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2025 DIGILAW 2775 (MAD)

Felguera Gruas India Private Limited v. Thiraviam Engineering Pvt Ltd

2025-07-04

N.ANAND VENKATESH

body2025
ORDER : N. ANAND VENKATESH, J. The issue involved in both these Writ Petitions are common and hence, they are taken up together, heard and disposed of through this common order. 2. The petitioner in both these writ petitions has challenged the Arbitral Award dated 02.12.2023, passed by the Arbitral Tribunal on the ground that the Tribunal lacked jurisdiction. 3. The respondent is carrying on with business of fabrication, assembly and supply of engineering items in general and in particular structural and mechanical fabrication of steel plants of conveyor systems and transfer towers. The respondent is also engaged in the business of carrying out turnkey projects in infrastructure sector across India and offering end to end services in Design, Testing, Commissioning etc. 4. The respondent entered into a contract on 06.09.2013 with the petitioner in both the writ petitions and materials were supplied for which invoices were raised for the period from 08.10.2013 to 07.01.2014. Since the amount was not paid, the MSME Council referred the dispute to Arbitration by order dated 21.08.2018. Pursuant to the same, the parties went before the Arbitral Tribunal and the Tribunal has passed an Award which has been put to challenge in both these writ petitions. 5. The respondent has filed a counter affidavit in both the writ petitions and raised the issue of maintainability of the writ petitions against an Award passed by the Arbitrator. They have also questioned the conduct of the writ petitioner in not raising the issue of jurisdiction before the Arbitrator and thereby, waiving their right. The writ petitioner had questioned the jurisdiction of the MSME Council referring the dispute to the Arbitrator on the ground that as on the date of contract and as on the date when the invoices were raised, the respondent was not registered with MSME and they had registered only on 03.05.2016. The writ petitioner had questioned the jurisdiction of the MSME Council referring the dispute to the Arbitrator on the ground that as on the date of contract and as on the date when the invoices were raised, the respondent was not registered with MSME and they had registered only on 03.05.2016. For this ground raised by the petitioner, the respondent has taken a stand in the counter affidavit that the respondent commenced their operations from the year 1979 insofar as Unit-I is concerned and in the year 2010 insofar as Unit-II is concerned and that the registration took place in the year 2010 on submission of Memorandum as per Section 8 of the Micro, Small and Medium Enterprises Development Act, 2006 (herein after referred to as “the Act”) and therefore, as on the date when the contract was entered into, respondent was registered with MSME. The respondent has also taken a stand that the petitioner has filed an application under Section 34 of the Arbitration and Conciliation Act, 1996. But however, the same was not prosecuted, since they are required to deposit 75% of the amount awarded and in order to avoid the same, the petitioner has parallely instituted writ proceedings before this Court. Accordingly, the respondent has sought for the dismissal of these writ petitions. 6. The learned counsel for the petitioner by placing reliance upon the judgement of the Apex Court in Tamil Nadu Cements Corporation Limited vs. Micro and Small Enterprises Facilitation Council and Another reported in 2025 4 SCC 1 , submitted that the maintainability of a writ petition under Article 226 of the Constitution of India against an order passed in exercise of power under Section 18 of the Act has been referred to a Larger Bench of five Judges and hence, requested this Court not to pass any final orders in these writ petitions. The learned counsel for the petitioner also relied upon the judgement to contend that the vires of Sections 16 to 19 of the Act has also been put to question and Section 19 of the Act insist for deposit of 75% of the amount awarded, which disenables the petitioner to prosecute the application filed under Section 34 of the Arbitration Act. 7. 7. The learned counsel further submitted that even if the jurisdiction issue was not raised before the Arbitrator, it can be always be raised at a later point of time if the authority lacks jurisdiction to even try the case and pass an Award. To substantiate this submission, the learned counsel placed relies upon the judgement of the Apex Court in Lion Engineering Consultants vs. State of Madhya Pradesh and Others reported in 2018 16 SCC 758 . He further relied upon the judgements of this Court in S.Pandi Meenakshi and Another vs. Hinduja Leyland Finance Ltd., reported in 2019 SCC Online Mad 5415 , K.Prem Chander and Another vs. Hella India Automotive Private Limited formerly known as FTZ Engineering (P) Ltd., and Another reported in 2020 SCC Online Mad 3654 and Landmark Housing Projects Chennai Pvt Ltd., rep. by its Managing Director T.Udayakumar vs. Savithri Naidu and others reported in 2021 SCC Online Mad 5715 8. The learned counsel for the petitioner further submitted that the Award of the Tribunal reflects the fact that the registration of the Unit had taken place only on 03.05.2016 which is much after the date of contract and the dates when the invoices were raised and therefore, the very maintainability of the Award passed by the Arbitral Tribunal is in question. Hence, fresh materials cannot be relied upon at this stage. To substantiate this submission, the learned counsel relied upon the judgement of the Apex Court in Alpine Housing Development Corporation Pvt. Ltd., vs. Ashok S.Dhariwal and Others reported in 2023 SCC Online SC 55 9. Per contra, the learned Senior Counsel appearing on behalf of the respondent submitted that the petitioner has already initiated proceedings under Section 34 of the Arbitration Act and since the petitioner is not able to comply with the pre-deposit mandated under Section 19 of the Act, has parallelly filed the present writ petition and the same is an abuse of process of law. The learned Senior Counsel further submitted that the date of commencement of business was on 01.09.1979 insofar Unit-I is concerned and 01.02.2010 insofar as Unit-II is concerned and they are registered by way of filing a Memorandum before the authority under Section 8 of the Act and the Registration Number has also been given as 3302812. The learned Senior Counsel further submitted that the date of commencement of business was on 01.09.1979 insofar Unit-I is concerned and 01.02.2010 insofar as Unit-II is concerned and they are registered by way of filing a Memorandum before the authority under Section 8 of the Act and the Registration Number has also been given as 3302812. The learned Senior Counsel in order to substantiate this submission, relied upon the typed set of papers filed on the side of the respondent. It was further submitted that the petitioner did not raise the issue of jurisdiction before the Arbitral Tribunal and has waived the right and for the first time, such a ground has been raised in these writ petitions. The learned Senior Counsel in order to substantiate his submission, relied upon the judgement of this Court VR Dakshin Pvt. Ltd., vs. SCM Silks Pvt., Ltd., Tiruppur and others reported in 2025 1 CTC 1 and the judgement of the Apex Court in Sweta Construction vs. Chhattisgarh State Power Generation Company Limited reported in 2024 4 SCC 722 10. In reply to the above submission, the learned counsel for the petitioner submitted that the respondent did not place any of the documents that are now filed in the present writ petitions before the Arbitrator and the Arbitrator has proceeded further with the case after taking note of the fact that the registration with MSME took place only on 03.05.2016. Therefore, those documents which are now relied upon cannot be looked into by this Court. To substantiate his submission, the learned counsel placed reliance upon Section 34(2)(a). It was further submitted that the Act itself came into force only in the year 2006 and therefore, the respondent could not have registered in the year 1978. There is absolutely no reference in any of the documents at the time of entering into an agreement that the respondent is registered with MSME. 11. This Court has carefully considered the submissions made on either side and the materials available on record. 12. The respondent made a reference of the dispute concerning the works carried out by the respondent to Micro and Small Enterprises Facilitation Council (MSEFC) on 03.05.2016 against the petitioner which was ultimately referred to arbitration by MSEFC vide order dated 21.08.2018. 13. This Court has carefully considered the submissions made on either side and the materials available on record. 12. The respondent made a reference of the dispute concerning the works carried out by the respondent to Micro and Small Enterprises Facilitation Council (MSEFC) on 03.05.2016 against the petitioner which was ultimately referred to arbitration by MSEFC vide order dated 21.08.2018. 13. The main ground that has been raised by the learned counsel for the petitioner is that the respondent was registered only on 03.05.2016 which is evident from the Award passed by the Tribunal and therefore, the reference of dispute under the Act and all the other consequential proceedings is non est in the eye of law. This ground has been raised, since to apply and rely upon the Act, the enterprise should be registered under the Act either on the date of the agreement between the parties or on the date of supply of the goods/rendering of services. That apart, registration under the Act will only apply prospectively. Thus, if the respondent has not been registered under the Act as on the date of entering into an agreement on 06.09.2013 or on the date when the goods were supplied/services were rendered or even on those dates when the invoices were raised from 08.10.2013 to 07.01.2014, the very reference of dispute under the Act and the consequential Award becomes non est in the eye of law. 14. In the counter affidavit filed by the respondent, they have taken a stand that Unit-I started their manufacturing from 01.09.1979 and Unit-II started their manufacturing from 01.02.2010. It will be relevant to take note of Section 8 of the Act at this juncture. This provision states that a person who intends to establish a micro or small enterprise is required to file a Memorandum with the authorities specified by the State Government. the District Industries Center, Thoothukudi falls under the Department of Industries and Commerce, Government of Tamil Nadu. The petitioner filed a Memorandum before the concerned authority and it was acknowledged as early as on 15.03.2010. For proper appreciation, the Certificate issued on 21.08.2012 is scanned and extracted hereunder: 15. Thereafter, there was compulsory upgradation with Aadhaar which resulted in a Memorandum dated 03.05.2016. Even in this document, the registration detail is shown as EM-II, 33-028-12-00091. This number coincides with the earliest registration number that was given in the year 2010. 16. For proper appreciation, the Certificate issued on 21.08.2012 is scanned and extracted hereunder: 15. Thereafter, there was compulsory upgradation with Aadhaar which resulted in a Memorandum dated 03.05.2016. Even in this document, the registration detail is shown as EM-II, 33-028-12-00091. This number coincides with the earliest registration number that was given in the year 2010. 16. The petitioner has not raised the ground of jurisdiction before the Arbitral Tribunal. For the first time, it is raised before this Court. The learned counsel for the petitioner submitted that where there is complete lack of jurisdiction, the same can be raised at any stage and to substantiate the same, the learned counsel relied upon some judgements. 17. It is now too well settled that where there is complete lack of jurisdiction for an authority or a Court to decide an issue, such a ground can be raised at any stage of the proceedings, since it touches upon the very jurisdiction of the authority to deal with the claim/case. If there is fundamental lack of jurisdiction, the order passed by the authority/Court will be non est and therefore, raising such a ground at any stage is permissible. 18. In the case in hand, the petitioner has proceeded on the premise that the respondent was registered only on 03.05.2016. This stand was taken on the basis of one stray line found in the Award as if the respondent was registered on 03.05.2016. 19. The respondent never had an opportunity to deal with this ground taken by the petitioner in the present writ petitions, since the petitioner did not raise the ground of jurisdiction before the Arbitrator. If such a ground had been raised, the respondent would have established before the Arbitrator that they were registered much before they entered into a contract with the petitioner. Having not raised this ground before the Arbitral Tribunal, the petitioner now wants to stop the respondent from relying upon any documents by quoting Section 34(2)(a) of the Arbitration and Conciliation Act, 1996. The learned counsel for the petitioner submitted that only those documents available before the Tribunal can be relied upon and no new documents can be brought-forth at the stage of dealing with the application under Section 34 of the Arbitration Act. 20. The learned counsel for the petitioner submitted that only those documents available before the Tribunal can be relied upon and no new documents can be brought-forth at the stage of dealing with the application under Section 34 of the Arbitration Act. 20. The respondent is not attempting to bring-forth any new documents before this Court and respondent is only trying to explain this Court that the ground taken by the petitioner as if the respondent was registered much after entering into an agreement, is unsustainable. On the one hand, the petitioner did not raise the issue of jurisdiction before the Arbitral Tribunal and on the other hand, when such a ground is raised in the writ petition, the petitioner is preventing the respondent from placing documents before the Court to show that they were registered much before entering into an agreement with the petitioner. This shows the attitude of the petitioner in this case. 21. These writ petitions will lie only if the petitioner is able to establish that the entire proceedings is non est in the eye of law due to lack jurisdiction. If the petitioner fails to establish this ground, the very maintainability of these writ petitions will become questionable. 22. It is also not in dispute that the petitioner has initiated proceedings under Section 34 of the Arbitration Act and is not prosecuting the same in view of the pre-requisite under Section 19 of the Act to deposit 75% of the Award amount. Hence, to escape from that consequence, the petitioner has chosen to parrellely file these writ petitions by raising the question of jurisdiction for the first time in these writ petitions. 23. The judgement relied upon by the learned counsel for the petitioner to establish the maintainability of a writ petition against the Award passed under the Act which has been referred to a Larger Bench, will not come to the aid of the petitioner. If the petitioner had established that the very Award passed is non est in the eye of law, certainly this Court would have entertained the writ petitions. However, since the issue of lack of jurisdiction raised by the petitioner is found to be unsustainable and that ground was not even raised before the Arbitral Tribunal, this Court holds that the present writ petitions are not maintainable. However, since the issue of lack of jurisdiction raised by the petitioner is found to be unsustainable and that ground was not even raised before the Arbitral Tribunal, this Court holds that the present writ petitions are not maintainable. The ingenuity of the petitioner is quite apparent, since the petitioner found that they will not be able to prosecute the application filed under Section 34 of the Arbitration Act without fulfilling the requirement under Section 19 of the Act. Hence, the petitioner found a new method of challenging the Award on the ground which was not even raised before the Arbitral Tribunal. 24. This Court finds that both these writ petitions are clearly an abuse of process of Court and there are absolutely no merits in these writ petitions and hence, both these writ petitions are dismissed by imposing cost of Rs.1 Lakh payable by the petitioner to the Chief Justice Relief Fund (payable in Accounts Section of the High Court Registry) , within a period of four weeks from the date of receipt of copy of this order and file a photocopy of the receipt along with a memo reporting compliance in the Registry. 25. Post these writ petitions 'For Reporting Compliance on the Payment of Costs ' on 06.08.2024.