Madhya Pradesh High Court
Sterlite Technologies Ltd. vs Dhar Industries on 12 April, 2012
WP 8653.11
Writ Petition No. 8653 of 2011
(Sterlite Technologies Ltd. v. Dhar Industries and another)
12-04-2012
Shri Brian D'silva learned senior counsel with Shri V.
Bhide, learned counsel for the petitioner.
Shri A. P. Shroti, learned counsel for the
respondents.
Heard.
Order dated 31-07-2010 passed by the M. P. Micro and Small Enterprises Facilitation Council, Bhopal, is being challenged vide this writ petition. By impugned order claim by respondent No. 1 for a sum of Rs. 36,32,508/- along with Rs. 20,16,405/- towards interest with effect from 31-03-2009 has been allowed.
Petitioner is a manufacturer of Optical Fiber, Jelly Filled Copper Telecom Cables and Power Conductors and galvanized steel strips used for packing by manufacturing industries. During the period 10-09-2005 to 14-02-2006, respondent No. 1 supplied foods to the extent of Rs. 87,99,332/-. The 'C' Form for the said period was issued on 15-04-2009. The late filing of 'C' Form by the respondent No. 1 led the Appropriate Authority to impose penalty.
The amount towards penalty was paid by respondent No. 1 then proceeded to be recovered from the petitioner by taking recourse to the provisions of the Micro Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as 2006 Act), which led to passing of impugned order.
The impugned order is being assailed before XI Additional Judge to the Court of District Judge, Bhopal, WP 8653.11 under section 19 of 2006 Act read with section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 1996 Act).
That section 19 of 2006 Act lays down a precondition for entertaining a challenge to an Award passed by the Council i.e. depositing 75% of the amount in terms of decree. The petitioner sought an exemption from depositing such amount which the Court declined by order dated 25-03-2011. Aggrieved, petitioner filed a writ petition : W. P. No. 7442/2011 which was withdrawn with a liberty to challenge the vires of section 19 of 2006 Act. Instead, the petitioner has filed this petition seeking quashment of order dated 31-07-2010.
Issue regarding section 19 of 2006 Act has been settled at rest by a Division Bench of this Court in M/s R.S. Avtar Singh & Co. Vs. M/s Vindyachal Air Products Pvt. Ltd. and another : 2009(5) M.P.H.T. 380, wherein it held :
"6. The Act of 2006 has been enacted with a view to extend support for the small enterprises so that they are able to grow into medium ones, adopt better and higher levels of technology and achieve higher productivity to remain competitive in a fast globalization area. The Act is intended to provide single legal framework to small and medium enterprise sector. Intention is also to make further improvements as to the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993. It has also intended to ensure timely and smooth flow of credit to small and medium enterprises as well as minimizing instances of sickness among them. Section 19 of the Act of 2006 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 alternative dispute resolution services to which a WP 8653.11 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."
The aforesaid Section 19 provides that in case any appeal is preferred against any award or order made either by the Council 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 75% of the amount in terms of the decree, award or, as the case may be, in the manner directed by such Court, deposit of 75% in the manner directed by the Court is mandatory requirement. Proviso to Section 19 empowers the Court to pass appropriate orders with respect to disbursement of the amount to the supplier on condition, as it considers reasonable under the circumstances of the case to impose. The words used in Section 19 "in the manner directed by the Court" cannot be interpreted so as to dilute the very requirement of deposit of 75% amount itself. The manner of depositing 75% of amount has to be as ordered by the Court. In the circumstances, 75% of the amount inclusive of interest is ordered to be deposited as that is pre-condition envisaged under Section 19 of the Act of 2006. Let it be deposited within four weeks by way of Bank Draft. Considering the Proviso to Section 19 of the Act of 2006, 50% of the amount is ordered to be disbursed to the respondent No. 1, remaining amount of 25% shall be invested in the Fix Deposit to be disbursed in terms of the final decision to be rendered in the case. However, for withdrawal of 50% of the amount the respondent No. 1 shall furnish solvent surety to the satisfaction of the District Judge, Sidhi."
WP 8653.11 Another Division Bench in M/s Orient Paper Mill Ltd. Vs. M/s Bang Lime Industries : W. P. No. 16696/2010, decided on 17-01-2011 declined to reconsider the decision in M/s R. S. Avtar Singh & Co. Vs. M/s Vindyachal Air Products Pvt. Ltd. and another (supra) holding :
"6. A bare reading of the above quoted section makes it clear that the expression "or, as the case may be, the other order" refers to the words "any decree, award or the other order" occurring in the beginning of section. The requirement of depositing 75% of the amount in terms of the decree, award or other order as the case may be is, therefore, mandatory and the court can only direct the manner in which the amount of 75% has to be deposited. The court may, in suitable cases, give the appellant time for depositing the amount after filing of the appeal but the appeal would be entertained or admitted for hearing only when total 75% of the amount of any decree, award or the other order, as the case may be, is deposited. Thus, we also agree with the interpretation of section 19 given in the case of M/s. R. S. Avtar Singh. Deposit of 75% of the amount awarded being the mandatory requirement, we hold that the court below has rightly dismissed the petitioner's application for exemption from depositing the amount."
Contention of the petitioner that the issue raised against the order dated 31-07-2010 passed by Council that it is beyond its jurisdiction to have saddled the petitioner with award of Rs. 36,32,508/- and interest thereon of Rs. 26,12,405/- in respect of the taxes and penalty with which the respondent was saddled with for late furnishing of 'C' Form, is beyond the jurisdiction of the Court to examine in a proceedings under section 18 of 2006 Act read with section 34 of the 1996 Act, has to be discarded as the petitioner has failed to establish that the Court lacks inherent jurisdiction. In case the petitioner wants to WP 8653.11 establish that the award by Council suffered from inherent lack of jurisdiction, the Court under section 19 of 2006 Act read with 34 of 1996 Act, is competent to try the issue. Because it is a fundamental principle that invalidity of an award by an Authority could be set up whenever and wherever it is sought to be enforced or relied upon (please see : Kiran Singh and others Vs. Chaman Paswan and others : AIR 1954 SC 340 paragraph 6, Sri Budhia Swain and others Vs. Gopinath Deb and others : (1999) 4 SCC
396).
In view whereof since the petitioner has already availed the statutory remedy, he would be at liberty to raise all such grounds in the Appeal preferred subject to compliance of the provisions of section 19 of 2006 Act.
With these observations petition is finally disposed of.
(SANJAY YADAV) JUDGE sc