Scooter India Ltd v. Micro And Small Enterprise Facilitation Council And ORS

-1IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH (107) Date of decision:- 11.09.2024 Scooter India Ltd.

... Petitioner

Versus

The Micro and Small Enterprise Facilitation Council and others ... Respondents CORAM: HON'BLE MR. JUSTICE SUVIR SEHGAL Present:- Mr. Satya Pal Jain, Senior Advocate with Mr. Sarthak Gupta, Advocate for the petitioner. **** SUVIR SEHGAL, J. (ORAL) 1.

By way of present writ petition filed under Article 226/227 of the Constitution of India, petitioner has approached this Court inter-alia for issuance of a writ in the nature of certiorari for quashing the impugned award dated 10.09.2018, Annexure P-12, passed by respondent No.4, under the Micro, Small and Medium Enterprises Development Act, 2006 (for brevity hereinafter referred to as "the MSMED Act"). 2.

By referring to Section 15 and 17 of the MSMED Act, learned senior counsel contends that neither any goods were supplied to the petitioner, nor any service was rendered by claimant-respondent No.3, therefore, the proceedings could not have been initiated under the MSMED Act. It is also his argument that prior to reference of the dispute to the Arbitrator, no conciliation proceedings took place, nor was the petitioner ever associated with the conciliation process as contemplated under Section

-218 of the MSMED Act. He submits that the impugned award passed under the provisions of the MSMED Act cannot be sustained and deserves to be set aside.

3.

Arguments addressed by the learned senior counsel have been considered.

4.

In M/s India Glycols Limited and another Versus Micro and Small Enterprises Facilitation Council, Medchal - Malkajgiri and others, 2023 SCC OnLine 1852, Hon'ble Supreme Court has observed as under:- "10.

In terms of Section 19, an application for setting aside an award of the Facilitation Council cannot be entertained by any court unless the appellant has deposited seventy-five per cent of the amount in terms of the award. In view of the provisions of Section 18(4), where the Facilitation Council proceeds to arbitrate upon a dispute, the provisions of the Act of 1996 are to apply to the dispute as if it is in pursuance of an arbitration agreement under sub-section (1) of Section 7 of that Act. Hence, the remedy which is provided under Section 34 of the Act of 1996 would govern an award of the Facilitation Council.

However, there is a super added condition which is imposed by Section 19 of MSMED Act 2006 to the effect that an application for setting aside an award can be entertained only upon the appellant depositing with the Council seventyfive per cent of the amount in terms of the award. Section 19 has been introduced as a measure of security for enterprises for whom a special provision is made in the MSMED Act by Parliament. In view of the provisions of Section 18(4), the appellant had a remedy under Section 34 of the Act of 1996 to challenge the award which it failed to pursue. 11.

In the judgment of this Court in Gujarat State

-3Civil Supplies Corporation Limited (supra), a two-Judge Bench of the Court has observed, in the course of drawing its conclusions, that:

"The proceedings before the Facilitation Council/institute/centre acting as an arbitrator/Arbitral Tribunal under Section 18(3) of the MSMED Act 2006 would be governed by the Arbitration Act, 1996."

12.

The appellant failed to avail of the remedy under Section 34. If it were to do so, it would have been required to deposit seventy-five per cent of the decretal amount. This obligation under the statute was sought to be obviated by taking recourse to the jurisdiction under Articles 226/227 of the Constitution. This was clearly impermissible. 13.

For the above reasons, we are in agreement with the view of the Division Bench of the High Court that the writ petition which was instituted by the appellant was not maintainable."

5.

In view of the dictum of the Supreme Court, the instant petition is not maintainable and is dismissed as such. Liberty is, however, granted to the petitioner to take recourse to the remedy available to him under the MSMED Act in accordance with law.

(SUVIR SEHGAL) JUDGE 11.09.2024 Kamal Whether Speaking/Reasoned Yes/No Whether Reportable Yes/No