Telangana High Court
Union Of India vs M/S Tm Inputs Ad Services Private ... on 20 April, 2022
Author: P.Sree Sudha
Bench: P.Sree Sudha
HON'BLE SMT. JUSTICE P.SREE SUDHA
CIVIL REVISION PETITION No.805 of 2020
ORDER
1. This revision is filed by the Union of India represented by its Assistant Director (Recruitment), Chief Post Master General Office, Tamil Nadu Circle, Chennai-petitioner herein aggrieved by the Award dated 22.07.2019 passed in Case No.21/C/IFC/2017/47533 on the file of the Micro and Small Enterprises Facilitation Council, Ranga Reddy Region, whereby the Council allowed the reference petition filed by the petitioner therein.
2. M/s.TM Inputs and Securities Private Limited, respondent herein, filed a reference petition before the Council by submitting that it had provided HR services such as engaging an agency for end to end solution for conduct of direct recruitment examination process on turnkey basis to the appellant against tender dated 18.12.2014 for which the net outstanding amount payable by the buyer to the supplier is Rs.85,37,575/-. When the petitioner failed to pay the above amount, it approached the Council and the Council after hearing both the parties, passed an Award in favour of the 2 respondent herein. Aggrieved by the same, the petitioner herein preferred this revision.
3. Learned counsel for the petitioner would contend that the impugned Award is contrary to the provisions of the Micro Small and Medium Enterprises Development Act, 2006 (for short, 'the MSME Act') and that the respondent agency has no valid registration certificate and that the Council failed to see the date of its registration. He would further contend that the main contract was entered with the respondent on 16.12.2014 and the company was registered on 04.08.2015. He would also aver that the Council has no jurisdiction to pass the order under revision. The contract is dated 16.12.2014 and the period fixed was initially for two years, which expired on 16.12.2016 and it was extended for one more year. Thereafter, the contract was not extended. The concluded contract between the parties would over ride the provisions of Section 18 of MSME Act. He would also contend that Clause 24 of the MSME Act restricts the jurisdiction when the contract was concluded and Clause 25 of the Act deals with arbitration as per the ICADR Arbitration Rules, 1996 and the place was agreed to be at Bangalore. He would also argue that invocation of MSME Act itself is not sustainable on the ground of lack of jurisdiction and the 3 respondent agency registered in MSME taking advantage of the definition in Section 2(b)(i)(a) of MSME Act including Clause 'C' thereon, and as such requested to set aside the award.
4. Heard the learned counsel appearing for the petitioner and the learned counsel appearing for the respondent. Perused the record and the case law cited by both the counsel.
5. M/s.TM Inputs and Services Private Limited, respondent herein, was engaged by the petitioner-Postal Department in respect of recruitment in their department and as per the contract they have to pay the amounts in four stages and already paid an amount of Rs.58,42,630/- for the two stages and stopped payment for third and final stage to an extent of Rs.85,37,757/- on the ground that investigation was pending before the CBI. There were some malpractices in the recruitment and the matter was entrusted to the CBI and as such the balance amount was not paid by the Postal Department to the respondent herein.
6. Learned counsel for the respondent submitted that as per the letter dated 26.08.2020 in Paragraph No.6 it was clearly mentioned that as per the information given by CBI/ACB Chennai Branch in a letter dated 24.02.2020 that the charge- 4 sheet was filed and TMI Agency, respondent herein, was not figured as an accused. Charge-sheet is also enclosed to I.A.No.3 of 2020.
7. For better understanding of the matter, it is apt to extract Sections 20 and 24 of the Act.
'20. Establishment of Micro and Small Enterprises Facilitation Council.--The State Government shall, by notification, establish one or more Micro and Small Enterprises Facilitation Councils, at such places, exercising such jurisdiction and for such areas, as may be specified in the notification.
24. Overriding effect.--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.'
8. Learned counsel for the petitioner would contend that the subject contract was entered between the parties on 16.12.2014. It is also necessary to extract Clause 25 of the Arbitration Clause, terms and conditions of the contract, which reads as follows:
'25. ARBITRATION If a dispute arises out of or in connection with this contract, or in respect of any defined legal relationship associated therewith 5 or derived there from, the parties agreed to submit that dispute to arbitration under the ICADR Arbitration Rules, 1996.
The authority to appoint the arbitrator(s) shall be the International Centre for Alternative Dispute Resolution. The International Centre for Alternative Dispute Resolution will provide Administrative services in accordance with the ICADR Arbitration Rules, 1996.
The number of arbitrator shall be ONE. The language of the arbitration proceedings shall be in English. The place of arbitration proceedings shall be at Bangalore.' Accordingly, the matter was referred to the arbitrator and it cannot be decided by the Facilitation Council.
9. Learned counsel for the respondent herein relied upon case law reported in GE T & D INDIA LIMITED V/s. RELIABLE ENGINEERING PROJECTS AND MARKETING1, in which at para No.39 it was held as follows:
'39. In EDUKANTI KISTAMMA (DIED) THROUGH LRs. V/s. S.VENKATAREDDY (DEAD) THROUGH LRs [(2010) 1 SCC 756], the Supreme Court explained that a special statute would be preferred over a general one where it is beneficial. It was explained that the purport and object of the Act must be given its full effect by applying the principles of "purposive construction." The question whether the dispute resolution mechanism under Section 18 of the MSMED Act overrides the 1 OMP 9COMM) 76/2016 DECIDED ON 15.02.2017 6 arbitration clause under the contract has to be answered in the affirmative. As was explained in WAMAN SHRINIWAS KINI V/s. RATILAL BYHAGWANDAS & CO (AIR 1959 SC 689) an agreement contrary to a statutory provision that prohibits it would be unenforceable.'
10. Admittedly, the statutory provision overrides the arbitration clause under the contract. As such, the dispute was rightly resolved by the Facilitation Council and the argument of the learned counsel for the revision petitioner with regard to lack of jurisdiction is not sustainable. More over, the issue of jurisdiction is to be raised before the Facilitation Council at the earliest point of time, but they failed to do so. Therefore, it cannot be raised in this revision at a belated stage. Further, learned counsel for the revision petitioner submitted that the conciliation was not done before approaching the Facilitation Council. Perusal of the Award passed by the Facilitation Council in paragraphs 2 to 4 of the Award, which are extracted below:
2) The matter was heard in the Council's hearing held on 08.03.2018. The Respondent has attended to the hearing and stated that case is in CBI the respondent is refusing to make payment until the CBI completes the enquiry.7
3) The matter was heard in the Council's hearing held on 23.02.2019. Council notice was delivered to the Respondent but did not attend the hearing.
4) The matter was heard in the Council's hearing held on 16.03.2019. Respondent has attended to the hearing and claimant submitted the rejoinder. Council decided to transfer the case to arbitration because conciliation has been failed.'
11. From the above it is clear that conciliation was conducted between the parties and failed and then only the matter was referred to the Facilitation Council. It was also mentioned in the Award that the parties were given opportunities of the conciliation under Section 18(2) of the MSMED Act in page No.5 of the Award. Therefore, the argument of the revision petitioner cannot be accepted.
12. Admittedly, the part of the amount was released by the Postal Department and only the balance amount of Rs.85,37,575/- was not released in view of the pendency of the investigation. As the charge-sheet was already filed and the respondent Agency is not figured as an accused, the revision petition filed against the Award of the Facilitation Council has no merits and the Award was rightly passed for payment of the 8 balance amount to the respondent herein as per the contract and as such it needs no interference.
13. In the result, the Civil Revision Petition is dismissed with a direction to the petitioner to deposit the balance amount to the respondent within two months from the date of receipt of a copy of this order. No costs.
14. Miscellaneous Petitions, if any, pending in this appeal shall stand dismissed in the light of this final order.
____________________ P.SREE SUDHA, J.
20th APRIL, 2022.
PGS