JUDGMENT : Vivek Singh Thakur, J. Petitioner Firm has approached this Court for quashing impugned order dated 24.4.2019 (Annexure P-15) passed by Himachal Pradesh, Micro and Small Enterprises Facilitation Council, Shimla (respondent No. 2) (for short ‘Council’), whereby by observing that for already existing arbitration clause in agreement executed between supplier (petitioner) and buyer (respondent No. 1), reference from the proceedings of the Council was decided to be dropped with advise to the parties to act as per already existing arbitration clause at the first instance, respondent No. 2 has been directed to refer the dispute, between petitioner and respondent No. 1, to Arbitrator as per provisions of Section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 (for short ‘MSMED Act’). 2. Petitioner Firm is duly registered under provisions of MSME Act since 2009 and is engaged in manufacturing of Distribution Transformers. 3. Respondent No. 2-Punjab State Power Corporation Limited (PSPC), a Public Sector Company, is engaged in power distribution in the State of Punjab. 4. In response to tender invited by respondent No. 1 for supply of Transformers, petitioner participated in the process and was awarded purchase orders for supply of ‘Distribution Transformers’ and in furtherance whereof, petitioner supplied ‘Distribution Transformers’ to respondent No. 1. 5. Petitioner’s claim is that for supply of Distribution Transformers, some of payments were made by respondent No. 1 on time, however, majority of payments were made beyond period of 45 days, the agreed time for making the payment and, therefore, petitioner raised demand for payment of interest as per MSMED Act on the delayed payments. 6. For non-payment of interest on delayed payments, as claimed by petitioner, respondent No. 2-Council was approached by the petitioner by filing Reference Application under Section 18(1) of the MSMED Act, wherein respondent No. 1 was summoned. After filing reply to the reference, Council conducted conciliation itself and tried to resolve the matter amicably between the parties, but conciliation failed, whereupon respondent No. 2-Council passed the impugned order. 7. After filing reply to the reference, Council conducted conciliation itself and tried to resolve the matter amicably between the parties, but conciliation failed, whereupon respondent No. 2-Council passed the impugned order. 7. Petitioner’s case is that petitioner Firm is registered unit under the provisions of MSMED Act and, therefore, for adjudication and resolution of dispute in reference, provisions of MSMED Act were applicable notwithstanding any terms and conditions contained in the contract, purchase orders or any other law in terms of provisions of Section 24 of MSMED Act, which provide that Sections 15 to 23 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force and, therefore, instead of relegating the parties to avail the recourse in terms of arbitration clause in the agreement, the Council had to follow provisions of Section 18 of MSMED Act, which provides that in case conciliation 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 it to any institution or centre providing alternative dispute resolution services for such arbitration and, therefore, it has been canvassed that impugned order is not sustainable and deserves to be set aside with direction to respondent No. 2-Council to adjudicate the matter by acting as Arbitrator or to refer the dispute for arbitration as per provisions of Section 18(3) of the MSMED Act. 8. Learned counsel for the petitioner, to substantiate plea of overriding effect of provisions of Section 18 of MSMED Act, has referred pronouncement of this High Court in Simplex Infrastructures Ltd. Vs. Himachal Pradesh Micro and Small Facilitation Council and Another, Latest HLJ 2022 (HP) (1) (113), wherein it has been observed that Section 24 of MSMED Act has given overriding effect to the provisions of Sections 15 to 23 including Section 18 and, therefore, Arbitrator appointed by the Facilitation Council shall have precedence over the arbitration proceedings conducted by the Arbitrator appointed in terms of arbitration agreement. 9. Learned counsel for the petitioner has also referred pronouncement of the Supreme Court in M/s Silpi Industries Etc. Vs. 9. Learned counsel for the petitioner has also referred pronouncement of the Supreme Court in M/s Silpi Industries Etc. Vs. Kerala State Road Transport Corporation and another, AIR 2021 SC 5487 , wherein it has been observed that on failure of conciliation initiated under Section 18 (2) of the MSMED Act, the Council shall either itself take up the dispute for arbitration or refer it to any institution for arbitration. 10. Learned counsel for respondent No. 1 has submitted that at the time of participating in the tender process, it was never disclosed by the petitioner Firm that it was registered under the MSMED Act and had it been disclosed, respondent No. 1 would have never placed purchase orders to the petitioner for supply of Distribution Transformers and to avoid penalty of highly exorbitant interest for delayed payments. He has further submitted that it is not the only case where Council has asked the parties to take recourse of arbitration clause existing in the agreement instead in all cases identical advise has been given by the Council. To substantiate his plea, he has referred another similar order passed by the Council, placed on record as Annexure R-1, in another case between M/s New Bansal Generation and respondent No. 1. 11. It has been further submitted by learned counsel for respondent No. 1 that Council had advised the parties to refer the matter for arbitration in terms of existing agreement, in the year 2019, but instead of doing so, petitioner approached this Court and now referring the matter for arbitration to the Council, would cause grave prejudice to respondent No. 1, as respondent No. 1 may be held liable for interest for these three years also, whereas the interest during pendency of litigation should not be awarded, particularly for the reasons that respondent No. 1 has already paid the principal amount alongwith 0.5% penalty for delayed payments, as agreed under the agreement. 12. 12. Referring clauses 5, 13, 19 and 20 of the agreement, it has been contended that maximum penalty for delayed payments leviable in terms of contract was 0.5% and territorial jurisdiction to adjudicate the dispute in connection with purchase orders/contract, as agreed between the parties is at Patiala and also that purchase orders with complete terms and conditions (commercial and technical) itself forms contract agreement and any dispute or difference arising out of contract is to be referred for arbitration in terms of clause 19 of the agreement. Further that claim of the petitioner was time barred and thus by referring the matter to the Council, petitioner has not become entitled for claiming, agitating and receiving a time barred claim. 13. Issue involved in present petition is limited to the question that what procedure would have been adopted by the Council after unsuccessful effect for conciliation under Section 18(2) of the MSMED Act. 14. Section 24 of MSMED Act gives overriding effect to the provisions of Sections 15 to 23 of MSMED Act, which include Section 18 also. Section 18 of MSMED Act provides complete procedure to be adopted and followed by the Council on receipt of reference by any party entitled to do so under MSMED Act. After receiving the reference, Council has to resort to conduct conciliation in the matter either itself or to seek assistance from any institution or centre providing alternative dispute resolution service. On failure of conciliation, Council has to resolve the dispute by taking up it for arbitration either itself or refer it to any institution or centre providing alternative dispute resolution service. In such arbitration proceedings, provisions of the Arbitration and Conciliation Act, 1996 shall apply as if the arbitration was in pursuance to arbitration agreement referred to in Section 7(1) of that Act. 15. For overriding effect of provisions of MSMED Act, contract agreement is to be governed by the provisions of MSMED Act and, therefore, clause 5 providing minimum penalty charges of 0.5%, clause 13 providing jurisdiction at Patiala only, clause 19 providing arbitration clause in the agreement shall be eclipsed by the special provision of MSMED Act and procedure provided under MSMED Act shall prevail over clauses of arbitration agreement and interest between the parties. 16. 16. Petitioner Firm is registered under MSMED Act with respondent No. 2 Council at Shimla, therefore, Council has jurisdiction to adjudicate the reference preferred under Section 18 of the MSMED Act for resolution of dispute. 17. Passing of similar order by the Council in other cases does not legalize or cure inherent defect in the order passed by the Council in violation of or ignoring the provisions of Section 18 of MSMED Act. Wrong order can never be a good precedent. Such orders including the impugned order passed by the Council are not in consonance with the provisions of MSMED Act and thus not sustainable. 18. The issue, with regard to limited time barred claim, exemption from payment of interest for the parties spent in litigation especially during pendency of present petition, are the claims which are to be adjudicated and determined in the arbitration proceedings by the Arbitrator, but not in present petition and, therefore, parties are at liberty to raise all contentions with respect to their respective claims and counter claims before the Arbitrator, who shall adjudicate and determine all such contentions on its own merit in accordance with law as applicable. 19. In view of above discussion, impugned order so far as it is directing the parties to resort to the arbitration clause already existing in the agreement to resolve the dispute, is quashed and set aside with direction to the Council to proceed further in accordance with the provisions of MSMED Act as applicable. The parties are directed to appear before the Chairman/Council-respondent No. 2 on 30th January, 2023, whereafter Council shall proceed further in accordance with law. Learned Additional Advocate General is directed to inform the Chairman of the Council about passing of this order for ensuring necessary compliance on the part of Chairman/Council. Petition is allowed and disposed of in aforesaid terms alongwith pending application(s).