Madras High Court
M/S.Thyrocare Technologies Ltd vs The Chairman on 29 August, 2022
Author: C.Saravanan
Bench: C.Saravanan
W.P.No.3340 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 29.08.2022
CORAM
THE HON'BLE MR.JUSTICE C.SARAVANAN
W.P.No.3340 of 2022 &
WMP No.3461 & 3462 of 2022
M/s.Thyrocare Technologies Ltd.,
Rep., by its Vice-President (Finance) cum
Legal & Authorized Signatory Mr.Sachin Salvi,
D-37/3, TTC Industrial Area, MIDC, Turbhe, Navi
Mumbai – 400 703. ... Petitioner
Vs.
1.The Chairman,
Micro and Small Enterprises Facilitation Council,
Industries Commissioner and Director of Industries,
& Commerce, Guindy, Chennai – 600 032.
2.M/s.Social Beat Digital Marketing LLP.,
403, 3rd Floor, Samson Towers, Pantheon Road,
Egmore, Chennai – 600 008. ... Respondents
Prayer: Writ Petition filed under Article 226 of Constitution of India, for
issuance of a Writ of Certiorarified Mandamus, to call for the records of the
first respondent in MSEFCC/CR/184/2020, dated 19.07.2021, quash the
order dated 19.07.2021 and received by the petitioner on 30.11.2021 and
refer the claim of the second respondent in Online Application
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Page No. 1 of 14
W.P.No.3340 of 2022
No.TN02E0101940/S/00003 and registered as MSEFCC/CR/184/2020 to
alternate dispute resolution by Arbitration in terms of S.18 of the Micro,
Small and Medium Enterprises Development Act, 2002.
For Petitioner : Mr.Sundar Narayan
For Respondents : Mrs.C.Meera Arumugam AGP for R1
Mr.Navarre Ebenezer Roy for R2
ORDER
The petitioner has challenged the impugned order passed by the first respondent dated 19.07.2021, which appears to have been received by the petitioner on 30.11.2021. The impugned order of the first respondent reads as under:-
PROCEEDINGS OF THE MICRO AND SMALL ENTERPRISES FACILITATION COUNCIL CHENNAI REGION, TAMIL NADU HELD ON 19.07.2021.
Present:Tmt Sigy Thomas Vaidhyan,I.A.S., Chairperson, MSE Facilitation Council, Chennai/Industries Commissioner and Director of Industries and Commerce, Guindy, Chennai 600 032.
MSEFC/CR/184/2020 Online Application No.TN02E0101940/S/00003 Thiru Subrat Kumar Sd/- Sd/- Sd/-
Nayak, Thiru.S.Ashok, Thiru.D.Gandhikumar Thiru.R.J.Ramesh Chief Manager, Vice-President, Regional Manager Vice-President, Indian Overseas Bank, TANSTIA, Tamilnadu Chennai, Council FISME, New Delhi -29, Guindy, Industrial member CouncilMember Investment CouncilMember Corporation Chennai.
CouncilMember Petitioner M/s.Social Beat Digital Marketing LLP ____________ https://www.mhc.tn.gov.in/judis Page No. 2 of 14 W.P.No.3340 of 2022 403, 3rd Floor, Samson Towers, Pantheon Road, Egmore, Chennai – 600 008.
Respondent M/s.Thyrocare Technologies Limited D-37/3MIDC Turbhe Opp Sandoz, Midc Industrial Area, Sanpada, Navi Mumbai, Maharashtra – 400 703.
1. The present reference has been filed by the petitioner before the Council on 15.06.2020 under Section 18(1) of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED, Act, in short) against the respondent for recovery of the Principal amount of Rs.8,55,338/- (Rupees Eight Lakhs Fifty Five Thousand Three Hundred and Thirty Eight only) along with compound interest with monthly rests as stipulated in Sections 15 and 16 of the MSMED Act, 2006.
2. Brief facts of the case are that the petitioner is engaged in the business of providing Digital Marketing Services and possess UAM No.TN02E0101940. The petitioner represented that the Principal amount of Rs.8,55,338/- pertaining to 4 No., of invoices dated from 07.02.2019 to 31.03.2019 is yet to be received from the respondent. The petitioner appealed to the Council for early settlement of the Principal amount.
3. The respondent has forwarded the copy of the letter sent to the Council on 22.02.2021.
4. In the Council meeting held on 23.02.2021 through video conference, the petitioner was present and represented by Thiru Navraebanezer, Advocate and the respondent was absent. The Council decided to give one more opportunity to the respondent and adjourned the case to the next hearing.
5. The respondent has submitted a letter dated 23.02.2021, stating that they have requested a copy of the application filed by the petitioner, so as to examine the contents, avertments etc., made against them.
6. In the Council meeting held on 11.06.2021 through video conference, the petitioner was present and represented by Thiru Navraebenezer, Advocate and the respondent was absent. The Council decided to give one more opportunity to the respondent and adjourned the case to the next hearing.
7. In the Council meeting held on 19.07.2021 through video conference, the petitioner was present and represented by Thiru Navraebenezer, Advocate and the respondent was absent. The Council verified the documents produced by the petitioner to prove its case . Petitioner has tendered four invoices, No.SOCDTCHE02190034 dated 07.02.2019 of bill amount Rs.1,52,161/-, No.SOCDTCHE03190044 DATED 07.03.2019 of bill amount Rs.3,12,385/-
No.SOCDTCHE03190083, dated 14.03.2019 of bill amount Rs.15,000/- ____________ https://www.mhc.tn.gov.in/judis Page No. 3 of 14 W.P.No.3340 of 2022 and No.SOCDTCHE03190235, dated 31.03.2019 of bill amount Rs.3,91,755/-. The total amount towards TDS deduction against the aforesaid invoices are Rs.15,963.10/-.
From the evidence available on record, it is proved that the respondent has availed the services of the petitioner but failed to pay the claim amount to the petitioner. After hearing the petitioner and based on a detailed and critical examination of the claims made by the petitioner along with available materials on record and on merits of the case, this Council has come to the considered conclusion that the petitioner is entitled to recover the Principal amount of Rs.8,55,338/- (Rupees Eight Lakhs Fifty Five Thousand Three Hundred and Thirty Eight only) along with compound interest with monthly rests at three times the Bank rate notified by the RBI in accordance with Sections 15 & 16 of the MSMED Act, 2006.
8. Section 15 of the MSMED Act 2006 is extracted as under:-
15. Where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment there for 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.
Section 16 of the MSMED Act 2006 is extracted as under:-
16. 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 the appointed day or, as the case may be from the date immediately following the date agreed upon, at three times of the bank rate notified by the Reserve Bank.
9. The Council hereby allows the reference of the petitioner and directs the respondent to pay the Principal amount of Rs.8,55,338/- (Rupees Eight Lakhs Fifty Five Thousand Three Hundred and Thirty Eight only) along with compound interest with monthly rests, at three times the bank rate, notified by the Reserve Bank of India as stipulated in Section 15 and 16 the MSMED Act, 2006 from the appointed due dates pertaining to the 4 No of Invoices dated from 07.02.2019 to 31.03.2019 to the petitioner, till the date of realisation of dues.
Based on the above, the petition filed before this Council on 15.06.2020 stands disposed.
Dated on this 19th day of July 2021
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Page No. 4 of 14
W.P.No.3340 of 2022
Thiru Subrat Kumar Sd/- Sd/- Sd/-
Nayak,
Thiru.S.Ashok, Thiru.D.Gandhikumar Thiru.R.J.Ramesh
Chief Manager, Vice-President, Regional Manager
Vice-President,
Indian Overseas Bank,
TANSTIA, Tamilnadu
Chennai, Council FISME, New Delhi -29,
Guindy, Industrial
member
CouncilMember Investment
CouncilMember
Corporation
Chennai.
CouncilMember
Sd/-
Tmt.Sigy Thomas Vaidhyan, I.A.S.,
Chairperson, MSE Facilitation Council, Chennai/Industries Commissioner and Director of Industries and Commerce, Guindy, Chennai – 600 032.
2. The impugned order is primarily challenged by the petitioner on the ground that the complaint given by the second respondent before the first respondent has never been served on the petitioner for participating in the arbitration proceedings. It is submitted that when the order was passed, the entire country was under lock down imposed due to the outbreak of Covid-19.
3. It is submitted that the impugned order has been passed in violation of principle of natural justice as the petitioner could not participate in the proceedings before the first respondent through Video Conferencing on the earlier occasions on 23.02.2021 and 11.06.2021 or on 19.07.2021 when the impugned order was passed.
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4. It is submitted that the petitioner is handicapped all along and therefore, the impugned order passed by the first respondent by giving a summary disposal of the case without resorting to either conciliation or arbitration is liable to be interfered. The learned counsel for the petitioner has placed reliance on the decision of the Hon'ble Supreme Court in Jharkhand Urja Vikas Nigam Limited Vs. State of Rajasthan and others, 2021 SCC OnLine SC 1257 and the decision of this Court in M/s.Subaya Constructions Co. Ltd. Vs. The Chairman, The Mircro and Small Enterprises Facilitation Council and another, dated 16.03.2021 in W.P.Nos.2001 & 5452 of 2017.
5. The second respondent was engaged by the petitioner and in connection therewith, there is a commercial dispute regarding the payments to be made by the petitioner to the second respondent. The second respondent appears to have filed intimations, work orders, invoices and correspondence exchanged with the petitioner before the first respondent as a complaint on 19.05.2020. The complaint was received by the petitioner company. However, the petitioner requested the first respondent to furnish a copy of the application/complaint of the second respondent before it. ____________ https://www.mhc.tn.gov.in/judis Page No. 6 of 14 W.P.No.3340 of 2022 Thereafter, series of notices were issued by the first respondent which were received by the employees of petitioner Company viz., earlier one Mr.Ramjee Dorai, Company Secretary and thereafter, one Mr.Shraddha Kambli, Legal Manager. It appears that the notice for the hearing through video link was sent to one Dr.Amruta Velumani, who was the Director of the petitioner company.
6. It is the specific case of the petitioner that though the video link was sent for the first occasion to the said Dr.Amruta Velumani, the petitioner was unaware of the same. As far as the third hearing held on 19.07.2021, the concerned officer of the petitioner company namely, Mr.Shraddha Kambli, received the hearing notice but was unable to go to office due to heavy rain and therefore, the petitioner could not participate in the video conferencing by the first respondent in response to the second respondent oppose complaint purportedly filed under Section 17 of the Micro Small and Medium Enterprises Development Act, 2006 (MSMED Act).
7. It is submitted that under the provisions of the MSMED Act, it is mandatory on the part of the first respondent to first conciliate and thereafter ____________ https://www.mhc.tn.gov.in/judis Page No. 7 of 14 W.P.No.3340 of 2022 arbitrate the dispute either by itself or by an institution specialized in conciliation and arbitration and in this case no such exercise was carried out by the first respondent and straightway the respondent has passed the impugned order.
8. The impugned order is stoutly defended by the second respondent who had filed the application under the MSMED Act, 2006 on 19.05.2020 before the first respondent against the petitioner.
10. It is submitted that the proceeding was initiated by filing a complaint on the web portal of the first respondent by filing intimations, work orders, invoices raised and the correspondence exchanged between the petitioner and the second respondent and that there was a willful failure on the part of the petitioner to participate in the hearing. It is submitted that the video link for first two hearings were received by Dr.Amruta Velumani and the third hearing link was admittedly received by Mr.Shraddha Kambli. Therefore, there is no excuse on the part of the petitioner to blame the first respondent for having not extended any opportunity to the petitioner to defend itself before the first respondent.
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11. It is further submitted that the proceedings under the provisions of the MSMED Act, 2006 has to be completed in a time bound manner within a period of 90 days and therefore, it was incumbent on the part of the petitioner to have filed the counter to distance itself from the liability. In the instant case, the petitioner remained absent and therefore, there is no merits in the present Writ Petition.
12. That apart, it is submitted that under Section 19 of the MSME Act, 2006 the petitioner is required to make a mandatory pre-deposit of 75% and therefore, on this ground also, the Writ Petition is liable to be dismissed. Finally, it is submitted that the order passed by the first respondent is deemed to be an award under the Arbitration and Conciliation Act, 1996 and therefore, the petitioner has an alternate remedy before the commercial division of this Court under Section 34 of the Later Act. It is therefore submitted that on this ground also, the present Writ Petition is liable to be dismissed.
13. I have considered the arguments advanced by the learned counsel for the petitioner and the respondents.
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14. The proceedings were conducted through Video Conferencing and further, on two occasions when the meetings were fixed for hearing on 23.02.2021 and 11.06.2021 vide communication dated 09.02.2021 and 02.06.2021 respectively, the video link was not sent to the petitioner and on the last occasion, when the meeting was fixed on 19.07.2021, video link was provided vide communication dated 16.07.2021. However, officers of the petitioner could not login as there was heavy rain and therefore, none of the petitioner could not reach the office of the petitioner.
15. No doubt the provisions of the MSMED Act 2006 is intended to give a speedy relief to small, medium and ancillary units and the persons, who provide supplies goods or the services. The purchase of such goods or service bound to comply with the requirement of the aforesaid Act. Any delay in payment would attract interest under Section 17 of the MSMED Act at the rate prescribed under Section 16 of the said Act. Section 18 (5) also mandates that every reference made under Section 18 shall be decided within a period of 90 days from the date of making of such reference.
16. Facts on record indicate that the second respondent has merely uploaded the correspondences, work orders, invoices and intimations which ____________ https://www.mhc.tn.gov.in/judis Page No. 10 of 14 W.P.No.3340 of 2022 are prior to filing of the application in terms of architecture of the website of the first respondent to the petitioner. It appears that these informations have been furnished. However, to take up the case for either conciliation or for mediation, a claim petition is sine quo non and without the same neither a conciliation nor an arbitration can take place. In this case three hearings were held through video conferencing on 23.02.2021, 11.06.2021 and 19.07.2021.
17. In response to the first hearing, the petitioner had sent an e-mail on 23.02.2021 with a request for the application filed by the second respondent to examine the content, averments etc., As far as the second hearing held on 11.06.2021, the petitioner has responded through email dated 08.06.2021 and 11.06.2021. However, the petitioner did not participate in the hearing as according to the petitioner, the link was sent to one Dr.Amruta Velumani, and not to Shraddha Kambli.
18. As far as the third hearing held on 19.07.2021, is concerned, it is the specific case of the petitioner that the concerned officer namely Mr.Shraddha Kambli could not participate through video conferencing as the ____________ https://www.mhc.tn.gov.in/judis Page No. 11 of 14 W.P.No.3340 of 2022 city of Bombay was flooded and could not travel to office to log on to the video link.
19. Be that as it may, the impugned order, which has been extracted in the beginning of the order indicates that Conciliation failed, as the petitioner failed to participate in the video conferencing. Thereafter, it was incumbent on the part of the first respondent to have either taken up the case for arbitration by itself or refer to an institution specialized in an arbitration. This has not been done. On the other hand, the first respondent has straightway proceeded to pass an order which is a clear violation of principles of natural justice.
20. Considering the above, I am inclined to quash the impugned order and remit back to the first respondent to pass a fresh order within a period of 90 days from the date of receipt of a copy of this order. It is made clear that the second respondent should file a claim petition before the first respondent within 15 days from the date of receipt of a copy of this order. On receipt of the same, the petitioner shall file its reply to distance itself from the proposed liability. Thereafter, the first respondent Facilitation Council shall proceed ____________ https://www.mhc.tn.gov.in/judis Page No. 12 of 14 W.P.No.3340 of 2022 with arbitration either by itself or by referring the case to another institution and complete the proceedings within a period of 60 days from the date of receipt of a copy of this order. Entire proceedings shall be completed within a period of 90 days from the date of receipt of a copy of this order. It is made clear that if the petitioner is aggrieved the proposed award to be passed by the Facilitation Council, if the petitioner is aggrieved, the petitioner should only file petition under Section 34 of the Arbitration and Conciliation Act after due compliance of Section 19 of the MSMED Act, 2006.
21. The Writ Petition stands allowed with the above terms. No costs. Consequently, connected Miscellaneous Petitions are closed.
29.08.2022 Index : Yes/No Internet : Yes/No Speaking/Non-speaking Order Pbn ____________ https://www.mhc.tn.gov.in/judis Page No. 13 of 14 W.P.No.3340 of 2022 C.SARAVANAN, J.
pbn To The Chairman, Micro and Small Enterprises Facilitation Council, Industries Commissioner and Director of Industries, & Commerce, Guindy, Chennai – 600 032.
W.P.No.3340 of 2022
29.08.2022 ____________ https://www.mhc.tn.gov.in/judis Page No. 14 of 14