Kerala High Court
Manveer Oberoi vs Micro And Small Enterprises ... on 24 January, 2020
Author: P.B.Suresh Kumar
Bench: P.B.Suresh Kumar
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR
FRIDAY, THE 24TH DAY OF JANUARY 2020 / 4TH MAGHA, 1941
WP(C).No.3143 OF 2018(P)
PETITIONER:
MANVEER OBEROI
AGED 38 YEARS
DIRECTOR, M/S.H.S OBEROI BUILD TECK PVT
LTD,365, 1ST FLOOR, SULTANPUR, MEHRAULI, NEW
DELHI - 110 030.
BY ADV. SRI.R.AZAD BABU
RESPONDENTS:
1 MICRO AND SMALL ENTERPRISES FACILITATION
COUNCIL
KERALA REPRESENTED BY CHAIRMAN(DIRECTOR OF
INDUSTRIES & COMMERCE)VIKAS BHAVAN,
THIRUVANANTHAPURAM - 695 001.
2 M.R SUBRAHMANIAN
MANAGING DIRECTOR, M/S. ADTECH SYSTEM LTD,
THE CHIEF ELECTION COMMISSIONER, SRIRAM,
TC - 8/1128-1,PARAKOIL ROAD, VETTAMKKU,
THIRUMALA, THIRUVANANTHAPURAM - 695 006.
R1 BY GOVERNMENT PLEADER SMT. PRINCY XAVIER
R1-2 BY ADV. SRI.M.S.AMAL DHARSAN
R1 BY ADV. SRI.SREELAL N.WARRIER
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 24.01.2020, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
W.P.(C) No. 3143 of 2018
..2..
P.B.SURESH KUMAR, J.
-------------------------------------
W.P.(C) No. 3143 of 2018
--------------------------------------
Dated this the 24th day of January, 2020
JUDGMENT
Ext.P4 award passed by the Micro and Small Enterprises Facilitation Council (the Council) constituted under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act) is under challenge in the writ petition.
2. The second respondent is a registered enterprise under the Act. They have made a reference before the Council with regard to a claim against the petitioner for a sum of Rs.14,47,930/-. Ext.P1 is the reference made by the second respondent in this regard. The Council issued notice to the petitioner on Ext.P1 reference for appearance before the Council on 27.11.2015. On appearance, both the petitioner and the second respondent expressed willingness to settle the matter. Consequently, the parties were referred for conciliation as provided for under Section 18(2) of the Act. Thereupon, the Conciliation Committee constituted by the W.P.(C) No. 3143 of 2018 ..3..
Council issued notice to the parties and attempted to conciliate the dispute. As the matter could not be settled, the Conciliation Committee referred the matter back to the Council and the Council has disposed of the matter on merits permitting the second respondent to realise Rs.13,47,180/- with interest as provided for under the Act from the petitioner in terms of Ext.P4 award. As noted, Ext.P4 award is under challenge in the writ petition.
3. A counter affidavit has been filed by the second respondent in the matter contending, among others, that the writ petition under Article 226 of the Constitution is not maintainable as the petitioner is entitled to challenge the impugned award in a proceedings under Section 34 of the Arbitration and Conciliation Act 1996.
4. Heard the learned counsel for the petitioner, learned Government Pleader as also the learned counsel for the second respondent.
5. Though very many grounds have been raised in the writ petition, the only contention raised by the learned counsel for the petitioner at the time of hearing was that in terms of Section 18(2) of the Act, on receipt of a reference W.P.(C) No. 3143 of 2018 ..4..
under sub-section (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 institution or centre for conducting conciliation. It was contended that the conciliation in the instant case is not one conducted by the Council nor by any institution or centre providing alternate dispute resolution services. Instead, it was pointed out that the conciliation has been conducted by a Committee constituted by the Council for the said purpose. According to the learned counsel, such a procedure is not one contemplated by Section 18(2) of the Act. It was also contended by the learned counsel that going by the scheme of the statute, a reference cannot be adjudicated on merits by the Council without there being a proper conciliation. It was the contention of the learned counsel that insofar as there was no conciliation at all as provided for under Section 18(2) of the Act, the impugned award is one issued without jurisdiction. It was argued by the learned counsel that insofar as the impugned award is one issued without jurisdiction, the petitioner is entitled to challenge the award in a writ petition under Article 226 of the Constitution, without resorting to the W.P.(C) No. 3143 of 2018 ..5..
alternate remedy provided for under the Act. The learned counsel has placed reliance on the decision of this Court in W.P. (C) No. 30844 of 2018 in support of the said proposition.
6. Per Contra, the learned counsel for the second respondent pointed out that in the light of the provision contained in Section 19 of the Act, in order to challenge the impugned award under Section 34 of the of the Arbitration and Conciliation Act 1996, the petitioner is obliged to make a pre- deposit. It was contended that in a case of this nature, one shall not be permitted to invoke the writ jurisdiction under Article 226 of the Constitution to challenge an award under Section 18(3) of the Act bypassing the alternate remedy, for the said course if permitted would enable the aggrieved party to defeat the provision contained in Section 19 of the Act. According to the learned counsel, the writ petition, in the circumstances, is liable to be dismissed as not maintainable.
7. I have considered the rival contentions raised by the learned counsel for the parties.
8. On a specific query from the Court, the learned Government Pleader ascertained from the Council and submitted that the conciliation proceedings in the instant case W.P.(C) No. 3143 of 2018 ..6..
has been conducted by the Committee constituted by the Council for the said purpose, and not by the Council.
9. It is seen that having regard to the provisions contained in Section 18 of the Act, a learned Judge of this Court has held in W.P.(C) No. 30844 of 2018 that the Council do not have the power under Section 18(2) of the Act to constitute any committee for conciliation and refer any matter to such committee for conciliation and that going by the scheme of the statute, the conciliation proceedings are to be conducted by the Council itself or by any institution or centre providing alternate dispute resolution services on a reference from the Council. It is also seen that on that ground, a similar award passed by the Council has been set at naught in the said case.
10. There cannot be any dispute to the proposition that the conciliation contemplated under Section 18(2) of the Act is to be conducted either by the Council themselves or by any institution or Center providing alternate dispute resolution services by making reference to such centre or institution. As noted, in the instant case, the conciliation has not been conducted by the Council and instead the conciliation has been conducted by a committee constituted by the Council. Should W.P.(C) No. 3143 of 2018 ..7..
the impugned award be set at naught on that sole ground is the question arising for consideration.
11. In the light of the provision in Section 18(3) of the Act that where the conciliation under Section 18(2) of the Act is not successful and stands terminated without any settlement between the parties, the counsel 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 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 the Act, and a person aggrieved by an award under Section 18(3) of the Act is certainly entitled to prefer an application under Section 34 of the Arbitration and Conciliation Act to set aside an award in the nature of one impugned in the writ petition. Section 19 of the Act however makes the said right conditional. Section 19 of the Act reads thus:
"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 W.P.(C) No. 3143 of 2018 ..8..
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."
In the light of the said provision, as pointed out by the learned counsel for the second respondent, in order to invoke the remedy under Section 34 of the Arbitration and Conciliation Act 1996, the aggrieved person is obliged to make a pre-deposit. Unlike other statutes containing similar provisions where a discretion is given to the court concerned to waive the said obligation cast on the aggrieved party in appropriate cases, such discretion is not given to the court under this statute. The reason for the same is obvious from the proviso to Section 19 of the Act which provides that once the deposit is made and an appeal is preferred on that basis, the court shall order that such percentage of the amount deposited shall be paid to the W.P.(C) No. 3143 of 2018 ..9..
supplier, as it considers reasonable under the circumstances of the case subject to such conditions as it deems necessary to impose. In other words, the requirement to make the pre- deposit is mandatory under the Act in order to challenge an award passed under Section 18(3) of the Act. It is therefore clear that if the High Court entertains a writ petition challenging the award made under Section 18 (3) of the Act in exercise of the power under Article 226 of the Constitution, the aggrieved party would be able to bypass the statutory requirement of pre-deposit. True, there would be exceptional cases where the High Court has to invoke the extra ordinary jurisdiction under Article 226 of the Constitution notwithstanding the alternate remedy available to the party. This is certainly not an extra ordinary case to entertain a writ petition challenging an award under Section 18(3) of the Act, for, it is seen from the materials on record that it is a case where the petitioner admits the liability and the entire exercise is for the purpose of availing time. In the circumstances, I am of the view that in a case of this nature, it is inappropriate for this court to entertain a writ petition challenging an award under Section 18(3) of the Act under Article 226 of the W.P.(C) No. 3143 of 2018 ..10..
Constitution. I am fortified in the aforesaid view by the observation made by the Apex Court in a similar case, viz, Modern Industries (M/s.) v. M/s. Steel Authority of India Ltd. and Others (2010 KHC 4250) that the High Court ought not have permitted a party aggrieved by the award under Section 18(3) of the Act to challenge the same in a proceedings under Section 226 of the Constitution bypassing the statutory remedy available to them on the facts of that case.
The writ petition, in the circumstances, is without merits and the same is, accordingly, dismissed.
Sd/-
P.B.SURESH KUMAR JUDGE ds W.P.(C) No. 3143 of 2018 ..11..
APPENDIX PETITIONER'S/S EXHIBITS:
EXHIBIT P1 TRUE COPY OF CLAIM PETITION SUBMITTED BY THE PETITIONER BEFORE THE 1ST RESPONDENT DATED 27/10/2015.
EXHIBIT P2 TRUE COPY OF REPLY STATEMENT DATED 11/1/2016 FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT.
EXHIBIT P3 TRUE COPY OF COUNTER STATEMENT TO REPLY DATED 14/3/16 SUBMITTED BY THE PETITIONER BEFORE THE 1ST RESPONDENT.
EXHIBIT P4 TRUE COPY OF THE AWARD DATED
27/10/2017 PASSED BY THE 1ST
RESPONDENT DATED.