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2025 DIGILAW 201 (GUJ)

H. K. Infracon Private Limited v. Mamlatdar and Executive Magistrate Mehsana

2025-03-04

PRANAV TRIVEDI, SUNITA AGARWAL

body2025
ORDER : SUNITA AGARWAL, CJ. 1. Having heard the learned counsel for the appellant and perused the record, it is pertinent to note that the original writ petition out of which the instant appeal has arisen, was filed challenging the award dated 05.01.2024 passed by the Micro & Small Enterprises Facilitation Council (in short ‘MSME Council’) located in the State of Madhya Pradesh (MP) on the premise of the same being nullity and without jurisdiction. The further challenge was to the consequential notice dated 26/27.11.2024 issued by the Mamlatdar, Mehsana seeking to make recovery under the said award passed by the MSME Council, MP. 2. The learned single Judge has categorically recorded the submissions of the learned counsel appearing for the petitioner that MSME Council had originally initiated the conciliation proceedings under Section 18(2) of the Micro, Small and Medium Enterprises Development Act, 2006 (in short MSMED Act’) and whereas, no settlement proposal has been submitted by the petitioner in the conciliation proceedings, the MSME Council without conducting any Arbitration proceedings further, had passed the award without following the procedure prescribed. The office of the Collector, Bhopal had sought assistance of the Collector, Mehsana for recovery of the awarded amount as arrears of the land revenue and consequential notice under Section 152 of the Land Revenue Code was accordingly issued by the Mamlatdar, Mehsana asking the petitioner to deposit the amount-in-question failing which recovery proceedings under the Land Revenue Code would be undertaken. 3. it was categorically recorded by the learned single judge that the preliminary question before the writ court was about the territorial jurisdiction to entertain the writ petition. Admittedly the challenge is to the validity of the award passed by the MSME Council located at Madhya Pradesh. It is also noted by the learned single Judge that the MSME Council at MP is the authority established in and for the State of MP. The contract was awarded in the State of MP. The original petitioner had engaged the respondent No.2 as sub-contractor for the contract awarded and the respondent no.2 had carried out the work within the State of MP. The dispute had arisen with regard to the work allegedly done by the respondent No.2 within the State of MP and consequentially MSME Council, MP had been approached by the respondent No.2. 4. The dispute had arisen with regard to the work allegedly done by the respondent No.2 within the State of MP and consequentially MSME Council, MP had been approached by the respondent No.2. 4. Taking note of the above, the learned single Judge records that no part of cause of action can be said to have arisen conferring jurisdiction to this Court, which has no territorial jurisdiction to act as a supervisory authority/Court to examine the validity of the award passed by the MSME Council, MP.. As regards the notice issued by the Mamlatdar, Mehsana, it is categorically noted by the learned single Judge that the notice seeks to execute the award passed by the MSME Council, MP and unless and until the award passed by the MSME Council, MP is interfered with by the competent Court, no fault could be found with the revenue authority for having issued the notice to the petitioner. 5. Learned advocate appearing for the appellant has vehemently relied upon the decision of the Apex Court in Jharkhand Urja Vikas Nigam Limited vs. State of Rajasthan and Others [(2021) 19 SCC 206] to submit that the MSME Council has committed a grave error of jurisdiction in passing the award without undertaking the arbitration proceedings since after the conciliation failed. In the aforesaid decision, the Apex Court has categorically pointed out the fundamental difference between the conciliation and arbitration. It is categorically laid down therein that in conciliation, the Conciliator assists the party to arrive at an amicable settlement in an impartial and independent manner. Whereas in arbitration, the Arbitrator Tribunal/Arbitrator adjudicates the dispute between the parties. The claim has to be proved before the Arbitrator, if necessary, by adducing evidence. Even though the strict rules of CPC or the Evidence Act may not apply, but oral hearings have to be held. Drawing analogy from the said decision of the Apex Court, it was sought to be submitted that since the award passed by the MSME Council is nullity as it runs contrary to the provisions of the MSMED Act, 2006 as well as the mandatory provisions of the Arbitration and Conciliation Act, 1996 for undertaking Arbitration Proceedings, the award has to be treated as patently illegal. In such a scenario, the petitioner cannot be relegated to avail the remedy of appeal under Section 34 of the Arbitration and Conciliation Act, 1996. 6. In such a scenario, the petitioner cannot be relegated to avail the remedy of appeal under Section 34 of the Arbitration and Conciliation Act, 1996. 6. With the aid of the decision of the Apex Court in Hindustan Zinc Limited (HZL) vs. Ajmer Vidyut Vitran Nigam Limited [(2019) 17 SCC 82] , it was sought to be argued that it is a settled principle of law that if the order suffers from inherent lack of jurisdiction, the plea can be taken at any stage and even in collateral proceedings. It was the argument that it is fundamental principle well-established that if a decree passed by the Court without jurisdiction is a nullity its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. The contention is that the defect of jurisdiction, whether it is pecuniary or territorial or whether it is in respect of subject matter of action strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of the parties. Principle of coram non judice is sought to be pressed into service to argue that the learned single Judge has committed an illegality in dismissing the writ petition on the ground of lack of jurisdiction, inasmuch as, the petitioner had challenged the notice issued by the Mamlatdar, Mehsana namely the respondent no.1, the validity of which falls within the territorial jurisdiction of this Court. The submission is that since the award passed by the MSME Council, which is nullity is sought to be executed through the notice issued by the Mamlatdar, Mehsana dated 26/17.11.2024, the learned single Judge could not have dismissed the writ petition on the ground of lack of territorial jurisdiction. 7. Dealing with all these contentions made by the learned counsel appearing for the appellant, suffice it to note that the reliance placed on the decision of the Apex Court in Hindustan Zinc Limited (supra) , is wholly misconceived, inasmuch as, the said case talks about the situation where the award or the decree is passed by the Court having no jurisdiction at all. It was a case where the challenge was to an order or decree passed in a case of inherent lack of jurisdiction, which was sought to be assailed in collateral proceedings or even at the stage of execution. In the present case, there is no dispute about the fact that the MSME Council at MP had jurisdiction to deal with the claim made by the original respondent No.2 and the claim was duly entertained. The conciliation proceedings had commenced which failed. The only ground of challenge by the original petitioner to the validity of the award passed by the MSME Council is that the procedure prescribed for making of the award in accordance with the provisions of the MSMED Act, 2006 read with the Arbitration and Conciliation Act, 1996 had not been followed. It is, thus, not a case of inherent lack of jurisdiction of the MSME Council who passed the award. As regards the reference to the decision of the Apex court in Jharkhand Urja Vikas Nigam Limited (supra) , the same is wholly out of context, inasmuch as, the learned single Judge has not dismissed the writ petition on the ground that the petitioner had not availed the alternative remedy of filling of an appeal under Section 19 of the MSMED Act read with Section 34 of the Arbitration and Conciliation Act, 1996. 8. As noted hereinabove, the learned single Judge having noted the fact pertaining to award of the contract-in-question, execution of work and the dispute having been arisen within the State of MP and the consequentially the MSME Council having been approached by the respondent No.2, had rightly reached at the conclusion that the defect of jurisdiction strikes on the very authority of the Court to pass the order and has held that no part of cause of action lies within the jurisdiction of this Court. This Court will have no jurisdiction to grant any prayer seeking for quashing of the award dated 05.01.2024 passed by the MSME Council at MP. 9. Taking note of the reasoning given by the learned single Judge and the factual aspects of the matter, we do not find any error in the decision of the learned single judge. This Court will have no jurisdiction to grant any prayer seeking for quashing of the award dated 05.01.2024 passed by the MSME Council at MP. 9. Taking note of the reasoning given by the learned single Judge and the factual aspects of the matter, we do not find any error in the decision of the learned single judge. In so far as the notice issued by the Mamlatdar, Mehsana is concerned, it is pertinent to note that the Mamlatdar, Mehsana had issued notice on a letter written by the Collector, Bhopal to seek assistance for execution of the award passed by the MSME Council, MP. The notice dated 26/27-11-2024 is only a consequential action initiated by the Mamlatdar, Mehsana pursuant to the request made by the Collector, Bhopal and hence the challenge to the said notice independent of the challenge to the award passed by the MSME Council, MP cannot be entertained. 10. For the above, the present appeal is found devoid of merits. Hence, it is dismissed. In view of the dismissal of the main appeal, no orders are required to be passed in the Civil Application. The Civil Application stands disposed of, accordingly.