Orissa High Court
WP(C)/3214/2021 on 23 March, 2021
Author: D. Dash
Bench: D. Dash
W.P.(C) No.3214 of 2021
02. 23.03.2021 This matter is taken up through hybrid arrangement
(virtual/physical) mode.
The Petitioner, by filing this application, has invoked
the jurisdiction of this Court under Article 226 of the
Constitution for setting aside the award passed by the Micro
Small Medium Enterprises Facilitation Counsel (MSEFC) in
an arbitration proceeding under sub-section 3 of section 18 of
the Micro Small Medium Enterprises Development Act, 2006
(MSME Act), upon failure of the conciliation and termination
of the said reference for non settlement of the dispute between
the Parties.
Learned counsel for the Petitioner submits that this
Petitioner has not been given the opportunity of hearing in the
said proceeding before the MSEFC and the award has been
passed without following the principles of natural justice
providing the scope to the petitioner in placing his side of the
case as also the evidence. Referring to the award dated
20.08.2020, which is under challenge, he submits that on
16.11.2019, the conciliation is said to have failed and
thereafter the MSEFC having not specifically passed any
order that it would either itself sit over as arbitrator over the
matter or refer it to any institution or centre, has straightway
proceeded with the matter. It is further submitted that the
order is without any sort of discussion as to the rival case or
the evidence. According to him, this award does not satisfy
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the legal requirements as provided under the Arbitration and
Conciliation Act, 1996.
Keeping in view the submission made, I have perused
the award under challenge as at Annexure-3.
On going through the award in question, it appears that
after failure of the conciliation when the reference stood
terminated without any settlement being arrived at between
the Parties, the MSEFC having proceeded to arbitrate over the
dispute have passed the award allowing the claim of the
Opposite Party to the extent of Rs.3,19,54,784.30 towards the
principal and Rs.2,90,64,386.69 towards the interest as on
30.09.2018.
Section 18 of the MSME Act provides for reference to
MSEFC. In case of any dispute, any Party to a dispute may
with regard to any amount due under section 17, make a
reference to the said MSEFC. Above being the provision of
sub-section-1 of section 18; sub-section 2 of said section
provides that upon receipt of such reference, the MSEFC 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 sections 65 to 81 of the Arbitration and
Conciliation Act, 1996 shall then apply to such a dispute as if
the conciliation was initiated under Part III of that Arbitration
and Conciliation Act, 1996. Sub-section 3 of section 18 of
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MSME Act contains the provision as to what course has to be
adopted when the conciliation initiated under sub-section (2)
is not successful and the reference in that regard stands
terminated without any settlement between the parties. It
appears that the MSEFC then shall either itself take up the
dispute for arbitration or refer to it any institution or centre
providing alternate dispute resolution services for such
arbitration and the provisions of the Arbitration and
Conciliation Act, 1996 shall then also apply to the dispute
resolution process. It contains a deeming provision that the
arbitration, pursuant to the said provision, would be deemed to
have been in pursuance of an arbitration agreement as referred
to in sub-section 1 of section 7 of the Arbitration and
Conciliation Act, 1996.
So, the provision of section 18 of MSME Act makes it
clear that once a reference is made to the MSEFC in terms of
sub-section 1 of Section 18 of the MSME Act, the proceeding
for conciliation would commence and from that time onwards
in so far as the conciliation as also the arbitration, which is the
subsequent step in case of failure of conciliation, the
provisions of Arbitration and Conciliation Act, 1996 would
come to govern the process and have their play. So the award
which is the subject matter of this proceeding being one under
the Arbitration and Conciliation Act, 1996, the party
aggrieved by the same has to take recourse to the remedy as
provided in said Act so as to set aside the award and for that
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invocation of the jurisdiction under Article 226 of the
Constitution would not be permissible.
In that view of the matter, while being not inclined to
entertain this application so as to invoke the extraordinary
writ jurisdiction of this court in interfering with the award as
impugned herein; the application stands disposed of granting
liberty to the Petitioner to question the award as at Annexure-
3 before the appropriate forum as provided in law.
Issue urgent certified copy of this order as per rules.
.......................
D. Dash, J.
Basu