Madhya Pradesh High Court
M/S Dsc Limited E Rd Floor South ... vs Madhya Pradesh Micro And Small ... on 26 July, 2021
Equivalent citations: AIRONLINE 2021 MP 1263
Author: Vishal Dhagat
Bench: Vishal Dhagat
1 Wr i t P e t i t i o n . NO. 14122/ 2019
HIGH COURT OF MADHYA PRADESH PRINCIPAL SEAT AT
JABALPUR
Writ Petition No. 14122/2019
Parties Name: M/s DSC Limited and another Vs. Madhya Pradesh
Micro and Small Enterprises Facilitation Council and
another
Bench Constituted Single Bench
Judgment delivered By HON'BLE SHRI JUSTICE VISHAL DHAGAT
Whether approved for
reporting
Name of counsel for parties For petitioners : Shri Deepak Khurana, Advocate
For respondent no.2: Shri Anoop Nair, Advocate.
Law laid down
Significant paragraph
numbers
Hearing Through Video Conferencing
ORDER
26.07.2021 Petitioners have called in question award dated 12.3.2019 passed by Madhya Pradesh Micro and Small Enterprises Facilitation Council, Bhopal.
2. Respondent no.2 i.e. M/s Sanfield India Limited has filed an application before Facilitation Council, Bhopal against buyers to make payment of order issued on 17.7.2009, 8.2.2010 and 15.7.2010 in respect of purchase of bearings and joint systems. Facilitation Council after failure of conciliation commenced Arbitration Proceedings and passed an award dated 12.3.2019 for principal amount of Rs. 13,48,305/- and interest of Rs. 8,74,820/- against petitioners/Company. Petitioners-Company being 2 Wr i t P e t i t i o n . NO. 14122/ 2019 aggrieved by impugned award have preferred this writ petition under Article 226 of the Constitution of India.
3. Counsel appearing for the petitioners has challenged the impugned award on two grounds i.e., award was passed without giving an opportunity of hearing to petitioners/Company and Facilitation Council wrongly held that provision of Limitation Act 1963 is not applicable in Arbitration proceedings conducted under the Micro, Small and Medium Enterprises Development Act, 2006.
4. Counsel appearing for the petitioners has drawn attention of this Court towards para 4 of the award and argued that case was fixed for conciliation on 18.2.2015, 7.5.2015, 28.8.2015, 3.1.2016, 18.2.2016, 23.6.2016, 21.12.2016 and 15.3.2017. Facilitation Council on 15.3.2017 held that non applicants refused to do conciliation, therefore, conciliation proceedings were terminated. On the said date, non applicants prayed for time as there was reconstitution DSC Ltd.. Facilitation Council held that sufficient opportunity was given to petitioners, non applicants therein and ordered to argue the matter today i.e. 15.3.2017 or to file written arguments by 25.3.2017. Referring to the said facts, counsel appearing for the petitioners submitted that after termination of conciliation proceedings and on commencement of Arbitration, notice ought to have been given to petitioners regarding initiation of arbitration under Arbitration and Conciliation Act, 1996. Petitioners ought to have been given opportunity to lead their 3 Wr i t P e t i t i o n . NO. 14122/ 2019 evidence. Since no notice regarding commencement of Arbitration Proceedings and opportunity to lead evidence was given to petitioners, therefore, their rights of natural justice have been violated.
5. Counsel appearing for the petitioners further argued that Limitation Act, 1963 is applicable in Arbitration Proceedings. He referred to Section 18(3) of the Micro Small and Medium Enterprises Development Act, 2006 (herein after referred to as MSMED Act, 2006) and Section 43 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to Act, 1996) before the Court. He also relied on Apex Court judgment reported in 2021 SCC Online SC 439-Shilpi Industries Etc. Vs. Kerala State Road Transport Corporation and another . Relying on the said judgment counsel appearing for the petitioner submitted that Apex Court held that provision of Limitation Act, 1963 is applicable to Arbitration Proceedings under Section 18(3) of the MSMED Act, 2006. It was further argued by him that though there is an alternative remedy under Section 19 of MSMED Act, 2006 to challenge the award, but this Court can exercise its discretion under Article 226 of the Constitution of India despite availability of alternative remedy because there is violation of fundamental rights and jurisdictional error to entertain claim barred by Limitation Act.
4 Wr i t P e t i t i o n . NO. 14122/ 2019
6. Counsel appearing for the respondents submitted that petitioners have an alternative remedy for setting aside the award in MSMED Act, 2006. Under Section 19 of the MSMED Act 2006, 75% pre-deposit of award is mandatory for entertaining application. To avoid pre-deposit, respondents had filed writ petition under Article 226 of the Constitution of India. In view of same, writ petition may be dismissed.
7. No other ground was raised by counsel appearing for the petitionerS as well as by counsel appearing for the respondents.
8. Heard learned counsel for the petitioners and respondents.
9. Section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 provides as under:
(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 to it any institution or centre providing alternate dispute resolution services for such arbitration and the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) 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.
5 Wr i t P e t i t i o n . NO. 14122/ 2019
10. Section 43 of the Arbitration and Conciliation Act, 1996 is quoted as under:
43. Limitations- (1) The Limitation Act, 1963 (36 of 1963) shall apply to arbitrations as it applies to proceedings in Court.
(2) For the purposes of this section and the Limitation Act, 1963 (36 of 1963), in arbitration shall be deemed to have commenced on the date referred in section 21.
(3) Where an arbitration agreement to submit future disputes to arbitration provides that any claim to which the agreement applies shall be barred unless some step to commence arbitral proceedings is taken within a time fixed by the agreement, and a dispute arises to which the agreement applies, the Court, if it is of opinion that in the circumstances of the case undue hardship would otherwise be caused, and notwithstanding that the time so fixed has expired, may on such terms, if any, as the justice of the case may require, extend the time for such period as it thinks proper.
(4) Where the Court orders that an arbitral award be set aside, the period between the commencement of the arbitration and the date of the order of the 6 Wr i t P e t i t i o n . NO. 14122/ 2019 Court shall be excluded in computing the time prescribed by the Limitation Act, 1963 (36 of 1963), for the commencement of the proceedings (including arbitration) with respect to the dispute so submitted.
11. In view of the said provisions of MSMED Act 2006 and Arbitration and Conciliation Act, 1996, it is clear that Limitation Act, 1963 shall apply to Arbitration as it apply to proceedings in the Court. This has been given seal of approval by Apex Court in case of Shilpi Industries (supra).
12. From perusal of the award, it is clear that on 15.3.2017 conciliation proceedings were terminated and on the same date parties were directed to argue the matter finally or to give their written arguments in the case on 25.3.2017. Parties were not given notice of commencing of Arbitration. On the said date, parties were appearing before the Facilitation Council in conciliation proceedings. In proceedings under the Act, 1996 parties shall be given sufficient advance notice of hearing or any meeting of Arbitral Tribunal for purposes of inspection of documents goods, properties and to adduce evidence oral or documentary in the case. Petitioners were ordered to argue the matter on same date when conciliation was terminated. No opportunity was given to petitioners by giving notice of commencement of arbitration, 7 Wr i t P e t i t i o n . NO. 14122/ 2019 therefore, they had no opportunity and sufficient time to lead evidence.
13. In view of the aforesaid facts and circumstances of the case since award has been passed without giving any opportunity to lead evidence to both the parties applicability of issue of Limitation Act is also wrongly decided, therefore, award is quashed and matter is remanded back to Facilitation Council to pass fresh award after giving opportunity of leading evidence to both the parties on issue involved and also on question whether claim is barred under Limitation Act.
14. With the aforesaid directions, writ petition filed by the petitioners is disposed off.
(VISHAL DHAGAT) JUDGE DUBEY/-
Digitally signed by ARVIND KUMAR DUBEY Date: 2021.07.29 11:12:05 +05'30'
8 Wr i t P e t i t i o n . NO. 14122/ 2019 In view of above, Facilitation Council committed an error in holding that Limitation Act, 1963 is not applicable in proceedings arising out of MSMED Act, 2006 as no limitation is provided under the said Act and claim of petitioners barred by time. Proceedings in Arbitration and Conciliation Act, 1996 as well as proceedings under MSMED Act, 2006 are to be carried out in time bound manner. Case was filed in the year 2014 and award was passed on 12.3.2019, therefore, there is no point in remanding the matter back to Facilitation Council for considering the issue of Limitation Act.
On going through the award, it is clear that claim is made in respect of bills dated 17.7.2009, 8.2.2010 and 15.7.2010. Petitioners had raised the ground before Facilitation Council that last payment was made to claimant/applicant on 31.7.2010. Respondents had not made any acknowledgment regarding payment of amount after 31.7.2010. Respondent M/s Sanfield India Limited ought to have filed an application within a period of three years i.e. before 30.7.2013.
Since Arbitration commenced on the same date and final arguments was also to be made on the same date therefore, sufficient opportunity was not given to the parties to adduce their 9 Wr i t P e t i t i o n . NO. 14122/ 2019 evidence. In view of same, right of natural justice of petitioners was violated while passing the award and fair procedure was not adopted in Arbitral proceedings. Since right of natural justice of petitioners was violated and issue of jurisdiction was not considered and decided by Facilitation Council in Arbitral Proceedings, therefore, arbitration award dated 12.3.2019 is set aside. Facilitation Council, Bhopal is ordered to reconsider the claim of respondent no.2-M/s Sanfield India Ltd.. after giving opportunity to both the parties to lead evidence on issues (i) whether claim of respondents is barred under Limitation Act, 1963 or not and give proper opportunity to contesting parties to lead evidence in the matter and thereafter pass final award in the case regarding claim of respondent no.2-M/s Sanfield India Limited.