Research › Search › Judgment

Rajasthan High Court · body

2017 DIGILAW 322 (RAJ)

State of Rajasthan through The Chief Engineer, Water Resources, Government of Rajasthan, Jaipur v. Sigma Engineering Pvt. Ltd. , Director, Sri Paras Nath Choubey, S/o. Hari Narayan Choubey

2017-01-30

MOHAMMAD RAFIQ

body2017
ORDER : 1. This writ petition seeks to challenge the award dated 10.09.2015 passed by the Micro and Small Enterprises Facilitation Council at Odisha, Cuttak (for short 'the Facilitation Council') in claim application filed by the respondent, M/s. Sigma Engineering Private Limited, whereby the petitioners have been directed to pay an amount of Rs. 37,15,000/- towards principal and Rs. 69,20,659/- towards interest. 2. Facts of the case are that a tender was floated by State of Rajasthan for construction of vertical lift steel gates of Suk li-Selwara Dam Project in Sirohi District, Rajasthan. The respondent being successful bidder/tenderer, was issued work order for a sum of Rs. 4,71,35,000/- in the year 2005. As per the petitioners, in spite of receiving amount of Rs. 4,64,75,000/- out of the total amount, respondent-firm did not complete the work within the stipulated time frame. Even though the work was completed with inordinate delay, there were certain defects in the construction which were to be rectified/corrected. Despite several reminders by the petitioners, the aforesaid defects were not rectified/corrected by the respondent, owing to which the petitioners had to get the said work done through another contractor incurring extra expenditure. On account of all these facts, dispute arose between the parties. 3. Mr. J.M. Saxena, learned Additional Advocate General submitted that Clause 23 of the agreement executed between the parties provided for reference of any such dispute to the Standing Committee for settlement and if the decision of the Standing Committee was not acceptable, the aggrieved party was free to approach concerned civil court, as per Clause 51 of the agreement, having jurisdiction over the place where the agreement was executed. The respondent, instead of raising the dispute before the Standing Committee or approaching any civil court in the State of Rajasthan, approached the Facilitation Council. Despite objection raised by the petitioners about jurisdiction of the Facilitation Council, the said Council vide impugned award dated 10.09.2015, has required the petitioners to pay the respondent a sum of Rs. 37,15,000/- towards principal amount and Rs. 69,20,659/- towards interest. 4. Learned Additional Advocate General argued that the impugned award passed by the Facilitation Council is wholly without jurisdiction and the same, being illegal, is unenforceable against the petitioners. 37,15,000/- towards principal amount and Rs. 69,20,659/- towards interest. 4. Learned Additional Advocate General argued that the impugned award passed by the Facilitation Council is wholly without jurisdiction and the same, being illegal, is unenforceable against the petitioners. The Facilitation Council ought not to have entertained the claim of the respondent, who was having alternative efficacious remedy of reference of the dispute to the Standing Committee under Clause 23 of the agreement executed between the parties. 5. Mr. Ashutosh Bhatia, learned counsel referred to Section 18(1) of the Micro, Small and Medium Enterprises Development Act, 2006(for short 'the Act of 2006'), which provides that notwithstanding anything contained in any other law for the time being in force, any party to a dispute may, with regard to any amount due under Section 17, make a reference to the Micro and Small Enterprises Facilitation Council. It is argued that the impugned award passed by the Facilitation Council falls in the scope of Section 18(3) of the Act of 2006 which inter alia provides that where the conciliation initiated under sub-section (2) of Section 18 is not successful and stands terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer to it any institution or centre providing alternate dispute resolution services for such arbitration and the provisions of the Arbitration and Conciliation Act, 1996(for short 'the Act of 1996') shall then apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in sub-section (1) of Section 7 of the Act of 1996. Learned counsel submitted that objection with regard to jurisdiction of the Facilitation Council is devoid of any merit because sub-section (4) of Section 18 of the Act of 2006 inter alia provides that notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council shall have jurisdiction to act as an Arbitrator or Conciliator under this section in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India. Learned counsel invited attention of the Court towards Section 24 of the Act of 2006 which provides that the provisions of Sections 15 to 23 of the Act of 2006 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Learned counsel invited attention of the Court towards Section 24 of the Act of 2006 which provides that the provisions of Sections 15 to 23 of the Act of 2006 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. In that view of the matter, submission of learned counsel for the respondent is that stipulation contained in the agreement executed between the parties would not oust the jurisdiction of the Facilitation Council because provisions contained in Section 15 to 23 of the Act of 2006 have been overriding effect over any other law for the time being in force. Learned counsel argued that once an award has been passed by the Facilitation Council, the provisions of the Arbitration and Conciliation Act, 1996 would apply which also include Section 34(2) whereunder the petitioners can file objections before the competent civil court. 6. I have given my anxious consideration to rival submissions and carefully perused the material on record. 7. Analysis of the provisions of Micro, Small and Medium Enterprises Development Act, 2006 show that the Facilitation Council has been set up to redress the grievances of the Micro and Small Enterprises. The respondent being a Small Enterprise is covered by the provisions of the Act of 2006. Chapter V of the Act of 2006 deals with delayed payments to Micro and Small Enterprises. Section 15 of the Act of 2006 requires that where any supplier, supplies any goods, the buyer shall make payment therefor 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 Act of 2006 further provides that 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. Section 17 of the Act of 2006 provides that for any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the amount with interest thereon as provided under Section 16. 8. It is significant to note that provisions of the Act of 2006 have been given overriding effect by repeated emphasis of the Legislation. Section 18(1) of the Act of 2006 begins with non-obstente clause which provides that notwithstanding anything contained in any other law for the time being in force, any party to a dispute may, with regard to any amount due under Section 17, make a reference to the Micro and Small Enterprises Facilitation Council. Sub-section (2) of the Section 18 of the Act of 2006 further provides that on receipt of a reference under sub-section (1), the Council shall either itself conduct conciliation in the matter or seek the assistance of any institution or centre providing alternate dispute resolution services by making a reference to such an institution or centre, for conducting conciliation and the provisions of section 65 to 81 of the Act of 1996 shall apply to such a dispute as if the conciliation was initiated under Part III of that Act. Sub-section (3) of the Section 18 provides that where the conciliation initiated under sub-section (2) is not successful and stands terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer to it any institution or centre providing alternate dispute resolution services for such arbitration and the provisions of the Arbitration and Conciliation Act, 1996(for short 'the Act of 1996') shall then apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in sub-section (1) of Section 7 of the Act of 1996. Sub-Section (4) of Section 18 of the Act of 2006 further provides that notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council or the centre providing alternate dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator under this section in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India. Section 18(4) thus makes it clear that jurisdiction has been conferred to Facilitation Council at the place where the supplier is located which is evident from the wordings of sub-section (4) of the Section 18 that “Notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council or the centre providing alternate dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator under this section in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India.” (emphasis supplied) That would mean that jurisdiction has been conferred on Facilitation Council of the place where the supplier is located, regardless of location of buyer. Moreso, provisions of the Act of 2006 contained in Section 15 to Section 23 have been given overriding effect also under Section 24 of the Act of 2006 which provides that “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.” Once the award passed by the Facilitation Council is deemed to be an award under the provisions of the Act of 1996, it goes without saying that provisions of the Act of 1996, which otherwise applies to such an award for the period subsequent to passing of the award, would also be attracted including Section 34 whereunder the remedy has been provided to the person aggrieved to file objections against the award before the competent civil court. This Court, therefore, does not deem it appropriate to entertain the dispute on merits. 9. Somewhat similar scheme has been provided under the National Highways Act, 1956 wherein sub-section (6) of Section 3-G provides that subject to the provisions of this Act (National Highways Act, 1956), provisions of the Arbitration and Conciliation Act, 1996 shall apply to arbitration under the National Highways Act, 1956. In this context, award passed by an arbitrator under National Highways Act, 1956 was challenged before the Karnataka High Court in Smt. Susheelamma & Others Vs. The Deputy Commissioner-Cum-Arbitrator, Chitradurga District & Others, (W.P. No. 44398/2012(LA-RES) decided on 26.04.2013) seeking issuance of writ of mandamus to the Competent Authority (Land Acquisition), National Highway Authority of India to enhance the compensation on par with the amount determined and awarded in another case. The Karnataka High Court held that if the petitioners therein are aggrieved by the award passed by the Arbitrator, they have to avail the alternative remedy provided as per sub-section (6) of Section 3G of the National Highways Act, 1956 read with Section 34 of the Arbitrator & Conciliation Act, 1996 by initiating the proceedings before the jurisdictional District Judge. When special provisions are made providing special remedy for an aggrieved person to redress his grievance against the award passed by the Arbitrator, the High Court will not interfere in the matter exercising writ jurisdiction, that too by issuing a writ of mandamus as sought for enhancement of compensation. When special provisions are made providing special remedy for an aggrieved person to redress his grievance against the award passed by the Arbitrator, the High Court will not interfere in the matter exercising writ jurisdiction, that too by issuing a writ of mandamus as sought for enhancement of compensation. Scope of the remedy provided under Section 34 of the Act may be limited, but that does not mean that the petitioners do not have any remedy at all against the determination made by the Arbitrator. Therefore, they have to avail the remedy under Section 34 of the Arbitration and Conciliation Act, 1996. 10. In view of above, present writ petition cannot be held to be maintainable, as the petitioners have alternative efficacious remedy of filing objections under Section 34 of the Act of 1996 against the award. With that liberty to the petitioners, writ petition is dismissed as not maintainable. Stay application also stands dismissed.