19, an
application for setting aside an award of the Facilitation Council cannot be entertained by any court
unless the appellant has deposited seventy-five per cent of the amount in terms of the award. In view of
the provisions of Section 18(4), where the Facilitation Council proceeds to arbitrate upon a dispute, the
provisions of the Act of 1996 are to apply to the dispute as if it is in pursuance of an arbitration
28
2023 SCC OnLine SC 1852
23
agreement under sub-section (1) of Section 7 of that Act. Hence, the remedy which is provided
under Section 34 of the Act of 1996 would govern an award of the Facilitation Council. However, there is
a super added condition which is imposed by Section 19 of MSMED Act 2006 to the effect that an
application for setting aside an award can be entertained only upon the appellant depositing with the
Council seventy-five per cent of the amount in terms of the award. Section 19 has been introduced as a
measure of security for enterprises for whom a special provision is made in the MSMED Act by
Parliament. In view of the provisions of Section 18(4), the appellant had a remedy under Section 34 of
the Act of 1996 to challenge the award which it failed to pursue
..
2 The appellant failed to avail of the remedy under Section 34. If it were to do so, it would have been
required to deposit seventy-five per cent of the decretal amount. This obligation under the statute was
sought to be obviated by taking recourse to the jurisdiction under Articles 226/227 of the Constitution.
This was clearly impermissible.
13 For the above reasons, we are in agreement with the view of the Division Bench of the High Court
that the writ petition which was instituted by the appellant was not maintainable.
(ii) In another case reported in Tamilnadu Generation and
Distribution Corporation Limited and others versus State of U.P and
others29, wherein the High Court of Allahabad held that :
“In the instant writ petition under Article 226 of the Constitution of India has been filed
challenging the order dated 01.01.2024 whereby respondent no.2 (Zonal Micro and Small Enterprises,
Facilitation Council (MSEFC), Meerut Zone, Meerut) (for short ‘the Facilitation Council’) has declared an
award of a total sum of Rs.1,49,48,762/- in favour of respondent no.3, in exercise of powers
under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (for short
‘the MSME Act, 2006).
..
Respondent no. 3 raised preliminary objection with regard to maintainability of the writ petition
on the ground of availability of alternative remedy of filing objections against the impugned award
under Section 34 of the Arbitration and Conciliation Act, 1996, read with Section 18(3) of the MSME Act,
2006. Additionally, it is also contended that unless 75% of the amount in terms of impugned award is
deposited by the petitioners, the challenge would not be maintainable in view of Section 19 of the MSME
Act, 2006. In support of his submission, he places reliance on the judgment of Supreme Court in the
case of M/s India Clycols Limited and another Vs. Micro and Small Enterprises Facilitation Council,
Medchal – Malkajgiri and others in Civil Appeal No.7491 of 2023, arising out of SLP (C) No.9899 of 2023,
decided on 06.11.2023.
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 amount 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.”
Xxx
29
2024 SCC OnLine 4718
24
he appellant failed to avail of the remedy under Section 34. If it were to do so, it would have been
required to deposit seventy-five per cent of the decretal amount. This obligation under the statute was
sought to be obviated by taking recourse to the jurisdiction under Articles 226/227 of the Constitution.
This was clearly impermissible.
13. For the above reasons, we are in agreement with the view of the Division Bench of the High Court
that the writ petition which was instituted by the appellant was not maintainable.”
(iii) In another case reported in Mrinmoy Maity v. Chhanda Koley and
others30, wherein it was held that :
For filing of a writ petition, there is no doubt that no fixed period of limitation is prescribed.
However, when the extraordinary jurisdiction of the writ court is invoked, it has to be seen as to whether
within a reasonable time same has been invoked and even submitting of memorials would not revive the
dead cause of action or resurrect the cause of action which has had a natural death. In such
circumstances on the ground of delay and laches alone, the appeal ought to be dismissed or the
applicant ought to be non-suited. If it is found that the writ petitioner is guilty of delay and laches, the
High Court ought to dismiss the petition on that sole ground itself, in as much as the writ courts are not
to indulge in permitting such indolent litigant to take advantage of his own wrong. It is true that there
cannot be any waiver of fundamental right but while exercising discretionary jurisdiction under Article
226, the High Court will have to necessarily take into consideration the delay and laches on the part of
the applicant in approaching a writ courtXx
If the petitioner wants to invoke jurisdiction of a writ court, he should come to the Court at the
earliest reasonably possible opportunity. Inordinate delay in making the motion for a writ will indeed be a
good ground for refusing to exercise such discretionary jurisdiction.
((iv) In another decision reported in National Small Industries
Corporation Ltd., NSIC versus State of Telanagana, rep. by its Pr.
Secretary, Industries Department and others31, wherein the High Court of
Telangana at Hyderabad held that :
By filing this petition under Article 226 of the Constitution of India, petitioner has prayed for
setting aside of the award dated 03.11.2022 passed by the Telangana State Micro and Small
Enterprises Facilitation Council, Ranga 4 HCJ & NTRJ Reddy Region (briefly referred to hereinafter as
‘the Facilitation Council’) in Case No.236/MSEFC/2020.
Xx
Be that as it may, we are not inclined to entertain the writ petition for two reasons. Firstly it is now trite
law that an award passed by the Facilitation Council under Section 18 of the MSME Act can be
questioned under Section 34 of the Arbitration and Conciliation Act, 1996 (briefly referred to hereinafter
as ‘the 1996 Act’).
5.1. We see no reason to by-pass the remedy provided under the 1996 Act read with the MSME Act and
entertain the writ petition.
30
(2024) 4 S.C.R. 506
31
2023 SCC OnLine TS 627
25
(v) In another case reported in Ballarpur Industries Ltd., Chanderpur
District, Maharashtra v. A.P. Micro Small Enterprises Facilitation
Council, Hyderabad and another32, wherein the High Court of Judicature,
Telangana and Andhra Pradesh at Hyderabad held that “Micro, Small Medium
Enterprises Development Act 2006 – Sections 18, 19 – Award passed by
Council under S.18 – writ petition against – Not maintainable – only remedy
that is available to petitioner is under S.34 of Arbitration Act.
(vi) In another case reported in Goodyear India Limited versus
Norton Intech Rubbers Private Limited and another33 , wherein the Hon‟ble
Apex Court held that : the learned Single Judge having considered the
submissions made on the said provision came to the conclusion that on a
plain reading of the section, the Court had no discretion to either waive or
reduce the amount of seventy five percent of the award as a pre-deposit for
filing fo the appeal and, accordingly, dismissed the original petition, with leave
to the petitioner to deposit an amount, amounting to seventy five percent of
the award within an extended period of six weeks. The Division Bench before
whom the aforesaid appeal was preferred concurred with the judgment of the
learned Single Judge and while dismissing the appeal, extended the period for
deposit of the aforesaid amount by a further period of six weeks.
25. On a perusal of the material on record, this Court observed from
the counter statement filed by the petitioners herein in Ref No.180 of 2004,
32
2014 (6) ALD 266
33
(2012) 6 Supreme Court Cases 345
26
which is impugned in WP No.2771 of 2013, wherein the Micro and Small
Enterprises Facilitation Counsel at Hyderabad held that, a reading of the
provision under Section 17 of Act, 27 of 2006, the Act does not provide for
recovery of the principal amount when a dispute arises as to what is the
principal amount. In the instant case the respondent had paid all the principal
amounts under the purchase orders. But the claimant has raised a dispute
contending that the discount amount and liquidated damages which have
been deducted as per the mutually agreed terms, ought not to have been
deducted. Since this dispute relates to the principal amount payable but does
not relate to interest for delayed payment, it is outside the scope of Act, 27 of
2006. Consequently the Facilitation Council does not have jurisdiction to
entertain this dispute. It is submitted that it cannot go in to the question of
validity or legality of the deduction of interest and liquidated damages made as
per the agreed terms between the parties.
26. Further, it is the contention of learned Senior Counsel for the
petitioners that, in the above stated counter, it was clearly mentioned by the
petitioners herein that the respondent conducted a meeting of all its suppliers
including the claimant. All of them agreed in that meeting, including the
claimant, that the respondent may recover Rs.1,550/- per M.T while releasing
the pending bills. It is further contentions of learned Senior Counsel that,
similarly the claim for recovery or liquidated damages is also barred by
limitation taking in to consideration the dates when balance bill amounts were
paid after deduction of the amount of liquidated damages. The balance
27
amount were received without any objection and in full satisfaction. The
liquidated damages have been imposed as per mutually agreed terms of
contract. Therefore the council has no jurisdiction to entertain or consider the
dispute raised against imposition of liquidated damages.
27. On hearing the submissions of the learned counsels and on
perusing the material on record, it is an admitted fact that the petitioners
placed purchase orders to the 2nd respondent. in pursuance of the same, the
2nd respondent supplied material. It is the contention of the respondents
counsel that the Section 18(4) of the 2006 Act, says that “Not withstanding
anything contained in any other law for time being in force, the Micro and
Small Enterprises Facilitation Council or the centre providing alternate dispute
resolution services shall have jurisdiction to act as an arbitrator or conciliator
under this section in a dispute between the supplier located within its
jurisdiction and a buyer located anywhere in India and therefore submits that
the 1st respondent having its jurisdiction.
28. In Union of India vs. Shri Kant Sharma34, wherein the Hon‟ble
Supreme Court has held that though the jurisdiction of the High Court under
Article 226 of the Constitution of India and that of the Supreme Court under
Article 32 of the Constitution of India, cannot be circumscribed by the
provisions of any enactment, but they certainly have due regard to the
legislative intent evidenced by the Act and exercise their jurisdiction consistent
with the Act. Furthermore, when statutory forum is created by law for redressal
34
(2015) 6 SCC 773
28
of grievances, a writ petition should not be entertained ignoring the statutory
dispensation. Thus, the High Court should not entertain petition under Article
226 of the Constitution of India if an effective alternative remedy is available to
the aggrieved person or the statute under which the action complained of itself
contains a mechanism for redressal of grievance.
29. The provisions contained in the MSMED Act with the aid of the
1996 Act are self-contained, providing therein the statutory mechanism of
conciliation and/or reference to arbitration. They also provide that the award
passed by the Facilitation Council shall be deemed to be an award passed
under the 1996 Act. If the order/award passed by the Facilitation Council is an
award under the 1996 Act, the same can be assailed under the MSMED Act,
read with the provisions of the 1996 Act and writ remedy under Article 226 of
the Constitution of India, is not available.
30. The argument canvassed by the learned Senior counsel for the writ
petitioners based on violation of principles of natural justice, if accepted, would
wreak havoc with the judicial hierarchy, inasmuch as every decree passed by
the trial court can be challenged by preferring writ petition under Article
226/227 of the Constitution of India, on the ground of violation of principles of
natural justice by the trial court.
31. Supreme Court in Sterling Industries v. Jayprakash Associates
Ltd.35 has clearly disapproved the stand adopted by some High Courts that
35
AIR 2019 SC 3558
29
any order passed by an arbitral tribunal is capable of being corrected by the
High Court under Articles 226 or 227 of the Constitution of India. Adverting to
Section 34 of the 1996 Act, Supreme Court has held that intervention by the
High Court under Articles 226 or 227 of the Constitution of India in an arbitral
award is not permissible.
32. This Court is also not inclined to entertain the writ petition because
under Section 19 of the MSME Act, no application for setting aside an award
passed by the Facilitation Council shall be entertained by any Court unless the
party challenging the award deposits 75% of the amount in terms of the
award. No such deposits have been made.
33. Further, MSME Act is a special legislation to protect and further the
interest of MSMEs. The Act provides for a dedicated dispute resolution
mechanism under Section 18. To ensure that interest of the MSME is
protected and to weed out frivolous challenge to an award passed by the
Facilitation Council under Section 18, the statute has put in a caveat: any
challenge to such an award would be entertained only upon deposit of 75% of
the awarded amount.
34. That being the position and without expressing any opinion on
merits, this Court is of the view that the writ petitions are clearly misconceived.
Therefore, This Court found no merit in the instant writ petitions, as devoid of
merits and the same are liable to be dismissed.
30
35. Accordingly, all the Writ Petitions are dismissed. There shall be no
order as to costs. As a sequel, interlocutory applications, if any pending, shall
stand closed.
__________________________
DR. K. MANMADHA RAO, J.
Date : 10 -01-2025
Gvl
31
HON’BLE DR. JUSTICE K. MANMADHA RAO
WRIT PETITION Nos: 2771, 2778 and 2779 of 2013
Date :10.01.2025
Gvl