Transmission Corporation of Andhra Pradesh Limited v. Haryana Micro And Small Enterprises Facilitation Council
2022-09-08
A.V.SESHA SAI, V.SRINIVAS
body2022
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JUDGMENT A.V.SESHA SAI, J. - In this Writ Petition, petitioners herein are challenging the order dtd. 11/7/2018, passed by the Haryana Micro and Small Enterprises Facilitation Council, Chandigarh, represented by its Member Secretary, 1st respondent herein in Case No.7. 2. Briefly, stated the case of the petitioners in the present Writ Petition is as follows: "2.1 During the year 1998, M/s.Equipment Conductors and Cables Limited, New Delhi-2nd respondent herein, supplied electric conductors to the predecessor of the petitioners herein. Predecessor of the petitioners and the petitioners herein paid the entire amounts to the 2nd respondent as per the invoices, however with some delay and the 2nd respondent received the said amounts without any protest. 2.2 The 2nd respondent herein initiated the Arbitration proceedings under the Arbitration and Conciliation Act, 1996, by filing the Claim Petition vide Case No.07 before the 1st respondent-Council, under the provisions of the "Interest on Delayed Payments Act, 1993, claiming interest on delayed payments for 45 claims". 2.3 Petitioner No.1 herein, after receipt of notices in the said Claim Petition Case No.07, filed a counter and also an additional defence statement and contested the matter. Respondent No.1-Council, partly allowed the said Claim Petition, vide Award No.HMSEFC/2010/08, dtd. 21/6/2010, and claims 26-45 were allowed and claims 1-25 were disallowed, on the ground that they were hopelessly barred by limitation. 2.4 Towards claims 26-45, the 1st respondentCouncil granted a sum of Rs.22, 42, 619.00 and as against the said Award dtd. 21/6/2010, petitioner No.1 herein filed Arbitration Original Petition No.523 of 2010, before the Court of the Chief Judge, City Civil Court, Hyderabad, under Sec. 34 of the Arbitration and Conciliation Act, 1996, r/w Sec. 19 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. 2.5 As per Sec. 19 of the Act, petitioner No.1 herein deposited 75% of the awarded amount. Against the aforesaid Award dtd. 21/6/2010, to the extent the same went against the 2nd respondent, 2nd respondent herein filed A.C.No.399 of 2010 before the Court of the District Judge, Chandigarh. Subsequently, Arbitration O.P.No.523 of 2010 was transferred from the Court of the Chief Judge, City Civil Court, Hyderabad, along with 75% deposit to the Court of the District Judge, Chandigarh, and was renumbered as Arbitration Case No.580 of 2010. 2nd respondent herein had withdrawn the said deposited 75%. 2.6 Vide order dtd.
Subsequently, Arbitration O.P.No.523 of 2010 was transferred from the Court of the Chief Judge, City Civil Court, Hyderabad, along with 75% deposit to the Court of the District Judge, Chandigarh, and was renumbered as Arbitration Case No.580 of 2010. 2nd respondent herein had withdrawn the said deposited 75%. 2.6 Vide order dtd. 28/8/2014, the Chief Judge, Chandigarh, dismissed Arbitration Case No.580 of 2010, filed by petitioner No.1 herein. 2.7 Vide order dtd. 28/8/2014, the Chief Judge, Chandigarh, allowed Arbitration Case No.399 of 2010 and remanded the matter to respondent No.1-Council, for fresh decision on claims 1-25. 3. Aggrieved by the aforesaid orders dtd. 28/8/2014, in Arbitration Cases 580 of 2010 and 399 of 2010, petitioner No.1 herein filed Appeals vide FAO No.34 of 2015 and 68 of 2015 respectively, before the High Court for the States of Punjab and Haryana. The Punjab and Haryana High Court passed a common order, dtd. 29/1/2016, in the said two Appeals and other two Appeals and set aside the orders impugned therein and remanded the matters. The operative portion of the said order reads of follows: "Accordingly the order passed by the objecting court remanding the matter back is hereby set aside. As regards the objections filed by the appellant against the award aforementioned. It would be apt to refer Sec. 19 of the Act statutorily provides deposit of 75% of the amount. Sec. 19 of the Act reads thus: "Application for setting aside decree, award or order:-No application for setting aside any decree, award or other order made either by the council itself or by any institution or centre providing alternate 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 percent 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 such conditions as it deems necessary to impose." A serious dispute has been raised viz-a-viz calculation of 75% of the awarded amount or whether after calculating compounding interest, 75% of the amount is to be calculated. Instead of pondering upon the calculations referred to during the course of arguments, I am of the view that the same shall be subject matter of the objecting Court. In essence, both the parties shall be given one-one effective opportunity to submit their calculations viz-a-viz amount consisting 75% of the awardd amount as per award dtd. 21/6/2010 and thereafter the objecting Court shall determine 75% of the awarded amount and give another fifteen days time to the appellant to deposit 75% of the amount. In case of non-deposit of the same, objections shall be deemed to have been dismissed. If otherwise, the objecting court shall decide the matter pragmatically, much less in accordance with law. With the aforementioned observations, the orders passed by the objecting court are hereby set aside. The matter is remanded back to it. Parties through their counsel shall appear before the objecting court on 15/2/2016." 4. Thereafter, petitioner No.1 filed its calculation memo for 75% and after determination of the same, petitioner No.1 deposited the balance amount. Pending O.P.Nos.580 and 399 of 2010 before the Court of the District Judge, Chandigarh, in respect of claims 26-45, which were allowed by respondent No.1-Council, respondent No.2 filed Execution Petition before the Additional District Court, Chandigarh, and respondent No.2 got the same transferred to the Court of the Chief Judge, City Civil Court, Hyderabad, for execution. Subsequently, the said E.P. was made over to the Court of the II Additional Chief Court, City Civil Court, Hyderabad and numbered as E.P.No.61 of 2011 and the same was dismissed vide order dtd. 19/2/2016. Subsequently, the 2nd respondent filed another E.P.No.33 of 2016, before the Court of the Chief Judge, City Civil Court, Hyderabad, wherein the 2nd respondent sought prohibitory orders under Order 46 and 46- A of the Code of Civil Procedure, which was allowed vide order dtd. 30/6/2016. Against the said order dtd.
19/2/2016. Subsequently, the 2nd respondent filed another E.P.No.33 of 2016, before the Court of the Chief Judge, City Civil Court, Hyderabad, wherein the 2nd respondent sought prohibitory orders under Order 46 and 46- A of the Code of Civil Procedure, which was allowed vide order dtd. 30/6/2016. Against the said order dtd. 30/6/2016, petitioner No.1 filed C.R.P.No.3601 of 2016, before the common High Court of Andhra Pradesh. The common High Court vide order dtd. 8/11/2016, partly allowed C.R.P.No.3601 of 2016, holding that the E.P filed in respect of claims 1-25 and Garnishee order passed for recovery of the said amount are illegal and confirmed the Garnishee in respect of claims 26-45. 5. Aggrieved by the dismissal of C.R.P.No.3601 of 2016 in respect of claims 26-45, petitioner No.1 herein filed SLP(C) No.187 of 2017, before the Hon'ble Supreme Court. SLP(C) No.187 of 2017 came to be disposed of by the Hon'ble Apex Court vide order dtd. 13/1/2017, directing the learned Additional District Judge, Chandigarh, to determine the amount of 75% of the Award, so as to enable petitioner No.1 to deposit the same within a period of 15 days from the date of the order of determination by the District Court. The said order reads as follows: "1. The High Court, on 29/1/2016 inter alia directed as under: "A serious dispute has been raised viz-a-viz calculation of 75% of the awarded amount whether Rs.15, 52, 089.00 would constitute 75% of the awarded amount or whether after calculating compounding interest, 75% of the amount is to be calculated. Instead of pondering upon the calculations referred to during the course of arguments, I am of the view that the same shall be subject matter of the objecting court. In essence, both the parties shall be given one-one effective opportunity to submit their calculations viz-a-viz amount constituting 75% of the awarded amount as per award dtd. 21/6/2010 and thereafter the objecting court shall determine 75% of the awarded amount and give another fifteen days time to the appellant to deposit 75% of the amount. In case of non-deposit of the same, objections shall be deemed to have been dismissed. If otherwise, the objecting court shall decide the matter pragmatically, much less in accordance with law." 2.
21/6/2010 and thereafter the objecting court shall determine 75% of the awarded amount and give another fifteen days time to the appellant to deposit 75% of the amount. In case of non-deposit of the same, objections shall be deemed to have been dismissed. If otherwise, the objecting court shall decide the matter pragmatically, much less in accordance with law." 2. It is apparent, that on account of the amount deposited, which was stated to be less than the one contemplated under Sec. 19 of the Micro, Small and Medium Enterprises Development Act, 2006, the objections raised by the petitioner have not been dealt with by the District Judge under Sec. 34 of the Arbitration and Conciliation Act, 1996, on merits. 3. We are of the view, that one further opportunity should be afforded to the petitioner, to make such deposit within 15 days, from the determination, of the deposit amount (under Sec. 19, afore-mentioned) by the District Judge, in consonance with the order of the High Court dtd. 29/1/2016. 4. Ordered accordingly. 5. We are of the view, that the petitioner can only insist for a determination on merits, if it complies with Sec. 19 aforementioned. In case the petitioner does not make the deposit within 15 days, from the date of determination by the District Judge, the execution petition filed by the respondent shall be adjudicated upon without any impediment. In case the aforesaid payment is made, within the time stipulated above, the execution petition will revive only after adjudication of the controversy, on merits, by the District Judge (under Sec. 34 of the Arbitration and Conciliation Act, 1996). 6. The Special Leave Petition and connected applications are disposed of. 7. The orders passed by the executing court hitherto before, shall stand vacated. 8. Needless to mention, that it would be open to the respondent to move an appropriate application, if the respondent is so advised, for premature payment of deposits made before the District Judge." 6. The learned Additional District Judge, Chandigarh, pursuant to the aforesaid order of the Hon'ble Supreme Court in SLP(C) No.187 of 2017, dtd. 13/1/2017, passed an order on 4/9/2017 in Arbitration Case No.580 of 2013, directing petitioner No.1 to deposit 75% of the amount i.e., Rs.24, 50, 046.00 and according to the petitioner, the said 75% was deposited. 7.
The learned Additional District Judge, Chandigarh, pursuant to the aforesaid order of the Hon'ble Supreme Court in SLP(C) No.187 of 2017, dtd. 13/1/2017, passed an order on 4/9/2017 in Arbitration Case No.580 of 2013, directing petitioner No.1 to deposit 75% of the amount i.e., Rs.24, 50, 046.00 and according to the petitioner, the said 75% was deposited. 7. Thereafter, E.P.No.33 of 2016 was transferred from the Court of the Chief Judge, City Civil Court, Hyderabad, to the Commercial Court-cum-XXIV Additional Chief Judge, City Civil Court, Hyderabad, and was renumbered as C.E.P.No.41 of 2017. Vide order dtd. 20/11/2017, the above said Court dismissed E.P.No.33 of 2016, and the operative portion of the said order reads as follows: "7. Admittedly arbitration proceedings were initiated prior to Act 3 of 2016, hence, I am relying on the judgment of Hon'ble Sri Justice C.V.Nagarjuna Reddy and the Hon'ble Smt.Justice T.Rajani in Civil Revision Petition No.6172 of 2016 held in between Government of Andhra Pradesh vs. Potluri Srinivas and another wherein it was held that: Sec. 19 of the Arbitration and Conciliation (Amendment) Act, 2015 (for short, 'the Amendment Act'), substituted Sec. 36 of the Arbitration and Conciliation Act, 1996 (for short, 'the Principal Act'). Sub-sec. (2) of Sec. 19 of the Amendment Act provided that when an application to set aside the arbitral award has been filed in the Court under Sec. 34, the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said arbitral award is accordance with the provisions of subsec. (3) on a separate application made for that purpose. Sec. 26 of the Amendment Act, however, exempted the amended provisions of the Act from application to the arbitral proceedings commenced, in accordance with the provisions of Sec. 21 of the Principal Act, before the commencement of the Amendment Act unless the parties otherwise agree. In the instance case, not only that the arbitral proceedings were commenced before the commenced of the Amendment Act but also the award was passed on 19/9/2015 which is earlier to the commencement of the Amendment Act i.e., 23/10/2015. In view of the above admitted position, the un-amended proviso is of Sec. 36 of the Principal Act will continue to apply to A.O.P.No.30 of 2016 and pendency of the said proceedings shall operate stay of execution of the arbitral award.
In view of the above admitted position, the un-amended proviso is of Sec. 36 of the Principal Act will continue to apply to A.O.P.No.30 of 2016 and pendency of the said proceedings shall operate stay of execution of the arbitral award. Hence, the Court below has committed a serious error in granting stay of the execution proceedings, subject to the terms as indicated above, as the very E.P itself is not maintainable during the pendency of A.O.P.No.30 of 2016. 8. In view of the judgment of the Hon'ble Division Bench of the Hon'ble High Court of Judicature at Hyderabad, after amendment of Act 3 of 2016 petition under Sec. 36(2) is mandatory, for the Arbitration initiated prior to the amendment of the act separate petition is not necessary. As per the Arbitration and Reconciliation Act, 1996 mere filing petition under Sec. 34 is deemed stay. Therefore, the present dispute was initiated prior to the amendment of Act 3 of 2016. Therefore, the award passed by Arbitrator, dtd. 21/6/2010 deemed stay since the JDr filed petition under Sec. 34 of Arbitration and Reconciliation Act which was pending before Additional District Judge, Chandigarh. In the result, Execution Petition is disposed of with an observation that the present E.P has filed in pursuance of the award passed prior to enforcement of Act 3 of 2016. Therefore, mere pending of application under Sec. 34 of Arbitration and Reconciliation Act challenging the arbitration proceedings initiated prior to enforcement of Act 3 of 2016 implies that the Award passed by Arbitrator is deemed to be stayed. Hence, the Execution Petition is dismissed in limini." 8. The said order dtd. 20/11/2017, according to the petitioner attained finality. In respect of claims 26-45, respondent No.2 filed C.E.P.No.15 of 2018 before the Commercial Court-cumXXIV Additional Chief Judge, City Civil Court, Hyderabad, and as per the petitioners, the same was closed vide order dtd. 27/8/2018. 9. While the things being so, the 2nd respondent herein filed an application in the year 2017, before the 1st respondentCouncil, under Sec. 17(ii)(e) r/w Sec. 17(ii)(b) of the Arbitration and Conciliation (Amendment) Act, 2015, praying to determine the amount payable by the petitioners in the Award dtd. 21/6/2010, in respect of the disallowed claims. The said application came to be dismissed vide order dtd.
21/6/2010, in respect of the disallowed claims. The said application came to be dismissed vide order dtd. 6/9/2017, by respondent No.1-Council, as not maintainable and the said order, according to the petitioners attained finality, as it was not challenged before any forum of law. 10. On 14/10/2017, respondent No.2 filed another application before respondent No.1-Council, seeking review of the order dtd. 6/9/2017, by arraying petitioner Nos.2 and 3 and respondent Nos.3 and 4 herein as Garnishees. The 1st respondent-Council passed an order in the said Application on 11. 07.2018. The said order of the 1st respondent-Council, dtd. 11/7/2018, is under challenge in the present Writ Petition. 11. Heard Sri Y.N.Vivekananda, learned Special Government Pleader representing Sri Anup Koushik Karavadi, learned counsel for the petitioners on record and Sri Challa Ajay Kumar, learned counsel for respondent No.2 in W.P.No.34399 of 2018 and Sri P.A.Seshu, learned counsel for respondent No.2 in W.P.No.34412 of 2018. 12. It is contended by Sri Y.N.Vivekananda, learned Special Government Pleader representing learned counsel for the petitioners, that the order impugned in W.P.No.34399 of 2018 is highly erroneous, contrary to law and opposed to the very spirit and object of the provisions of the Micro, Small and Medium Enterprises Development Act, 2006, and the Arbitration and Conciliation Act, 1996. It is further submitted by the learned Special Government Pleader in elaboration that, before passing the impugned order, the 1st respondent herein did not issue any notice to the petitioners and that the order passed suffers from inherent lack of jurisdiction. It is further submitted that, the impugned order is also violative of the principles of natural justice. 13. On the contrary, Sri Challa Ajay Kumar and Sri P.A.Seshu, representing respondent No.2 in both the Writ Petitions contend that, there is absolutely no illegality nor there exists any infirmity in the impugned action and in the absence of the same, the orders impugned in the Writ Petitions are not amenable for any judicial review under Article 226 of the Constitution of India. In elaboration, it is further contended that the learned counsel that, having regard to the mandatory provisions of law, particularly Sec. 17 of the Arbitration and Conciliation Act, 1996 and Sec. 19 of the Micro, Small and Medium Enterprises Development Act, 2006, since the petitioners herein failed to deposit 75% of the amount, the Writ Petition is not maintainable before this Court.
It is further contended by the learned counsel representing 2nd respondent in both the Writ Petitions that, having failed to adhere to the mandatory provisions of law, it is not open for the petitioners herein to raise any contention as to the violation of the principles of natural justice. In support of his submissions and contentions, the learned counsel for 2nd respondent placed reliance on Arcelor Mittal Nippon Steel India Limited vs. Essar Bulk Terminal Limited(Civil Appeal No.5700 of 2021), Gujarat State Disaster Management Authority vs. M/s.Aska Equipments Limited(Civil Appeal No.6252 of 2021), M/s.Tirupati Steels vs. M/s.Shubh Industrial Component an another(Civil Appeal No.2941 of 2022), M/s.Tirupati Stationary Private Limited vs. State of Uttar Pradesh and another(C.No.46388 of 2013), M/s.Eden Exports Company vs. Union of India(W.P.No.27319 of 2011) and Churchs Auxiliary For Social Action and another vs. Director General of Income Tax (Exemptions) New Delhi and others(W.P(C).No.7481 of 2009). There is absolutely no controversy with regard to the reality that, when earlier an application was filed by the 2nd respondent, under the provisions of Sec. 17(ii)(e) read with Sec. 17(ii)(b) of the Arbitration and Conciliation (Amendment) Act, 2015, praying to determine the amounts payable by the petitioners herein in the Award dtd. 20/1/2010, in respect to the disallowed claims, the 1st respondent-Council, dismissed the said Application vide order dtd. 6/9/2017, as not maintainable and admittedly the said order attained finality and according to the learned counsel for the petitioners, as the same attained finality and never challenged before any forum of law, they cannot file any other application. 14. While that being the situation, once again on 14/10/2017, another application came to be filed by the petitioner/2nd respondent herein, seeking review in order dtd. 6/9/2017, by arraying the Petitioner Nos.1 and 2 and also respondent Nos.3 and 4 as Garnishees. 15. The essence of the case of the petitioners in the present Writ Petition, as evident from the pleadings is that, the 1st respondent-Council entertained the said application and passed an order on 11/7/2018, without issuing any notice and without affording any opportunity to contest the matter to the petitioners herein. The said aspect is not disputed. It is a settled and well established principle of law that, any action, which has civil consequences must necessarily be preceded by notice and opportunity of hearing to the persons likely to be effected by such action. 16.
The said aspect is not disputed. It is a settled and well established principle of law that, any action, which has civil consequences must necessarily be preceded by notice and opportunity of hearing to the persons likely to be effected by such action. 16. In the case on hand, the 1st respondent-Council, passed the order under challenge in deviation to the said cardinal principle of law. It is also very much evident from a perusal of the order impugned in the present Writ Petition that, the 2nd respondent herein filed the instant application on 14/10/2017, seeking review of the order of the Council dtd. 6/9/2017. The order impugned also does not disclose anything as regards the issuance of notice to the petitioners herein while passing the impugned orders. 17. According to the learned counsel for the petitioners, had the opportunity been afforded to the petitioners herein, they would have contested the matter and the order of the 1st respondent-Council, would have been otherwise and the order impugned in the Writ Petition would not be emanated. 18. In the considered opinion of this Court, the order passed by the 1st respondent-Council is in violation of the principles of natural justice. 19. Infact, the quantum of Award is in dispute and on one hand, petitioners contend that they made such deposit in accordance with the provisions of law and on the other hand, respondent No.2 denies the same. Having regard to the facts and circumstances of the case, the objection of the learned counsel for the 2nd respondent that, unless the petitioners herein deposit 75% of the amount in terms of the Award, they cannot maintain the Writ Petition is unacceptable and cannot be approved by this Court. 20. As observed supra, since the order passed by the 1st respondent-Council is in total violation of the principles of natural justice i.e., without giving notice and opportunity of hearing to the petitioners herein, this Court is inclined to set aside the order. 21. Coming to the judgment cited by the learned counsel for the 2nd respondent, having regard to the factual situation in the present Writ Petition, the same would not render any assistance to the 2nd respondent herein. 22. For the aforesaid reasons, the Writ Petition is allowed, setting aside the order dtd.
21. Coming to the judgment cited by the learned counsel for the 2nd respondent, having regard to the factual situation in the present Writ Petition, the same would not render any assistance to the 2nd respondent herein. 22. For the aforesaid reasons, the Writ Petition is allowed, setting aside the order dtd. 11/7/2018, passed by the 1st respondent in case No.7 and the matter is remanded to the 1st respondent-Council for fresh consideration, after issuing due notice and opportunity of hearing to the petitioners herein. It is also needless to observe that all the consequential orders, if any, including the orders passed by the respondent-bank authorities freezing the accounts of the petitioners are of no significance at all and cannot be acted upon. 23. Having regard to the facts and circumstances, this Court deems it appropriate to request the 1st respondent to dispose of the applications filed by the 2nd respondent, as expeditiously as possible, preferably within a period of two (2) months from the date of receipt of a copy of this order. It is also made clear that all contentions are left open and parties are entitled to place all the relevant material before the Council. There shall be no order as to costs. Consequently, Miscellaneous Petitions, if any, pending shall stand closed.