G. P. T Infraprojects Limited, Salt Lake City, Kolkata v. State of Jharkhand
2016-03-03
APARESH KUMAR SINGH
body2016
DigiLaw.ai
ORDER : Heard learned counsel for the parties. 2. The award at Annexure-11 passed by the respondent no.2, Jharkhand Micro and Small Enterprises Facilitation Council communicated through memo no. 3342 dated 12.12.2013 is under challenge in the present writ petition by the petitioner. The award impugned has been passed under Section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 in case no. JHMSEFC No.01/2013 on a reference made by applicant – supplier/respondent no.3. The applicant/supplier is said to be a Small Enterprises Firm registered with District Industry Centre, Ranchi on whom order was placed on 1.10.2012 by the buyer/petitioner for supply of 2 lakhs kg of HTS wire valuing Rs.112.77 lakhs with payments to be made within 30 days from the date of delivery. Another purchase order for supply of specified description of HTS wire for a value of Rs. 107.73 lakhs was also placed on 29.11.2012 with payments to be made within 30 days from the date of delivery. Applicant claims to have supplied consignment amounting to Rs. 1,65,64,314/-in accordance with the purchase order on various dates to the buyers against which part payment of Rs.25,86,752/- were made on 22.12.2012. 3. Aggrieved with the delay in making payments, the applicant/supplier filed the reference on 4.2.2013 under Section 18(1) of the Act of 2006 before the Council for realization of outstanding dues of Rs. 1,39,77,562/-towards principal and Rs. 2,60,997/-towards interest up to 31.1.2013 supported by affidavit of the applicant and certified by a Chartered Accountant. On 12.2.2013 the reference was admitted by the Council and registered notices to the buyer/petitioner along with the claim petition of the applicant/ supplier were sent on 13.2.2013 directing him to appear on 5.3.2013 and file his objection/written statement, if any up till 28.2.2013. The Buyer/petitioner appeared in the proceeding on 5.3.2013 and preferred an application under Section 8 of the Arbitration & Conciliation Act, 1996, requesting the Council to stay the further proceeding in Case No. 1/2013 claiming that prayer is not maintainable under Section 18 of the Act of 2006. He also filed a Misc. Case No. 16/2013 (N) before the Additional District Judge, Barasat (West Bengal) under Section 9 of the Arbitration & Conciliation Act, 1996 which on contest, by the order and judgment dated 14.5.2013 was rejected. This order was also placed before the Council.
He also filed a Misc. Case No. 16/2013 (N) before the Additional District Judge, Barasat (West Bengal) under Section 9 of the Arbitration & Conciliation Act, 1996 which on contest, by the order and judgment dated 14.5.2013 was rejected. This order was also placed before the Council. Petitioner preferred an appeal before the Hon'ble Calcutta High Court in F.M.A. 1945 of 2013 along with an application vide C.A.N. No. 6439 of 2013 for staying of the proceedings pending before the Council. The Stay petition was disposed of without any order as to costs on 8.7.2013 with an observation that “ we have made it free for the parties to make their respective contentions before the tribunal”. The next date fixed for filing objection by the opposite parties/petitioner was 17.6.2013. A Junior Counsel appearing on behalf of the opposite party prayed for time on the ground that conducting lawyer has to appear. Time was allowed to the opposite parties by way of last chance to file written statement against the claim of the applicant by 19.8.2013, so that Council would hear the matter. The case was again taken up on 2.9.2013. However, on the said date also prayer of adjournment was made by the Junior Counsel for the Buyer/petitioner by way of adjournment petition stating that the opposite parties had invoked the arbitration clause pursuant to which arbitration proceedings are pending before the Sole Arbitrator, Kolkata. The said prayer of the petitioner/ buyer was rejected by the Council. It appears that on failure of the parties to arrive at a settlement through conciliation Under Section 18(2) of the Act of 2006, respondent-Council in exercise of power Under Section 18(4) of the Act of 2006 proceeded to decide the dispute between the parties. Thereafter, it dealt with the merit of the claim of the applicant and declared the Award under which the petitioner/ buyer has been directed to make payment of principal outstanding amount of Rs.1,39,77,562/-up to 31.8.2013. It also directed that the Buyer/petitioner shall pay interest of Rs. 26,61,381 from 10.11.2012 to 31.8.2013 on the principal outstanding @ 3 times of Bank Rate notified by R.B.I, compounded with monthly rests in terms of Section 16 of the Act of 2006. The interest will occur till the date final payment is made. 4.
It also directed that the Buyer/petitioner shall pay interest of Rs. 26,61,381 from 10.11.2012 to 31.8.2013 on the principal outstanding @ 3 times of Bank Rate notified by R.B.I, compounded with monthly rests in terms of Section 16 of the Act of 2006. The interest will occur till the date final payment is made. 4. Challenge to the impugned Award has been made by the petitioner on the ground that composition of the Tribunal suffers from irregularity and is not in accordance with the provisions of Section 21 of the Act of 2006 as there are more than 5 members. The challenge is also based upon the ground that the Tribunal has without evolving any procedure, proceeded to decide the claim of the applicant/supplier by a cryptic order, which does not contain any reason as to the admissibility of the amount claimed by way of adequate proof. It is submitted that though the provisions of Civil Procedure Code and Evidence Act are not applicable in a proceeding before Facilitation Council but proof of any such claim has to be established as per the general principles laid down in the Evidence Act. It is submitted that the State Government has failed to frame any Rules laying down procedure to be followed by the Council in entertaining such reference to adjudicate claims in terms of Section 30 of the Act of 2006. The procedure and the impugned Award therefore suffers from jurisdictional irregularity, which requires interference by this Court under Article 226 of the Constitution of India. Further submission has been made by learned counsel for the petitioner that if the proceedings and the impugned Award suffer from jurisdictional error, petitioner is not precluded from raising it before this Court in a proceeding under Article 226 of the Constitution of India in the presence of a statutory remedy. It is further submitted that the manner in which the Award was passed, smacks off failure to comply Principles of Natural Justice. 5. Respondent no.3 has filed counter affidavit.
It is further submitted that the manner in which the Award was passed, smacks off failure to comply Principles of Natural Justice. 5. Respondent no.3 has filed counter affidavit. It is urged on behalf of learned Senior counsel appearing on behalf of respondent no.3 that the petitioner after surrendering to the jurisdiction of the Facilitation Council and after having failed to obtain any stay in respect of the proceedings from the Hon'ble Calcutta High Court has now chosen to challenge the Award on untenable ground relating to composition of Tribunal or the procedure followed by the Tribunal. It is submitted that in the writ petition also there are no such grounds raised relating to challenge to the composition of the Tribunal or the procedure followed by the Tribunal. The provisions of Arbitration & Conciliation Act, 1996 are to be followed in terms of Section 18(3) by the Facilitation Council while deciding a dispute on reference in the manner of an Arbitration proceeding. It is submitted that the Tribunal has the jurisdiction to follow the Rules of procedures which the parties agree or on failure thereof, to conduct the proceeding in the manner it considers appropriate. In the conduct of any such proceeding, Arbitration Tribunal shall not be bound by Civil Procedure Code or the Indian Evidence Act as is apparent from the provisions of Section 19 of the Arbitration & Conciliation Act, 1996. It is further submitted that these grounds which are being urged to assail the impugned Award in a proceeding under the writ jurisdiction are available to the petitioner to be raised in an application under Section 34 of the Act of 1996 against Arbitral Award. Section 34(2)(v) is also referred in that regard. It is further submitted that merely to escape liability to deposit 75% of the amount of the Award, the petitioner has chosen to invoke the jurisdiction of the writ Court and avoided approaching statutory remedy available under the Act of 2006 wherein provisions of 1996 Act have been incorporated by the reference. It is further submitted that provisions of Section 24 of Act of 2006 have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.
It is further submitted that provisions of Section 24 of Act of 2006 have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. In the absence of rule laid down by the State Government, under Section 30 of the Act of 2006, the Act would not become unworkable as the Tribunal is well within its jurisdiction to follow its own procedure, which of course should confirm to principle of natural justice and general principle of Civil Procedure Code and the Evidence Act. It is submitted that on merit, when the claim of the applicant/supplier has not been resisted by any written statement, the Tribunal was wholly justified in declaring the Award after consideration of material available on record. Therefore, instant writ petition deserves to be dismissed. 6. Learned counsel for the respondent-State has submitted in support of the submission of the learned counsel appearing on behalf of Respondent no.3. It is submitted that the Facilitation Council is a body specifically created under the Act of 2006. The Act of 2006 has been enacted to protect the interest of the Micro, Small and Medium enterprises laying down provisions for adjudication of claim arising out of delay in payment after supply made on purchase order placed by the Buyer in the nature of Arbitration proceeding not inhibited by the rigours of procedural law as followed in a regular Courts. Petitioner should therefore be directed to avail of the statutory remedy available under the Act of 2006. 7. I have considered the submission of the parties and gone through relevant materials on record including the impugned Award. A bare perusal of the pleadings and the impugned award show that the applicant/supplier was a Small Enterprises registered firm with the District Industry Centre, Ranchi on whom purchase orders were placed by the petitioner/buyer for supply of certain items of specified discription. Such claims are duly entertainable before the Facilitation Council on reference made in terms of Section 18(1) of the Act of 2006. This is also not a ground of challenge by the petitioner that the reference itself was not maintainable as the supplier was not a enterprise covered under the provisions of the Act of 2006.
Such claims are duly entertainable before the Facilitation Council on reference made in terms of Section 18(1) of the Act of 2006. This is also not a ground of challenge by the petitioner that the reference itself was not maintainable as the supplier was not a enterprise covered under the provisions of the Act of 2006. Grounds of challenge as noted herein above are only on the composition of Tribunal and lack of Rules of procedure laid down to be followed by the Tribunal in arriving at such adjudication. 8. Facts on record noticed hereinabove also show that at interlocutory stages petitioner invoked section 8 and 9 of the Arbitration and Conciliation Act, 1996 during the pendency of the proceeding before the Facilitation Council. There was no interference by the learned Court of Additional District Judge, Barasat, West Bengal or the Hon'ble Calcutta High Court. Moreover the Calcutta High Court has made a clear observation while rejecting the stay application that the parties are free to make their respective submission before the Tribunal. As a matter of fact, despite refusal of such stay, petitioner never chose to contest the case on merits rather the records show that only adjournment were sought at one or the other pretext. After several adjournments and by giving last opportunity, when the petitioner/ buyer did not file any written statement to contest the claim of the applicant/supplier on merits, the Tribunal has proceeded to adjudicate the reference. So far as the question relating to composition of the Arbitral Tribunal or failure to follow arbitral procedure is concerned, these are grounds specifically available under Section 34 under Chapter VII of the Arbitration and Conciliation Act, 1996 where recourse against the Arbitral Award can be made by the party aggrieved by the Award. It also appears from the perusal of provisions of Section 18(3) of the Act of 2006 that while resorting to decide the dispute in the nature of arbitration proceeding, the provisions of Arbitration and Conciliation Act, 1996 shall apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to Sub Section (1) of Section 7 of the Act of 1996. Provisions relating to procedure prescribed at Section 19 of the Act of 1996 are quoted hereinunder:- “19.
Provisions relating to procedure prescribed at Section 19 of the Act of 1996 are quoted hereinunder:- “19. Determination of rules of procedure-(1) The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872). (2) Subject to this part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. (3) Failing any agreement referred to in sub-section (2), the arbitral tribunal may, subject to this Part, conduct the proceedings in the manner it considers appropriate. (4) The power of the arbitral tribunal under sub-section (3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence”. It is evident that parties in any such Arbitration proceeding can agree to any such procedure and on failure to do so the arbirtal tribunal is free to conduct the proceeding in the manner it considers appropriate. Working of the Act of 2006 and the conduct of Arbitration proceeding by the Council was not impossible in absence of framing of rules laying down procedure. The Facilitation Council has a statutory obligation to decide such reference within a stipulated time period of 90 days. The only requirement and consideration to be followed in deciding such reference is to have a procedure which is in conformity with the principles of natural justice and also conforms to the general principles of the Evidence Act so far as admissibility of the claim is concerned. If the petitioner/buyer has failed to contest the claim on merit, then the learned Tribunal was left with no option but to conduct the proceeding in accordance with law following principles of natural justice and after adequate opportunity to the petitioner. In such circumstances, when such specific grounds to assail the impugned award are already available for challenge in a proceeding in an application under Section 34 of the Act of 1996 on the part of the aggrieved buyer/purchasers, there is no reason why the petitioner should not have availed of the statutory remedy available under the provisions of Act which are in the nature of special legislation. 9.
9. In conclusion, it can only be said that in such matters when hierarchy of statutory remedy is available and interference of the Courts are to be avoided as is the spirit of Section 5 of the Arbitration and Conciliation Act, 1996, there is no reason for this Court to exercise its discretionary jurisdiction to entertain the challenge to the award on the grounds urged. Moreover, losing party i.e. the Buyer in the instant case is also under a statutory obligation to make deposit of 75% of the amount awarded before his application under Section 34 of the Act of 2006 is entertained by the concerned Court. 9. Considering the totality of the facts and circumstances and the reasons discussed herein above, this Court is not satisfied that any interference is required to be made in exercise of the writ jurisdiction of this Court. The writ petition is dismissed, however with a liberty to the petitioner to avail of the statutory remedy available under the law. 10. Learned counsel for the petitioner in the midst of dictation of the judgment has also pointed out to the Court that in the matter of pre-deposit under Section 19 of the Act of 2006, there is discretion of the Court to allow pre-deposit in installments, as has been held by the Hon'ble Supreme Court in in the case of Goodyear India Limited Vrs. Norton Intect Rubber Private Limited & another reported in 2012(6) 345. 11. Let it be made clear that any discussions/observations made herein above are for the purposes of coming to a view whether such challenge to impugned Award should be entertained in a proceeding under Article 226 of the Constitution of India. They would however not act to the prejudice of the parties in any such proceeding before any competent Court of Law. Pending I.A.s are closed.