Indian Kanoon - Search engine for Indian Law

Himachal Pradesh High Court

Haryana Pradesh Congress Committee vs First Newsmedia Private Ltd on 10 January, 2020

Bench: L. Narayana Swamy, Jyotsna Rewal Dua

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA .

Arb. Appeal No. 15/2019 Judgment reserved on 02.01.2020.

Decided on: 10.1.2020 Haryana Pradesh Congress Committee .....Appellant.

Versus First Newsmedia Private Ltd. .....Respondent. Coram The Hon'ble Mr. Justice L. Narayana Swamy, Chief Justice. The Hon'ble Ms. Justice Jyotsna Rewal Dua, Judge. Whether approved for reporting?

For the appellant: Mr. Shrawan Dogra Sr. Advocate with Mr. Vivek Attri, Mr. Tejasvi Dogra and Mr. Abhinav Purohit, Advocates.

For the respondents: Respondent No.1 in person.

L. Narayana Swamy, Chief Justice.

This Arbitration Appeal is directed against the judgment dated 29.11.2019, passed by the learned Single Judge of this Court in Arbitration Case No. 58 of 2019, whereby OMP Nos. 448 and 343 of 2019 were allowed and the objections in Arbitration case No. 58 of 2019 was held not entertainable within the ambit of the prohibition contained in Section 19 of the Micro Small and Medium Enterprises ::: Downloaded on - 10/01/2020 20:31:14 :::HCHP 2 Development Act, 2006 for short 'MSMED Act', and for setting aside the Arbitral Reference No. 52 of 2017 being perverse, .

illegal and against the public policy, hereinafter referred to as the impugned judgment, on the grounds taken in the appeal.

2. Briefly stated, the facts leading to the presentation of the appeal can be stated thus. On 3.12.2017, the respondent filed a Claim Reference under the MSMED Act with the HP Micro and small Facilitation Council on the ground that the respondent have an outstanding amount of Rs.33,75,984/­, i.e., Rs.16,01,522/­ as principal amount and Rs.17,74,462/­ as interest against the appellant. As the name of Shri Rahul Gandhi, has been dropped by the HP Micro and Small Facilitation Council later on, thus the notice dated 4.1.2018 were issued to the appellant herein. It is stated that the appellant, after receiving the notices appeared before the Himachal Pradesh Micro and Small Facilitation Council through their counsel and obtained the copy of Reference.

Since the documents annexed with the Reference Petition were not readable, the authorized signatory of the respondent sought time for providing readable documents and the same ::: Downloaded on - 10/01/2020 20:31:14 :::HCHP 3 was prepared by the authorized signatory in his own handwriting and was supplied to the counsel for the appellant.

.

The appellant sought more time to file reply but during pendency of the Reference, respondent through their authorized signatory moved another application on 18.2.2018, seeking certain additions in the main Claim Reference.

3. The appellant moved application seeking dismissal of the Claim Reference on the ground of jurisdiction, maintainability and limitation. With this application, another application was also moved for deletion of name of Sh. Rahul Gandhi in the original Claim Reference from the array of appellants. The Himachal Pradesh Micro and Small Facilitation Council on 30.6.2018 appointed the Arbitrator and referred the matter for arbitration of Shri Ravinder Prakash Sharma, a Retired District and Sessions Judge. The appellant has received notice dated 9.8.2018 whereby the respondents have totally amended the original claim by amending the same. The appellant, after receiving notice dated 9.8.2018 filed CWP No. 2006 of 2018, before this Court which was disposed of by this Court with the consent of the parties, vide ::: Downloaded on - 10/01/2020 20:31:14 :::HCHP 4 order dated 22.11.2018, directing the Arbitrator to pass reasoned award, in terms of the directions contained in the .

said order. It is apt to reproduce the operative portion of the said order herein.

"(a) whether the Himachal Pradesh Micro & Small Enterprises Facilitation Council was competent to make the subject Reference?

(b) whether the Himachal Pradesh Micro & Small Enterprises Facilitation Council has got territorial jurisdiction to refer the dispute in the matter?

(c)who is the person responsible for making the due payment if it is found that the full payment has not been made to respondent No. 3?

(iii)The petitioner as well as respondent No. 3 shall be at liberty to submit written submissions alongwith relevant documents/part of the pleadings being referred to by them, for consideration of the Arbitrator and the same shall be kept in view while adjudicating the dispute."

4. On 9.1.2019, the learned Arbitrator passed the award whereby the appellant was held liable to pay a sum of Rs.16,01,522/­ (principal) and interest on this amount under Section 16 of MSMED Act, amounting to Rs.17,74,462 totaling to a sum of Rs.33,75,984/­ with interest from the date of filing ::: Downloaded on - 10/01/2020 20:31:14 :::HCHP 5 of reference, i.e., 4.1.2018 and litigation charges to the tune of Rs.60,000/­.

.

5. The appellant, feeling aggrieved, challenged the said Award by filing Objections under Section 34 of the Arbitration and Conciliation Act read with Section 19 of the MSMED Act, 2006, before this Court well within time but the respondent in the meantime, filed Execution Petition No. 286/2019 for execution of the said Arbitral award. The Executing Court, vide order dated 24.5.2019 restrained the appellant from operating its account No. 307804010028128 in Union Bank of India without serving any notice to the appellant herein with further direction to attach the decreetal amount of Rs.5098,702/­. The appellant had moved an application being OMP No. 269 of 2019 for staying the operation of the Arbitral award which was granted by the learned Single Judge and Executing Court was directed not to proceed with the order of attachment.

6. It is averred that the appellant while filing the Objections under Section 34 of the Arbitration and Conciliation Act, 1996 had already deposited the requisite ::: Downloaded on - 10/01/2020 20:31:14 :::HCHP 6 awarded amount of Rs.26,07,000/­ as per Section 19 (1) of the MSMED Act. Alongwith the aforesaid application, the .

appellant also filed OMP No. 448/2019 under Section 36 (3) of the said Act and Section 5 of the Limitation Act. The learned Single Judge heard the applications alongwith the main objection on 7.11.2019 and on 29.11.2019, allowed the aforesaid applications and dismissed the objections for want of depositing 75% of the awarded amount at the time of filing the objections. Hence the present appeal.

7. We may record herein that vide order dated 2.1.2020, respondent No. 1 appeared in person and stated that he may be permitted to withdraw the power of attorney given to Mr. Vijay Kumar Verma, Advocate with permission to argue his case in person, which was granted to him.

8. We have heard learned Senior Counsel for the appellant and respondent No. 1 in person.

9. The contention of respondent is that Section 19 of MSMED Act is mandatory in nature in which 75% of the awarded amount is to be deposited by the appellant at the time of filing Arbitration case/Objections under Section 34 of ::: Downloaded on - 10/01/2020 20:31:14 :::HCHP 7 the Arbitration and Conciliation Act, against the award of an Arbitrator. The appellant has not deposited the said amount .

therefore, the learned Single Judge has rightly dismissed the case of the appellant as the objections/petition without depositing 75% of the awarded amount is not maintainable. It is further contended that in case there was deficiency in deposit, the appellant could have filed application for the purpose of depositing remaining amount but no such application has been filed. It it is further contended that the MSMED Act is a Special Act and there is no time limitation prescribed and under these circumstances, the award had to be challenged alongwith the deposit of 75% of the awarded amount as there is no scope of condonation of delay prescribed in the MSMED Act. Therefore, it is argued that when there is Special Act covering the field, the General Law has to give way.

10. The learned Senior Counsel for the appellant has argued that the appellant while filing the Objections under Section 34 of the Arbitration and Conciliation Act, 1996 had already deposited the requisite awarded amount of ::: Downloaded on - 10/01/2020 20:31:14 :::HCHP 8 Rs.26,07,000/­ as per Section 19 (1) of MSMED Act, 2006. The learned Senior Counsel further contended that the learned .

Single Judge has rejected the objections on the ground that the appellant had not deposited the 75% of the awarded amount but has not looked into the other portion of the Act namely, that this Court can pass order in the manner directing the petitioner/appellant to deposit the remaining amount. When this Court has got the power to exercise such power either directing the petitioner to deposit 75% of the amount or in case, there is deficiency in their deposit by calculation and miscalculation, the Court should have directed the petitioner to deposit the remaining amount. But the learned single Judge has failed to exercise such power. Therefore, it is contended that the order of learned Single Judge deserves to be set aside.

11. It is apt to reproduce Section 19 of the MSMED Act herein:

"Section 19 of Micro Small and Medium Enterprises Development Act: Application for setting aside decree, award or order­ application for ::: Downloaded on - 10/01/2020 20:31:14 :::HCHP 9 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 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 the conditions as it deems necessary to impose."

12. As per Section 19 of the MSMED Act, the appellant had to deposit 75% 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. In the instant case, the learned Single Judge has rejected the Arbitration case on the ground of non­compliance of deposit of 75% of the awarded amount, in terms of Section 19 of the aforesaid Act.

13. The learned Single Judge has observed that the appellant had submitted a demand draft of Rs.26,07,000/­ which does not constitutes 75% of the amount. The award was passed for a sum of Rs.47,16,886/­ and 75% thereof comes to ::: Downloaded on - 10/01/2020 20:31:14 :::HCHP 10 Rs.35,37,664, which is not in consonance with Section 19 of the MSMED Act.

.

14. The aim and object of the aforesaid Act is to provide for facilitating the promotion and development and enhancing the competitiveness of micro, small and medium enterprises and for matters connected therewith or incidental thereto. Therefore, while challenging an award in terms of the aforesaid Act, the aim and objects of the said Act has to be kept in mind. When a Special Act provides for a special mechanism, the general law will have to give­way.

15. The maxim Generalia Specialibus non derogant means the General things do not derogate special things. General statements or provisions do not derogate from special statements or provisions. On the said principle, it is apt to reproduce relevant para 7 and 8 of the judgment delivered by the Hon'ble Supreme Court in The Commissioner of Income­tax Patiala vs. M/s Shahzada Nand and Sons and others, AIR 1966 SC 1342 herein.

7............ On the principle of generalia specialibus non­ derogant, the field covered by S. 34 (1A) should be excluded ::: Downloaded on - 10/01/2020 20:31:14 :::HCHP 11 from that covered by S. 34 (1) (a). If that was the legal position before the 1956 amendment, the argument proceeded, the same position would continue thereafter, as .

Parliament retained S. 34 (1A), along with its provisos, as it stood before the amendment and amended only S. 34 (1)(a). The lifting of the ban of limitation, therefore, should, on the basis of the said doctrine, be confined to the field covered by S. 34 (1) (a) before the amendment. If Parliament intended to do away with the period of limitation in respect of the escaped incomes during the war period, it would not have retained S. 34 (1A) on the statute book; for in that event, it would serve no purpose. It would be wrong to say that it ceased to be operative after April 1, 1956, for the period of limitation would still apply to proceedings in respect of escaped incomes of the war years. Sub­section (4) added in S. 34 in the year 1959 and S. 34 (1B), as amended in 1956, would not throw any light on the question, but in a way would support the view that they were concerned only with the escaped incomes covered by S. 34 (1) (a), excluding therefrom those covered by Section 34 (1A). The argument based on the alleged anomaly led nowhere and indeed the retention of S. 34 (1A) on the statute book was intentionally done, as the Parliament, having already placed a particular class of assessees under a special and heavy burden, did not think fit to make any provision which was likely to harass them further. The ambiguity in the section if any, should go for the benefit of the tax­payer and not the tax­gatherer. This argument was accepted by the Madhya Pradesh and Gujarat High Courts in Rustomji v. Income­tax Officer, Special Investigation Circle, Indore, (1964) 54 ITR 461 :

::: Downloaded on - 10/01/2020 20:31:14 :::HCHP 12

(AIR 1965 Madh Pra 170) and Mathurdas Govinddas v. G. N. Gadgil, (1965) 56 ITR 621 (Guj).

8. Before we advert to the said arguments, it will be .

convenient to notice the relevant rules of construction. The classic statements of Rowlatt, J., in Cape Brandy Syndicate v. Inland Revenue Commrs., (1921) 1 KB 64 at p. 71, still holds the field.

"In a Taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."

To this may be added a rider : in a case of reasonable doubt, the construction most beneficial to the subject is to be adopted. But even so, the fundamental rule of construction is the same for all statutes, whether fiscal or otherwise. "The underlying principle is that the meaning and intention of a statute must be collected from the plain and unambiguous expression used therein rather than from any notions which may be entertained by the Court as to what is just or expedient." The expressed intention must guide the Court. Another rule of construction which is relevant to the present enquiry is expressed in the maxim, generalia specialibus non­derogant,which means that when there is a conflict between a general and a special provision, the latter shall prevail. The said principle has been stated in Craies on Statute Law, 5th Edn., at p. 205, thus :

"The rule is, that whenever there is a particular enactment and a general enactment in the same statute, and the latter, taken in its most comprehensive sense, would overrule the ::: Downloaded on - 10/01/2020 20:31:14 :::HCHP 13 former, the particular enactment must be operative, and the general enactment must be taken to affect only the other parts of the statute to which it may properly apply."

.

But this rule of construction is not of universal application. It is subject to the condition that there is nothing in the general provision, expressed or implied, indicating an intention to the contrary; see Maxwell on Interpretation of Statutes, 11th Edn., at pp. 168­169. When the words of a section are clear but its scope is sought to be curtailed by construction, the approach suggested by Lord coke in In re; Heydon's case, (1584) 3 Co. Rep. 7a, yields better results :

"To arrive at the real meaning, it is always necessary to get an exact conception of the aim, scope, and object of the whole Act; to consider, according to Lord Coke : 1. What was the law before the Act was passed; 2. What was the mischief or defect for which the law had not provided; 3. What remedy Parliament has appointed; and 4. The reason of the remedy."

16. Section 19 of the MSMD Act is special in nature and mandates that while challenging an award, the deposit of 75% of the awarded amount has to be made. Therefore, it was obligatory on the part of the appellant to deposit 75% of the awarded amount which was mandatory in terms of Section 19 of the MSMED Act.

::: Downloaded on - 10/01/2020 20:31:14 :::HCHP 14

17. The argument advanced by the learned Senior Counsel for the appellant that the words "as the case may be"

.

as inserted in Section 19 of the MSMED Act mean that the learned Single Judge has to exercise the power to direct the appellant to deposit the remaining amount, is not tenable as the words "as the case may be" mean whichever the case may be or as the situation may be. The expression means that one out of the various alternatives would apply to one out of the various situations and not otherwise.

18. In Union of India and others vs. Ashok Kumar and others 2005 (5) SCC 760 the Hon'ble Supreme Court has held as under:

"17. A bare reading of Rule 20 makes the position clear that both the Director­General and the central Government can act in different situations and consideration by the Director­ General is not ruled out. Sub­ rule (3) makes the position clear that the explanation is to be considered by the director­ General and only when it is directed by the Central Government, the matter shall be submitted to the Central government with the officer's defence and the recommendations of the Director­General. When Director­ General finds the explanation unsatisfactory he recommends for action. There may be cases where the central Government directs the Director­ general to submit the case. There can be ::: Downloaded on - 10/01/2020 20:31:14 :::HCHP 15 a case where the Central Government finds that the explanation is unsatisfactory. In that case the Central Government may direct the case to be submitted to it. At the .

first stage the consideration is by the Director­General. When he finds the explanation unsatisfactory, he recommends action by the Central Government. But even if he finds explanation to be satisfactory, yet the central Government can direct the case to be submitted to it. Recommendations in terms of sub­rule (4) are made by the director­General and the final order under rule 20 (5) is passed by the Central Government. The expression "as the case may be" is used in sub­rule (2) and sub­rule (5). It obviously means either of the two. It is to be further noted that the order in terms of sub­ rule (5) is passed by the Central Government. But the enquiry can be either by the Central Government or the Director general, as the case may be. There is another way of looking at sub­rule (2). Where report of the officer's misconduct is made by the Director­General, the matter is to be placed before the Central Government and in all other cases the consideration is by the Director­General.

18. The words "as the case may be" means "whichever the case may be" or "as the situation may be". (See Shri Balaganesan metals v. M. N. Shanmugham Chetty and ors.

1). The expression means that one out of the various alternatives would apply to one out of the various situations and not otherwise."

19. Though the award was well within the knowledge of the appellant despite that the appellant had made default ::: Downloaded on - 10/01/2020 20:31:14 :::HCHP 16 for not complying with the provisions contained in Section 19 of the MSMED Act. As observed earlier that when there is a .

Special Act and a special mechanism is provided for covering the field, the General law will have to give­way. Under these circumstances, it is held that the learned Single Judge has rightly dismissed the objections of the appellant being not entertainable for non­compliance of Section 19 of the MSMED Act.

20. Viewed thus from every angle, we see no reason to interfere with the judgment passed by the learned Single Judge, hence the appeal is accordingly dismissed, alongwith pending applications if any.

(L. Narayana Swamy) Chief Justice (Jyotsna Rewal Dua) Judge January 10, 2020.

(cm Thakur ) ::: Downloaded on - 10/01/2020 20:31:14 :::HCHP