Madhya Pradesh High Court
M/S Fives Stein India Project Pvt. Ltd. vs The State Of Madhya Pradesh on 29 February, 2020
Author: Sanjay Yadav
Bench: Sanjay Yadav, Atul Sreedharan
1 WA-234-2019
THE HIGH COURT OF MADHYA PRADESH
(Division Bench)
Writ Appeal No.234/2019
M/s Fives Stein India Project Pvt. Ltd.
versus
State of Madhya Pradesh and other
Mr. Joy Saha, learned Senior Counsel with Mr. Akshay
Sapre and Mr. Tridib Bose, Advocates for the appellant.
Shri Sanjay Kumar Agrawal, learned counsel for the
respondent No.3.
CORAM :
Hon'ble Mr. Justice Sanjay Yadav, Judge
Hon'ble Mr. Justice Atul Sreedharan, Judge
Reserved on : 20.01.2020
Date of decision : 29.02.2020
Whether approved for reporting : Yes
Law laid down :
Where there exist an alternative efficacious remedy and, more
particularly, when it is in the form as stipulated under Section 19 of the
Micro, Small and Medium Enterprises Development Act, 2006, a writ
petition under Article 226 of the Constitution will not be an appropriate
remedy.
Effect of non-obstante clause would be that inspite of the provisions of
the Act mentioned thereafter, it shall have full operation and is used to
override the mentioned law in specified circumstances.
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Significant Paragraph Nos. : 15 to 20 and 23 to 29
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ORDER
Per : Sanjay Yadav, J :
This appeal under Section 2(1) of Madhya Pradesh Uchcha Nayalaya (Khand Nyayapeeth Ko Appeal) Adhiniyam,
2 WA-234-2019 2005 is directed against an order dated 02.11.2018 passed in Writ Petition No.22577/2018.
2. The writ petition was directed against the Award dated 26.11.2014 passed by the Micro and Small Enterprises Facilitation Council under the Micro, Small and Medium Enterprises Development Act, 2006 (for short "2006 Act").
3. The relevant facts which led to the dispute was that being engaged in the business of manufacturing and engineering of nuclear and thermal components, the appellant had placed purchase orders with the respondent No.3- Mahakaushal Refractories (Pvt.) Ltd. of Silica Alumina Bricks. Claiming it to be of sub-standard, dispute arose between the petitioner/appellant and the respondent No.3 which led the respondent to invoke the jurisdiction of the Council under Section 18 of 2006 Act for conciliation. The petitioner raised objection as to maintainability. The Council while overruling the objection and taking note of the fact that despite repeated opportunities, the petitioner did not appear, proceeded to hold that the conciliation having failed, took up the dispute for arbitration and after affording opportunity to 3 WA-234-2019 the petitioner, passed the Award dated 26.11.2014 of Rs.23,53,845/- towards principal amount and Rs.31,08,192/- interest upto 18.07.2014 as per Section 16 of 2006 Act.
4. Aggrieved, the petitioner preferred a writ petition on the following six grounds :
(i) the Award has not been passed within the statutory mandatory period of 90 days from the date of commencement of reference and, therefore, is a nullity lacking jurisdiction.
(ii) Rule 5 of the Madhya Pradesh Micro and Small. Enterprises Facilitation Council Rules, 2006 has no application beyond the territory of State of Madhya Pradesh.
(iii) Since there was no termination of purported conciliation proceedings in terms of the provisions of Section 76 of the Arbitration and Conciliation Act, 1996, the assumption of jurisdiction by the Council as an Arbitrator lacks inherent jurisdiction, rendering the Award as a nullity.
(iv) The objection raised before the Council as to its jurisdiction was not decided, which vitiates the Award.
(v) There is a delay on the part of respondent No.3 in initiating the execution of the Award.
(vi) The execution of the impugned Award of a private party, cannot be made by way of public demand.
5. Learned Single Judge vide impugned order declined to entertain the writ petition holding that the petitioner has an 4 WA-234-2019 effective remedy of Appeal under Section 19 of 2006 Act. Observing that the Council was within its competence to have entered into an arbitration proceeding and that the stipulation contained under Section 76 of the Arbitration and Conciliation Act, 1996 (for brevity '1996 Act') being overridden by Section 24 of the 2006 Act, learned Single Judge did not perceive any jurisdictional error in exercise of power by the Council.
6. Learned Single Judge upheld the validity of Rule 5 of the M.P. Micro and Small Enterprises Facilitation Rules, 2006 framed by the State Government in purported exercise of powers under Section 30 of 2006 Act. Furthermore, while dispelling the contention that the existence of alternative remedy is no bar to entertain a writ petition under Article 226 of the Constitution, learned Single Judge held that in cases where an alternative efficacious statutory remedy is provided and the statutory provision itself requires an appeal to be filed along with pre-deposit of certain percentage of the amount, the writ petition cannot be entertained unless it suffers a jurisdictional error or is a nullity. Both these circumstances, being not there, led learned Single Judge decline to entertain 5 WA-234-2019 the writ petition. It finds support in its proposition in the decisions in Nivedita Sharma vs Cellular Operators Association of India (2011) 14 SCC 337, Commissioner of Income Tax vs Chhabil Dass Agarwal (2014) 1 SCC 603 and Cicily Kallarackal vs Vehicle Factory (2012) 8 SCC
524.
7. The order is being challenged in this inter-Court Appeal.
8. Taking us through Sections 21, 23, 76 and Section 80 of 1996 Act and Article 32 and 33 of the Agreement, it is urged on behalf of the appellant that, the arbitration proceedings drawn by the Council was dehors its jurisdiction. The Council, it is urged, was under the obligation to have followed the procedure laid down in the 1996 Act even while entertaining the application under Section 18 of 2006 Act. It is urged that unless intimated that it is entering into the arbitral proceedings on the failure of conciliation, the assumption of arbitral jurisdiction was without any authority of law and was, therefore, a nullity. The decisions in State of Uttar Pradesh vs Singhara Singh AIR 1964 SC 358; Balasinor Nagrik Co- operative Bank Limited vs Babubhai Shankerlal Pandya 6 WA-234-2019 AIR 1987 SC 849; Agriculture Finance Co. Ltd. vs Micro and Small Enterprises Facilitation Council, 2013 SCC OnLine Cal 22786 and Gujarat State Petronet Ltd. vs Micro and Small Enterprises Facilitation Council 2018 SCC OnLine Bom 2039 were relied upon to bring home these submissions.
9. Responding to the contention raised on behalf of the appellant, the respondent No.3 has supported the view taken by learned Single Judge.
10. Considered rival submissions and perused the material on record.
11. The main contention in writ petition was that the Award was a nullity as the Council lacked inherent jurisdiction.
12. Apparently, the Council was dispensing under 2006 Act. The enactment of 2006 Act is to provide for facilitating its promotion and development and enhancing the competitiveness of micro, small and medium enterprises and for matters connected therewith or incidental thereto. It is not in dispute that respondent No.3 is a small enterprise and the provisions of 2006 Act are applicable.
7 WA-234-2019
13. Chapter V of 2006 Act makes provision regarding delayed payment to micro and small enterprises. Section 15 envisages liability of buyer to make payment. It stipulates :
"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."
14. Section 16 of 2006 Act makes provision regarding payment of interest. It stipulates :
"Where any buyer fails to make payment of the amount to the supplier, as required under section 15, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or 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 time the appointed day or, as the case may be, from the date immediately following the date 8 WA-234-2019 agreed upon, at three times of the bank rate notified by the Reserve Bank."
15. Furthermore, Section 17 lays down that "for any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the amount with interest thereon as provided under section 16". Section 18 deals with dispute resolution. It starts with a non-obstante clause contained under sub-section (1) of Section 18 stipulating that "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 section 17, make a reference to the Micro and Small Enterprises Facilitation Council." Effect of non-obstante clause would be that inspite of the provisions of the Act mentioned thereafter, it shall have full operation and is used to override the mentioned law in specified circumstances.
16. Furthermore, sub-section (2) of Section 18 lays down the procedure for conciliation. It states "on receipt of a reference 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 an institution or centre, 9 WA-234-2019 for conducting conciliation and the provisions of sections 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."
17. Thus, an effort is first to be made to conciliate on the dispute to get it resolved and for that, the provision as contained in Part III of 1996 Act wherein procedure is laid down in Sections 65 to 81, is to be adhered to.
18. The facts of the present case reveal that conciliation failed because the petitioner took objection as to the jurisdiction and did not participate. However, as the statute empowered the Council to entertain a dispute, it was within its jurisdiction in entertaining the same. Since the conciliation failed, sub-section (3) of Section 18 empowered the Council to either itself take up the dispute for arbitration or refer it to any institution or centre providing alternative dispute resolution services for such arbitration for which the provision of 1996 Act was made applicable. The provision contained under sub- section (3) of Section 18 thus does not contemplate a pre- decisional hearing before taking up the dispute for the 10 WA-234-2019 arbitration. The procedure laid down in 1996 Act are made applicable only after the dispute is taken up for arbitration. The Council, in the instant case, was thus within its competence in taking up the dispute for arbitration on the failure of conciliation.
19. Another non-obstante clause contained under sub-section (4) of Section 18 empowers the Council or the centre 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. It stipulates : "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". Thus, the provision overrides applicability of any other law for the time being in force when an action is taken under 2006 Act. In this context, reference can be had of the decision in 11 WA-234-2019 Parayankandiyal Eravath Kanapravan Kalliani Amma (Smt) vs K. Devi (1996) 4 SCC 76 wherein it is held :
"77. "Non Obstante clause is sometimes appended to a Section in the beginning, with a view to give the enacting part of the Section, in case of conflict, an overriding effect over the provision or Act mentioned in that clause. It is equivalent to saying that in spite of the provision or Act mentioned in the non obstante clause, the enactment following it, will have its full operation of that the provision indicated in the non obstante clause will not be an impediment for the operation of the enactment."
(See: Union of India vs. G.M. Kokil AIR 1984 SC 1022; Chandavarkar Sita Ratna Rao vs Ashalata S. Gurnam (1986) 4 SCC 447, R.S Raghunath vs State of Karnataka (1992) 1 SCC 335; G.P. Singh's Principles of Statutory Interpretation)."
20. It is further noted that the Council is duly constituted vide Notification issued by the State Government as provided under Section 20 of 2006 Act and the composition is as per Section 21 thereof. Thus, besides being empowered to take up the dispute for arbitration after failure of conciliation, the Council which was duly constituted having statutory quorum was within its jurisdiction to pass the impugned Award.
12 WA-234-2019
21. That, Section 19 of 2006 Act provides :
"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."
22. Thus, incumbent it was upon the petitioner to have availed the remedy under Section 19 of 2006 Act against the impugned Award.
23. The issue as to whether when there exist an alternative efficacious remedy and, more particularly, when it is in the 13 WA-234-2019 form as stipulated under Section 19 of 2006 Act, a writ petition under Article 226 of the Constitution will not be an appropriate remedy. In this context, reference can be had of the decisions in Kanaiyalal Lalchand Sachdev vs. State of Maharashtra (2011) 2 SCC 782, Union of India vs. Guwahati Carbon Ltd. (2012) 11 SCC 651 and Union of India vs Major General Shri Kant Sharma (2015) 6 SCC
773.
24. In Kanaiyalal Lalchand Sachdev (supra), it is held :
"23. In our opinion, therefore, the High Court rightly dismissed the petition on the ground that an efficacious remedy was available to the appellants under Section 17 of the Act. It is well-settled that ordinarily relief under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person. (See Sadhana Lodh vs. National Insurance Co. Ltd.; Surya Dev Rai vs. Ram Chander Rai; State Bank of India vs. Allied Chemical Laboratories.)"
25. In Guwahati Carbon Ltd. (supra), it is held :
14 WA-234-2019 "10. In other words, existence of an adequate alternative remedy is a factor to be considered by the writ court before exercising its writ jurisdiction (see Rashid Ahmed vs. Municipal Board, Kairana).
11. In Whirlpool Corpn. v. Registrar of Trade Marks 1998 8 SCC 1, this Court held:
"15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the fundamental rights or where there has been a violation of the principles of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged."
...
15. In our opinion, the assessee ought not to have filed a writ petition before the High Court questioning the correctness or otherwise of the orders passed by the Tribunal. The Excise Law is a complete code in order to seek redress in excise matters and hence may not be appropriate for the 15 WA-234-2019 writ court to entertain a petition under Article 226 of the Constitution. Therefore, the learned Single Judge was justified in observing that since the assessee has a remedy in the form of a right of appeal under the statute, that remedy must be exhausted first. The order passed by the learned Single Judge, in our opinion, ought not to have been interfered with by the Division Bench of the High Court in the appeal filed by the respondent assessee.
26. In Major General Shri Kant Sharma, it is held -
"36. The aforesaid decisions rendered by this Court can be summarised as follows:
(i) The power of judicial review vested in the High Court under Article 226 is one of the basic essential features of the Constitution and any legislation including Armed Forces Act, 2007 cannot override or curtail jurisdiction of the High Court under Article 226 of the Constitution of India. (Refer : L.Chandra Kumar vs Union of India (1997) 3 SCC 261 and S.N. Mukherjee vs Union of India (1990) 4 SCC 594).
(ii) The jurisdiction of the High Court under Article 226 and this Court under Article 32 though cannot be circumscribed by the provisions of any enactment, they will certainly have due regard to 16 WA-234-2019 the legislative intent evidenced by the provisions of the Acts and would exercise their jurisdiction consistent with the provisions of the Act. (Refer :
Mafatlal Industries Ltd. vs Union of India (1997) 5 SCC 536).
(iii) When a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation.
(Refer: Nivedita Sharma vs. Cellular Operators Assn. of India (2011) 14 SCC 337).
(iv) The High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance. (Refer:
Nivedita Sharma (supra))."
27. In the case at hand, having failed to establish the three parameters viz. (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of the principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged, learned Single Judge rightly declined the 17 WA-234-2019 indulgence as the petitioner has efficacious alternative remedy under Section 19 of 2006 Act.
28. Last but not the least. Section 24 of 2006 Act mandates that the provisions of Sections 15 to 23 (under Chapter V) shall have overriding effect. It stipulates that "the provisions of Sections 15 to 23 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force".
29. In view whereof also, the petitioner cannot escape the liability to seek redressal of grievance against the Award under Section 19 of 2006 Act.
30. In these factual and legal aspects, the decisions in Agriculture Finance Co. Ltd. vs Micro & Small Enterprises Facilitation Council 2013 SCC Online Cal 22786 : (2013) 5 CHN 375, Lioyd Insulations (India) Ltd. vs State of W.B. 2014 SCC Online Cal 20072 : (2015) 4 CHN 1; Reliance Communications Ltd. vs State of Bihar Civil Writ Jurisdiction Case No.14884/2016 decided on 11.04.2017 relied by learned counsel for the appellant will be of no assistance.
18 WA-234-2019
31. When the impugned order passed in Writ Petition No.22577/2018 is tested on the anvil of above analysis, it cannot be faulted with.
32. Consequently, the appeal fails and is dismissed. No costs.
(Sanjay Yadav) (Atul Sreedharan)
JUDGE JUDGE
vinod
Digitally signed by VINOD
VISHWAKARMA
Date: 2020.03.03 11:05:43
+05'30'