Andhra Pradesh Education & Welfare Infrastructure Development Corporation (APEWIDC), Managing Director v. State of A. P. , rep. by its Principal Secretary
2022-02-21
M.SATYANARAYANA MURTHY, PRASHANT KUMAR MISHRA
body2022
DigiLaw.ai
JUDGMENT : Prashant Kumar Mishra, J This Writ Appeal would call in question the order dated 20.10.2019 passed by the learned single Judge dismissing W.P.No.17258 of 2021 preferred by the writ petitioner challenging the order/award dated 14.07.2021 in Case No.21C/IFC/2018/5318, passed by the A.P. Micro and Small Enterprises Facilitation Council at Vijayawada/respondent No.2, directing the writ petitioner to pay the principal amount of Rs.84,45,275/- with interest to respondent No.7 (respondent No.6 herein). 2. The learned single Judge has framed an issue for consideration as to whether the plenary jurisdiction under Article 226 of the Constitution of India can be exercised to set aside the award passed by respondent No.2-Council under the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (in short, "the MSMED Act") read with the Arbitration and Conciliation Act, 1996 (in short, "the 1996 Act"). 3. Learned counsel for the writ petitioner/appellant argued that when principles of natural justice have been violated, existence of alternative remedy would not come in the way of the Writ Court to exercise jurisdiction under Article 226 of the Constitution of India. It is also argued that power under Article 226 has to be exercised to effectuate the regime of law and not for abrogating it, therefore, when principles enshrined under Article 14 of the Constitution of India have been violated, Writ Court should not refuse to entertain petition on the ground of existence of alternative remedy. 4. True it is that when principles of natural justice have been violated, Writ Court can exercise jurisdiction despite existence of alternative remedy, but in the case at hand, the writ petitioner has not assailed the legality and validity of any administrative or statutory order. What is under challenge is the award passed by the Facilitation Council under the MSMED Act. Section 18 (1) of the MSMED Act 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, which, in turn, shall decide the reference under the provisions contained in Sections 65 to 81 of the 1996 Act, as if conciliation was initiated under Part III of the 1996 Act.
It is also provided under sub-section (3) of Section 18 of the MSMED Act that where conciliation was not successful and terminated without any settlement between the parties, the Council either itself take up the dispute for arbitration or refer it to any institution or centre providing alternate dispute resolution services and the provisions of the 1996 Act shall then apply to the dispute as if the arbitration was conducted pursuant to an arbitration agreement as per Section 7 (1) of the 1996 Act. Further, Section 19 of the MSMED Act speaks about the provision for appeal and pre-requisite of deposit of amount, providing that no application for setting aside decree, award or order made by the Council or any institution or centre to which reference is made, shall be entertained by any Court unless the appellant (not being a supplier) deposits with it 75% of the amount in terms of the decree, award or order. 5. It would also be profitable to refer to the Rules framed by the Government of Andhra Pradesh in exercise of powers conferred under Section 30 read with sub-section (3) of Section 21 of the MSMED Act. The Rules are known as the Andhra Pradesh Micro and Small Enterprises Facilitation Council Rules, 2007 (in short, "the 2007 Rules"). Rule 4 prescribes the procedure to be followed in the discharge of functions of the Council. Sub-Rule (viii) of Rule 4 provides that the Council shall either itself conduct conciliation in each reference placed before it or seek the assistance of any institute or centre providing alternate dispute resolution services by making reference to such an institution or centre, for conducting conciliation. The provisions of Sections 65 to 81 of the 1996 Act shall apply to such a reference as if the conciliation was initiated under Part III of the said Act. Under Sub-Rule (x), it is provided that when such conciliation does not lead to settlement of the dispute, the Council shall either itself act as an Arbitrator for final settlement of the dispute or refer it to an institute for such arbitration, in accordance with the provisions of the 1996 Act. Thereafter, Sub-Rule (xii) mandates that the Council shall make an arbitral award in accordance with Section 31 of the 1996 Act and within the time specified in Sub-Section 5 of Section 18 of the 1996 Act. Sub-Rule (xii) speaks about Award.
Thereafter, Sub-Rule (xii) mandates that the Council shall make an arbitral award in accordance with Section 31 of the 1996 Act and within the time specified in Sub-Section 5 of Section 18 of the 1996 Act. Sub-Rule (xii) speaks about Award. Sub-Rule (1) of Rule 12 provides that the Council shall make an award in accordance with Section 31 of the 1996 Act. 6. The provisions of the MSMED Act and the Rules framed thereunder, read along with the provisions of the 1996 Act, clearly mandate that an award passed by the Facilitation Council has to be rendered in accordance with the procedure prescribed under the 1996 Act. Therefore, the mechanism for filing an appeal to challenge the award would necessarily follow and the award cannot be challenged by preferring a writ petition under Article 226 of the Constitution of India. The same view has been taken by a single Judge of Chhattisgarh High Court in M/s. Sunmarg Steels (P) Ltd. v. Micro Small and Medium Enterprises Facilitation Council and another (order dated 18.11.2015 in WPC No.1754 of 2013) and JMS Mining Services Private Limited v. State of Chhattisgarh and others (judgment dated 13.02.2017 in WPC No.2498 of 2016). 7. The issue as to whether an award passed under the 1996 Act can be challenged under Article 226 or Article 227 of the Constitution of India, was examined by a Seven-Judge Bench of the Hon'ble Supreme Court in SBP Et Co. v. Patel Engineering Limited, (2005) 8 SCC 618 in which it is held thus in paragraphs 45 and 46: "45. It is seen that some High Courts have proceeded on the basis that any order passed by an Arbitral Tribunal during arbitration, would be capable of being challenged under Article 226 or 227 of the Constitution. We see no warrant for such an approach. Section 37 makes certain orders of the Arbitral Tribunal appealable. Under Section 34, the aggrieved party has an avenue for ventilating its grievances against the award including any in-between orders that might have been passed by the Arbitral Tribunal acting under Section 16 of the Act. The party aggrieved by any order of the Arbitral Tribunal, unless has a right of appeal under Section 37 of the Act, has to wait until the award is passed by the Tribunal. This appears to be the scheme of the Act.
The party aggrieved by any order of the Arbitral Tribunal, unless has a right of appeal under Section 37 of the Act, has to wait until the award is passed by the Tribunal. This appears to be the scheme of the Act. The Arbitral Tribunal is, after all, a creature of a contract between the parties, the arbitration agreement, even though, if the occasion arises, the Chief Justice may constitute it based on the contract between the parties. But that would not alter the status of the Arbitral Tribunal. It will still be a forum chosen by the parties by agreement. We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed by the Arbitral Tribunal is capable of being corrected by the High Court under Article 226 or 227 of the Constitution. Such an intervention by the High Courts is not permissible. 46. The object of minimising judicial intervention while the matter is in the process of being arbitrated upon, will certainly be defeated if the High Court could be approached under Article 227 or under Article 226 of the Constitution against every order made by the Arbitral Tribunal. Therefore, it is necessary to indicate that once the arbitration has commenced in the Arbitral Tribunal, parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them under Section 37 of the Act even at an earlier stage." 8. Dealing with the same issue as is arising in the case at hand, the Hon'ble Supreme Court in Sterling Industries v. Jayprakash Associates Ltd., AIR 2019 SC 3558 , held that writ petition under Article 227 of the Constitution of India was not maintainable in the High Court as against an order of learned District Judge passed under Section 20 of the 1996 Act read with Section 19 of the MSMED Act. 9. In Union of India v. Shri Kant Sharma, (2015) 6 SCC 773 , the Hon'ble Supreme Court has held that though the jurisdiction of the High Court under Article 226 of the Constitution of India and that of the Supreme Court under Article 32 of the Constitution of India, cannot be circumscribed by the provisions of any enactment, but they certainly have due regard to the legislative intent evidenced by the Act and exercise their jurisdiction consistent with the Act.
Furthermore, when statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation. Thus, the High Court should not entertain petition under Article 226 of the Constitution of India if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of itself contains a mechanism for redressal of grievance. 10. The provisions contained in the MSMED Act with the aid of the 1996 Act are self-contained, providing therein the statutory mechanism of conciliation and/or reference to arbitration. They also provide that the award passed by the Facilitation Council shall be deemed to be an award passed under the 1996 Act. If the order/award passed by the Facilitation Council is an award under the 1996 Act, the same can be assailed under the MSMED Act, read with the provisions of the 1996 Act and writ remedy under Article 226 of the Constitution of India, is not available. The argument canvassed by the learned counsel for the writ petitioner/appellant based on violation of principles of natural justice, if accepted, would wreak havoc with the judicial hierarchy, inasmuch as every decree passed by the trial court can be challenged by preferring writ petition under Article 226/227 of the Constitution of India, on the ground of violation of principles of natural justice by the trial court. The said argument of the learned counsel for the writ petitioner/appellant has failed to impress us. 11. The Writ Appeal, therefore, deserves to be, and is hereby, dismissed. No order as to costs. Pending miscellaneous applications, if any, shall stand closed.