General Manager Telecom Distt. Bharat Sanchar Nigam Limited Ferozepur Cantt and Anr v. District Level Micro and Small Enterprises Facilication Council and Anr

o o 2023:PHHC:083258o o o o ooooooINoTHEoHIGHoCOURToOFoPUNJABoANDoHARYANAo AToCHANDIGARHoo o o o o o o o oooooo o o o o o o oo o o o ooooooooooooJUDGMENToRESERVEDoONoo oo:17.05.2023o o o ooooooooooooooooooooooJUDGMENToPRONOUNCEDoONo:o29.05.2023o o

(1)o o o o o o o o o ooooCWP-8814-2022o o GENERALoMANAGERoTELECOMoDISTT.oBHARAToSANCHARo NIGAMoLIMITEDoFEROZEPURoCANTToANDoANOTHERo oo o o o o o o o o o o o o o o o o o o o o ooooooooo......Petitionersoo o o o o o o VERSUSo o DISTRICToLEVELoMICROoANDoSMALLoENTERPRISESo FACILITATIONoCOUNCIL,oMOGAoANDoANOTHERo o o o o o o ooo o o oooo.......Respondentsoo o

(2)o o o o o o o o o ooCWP-16373-2022o o o GENERALoMANAGERoTELECOMoDISTT.oBHARAToSANCHARo NIGAMoLIMITEDoFEROZEPURoCANTToANDoANOTHERo oo o o o o o o o o o o o o o o o o o o o ooooooooooooooooooo......Petitionersoo o o o o o o VERSUSo o DISTRICToLEVELoMICROoANDoSMALLoENTERPRISESo FACILITATIONoCOUNCIL,oMOGAoANDoANOTHERo o o o o o o ooo o oooooooooooooo.......Respondentsoo o

(3)o o o o o o o o o ooCWP-16521-2022o o o GENERALoMANAGERoTELECOMoDISTT.oBHARAToSANCHARo NIGAMoLIMITEDoFEROZEPURoCANTToANDoANOTHERo o o o o o o o o o o o ooooooooooo o o o o o o o o o o ooooooooo......Petitionersoo o CWP-8814-2022o&oconnectedopetitionsoo -2-o o o DISTRICToLEVELoMICROoANDoSMALLoENTERPRISESo FACILITATIONoCOUNCIL,oMOGAoANDoANOTHERo o o o o o o ooooo o oooooooooooooo.......Respondentsoo o

(4)o o o o o o o o o ooCWP-16548-2022o o o GENERALoMANAGERoTELECOMoDISTT.oBHARAToSANCHARo NIGAMoLIMITEDoFEROZEPURoCANTToANDoANOTHERo oo o o o o o o o o o o o o o o o o o o o o ooooooooooo o o o o o o o o o o ooooooooo......Petitionersoo o o o o o o VERSUSo o DISTRICToLEVELoMICROoANDoSMALLoENTERPRISESo FACILITATIONoCOUNCIL,oMOGAoANDoANOTHERo o o o o o o ooo o o ooooooo o o o o o o o o o o o oooo.......Respondentsoo o

(5)o o o o o o o o o ooCWP-16550-2022o o o GENERALoMANAGERoTELECOMoDISTT.oBHARAToSANCHARo NIGAMoLIMITEDoFEROZEPURoCANTToANDoANOTHERo oo o o o o o o o o o o o o o o o o o o o ooooooooooooooooooo......Petitionersoo o o o o o o VERSUSo o DISTRICToLEVELoMICROoANDoSMALLoENTERPRISESo FACILITATIONoCOUNCIL,oMOGAoANDoANOTHERo o o o o o o ooo o o ooooooo o o o o o o o o o o o oooo.......Respondentsoo o o o

(6)o o o o o o o o o ooCWP-16827-2022o o o GENERALoMANAGERoTELECOMoDISTT.oBHARAToSANCHARo NIGAMoLIMITEDoFEROZEPURoCANTToANDoANOTHERo CWP-8814-2022o&oconnectedopetitionsoo -3-o o oo o o o o o o o o o o o o o o o o o o o o ooooooooooo o o o o o o o o o o ooooooooo......Petitionersoo o o o o o VERSUSo o DISTRICToLEVELoMICROoANDoSMALLoENTERPRISESo FACILITATIONoCOUNCIL,oMOGAoANDoANOTHERo o o o o o o o o oooooooooooooooo o o o o o o o o o o o .......Respondentsoo o o

(7)o o o o o o o o o ooCWP-16834-2022o o GENERALoMANAGERoTELECOMooBHARAToSANCHARoNIGAMo LIMITEDooJALANDHARooPUNJABoANDoANOTHERo oo o o o o o o o o o o o o o o o o o o o ooooooooooooooooooo......Petitionersoo o o o o o o VERSUSo o DISTRICToLEVELoMICROoANDoSMALLoENTERPRISESo FACILITATIONoCOUNCIL,oMOGAoANDoANOTHERo o o o o o o ooo ooooooooooooooooooooooooo.......Respondentsoo o

(8)o o o o o o o o o ooCWP-16901-2022o o o GENERALoMANAGERoTELECOMoDISTT.oBHARAToSANCHARo NIGAMoLIMITEDoFEROZEPURoCANTToANDoANOTHERo oo o o o o o o o o o o o o o o o o o o o ooooooooooooooooooo......Petitionersoo o o o o o o VERSUSo o DISTRICToLEVELoMICROoANDoSMALLoENTERPRISESo FACILITATIONoCOUNCIL,oMOGAoANDoANOTHERo o o o o o o ooo o o oooo.......Respondentsoo o

(9)o o o o o o o o ooooooooooooCWP-18401-2022o o o CWP-8814-2022o&oconnectedopetitionsoo -4-o o oo o o o o o o o o o o o o o o o o o o o o ooooooooo......Petitionersoo o o o o o o VERSUSo o DISTRICToLEVELoMICROoANDoSMALLoENTERPRISESo FACILITATIONoCOUNCIL,oMOGAoANDoANOTHERo o o o o o o ooo o oooooooooooooo.......Respondentsoo o o

(10)o o o o o o o o o ooCWP-18426-2022o o o GENERALoMANAGERoTELECOMoBHARAToSANCHARoNIGAMo LIMITEDoJALANDHARoANDoANOTHERo oo o o o o o o o o o o o o o o o o o o o ooooooooooooooooooo......Petitionersoo o o o o o o VERSUSo o DISTRICToLEVELoMICROoANDoSMALLoENTERPRISESo FACILITATIONoCOUNCIL,oMOGAoANDoANOTHERo o o o o o o ooo o o oooo.......Respondentsoo o

(11)o o o o o o o o o ooCWP-18313-2022o o M/SoSTOTZoGEARSoPVT.oLTD.o o ooooo o ooooooooo......Petitioners o o o o o o o o o o oo o o o o o VERSUSo o STATEoOFoPUNJABoANDoOTHERSo ooooooooooooooooooooooooo.......Respondents o o o o oo o

(12)o o o o o o ooooooooooooooooCWP-14235-2022o(Oo&M)o o o BHARAToSANCHARoNIGAMoLIMITEDoANDoOTHERSoo o o o o o o o o o o o o o o o o o o o o ooooooooooo o ooooooooo......Petitionersoo o o o o o o VERSUSo o CWP-8814-2022o&oconnectedopetitionsoo -5-o o DISTRICToLEVELoMICROoANDoSMALLoENTERPRISESo FACILITATIONoCOUNCIL,oPATIALAoANDoANOTHERo o o o o ooo o o oooooo o o o ooooo o o o o o o o o o o o oooo.......Respondentsoo o CORAMo:oHON'BLEoMR.oJUSTICEoVINODoS.oBHARDWAJo o o o o o o *****o o Arguedoby:o-Mr.oSanjeevoKaushik,ooAdvocateowitho o o Mr.oRohitoKumar,oAdvocateoandoo o o Mr.oDivyanshoKaushik,oAdvocateoo o o forotheopetitioneroinoCWP-8814-2022;oCWP-16373-2022o o o CWP-16521-2022o;oCWP-16548-2022o;oCWP-16550-2022o o o CWP-16827-2022o;oCWP-16834-2022o;oCWP-16901-2022o o o CWP-18401-2022o;oCWP-18426-2022oANDoCWP-14235-2022.o o o o Mr.oVivekoSheoran,oAdvocateoo o o forotheopetitioneroinoCWP-18313-2022.o o o o Mr.oDeepanjayoSharma,oDAG,oPunjab.o o o o Mr.oPuneetoKansal,oAdvocateo o o fororespondentoNo.2oinoCWP-8814-2022;oCWP-16373-2022o o o CWP-16521-2022o;oCWP-16548-2022o;oCWP-16550-2022o o o CWP-16827-2022o;oCWP-16834-2022o;oCWP-16901-2022o o o CWP-18401-2022o;oCWP-18426-2022.o o o o Mr.oAjayoSharma,oAdvocateo&oo o o Mr.oVilasoSharma,oAdvocateoo o o fororespondentoNo.3ooinoCWP-18313-2022.o o o o Mr.oJaganoNathoBhandari,oAdvocateoo o o fororespondentoNo.2oinoCWP-14235-2022.oo o o o o o o o *****oo VINODoS.oBHARDWAJ,oJ.o(Oral)oo o o o TheoquestionsowhichoariseoforoconsiderationobeforeothisoCourtoino theopresentobatchoofopetitionoareoasotoowhetheroconductoofoconciliationoundero Sectiono18o(2)oofotheoMicro,oSmalloandoMediumoEnterprisesoDevelopmento Act,o 2006o (hereinaftero referredo too aso "theo MSMEDo Act")o iso mandatoryo beforeo arbitrationo cano beo conductedo ando aso too whethero ao separateoooooooooooooooo CWP-8814-2022o&oconnectedopetitionsoo -6-o o noticeo iso requiredo too beo giveno ato theo stageo ofo referringo theo disputeo foro arbitration.ooo o

2.o o Ao batcho ofo writo petitionso iso beingo decidedo byo ao commono judgmentoasotheopartiesoagreeothatocommonoissuesoariseoforoconsiderationoino theopresentosetoofopetitions.oForofacilityooforeference,ofactsoareobeingoextractedo fromo CWP-14235-2022o titledo aso "Bharato Sancharo Nigamo Limitedo ando otherso versuso Districto Levelo Microo ando Smallo Enterpriseso Facilitationo Counciloandoanother".oo

3.o o Theo petitioner-o Bharato Sancharo Nigamo Limitedo (hereinaftero referredotooaso"BSNL")ohasochallengedotheoawardodatedo28.03.2022opassedo byorespondentoNo.1-DistrictoLeveloMicrooandoSmalloEnterprisesoFacilitationo Councilo (hereinaftero referredo too aso "Facilitationo Council"o wherebyo theo respondentoNo.2-theosupplierowasoheldoentitledoforointerestoamountingotooRs.o 10,09,222/-o undero theo MSMEDo Act.o Ao furthero prayero waso soughto too theo effectothatotheorespondentoNo.1-FacilitationoCouncilobeodirectedotooinitiateotheo proceedingsoafresh,ofromotheostageoofoconciliation,oinotermsoofoSectiono18(2)o ofotheoMSMEDoAct.o

4.o o oTheopetitioner-BSNLoissuedoaoPublicoNoticeoInvitingoE-tenderso forothreeodifferentoworksounderotheoPatiala,oSSAovideodifferentoNIToNumberso 12/2017-18,o13/2017-18oando14/2017-18oforoinfrastructureomaintenanceoino Patialao(Group)oRajpura,oRTTCoandoZirakpuroinoPatialaoSSAoono25.11.2017.o Accordingo too theo termso ofo theo tendero notice,o ao bido couldo beo giveno ono depositingoEarnestoMoneyoDeposito(EMD)oinofavouroofoAccountsoOfficer,otoo beovalidoforoaoperiodoofo30odaysofromotheodateoofoissuanceoofonotice.ooThereo wereootheroformalitiesoasowellothatowereoalsoorequiredotoobeofulfilledobyotheo interestedo bidders.o Certaino concessionso were,o however,o extendedo too theo CWP-8814-2022o&oconnectedopetitionsoo -7-o o Micro,oSmalloandoMediumoEnterprisesofromocertainoClausesoofotheoe-tendero notice.oTheoMicro,oSmalloandoMediumo Enterprisesointendingotoobidowereo providedotheotenderodocumentofreeoofocostoandotheyowereoalsooexemptedofromo paymento ofo bido security/performanceo guarantee/earnesto moneyo deposito

(EMD).o

5.o o Theo petitionero receivedo aso manyo aso 12o bidso fromo differento biddersoincludingotheoMSMEobidders,ohowever,otheobidosubmittedobyotheo respondent-claimantowasofoundotoobeomostocompetitiveo&oresponsive.oTheo respondent-claimanto hado depositedo ao demando drafto No.o 900020o datedo

16.12.2017o drawno ono Punjabo &o Sindo Banko towardso earnesto moneyo amountingotooRs.o56273/-oinoadditionotoopayingotheocostoofotheodocumento despiteoexemption.oAsoperoColumnoNo.o3oofotheogeneraloinstructionsoattachedo withotheoe-tender,otheoMSMEobiddersowereorequiredotooattachoanoattestedo copyoofotheovalidoMSEoCertificate,oandotheorespondent-claimantoisostatedotoo haveorespondedothatotheosameoisonotoapplicable.oo

6.o o Ao lettero ofo intento waso issuedo ino favouro ofo theo respondent-claimantoono24.02.2018oandowasodirectedotoodepositotheoperformanceosecurityo ofoRs.o2,20,572/-.oTheoearnestoamountoalreadyodepositedowasoalsooadjustedo towardsotheoamountowhichowasotoobeodepositedobyotheorespondentoNo.2.oAno agreemento ono ao judicialo papero waso alsoo executedo betweeno theo partieso ono

23.04.2018.oAnoarbitrationoclauseowasoincorporatedoinotheosaidoagreementotoo settleoanyodisputeoarisingobetweenotheoparties.oo

7.oo o Theo respondent-claimanto waso alsoo awardedo worko foro infrastructureo maintenanceo ino Mandio Gobindgarh,o o Samanao &o Sirhindo ino Patialao SSAo foro theo yearo 2017-18o video NITo No.o 14/2017-18o o ando foro infrastructureomaintenanceoinoPatialaoLocaloAreaoinoPatialaoSSAoforotheoyearo CWP-8814-2022o&oconnectedopetitionsoo -8-o o 2017-18ovideoNIToNo.o12/2017-18.oThreeodifferentoagreementsowereothuso executedo byo theo respondent-claimant.o Theo periodo foro completiono ofo theo tenderowasoextendedouptoo22.04.2020.ooTheosaidoworksowereosatisfactorilyo executedobyotheorespondent.oTheopaymentoquaotheoworksois,ohowever,oallegedo toobeonotoreleasedodespiteotheobillsohavingobeenoraised.oNooreasonsowereoalsoo furnishedoforonon-releaseoofotheodueoamountodespiteosatisfactorilyocompletiono ofo theo work.o Theo respondent-claimanto thuso filedo ao claimo beforeo theo FacilitationoCouncilounderoSectiono18oofotheoMSMEDoActoclaimingothatotheo wagesobillsoforo09omonthsoamountingotooRs.o58,19,281/-ohaveonotobeenopaido andoalsooclaimedointerestoinotermsoofoSectiono16ooofotheoMSMEDoAct,o2006.oo

8.o o Theopetitioner-BSNLofiledoitsoresponseoono29.11.2019,otakingo variouso preliminaryo objectionso includingo abouto theo jurisdictiono ofo theo FacilitationoCounciloinoentertainingotheoclaimoasoalsooabsenceoofoaoprovisiono ofo interestoinotheo agreemento executedo betweenotheo parties.o Ito waso furthero contendedothatotheoprincipaloamountohasoalreadyobeenofullyopaidoandothereo wasonoopendingoissueowithorespectotootheopayments.ooo

9.o o AnoawardowasoeventuallyopassedobyotheoFacilitationoCounciloono

28.03.2022oinofavourooforespondentoNo.2oandoagainstotheopetitioneroholdingoito liableotoopayoRs.o10,09,272/-otowardsointerestoforodelayedopayment.oHence,o theopresentopetition.ooo

10.o o Theochallengeotootheoawardohasobeenoraisedoonovariousogroundso alreadyo noticedo aboveo ando thato theo paymento hado alreadyo beeno released,o althoughoafterosomeodelay.oTheosameowasooccasionedodueotoofinancialocruncho insteadoofoanyomaliciousointent.oBesides,otheoCounciloneverocarriedooutotheo conciliationoproceedingsowhichoareomandatory,otheopowerounderoSectiono18o

(3)oofotheoMSMEDoActocanobeoinvokedoafteroconciliationounderoSectiono18o CWP-8814-2022o&oconnectedopetitionsoo -9-o o

(2)oofotheoActofailsotooresolveotheodispute.oChallengeowasoalsooraisedotootheo rateoofointerestoasoawardedobyotheoFacilitationoCouncil.oo

11.o o AoshortoreplyobyowayoofoaffidavitoofoAngadoSinghoSohi,oMembero Secretary-DL-MSEFC-cum-Generalo Manager,o Districto Industrieso Centre,o PatialaohadobeenofiledoonobehalfooforespondentoNo.1owhereinoitoisoobjectedoo thatotheopetitionerohasoanoefficaciousoalternativeoremedyounderoSectiono34oofo theoArbitrationo&oConciliationoAct,o1996oagainstotheoaward.oFilingoofotheo petitionoisoonlyotooavoidotheomandatoryopre-depositotootheoextentoofo75%oofo theoawardedoamountoasoperoSectiono19oofotheoMSMEDoAct,o2006.oTheopowero ofotheoHighoCourtotoointerfereowithotheoawardopassedoinoarbitraloproceedingso inowritojurisdictionoisoonlyounderoexceptionalocircumstances.oItowasofurthero averredothatotheoCouncilohadoadheredotootheostatutoryoprovisionsoandohasobeenoo establishedo aso pero provisionso ofo theo MSMEDo Act,o 2006.o Theo Councilo isoo guidedobyoprinciplesoofoobjectivity,ofairnessoandojusticeoinoitsoproceedings.o Fulloopportunityowasograntedotootheorespectiveopartiesotooleadotheiroevidences,o toomakeosubmissionso(writtenoasowelloasooral)oandoalsootoofurnishoverbalooro writteno argumentso ino supporto ofo theiro claims.o Theo awardo waso thereaftero pronouncedo aftero dealingo witho respectiveo contentions.o Thereo beingo noo illegalityooroproceduraloimproprietyoinotheoawardopassed,otheosameocouldonoto thusobeochallengedobyowayoofoaowritopetition.oo

12.o o AoseparateoreplyohasoalsoobeenofiledoonobehalfooforespondentoNo.o 2owherein,oinoadditionotootakingoanoobjectionoaboutotheomaintainabilityoofotheo writopetitionoandotheoavailabilityoofoalternativeoremedies,oitowasoalsooaverredo thatotheoarbitrationoproceedingsocanobeoconductedoeitherobyotheoFacilitationo CounciloitselfooroonoreferenceoofotheoFacilitationoCouncil,obyoanyoinstitutiono orocentreoprovidingoalternativeodisputeoresolutionoservices.oVideoNotificationo CWP-8814-2022o&oconnectedopetitionsoo -10-o o datedo 13.11.2017o issuedo byo theo Governmento ofo Punjab,o Departmento ofo Industrieso&oCommerce,oDistrictoLeveloMSMEoFacilitationoCouncilsohaveo beenoconstitutedooandosuchoCouncilsoareocompetentotoodecideotheoReferenceo Applicationso undero Sectiono 18o ofo theo MSMEDo Acto filedo byo theo serviceo provider/suppliers.oItoisocontendedothatotheochallengeotootheoawardohasobeeno raisedobyowayoofoaowritopetitionoafterotheoreferenceoandoculminationoofotheo proceedings,oinsteadoofoapproachingotheoCourtoatotheofirstoinstanceoinocaseotheo petitionerohadoaovalidocauseoandogrievance,oonlyotoodelayotheoproceedings.ooIto wasoalsooaverredothatotheoprovisionsoofotheoMSMEDoActohaveoanooverridingo effectoandothatotheorespondentoNo.2-claimantowasodulyoregisteredounderotheo MSMEDo Acto ando itso Udyogo Registrationo No.o iso PB17D0002322.o Theo answeringorespondentohadofurnishedoalloitsoparticularsoatotheotimeoofofilingotheo referenceo applicationo beforeo theo Councilo ando haso alsoo submittedo itso Certificateo issuedo undero theo MSMEDo Acto duringo theo proceedingso ofo theo OnlineoE-tender.oTheostatusoofotheorespondentoNo.o2oasoMSMEoUnitoisoalsoo notodisputedoorodeniedobyotheopetitioner.oItoisofurtherodeniedothatoconciliationo proceedingsoinotermsoofoSectiono18o(2)oofotheoMSMEDoActohaveonototakeno place.oItoisofurtheroaverredothatoevenoifosuchoconciliationoproceedingsohaveo noto takeno place,o yet,o theo aboveo saido objectiono couldo beo raisedo byo theo petitioneroinoanoappealothatomayofiledoagainstotheosaidoaward.o

13.o o Counseloforotheopetitioner,ohasoreferredotootheofactualoaspectso noticedoaboveoandoalsootheofollowingotermsoofotheoNoticeoInvitingoTender,o duringotheoarguments:-o o "17.o CONCESSIONSo TOo MSEo UNITS:-o Aso pero theo guidelines,o issuedo byo Ministryo ofo Micro,o Smallo &o Mediumo Enterpriseo (MSME),o Governmento ofo Indiao regardingo concessionsoforoMicro&oSmalloEnterpriseoUnitsoregisteredowitho CWP-8814-2022o&oconnectedopetitionsoo -11-o o Districto Industrieso Centreso oro Khadio &o Villageo Industrieso Commissiono oro Khadio &o Villageo Industrieso Boardo oro Coiro Boardo oro Nationalo Smallo Industrieso Corporationo (NSIC)o oro Directorateo ofo Handicraftso &o Handloomo oro anyo othero bodyo specifiedobyo Ministryo ofo Micro,oSmallo&o Mediumo Enterprise,o haveo beeno consideredo byo theo BSNLo foro theo followingo concessions.o 1)oSupplyoofoTenderoDocumentsoTheotenderodocumentsoshallobeo issuedotooMSEobiddersofreeoofocostoprovidedotheotenderedoitemoiso listedoinotheoRegistrationoCertificateoofoMSE.o 2)oExemptionofromopaymentoofoBidoSecurityo/EarnestoMoneyo DepositoTheoMSEounitsoregisteredowithobodiesoasodetailedoaboveo shallobeogivenoexemptionofromopaymentoofoBidoSecurityodeposito providedotheotenderedoitemoisolistedoinotheoRegistrationo CertificateoofoMSE.oi)oAoprooforegardingocurrentoregistrationo withobodiesoasodetailedoaboveoforotheotenderedoitemsowillohaveotoo beo attachedo alongo witho theobid.o ii)o Theo enlistmentocertificateo issuedobyobodiesoasodetailedoaboveoshouldobeocurrento&ovalidoono theodateoofoopeningoofobid.o 3)oReservationoofoQuantityo

(i)o20o%oofotheoEstimatedoQuantityo/requirementoinotheotendero shallobeoearmarkedotoobeoprocuredofromoMSEsoprovidedotheiro quotedopriceoisowithinotheobandoofoL1+15%.oOutoofothisoquantity,o aosubotargetoofo4%oisoearmarkedotoobeoprocuredofromoSC/STo ownedo eligibleo MSEs.o Ino caseo ofo nono availabilityo ofo SC/STo ownedoMSEs,othiso4%oquantityoshallobeoofferedotoootheroMSEs.o

(ii)oTheoparticipatingoMSEsoinoaotender,oquotingopriceowithinotheo bandoofoL1+15%oareoalsoobeoallowedotoosupplyoaoportionoofotheo requiremento byo bringingo downo theiro priceo too theo L1o priceo arrivedoafterotenderoevaluation.oSuchoMSEsoshallobeoorderedotoo supplyoupotoo20%oofotheototalotenderedovalue.oInocaseoofomoreo thanooneosuchoeligibleoMSE,otheosupplyowillobeosharedoequally.o CWP-8814-2022o&oconnectedopetitionsoo -12-o o

(iii)oInocaseoaoMSEohappensotoobeoL1,oL2oetc,othenoitowillobeo allottedotenderoquantityoasoenvisagedoinotheotender.o NOTE:-o BSNLo shallo followo theo instructions/regulations/notificationsoreceivedofromoMinistryoofo MSMEoGovt.oofoIndiaoissuedofromotimeotootime.o

14.o o Byoreferringotootheoaforesaidoprovision,oheohasoarguedothatotheo MSEoUnitsohadobeenoexemptedofromodepositotheotenderocostoandoalsoodeposito ofobidosecurity/EMD,ohowever,osuchocostsowereodepositedobyotheorespondentoo No.2-applicant.o Hence,o heo dido noto claimo theo statuso aso ao Microo Smallo &o MediumoEnterpriseoatotheotimeoofosubmissionoofotheobidodocument.oHavingo chosenonototooapproachotheopetitioneroasoMSMEoUnit,oitowaivedoofoitsostatus,o rightsoandoprivilegesoasoMSMEoUnitoandothatoitowouldonowobeoestoppedofromo claimingosuchorights.oItoisovehementlyoarguedothatotheopetitionerowasoentitledo tooknowotheostatusoofoitsosuppliersoandothatobyonotoinformingotheopetitionero aboutotheosame,oitocannotobeofastenedowithotheoliabilityotoopayointerestoundero theoMSMEoActoandothatotheorespondent-claimantoisorequiredotootakeorecourseo tootheoremedyoofoarbitrationoasoperotheoagreementosignedobetweenotheoparties.o Heo furthero contendso thato theo provisionso ofo theo MSMEDo Acto mandateo conciliationoproceedingsoundero Sectiono18o (2)o betweeno theopartiesobeforeo adjudicationo undero Sectiono 18o (3)o ofo theo MSMEDo Act,o 2006o cano beo commenced.oTheoFacilitationoCouncilohadonotoundertakenoanyoconciliationo betweeno theo partieso ando proceededo witho theo adjudicationo ando ano arbitralo awardowasopassed.oSuchoawardoisothusoinoviolationoofotheostatutoryoschemeo andowhenotheoillegalityoisoapparent,otheojurisdictionounderoArticleo226oofotheo Constitutiono ofo Indiao wouldo noto beo oustedo merelyo becauseo ano alternativeo CWP-8814-2022o&oconnectedopetitionsoo -13-o o

15.o o Counselo foro theo claimant-respondents,o ino CWP-8814-2022o &o others,oonotheootherohandohasoarguedothatotheoclaimantowasoundisputedlyodulyo registeredounderotheo MSMEDo Act,o 2006o ato theotimeo ofo enteringointoo theo contracto ando thato Clauseo 17o ofo theo Noticeo Invitingo Tendero onlyo grantedo certainoexemptionsotootheoMSMEoUnits.oItowasonotomandatoryoforoMSMEo Unitsotooavailothoseoconcessionsoandoitocouldonotobeoputotooanyoprejudiceoando beodeniedoitsoremedieso&oprotectionounderotheoMSMEDoAct,o2006omerelyo becauseoitooptedotoocompeteoonoaoleveloplayingofieldobyodepositingotheotendero costoasowelloasotheoperformanceoguaranteesoandodidonotoavailotheoconcession.o Theyo furthero contendso thato Facilitationo Councilo hado undertakeno theo ConciliationooproceedingsounderoSectiono18o(2)oandothatotheoarbitrationoundero Sectiono 18o (3)o waso initiatedo aftero failureo ofo theo conciliation.o Heo furthero argueso thato excepto ino theo mattero ofo CWP-14235-2022,o theo ziminio orders/interimo orderso passedo byo theo Facilitationo Councilo establisho thato conciliationoproceedingsowereodulyoinitiatedoandothatotheopetitioner(s)oalsoo participatedo ino theo saido conciliationo proceedingso througho theiro authorizedo representatives.oTheocontentionoofotheopetitioneroisothusowrongotootheosaido extent.oItoisofurtheroarguedothatoaomereofailureotooconductoaoconciliationowouldo notovitiateotheoawardoandothatotheopetitionerohasofailedotoosubstantiateoasotoo howo hiso rightso wereo prejudicedo ono accounto ofo failureo ofo theo conciliationo proceedings.oFurther,othereoisonooprohibitionoagainstotakingotheseopleasoino objectionsounderoSectiono34oofoArbitrationoandoConciliationoAct,o1966oreado withotheoapplicableoRulesowhileochallengingotheoaward.ooItoisoalsooarguedothato theopetitioneroneverochallengedotheovalidityoofotheoproceedingsoatotheofirsto availableoopportunityoandohasofiledotheopresentocaseoafterofinalizationoandoo onlyoafterotheoawardohasobeenopassedoagainstothem.oTheosameoisoclearlyoanoacto CWP-8814-2022o&oconnectedopetitionsoo -14-o o toodelayotheoexecutionoofotheoaward.ooHeofurtherocontendsothatotheopetitionero cannotobeopermittedotoodefeatotheoobjectoofotheoMSMEDoActobyoresortingotoo multiplicityoofolitigation.oo

16.o o Counselo foro theo respondentso alsoo contendo thato conciliationo proceedingso hado actuallyo takeno placeo ino allo theo caseso buto sucho specifico referenceoofoconciliationoisomissingoonlyoinotheocaseoNo.oCWP-14235-2022.o Theyofurtherocontendsothatotheoauthoritiesohadoassociatedoallotheostakeholdersoo inotheoconciliationoproceedingsoandothatoaomereoabsenceooforecordingosucho proceedingo ino theo ziminio ordero ino oneo caseo cannoto beo deemedo thato noo conciliationoeverotookoplace.oCounseloforotheorespondentsohaveoalsooreliedoonoo certainojudgmentsothatowouldobeoreferredotooinotheolateropartoofotheojudgment.o

17.o o Inorebuttal,oCounseloforotheopetitionerodidonotodisputeotheoclaimo madeobyotheorespondentsotootheoeffectothatoconciliationoproceedingsohadotakeno placeo ino allo othero matterso excepto ino CWP-14235-2022.o Counselo foro theo petitionerodoesonotodisputeothatoino allo caseso otherothanoCWP-14235-2022o conciliationo proceedingso areo dulyo recorded.o He,o however,o contendso thato whenotheocouncilowasorecordingoaboutotheoconciliationoproceedingsoinoallo otherocases,oitocannotobeoassumedothatoevenothoughoconciliationoproceedingso wereoundertakenoinotheopresentocase,ohowever,otheosameowereonotoreflectedoino theozimnioorders.oTheoFacilitationoCouncilohasomaintainedosuchorecordoino otheromattersoandofailureotoorecordoanyosuchoproceedingsoinoCWP-14235-2022owouldoleadotooanoinferenceoagainstoitoratherothanotooaopresumptionoino favouroofoconciliation.o

18.o o LearnedocounseloappearingoonobehalfoofotheopetitioneroinoCWP-18313-2022ootitledoaso"M/soStotzoGearsoPvt.oLtd.oVersusoStateoofoPunjabo andoothers"ohadoarguedothatotheorespondent-claimantohadoapproachedotheo CWP-8814-2022o&oconnectedopetitionsoo -15-o o FacilitationoCounciloatoFatehgarhoSahibobyofilingoaoclaimopetitionoNo.52oofo 2020.oAonoticeoinformingothatoinocaseotheopetitionerofailedotooappearoonotheo dateofixed,otheomatterowillobeodecidedoonomeritsowasoissuedoono17.06.2021.o Theoauthorizedorepresentativeocouldonotoattendotheoproceedingsoonotheodateo fixedodueotooCOVID-19.oAosecondonoticeowasoagainosentotootheopetitioneroforo

22.07.2021oforoconciliation.ooHeocontendsothatoevenothoughotheosaidodateowaso theofirstodateo fixedoforo conciliation,o however,otheo conciliationo proceedingo wereoterminatedoonotheosameodayowithoutorecordingoanyoreasonsoforosucho terminationoandowithoutoprovidingoanyofurtheroopportunityoforoconciliation.o Theo respondentso continuedo too issueo noticeso mentioningo (Conciliation/arbitration)o despiteo theo mattero haveo beeno referredo too theo arbitration.oLastoopportunityowasograntedoono14.09.2021oando09.11.2021otoo theo petitionero too fileo itso replies,o however,o theo saido orderso wereo nevero communicatedoandotheoFacilitationoCouncilodidonotopassoanyoorderotooproceedo ex-parteo againsto theo petitioner.o Theo Facilitationo Councilo directedo theo respondentotoosubmitoitsoevidence/argumentsovideoorderodatedo17.12.2021o andowhichowasonotofurnishedotoohim.oTheoawardowasopassedoinotheoabsenceoofo theo petitionero ono 11.04.2022.o Ito waso additionallyo contendedo thato theo procedureocontemplatedounderotheoArbitrationo&oConciliationoAct,o1996ohado noto beeno followedo duringo theo proceedingso ando thato theo languageo ofo theo noticesoissuedotootheopetitioneroforoconciliationowasonotoinoconformityowitho theomandateoofoconciliationoproceedingsorequiredotoobeoundertaken.ooItoiso arguedothatotheonoticeoinofactodidonotoproposeoanyoconciliationoandorathero informedothatoinocaseotheopetitionerodidonotoparticipateooroappear,ofurthero proceedingsoshallobeoundertaken.oNooeffectiveoproceedingoforoconciliationo CWP-8814-2022o&oconnectedopetitionsoo -16-o o hadobeenoresortedotoobyotheoFacilitationoCounciloandotheoawardowasopassedo arbitrarily.oTheoawardoisothusovitiatedoandoliableotoobeosetoaside.o

19.o o Learnedo counselo foro theo claimant-respondento ino CWP-18313-2022o titledo aso "M/so Stotzo Gearso Pvt.o Ltd.o Versuso Stateo ofo Punjabo ando others"ocontendothatotheocompanyowasoregisteredoSmalloEnterpriseoengagedo inobusinessoofosteeloalloysoandothatotheoclaimohadobeenofiledounderoChapteroVo ofotheoMSMEDoAct,o2006oasothereowasooutstandingolegitimateodebtoagainsto theopetitioner.oTheonoticeowasodulyoservedouponotheopetitionerounderoSectiono 18oofotheoMSMEDoActoandothatoaoreplyowasosubmittedobyotheopetitionerotoo theo noticeo too theo effecto thato ao complainto caseo undero Sectiono 138o ofo theo NegotiableoInstrumentsoAct,o1881ohadoearlierobeenofiledobyorespondentoNo.3o andoasosuchotheoproceedingsooughtotoobeodismissedoandothereoisonooneedoforo conciliation.ooReferenceoisomadeotootheocommunicationo(AnnexureoP-8)otoo contendothatotheopetitionerospecificallyodeniedoneedoforotheoconciliationooando thato heo isonoto willingo too appearo beforeo theo authoritieso foro theo same.o Theo respondentoCouncilohadothusodirectedotenderoofoitsoevidenceoandoadvanceo argumentso whereupono theo awardo waso finallyo passed.o Heo arguedo thato theo objectobehindo filingoofotheopetitiono isoonlyo toodelayo theo executiono ofo theo award.oHavingovoluntarilyooptedonototooparticipateoinotheoproceedingsooando havingosentoaospecificocommunicationotootheosaidoeffect,otheopetitionerocannoto beopermittedotoocontendothatoheoisoprejudicedoforonotobeingoassociatedoinotheo proceedings.o Theo abstinenceo beingo voluntaryo ando willful,o theo petitionero wouldobeoestoppedofromoraisingoanoargumentoofoprejudice.oo

20.o o Learnedo Stateo Counsel,o however,o reiterateso hiso submissionso noticedo earliero ando defendedo theo awardo byo relyingo upono objecto ofo theo MSEMDoAct,o2006oandothatotheoFacilitationoCouncilohadobeenoactedoonlyotoo CWP-8814-2022o&oconnectedopetitionsoo -17-o o furthero sucho objectives.o Theo petitionero cannoto beo permittedo too defeato theo protectionoandopromotionaloaspectsoofotheoMSMEDoAct,o2006.oo oo

21.o o Iohaveoheardolearnedocounseloappearingoforotheorespectiveopartieso andohaveogoneothroughotheopleadingsoasowelloasotheodocumentsoappendedo alongwithotheosame.oo

22.o o Beforeo proceedingo furthero certaino relevanto provisionso ofo theo MSMEDoAc,o2006oareoreproducedohereinafterobelow"o o o o "Objectiveo AnoActotooprovideoforofacilitatingotheopromotionoando developmentoandoenhancingotheocompetitivenessoofomirco,o smalloandomediumoenterprisesoandoforomattersoconnectedo therewithooroincidentalotheretooo

2.oDefinitions.-InothisoAct,ounlessotheocontextootherwiseo o requires,o o Xxxo xxxo xxxo xxxo xxxo xxxo xxxo xxxo xxo b)o"appointedoday"omeansotheodayofollowingoimmediatelyo afterotheoexpiryoofotheoperiodoofofifteenodaysofromotheodayo ofoacceptanceoorotheodayoofodeemedoacceptanceoofoanyo goodsooroanyoservicesobyoaobuyerofromoaosupplier.o Explanation.oForotheopurposesoofothisoclause,-o o(i)o"theodayoofoacceptance"omeans,-o

(a)otheodayoofotheoactualodeliveryoofogoodsoorotheo o renderingoofoservices;ooro

(b)owhereoanyoobjectionoisomadeoinowritingobyotheo buyeroregardingo acceptanceo ofo goodso oro serviceso withinofifteenodaysofromotheodayoofotheodeliveryoofo goodso oro theo renderingo ofo services,o theo dayo ono whichosuchoobjectionoisoo removedo byo theo iso VISHAL SHARMA supplier;oo CWP-8814-2022o&oconnectedopetitionsoo -18-o o o(ii)o "theodayoofodeemedoacceptance"omeans,owhereonoo o objectionomadeoinowritingobyotheobuyeroregardingo o acceptanceoofogoodsooroservicesowithinofifteenodayso o fromo theo dayo ofo theo deliveryo ofo goodso oro theo o renderingoofoservices,otheodayoofotheoactualodeliveryo o ofogoodsoorotheorenderingoofoservices;oo o Xxo xxxo xxxo xxxo xxxo xxxo xxxo xxxo o(d)oo "buyer"omeansowhoeverobuysoanyogoodsoororeceiveso o anyoservicesofromoaosupplieroforoconsideration;o o Xxo xxxo xxxo xxxo xxxo xxxo xxxo xxxo o(g)oo "mediumoenterprise"omeansoanoenterpriseoclassifiedo o asosuchounderosub-clauseo(iii)oofoclauseo(a)oorosub-o clauseo(iii)oofoclauseo(b)oofosub-o(a)osectiono(1)oofo o sectiono7;o oo(h)oo "microoenterprise"omeansoanoenterpriseoclassifiedo o asosuchounderosub-clauseo(i)oofoclauseo(a)oorosub-o clauseo(i)oofoclauseo(b)oofosub-sectiono(1)oofosectiono o 7;o o Xxo xxxo xxxo xxxo xxxo xxxo xxxo xxxo o(m)o"smalloenterprise"omeansoanoenterpriseoclassifiedoaso o suchounderosub-oclauseo(ii)oofoclauseo(a)oorosub-o clauseo(ii)oofoclauseo(b)oofosub-sectiono(1)oofosectiono o 7;o o Xxo xxxo xxxo xxxo xxxo xxxo xxxo xxxo

15.o Liabilityo ofo buyero too makeo payment.-Whereo anyo supplier,osuppliesoanyogoodsoororendersoanyoservicesotoo anyobuyer,otheobuyeroshallomakeopaymentothereforeoonooro beforeo theo dateo agreedo upono betweeno himo ando theo supplieroinowritingoor,owhereothereoisonooagreementoinothiso behalf,obeforeotheoappointedoday:o CWP-8814-2022o&oconnectedopetitionsoo -19-o o o Providedothatoinonoocaseotheoperiodoagreedoupono betweeno theosuppliero ando atotheobuyero ino writingoshallo exceedoforty-fiveodaysofromotheodayoofoacceptanceoorootheo dayoofodeemedoacceptance.o

16.o Dateo fromo whicho ando rateo ato whicho interesto iso payable.-Whereoanyobuyerofailsotoomakeopaymentoofotheo amountotootheosupplier,oasorequiredounderosectiono15,otheo buyeroshall,onotwithstandingoanythingocontainedoinoanyo agreementobetweenotheobuyeroandotheosupplierooroinoanyo lawoforotheotimeobeingoinoforce,obeoliableotoopayocompoundo interestowithomonthlyorestsotootheosupplieroonothatoamounto fromotheoappointedodayoor,oasotheocaseomayobe,ofromotheo dateoimmediatelyofollowingotheodateoagreedoupon,oatothreeo timesoofotheobankorateonotifiedobyotheoReserveoBank.o

17.oRecoveryoofoamountodue.-Foroanyogoodsosuppliedooro serviceso renderedo byo theo supplier,o theo buyero shallo beo liableotoopayotheoamountowithointerestothereonoasoprovidedo underosectiono16.o

18.o Referenceo too Microo ando Smallo Enterpriseso Facilitationo Council.-(1)o Notwithstandingo anythingo containedoinoanyootherolawoforotheotimeobeingoinoforceoanyo partyotooaodisputeomay,owithoregardotooanyoamountodueo undero sectiono 17,o makeo ao referenceo too theo Microo ando SmalloEnterprisesoFacilitationoCouncil.o

(2)oOnoreceiptoofoaoreferenceounderosub-sectiono(1),otheo Councilo shallo eithero itselfo conducto conciliationo ino theo matterooroseekotheoassistanceoofoanyoinstitutionoorocentreo providingoalternateodisputeoresolutionoservicesobyomakingo ao referenceo too sucho ano institutiono oro centre,o foro conductingoconciliationoandotheoprovisionsoofosectionso65o too81oofotheoArbitrationoandoConciliationoAct,o1996o(26oofo 1996)oshalloapplyotoosuchoaodisputeoasoifotheoconciliationo wasoinitiatedounderoPartoIIIoofothatoAct.o CWP-8814-2022o&oconnectedopetitionsoo -20-o o

(3)oWhereotheoconciliationoinitiatedounderosub-sectiono(2)o iso noto successfulo ando standso terminatedo withouto anyo settlemento betweeno theo parties,o theo Councilo (2)o shallo eitheroitselfotakeoupotheodisputeoforoarbitrationooforeferotoo ito anyo institutiono Chairpo oro centreo providingo alternateo disputeoresolutionoservicesoforosuchoarbitrationoandotheo provisionsoofotheoArbitrationoandoConciliationoAct,o1996o (26o ofo 1996)o shallo theno applyo too theo disputeo aso ifo theo arbitrationo waso ino pursuanceo ofo ano arbitrationo ino theo agreementoreferredotooinosub-sectiono(1)oofosectiono7oofo thatoAct.o

(4)oNotwithstandingoanythingocontainedoinoanyootherolawo foro theo timeo beingo ino force,o theo Microo ando Smallo Enterpriseso Facilitationo Councilo oro theo centreo statemo providingoalternateodisputeoresolutionoservicesoshallohaveo jurisdictionotooactoasoanoArbitratorooroConciliatoroundero thiso sectiono ino ao disputeo betweeno theo suppliero locatedo withinoitsojurisdictionoandoaobuyerolocatedoanywhereoino India.o

(5)o Everyo referenceo madeo undero thiso sectiono shallo beo decidedowithinoaoperiodoofoninetyodaysofromotheodateoofo makingosuchoaoreference.oo

19.oApplicationoforosettingoasideodecree,oawardooroorder-.o Noo applicationo foro settingo asideo anyo decree,o awardo oro otheroorderomadeoeitherobyotheoCounciloitselfoorobyoanyo institutiono oro centreo providingo alternateo disputeo resolutionoservicesotoowhichoaoreferenceoisomadeobyotheo Council,o shallo beo entertainedo byo anyo courto unlesso theo appellanto (noto beingo ao supplier)o haso depositedo witho ito seventy-o fiveo pero cento ofo theo amounto ino termso ofo theo decree,oawardoor,oasotheocaseomayobe,otheootheroorderoino theomannerodirectedobyosuchocourt:o CWP-8814-2022o&oconnectedopetitionsoo -21-o o o Providedothatopendingodisposaloofotheoapplicationo toosetoasideotheodecree,oawardooroorder,otheocourtoshallo orderothatosuchopercentageoofotheoamountodepositedoshallo beopaidotootheosupplier,oasoitoconsidersoreasonableoundero theocircumstancesoofotheocaseosubjectotoosuchoconditionso asoitodeemsonecessaryotooimpose.o Xxo xxxo xxxo xxxo xxxo xxxo xxxo xxxo xxxo

24.oOverridingoeffect.-Theoprovisionsoofosectionso15otoo23o shallo haveo effecto notwithstandingo anythingo inconsistento therewithocontainedoinoanyootherolawoforotheotimeobeingoino force."o

23.o o TheoMSMEDoActowasonotifiedobyotheoParliamentoafterorepealingo theo interesto ono delayedo paymentso too Smallo Scaleo &o Ancillaryo Industrialo Undertakingso Act,o 1993.o Ito waso felto thato non-availabilityo ofo theo adequateo workingocapitalocausedoseriousoproblemsoaffectingotheofinancialohealthoofotheo Small,o Microo ando Mediumo Enterprises.o Ino ordero too ensureo thato prompto paymentso ofo monieso dueo too theo suppliers/serviceo providerso iso made,o theo aboveo saido Acto waso notifiedo witho ao furthero objecto ofo facilitatingo theo promotion;odevelopmentoandoenhancingotheocompetitivenessooofotheoMicro,o Smallo ando Mediumo Enterprises.o Ano entireo mechanismo foro ensuringo expeditiousorecoveryoofotheooutstandingoduesohasobeenoprovidedoinotheostatue.o Sectiono15oofotheoActoholdsotheobuyeroliableotoomakeopaymentoforotheogoodso suppliedo oro serviceso renderedo ono oro beforeo theo dateo agreed.o Whereo sucho paymentoisonotomade,onotwithstandingoanythingocontainedoinoanyoagreemento betweenotheopartiesooroanyolawoforotheotimeobeingoinforce,otheodateofromo whichoandotheorateoatowhichointerestoisopayableoasoprescribedounderoSectiono 16owouldobecomeoapplicable.oHence,otheorigorsoofoSectiono16owouldobecomeo applicableoandotheodefenceooforeferringotootheotermsoandoconditionsoofotheo CWP-8814-2022o&oconnectedopetitionsoo -22-o o agreement,otootheocontraryoisonotoavailableoandooverridesoanyoagreementonoto inoconsonance.oTheopartyoaggrievedomayomakeoaoreferenceotootheoFacilitationo CouncilounderoSectiono18oandothatoonoreceiptoofosuchooaoreference,oitoshallo eithero conducto theo conciliationo itselfo oro seeko assistanceo ofo anyo othero institution/centreotooconductoconciliationoasoperoprovisionsoofoSectiono65otoo 81o ofo theo Arbitrationo &o Conciliationo Act,o 1996.o Whereo theo conciliationo initiatedo undero subo sectiono (2)o ofo MSMEDo Acto iso noto successfulo ando iso terminatedo withouto anyo settlemento betweeno theo parties,o theo Facilitationo Councilo mayo takeo upo theo disputeo foro arbitrationo oro refero theo sameo too ano institutionoorocentre.ooSectiono19oprovidesoforotheoremedyoforochallengingotheo decree,oawardoasowelloasoorderobyoaomandatoryopre-depositoandoSectiono24o giveso ano overridingo effecto too theo provisionso ofo theo MSMEDo Acto notwithstandingoanythingoinconsistentothereotoocontainedoinoanyootherolawoforo theotimeobeingoinoforce.oo

24.o o AoreferenceowasomadeobyotheocounseloforotheopetitioneroinoCWP-18313-2022otootheojudgmentoofo"UCALoFueloSystemsoLimitedoversusoMicroo andoSmalloEnterprisesoFacilitationoCounciloandoanother"oofoMadrasoHigho Courtoreportedoaso2020oSCCoOnLineoMadraso24345oasowelloaso"Moderno Petrofilso Dtyo Divisiono ando otherso versuso Microo ando Smallo Enterpriseso FacilitationoCounciloandoOthers"oreportedoaso2019oSCCoOnLineoGujarato 5245otoocontendothatowhereotheonoticeoissuedobyotheoFacilitationoCouncilodoeso notoenvisageoanoinvitationotootheopartiesoforoconciliation,otheonoticesoareoliableo toobeosetoasideoandotheoCounciloisorequiredotooundertakeotheoexerciseoafresho afteroissuingoappropriateonoticeoinoconformityowithoSectiono18oofotheoAct.oo

25.o o Theo relevanto extracto ofo theo judgmento ino UCALo Fuelo Systemo (supra)oisoreproducedohereinafterobelowo:-o o CWP-8814-2022o&oconnectedopetitionsoo -23-o o o 20.oSectiono18oofotheoActoprovidesofororeferenceotoo MicrooandoSmalloEnterprisesoFacilitationoCouncil.oAsopero Sectiono 18(1)o ofo theo Act,o anyo partyo too ao dispute,o witho regardotooanyoamountodueounderoSectiono17,ocanomakeoao referenceotootheoMicrooandoSmalloEnterprisesoFacilitationo Councilo(Shortlyo"theoCouncil");o o 21.oAsoperosub-sectiono(2)oofoSectiono18oofotheoAct,o theo Council,o shallo eithero itselfo conducto conciliationo oro seekotheoassistanceoofoanyoinstitutionooroCentreoprovidingo alternateodisputeoresolutionoservicesobyomakingorefereniceo too sucho institutiono foro conductingo conciliation.o Ito iso specificallyomentionedothatoprovisionsoofoSectionso65otoo 81oofotheoArbitrationoandoConciliationoAct,o1996o(Acto26o ofo1996)oshalloapplyotoosuchoaodispute,oasoifoconciliationo wasoinitiatedounderoPartoIIIoofothatoAct.oo o 22.oAsoperosub-sectiono(3)oofoSectiono18oofotheoAct,o ifotheoconciliationoinitiatedoisonotosuccessfuloandostandso terminatedo withouto anyo settlemento betweeno theo parties,o theo Councilo eithero itselfo takeo upo theo dispute,o foro arbitrationo oro refero ito too anyo institutiono oro Centreo providingoalternateodisputeoresolutionoservicesoforosucho arbitrationounderotheoprovisionsoofotheoArbitrationoando ConciliationoAct,o1996.o o o23.oAsoperosub-sectiono(4)oofoSectiono18oofotheoAct,o theoCouncilohasojurisdictionotooactoasoanoArbitratorooro Concillatoro ino ao disputeo betweeno theo suppliero locatedo withinoitsojurisdictionoandoaobuyerolocatedoanywhereoino India.o o 24.oAccordingly,otheoaboveoschemeoofoSectiono18oofo theoActoclearlyoprovidesoforoconciliationobyotheoCouncilobyo itselfoorotooanyootheroinstitutionoandoinocaseoofofailure,oforo arbitrationobyoitselfooroanyootheroinstitutionoandotheoseato CWP-8814-2022o&oconnectedopetitionsoo -24-o o o 25.oItohasotoobeonotedothatosub-sectiono(2)oofoSectiono 18o ofo theo Acto clearlyo spellso outo thato theo provisionso governingotheoconciliationoproceedings,oasoperoSectiono65o too 81o ofo Act,o 26o ofo 1996o Accordingly,o theo processo ofo conciliationoandoroleoandopowersoofotheoConciliatorohaso toobeoseen.o o 26.o Aso pero Sectiono 65o ofo Arbitrationo ando Conciliationo Act,o 1996,o theo procedureo foro receivingo writtenostatementofromotheopartiesoisospecified.oSectiono67o ofotheoArbitrationoandoConciliationoAct,o1995,ospecifieso theoroleoofoConciliator.oSub-sectiono(1)oofoSectiono67oofo theo Arbitrationo ando Conciliationo Act,o specificallyo mentionsothatotheoConciliatoroshalloassistotheopartiesoinoano independento ando impartialo mannero ino theiro attempto too reachoanoamicableosettlementoofotheirodispute.oItomeanso thatotheoConciliatoroplaysoaoroleoinoassistingotheopartiesotoo arriveo ato ano amicableo settlement,o too beo reachedo byo themselves,oonotheiroown.oInothatoprocess,otheoConciliatoro asoperosub-sectiono(2)oofoSectiono67oofotheoArbitrationoando ConciliationoActoisoguidedobyotheoprinciplesoofoobjectivity,o fairnesso ando justice,o givingo considerationo too theo rightso ando obligationso ofo theo parties.o Theo Conciliator,o thus,o assistotheopartiesoinomakingoproposalsoforosettlementoofo dispute.oTherefore,oitoisoveryoclearothatotheofirstostageoofo referenceoisoconciliation.oTheoprocedureoofoconciliationoiso onlyo too assisto theo partieso too arriveo ato ano amicableo settlement.o However,o theo statutoryo forceo ofo theo Acto compelsotheobuyerotooappearobeforeoitoandoparticipateoino theoconciliationoproceedings.oItodoesonotomeanothatotheo partyoisoboundobyotheodictatesoofotheoConciliator.o

27.oTherefore,oasoperosub-sectiono(3)oofoSectiono18o ofo theo Micro,o Smallo ando Mediumo Enterpriseso DevelopmentoAct,o2006,oaoprovisionoisomadeofororeferringo theo mattero foro arbitration,o ifo theo conciliationo iso noto CWP-8814-2022o&oconnectedopetitionsoo -25-o o successful.oItoisoalsoomadeoclearothatoonceotheoConciliatoro involvesoinotheoprocessoofoconciliation,oheocommunicateso botho theo partieso ando receiveso confidentialo informationso fromobothotheoparties.oInothatoprocess,otheoConciliatoroiso expectedo too maintaino confidentiality,o which,o aso pero Sectiono75oofotheoArbitrationoandoConciliationoAct,o1996,o shallo extendo alsoo too theo settlemento agreement,o excepto whereo itso disclosureo iso necessaryo foro theo purposeo ofo implementationoandoenforcementoofotheosettlement.o o 28.oSectiono80oofotheoArbitrationoandoConciliationo Act,o1996,ospecificallyomentionsothatounlessoandootherwiseo agreedobyotheopartiesotheoConciliatoroshallonotoactoasoano ArbitratorooroasoaorepresentativeoofotheoCounciloofotheo partyoinoanyoarbitraloorojudicialoproceedings,oinorespectoofo ao disputeo thato iso theo subjecto ofo theo conciliationo proceedingsoandoheoshallonotoactoasoaowitnessoinoanyosucho proceedingsoalso.o o 29.oIfotheomatteroisoviewedofromothatoangle,oitoiso veryoclearothatotheoconciliationoisoaodifferentoconfidentialo processo ando ao person,o whoo actedo aso ao Conciliator,o iso expectedotoomaintainoconfidentialityoandonototooactoasoano Arbitratorooroaorepresentativeooroasoaowitnessoinotheosameo subjectomatteroinoanoarbitrationoorojudicialoproceedings.o Therefore,otheocontentionoofotheopetitionerothatoSectionso 15,o16oando17oofotheoActoconferoblanketopowersoinofavouro ofotheosupplieroandodoesonotoprovideoforoanyosafeguardotoo theo buyero iso noto sustainable,o foro theo reason,o thato theo recoveryoproceedings.areomadeoinoaophasedomanneroando atotheofirstostage,oitoisoonlyo"Conciliation"oandoinocaseoofo failure,oitoisoreferredotooarbitration.oTheoinbuiltoprovisionso ofoArbitrationoandoConciliationoActoprovidesoscope,oforo allotheopartiesotooarbitration,oforogettingoprotectionoorderso fromotheoArbitraloTribunal.oTherefore,otheocontentionothato CWP-8814-2022o&oconnectedopetitionsoo -26-o o theoActodoesonotoprovideoforoanyosafeguardsotootheobuyerso toonotosustainable.o o 30.oTheocontentsoofotheoImpugnedonoticesoissuedobyo theoMicrooSmalloEnterprisesoFacilitationoCounciloreadso asounder:oo "WHEREASotheoaboveonamedopetitionerohasofiledoao PetitionotoothisoCounciloagainstotheorespondentoforo theopaymentoofodueoagainstotheomaterialsosuppliedo too theo respondento ando interesto thereon,o theo PETITIONERo aso wello aso theo RESPONDENTo areo herebyo summonedo too appearo ino thiso Councilo ino personoorobyoaoPleaderodulyoauthorizedo(Vakkalato shallo beo producedo byo theo Counselo whoo appearso beforeoCounciloomeeting)oandoableotooansweroallo materialoquestionsorelatingotoothisoSuitoorowhooshallo beoaccompaniedobyosomeopersonoableotooansweroallo sucho questionso ono 20o dayo ofo Novembero 2018,o ato

10.00oA.M.,oatoMinioConferenceoHall,oOfficeoofotheo Industrieso Commissionero ando Directoro ofo Industrieso ando Commerce,o 1o Floor,o SIDCOo Corporateo Building,o Guindy,o Chennai-600032o too answerotheoclaim,oandoyouoareodirectedotooproduceo ono thato dayo allo theo documentso upono whicho youo intendotoorelyoinosupportoofoyourodefense.o o Takeo noticeo that,o ino defaulto ofo youro appearanceoonotheodayobeforeomentioned,otheosuito willobeoheardoandodeterminedoinoyouroabsenceoaso ex-parte.oGivenounderomyohandoandotheosealoofotheo Councilothiso2odayoofoNovembero2018."oo

31.o Theo notices,o particularlyo ino theo penultimateo paragraph,oindicateothatoifotheobuyer/petitionerodoesonoto appear,o theosuito willo beoheardoando determinedoino theiro CWP-8814-2022o&oconnectedopetitionsoo -27-o o absenceo aso ex-parte,o whicho doeso noto conformo witho theo objectoofotheoconciliationoproceedings.o

32.oAsodiscussedoabove,oinotheoprocessoofoConciliation,o theo provisionso ofo theo Arbitrationo ando Conciliationo Act,o 1996,oareomandatorily,otoobeofollowedobyotheoCouncil.oButo theotenoroofotheonoticeothato"ifobuyerodoesonotoparticipateo inotheoproceedings,oCouncilowillopassoordersoonomerits,o settingotheorespondentoexparteoandodetermineotheoliability,o appearo likeo ano adversarialo proceedingso ando noto aso ao conciliationo proceedings.o Perhaps,o ito waso draftedo byo ao semioliterateocopyingoandopastingoformatsoofoCiviloCourto mechanically,o withouto applicanto ofo mind.o Aso such,o theo noticesoIssuedounderoproceedingsoinoMSEFC/CR/43/2018,o MSEFC/CR/39/2018,o MSEFC/CR/42/2018,o MSEFC/CR/40/2018,o MSEFC/CR/41/2018o ando MSEFC/CR/37/2018o respectivelyo areo contraryo too theo procedure,ocontemplatedounderoSectiono18oofotheoMSMEo Act.o o 33.oTheoCounciloisoexpectedotooinviteotheopartiesoforo conciliation.oHowever,otheoappearanceoofotheopetitionero andosecondorespondentoisomandatory.oTheoCounciloshallo assistotheopartiesotooreachoanoamicableosettlement.oOnlyoino caseoofofailure,oitocanobeoreferredotooarbitration.oEvenoino thatocase,otheopersonowhooactedoasoaoConciliatoroinothato particularomatter,oisonotoentitledotooactoasoanoArbitrator.o Inothatoviewoofotheomatter,otheoimpugnedonoticesodoonoto standotheotestoofoscrutinyoofolawoandoareoliableotoobeoseto aside.o o 34.oInofine,o o(1)otheoreferenceomadeounderoSectiono18oofotheoActobyotheo secondo respondento hereino beforeo theo Councilo iso CWP-8814-2022o&oconnectedopetitionsoo -28-o o

(ii)o theo proceedingso inflatedo byo theo Microo Smallo EnterprisesoFacilitationoCounciloisowithinotheoscopeoando ambitoofotheoAct.oo

(iii)o theo impugnedo notices,o aso such,o Issuedo byo theo firsto respondentoCounciloareonotoinoconformityowithotheoobjecto ofoSectiono18oofotheoAct.oTherefore,otheoimpugnedonoticeso areo seto asideo ando ao directiono iso giveno too theo firsto respondentoCouncilotooactoinoaccordanceowithoSectiono18o ofotheoActoandoissueonoticeoinoconformityowithosub-sectiono

(1)oofoSectiono18oofotheoActoandoproceedofurther.o

26.o o Theorelevantoextractoofotheojudgmentoinotheomatteroofo"Moderno Petrofilso(supra)oareoasounder:-oo o o 4.10.o Thereafter,o ino theo 50tho Meetingo ofo theo RespondentoNo.o1,otheoPetitioneroNo.1ocouldonotoremaino representedoandoitsoofficersohadosoughtoforoadjournment.o Theo Respondento No.o 1,o rejectingo theo requesto ofo theo Petitioner'o No.o 1,o declaredo completiono ofo Conciliationo Proceedingsou/s.o18(1)oando18(2)oofotheoMSMEoActoando withoutoanyofurtheroNotice,opassedotheoimpugnedoAwardo datedo22ndoFebruary,o2018,oexoparte.o Xxxo xxxo xxxo xxxo xxxo xxxo xxxo xxxo xxxo o o 9.o Mr.o Gandhio relyingo upono theo provisionso ofo Sectiono 18o ofo theo MSMEo Act,o submittedo thato theo respondentoNo.o1oinocompleteodisregardotootheoprocedureo contemplatedounderoSectiono18oofotheoMSMEoActopassedo theoimpugnedoorder,o asonoo conciliationoproceedingso aso contemplatedounderoSectiono18(2)oofotheoMSMEoActowaso initiatedo noro arbitrationo proceedingso aso contemplatedo underoSectionso18(3)oofotheoMSMEoActowasoinitiated.oIto wasopointedooutofromotheoimpugnedoorderopassedobyotheo respondentoNo.o1othatocontraryotootheoprovisionsoofotheo MSMEoAct,oanoexoparteoorderoisopassedowithoutogivingo CWP-8814-2022o&oconnectedopetitionsoo -29-o o anyo opportunityo ofo hearingo too theo petitioners.o Ito waso furtherosubmittedobyoMr.oGandhiothatotheorespondentoNo.o 1oCouncilodidonotocomplyowithotheoprovisionsoofoSectiono 18(3)o ofo theo MSMEo Acto ando straightawayo passedo ano awardobyotheorejectingotheoapplicationoforoadjournmento madeobyotheopetitioners.o Xxo xxxo xxxo xxxo xxxo xxxo xxxo xxxo xxxo o o 11.oMr.oGandhiowouldosubmitothatowhereotheore-conciliationounderoSectiono18(2)oreadowithoSectiono65otoo 81o ofo theo Arbitrationo ando Conciliationo Act,o 1996o (foro shorto theo "Arbitrationo Act")o iso terminatedo theno theo procedureo undero Sectiono 18(3)o iso mandatoryo soo aso too initiateo arbitrationo proceedingso byo applyingo theo provisionsoofotheoArbitrationoActoandotheorespondentoNo.o 1o couldo noto haveo mechanicallyo passedo theo impugnedo orderodirectingotheopetitioneroNo.o1otoomakeotheopaymento aso claimedo byo theo respondento No.o 2.o Ito waso furthero submittedobyoMr.oGandhiothatotheorespondentoNo.o1ofailedo tooadhereotootheomandatoryoprovisionsoofoSectiono18(3)oofo theoMSMEoActoandothereowasonooauthorityoorojurisdictiono toopassotheoimpugnedoorderoasoitoisoaosettledolegalopositiono thatowhereotheolaworequiresoparticularoprocedureotoobeo followed,oitohasotoobeodoneoinothatomanneroonlyoandonoto otherwise.o o 12.o Ono theo othero hand,o Mr.o Rohano A.o Shah,o theo learnedo advocateo appearingo foro theo respondento No.o 2o vehementlyo opposedo thiso petitiono ando raisedo theo preliminaryoobjectiono withoregardotoo maintainabilityoofo theopetitionoandograntoofointerimoreliefoinofavouroofotheo petitioners.oMr.oShahorelyingouponotheoaverinentsomadeoino theo affidavito filedo ono behalfo ofo theo respondento No.o 2,o submittedothatotheoprovisionsoofoSectiono18oofotheoMSMEo Actocontainsoaonon-obstanteoclauseowhichoprovidesothato notwithstandingoanythingocontainedoinoanyootherolawoforoVISHAL SHARMA CWP-8814-2022o&oconnectedopetitionsoo -30-o o theotimeobeingoinoforce,oanyopartyotoodisputeomay,owitho regardo too anyo amounto dueo undero Sectiono 17,o makeo ao referenceo too theo Council.o Mr.o Shaho wouldo submito thato onceoanoawardoisopassedobyotheorespondentoNo.o1oandoifo theopetitioneroisoaggrievedobyotheosame,oanoapplicationoforo settingo asideo theo awardo iso requiredo too beo madeo ino accordanceowithoSectiono34oofotheoArbitrationoAct.oItowaso therefore,o submittedo byo Mr.o Shaho thato wheno ao statuteo provideso foro ano alternativeo efficaciouso remedy,o sucho remedyo cannoto beo avoidedo oro bypassed.o Relianceo waso placedoonoSectiono19oofotheoMSMEoActoinosupportoofotheo submissionoforoalternativeoremedy.oItowasosubmittedobyo Mr.oShahothatowhenoaostatutoryoforumoisocreatedobyolawo fororedressaloofogrievances,oaowritopetitionoshouldonotobeo entertainedo ignoringo theo statutoryo dispensation.o Ito waso pointedooutothatoSectiono19oofotheoMSMEoAct,olaysodownoao conditionoofodepositoofo75%oofotheoamountoawardedooro decreed,obeforeoanoapplicationoforosettingoasideosuchoao decreeo oro awardo iso entertained,o however,o theo presento petitiono haso beeno filedo ino ordero too circumvento theo requirementoofodepositoofo75%oofotheoawardedoamount,o therefore,otheopetitionoisorequiredotoobeodismissed.oo o 13.oMr.oShahofurtherosubmittedothatotheoMSMEoActo isoaospecialoActoandotherefore,otheoprovisionsoofotheosaido Actowouldoprevailooveroanyootherolaw.oItowasopointedoouto byoMr.oShahothatotheopetitioneroNo.o1owasoinformedobyo letterodatedo5oMarcho2018,oafteroimpugnedoawardowaso passedobyotheorespondentoNo.o1oandodespiteobeingoawareo ofotheosaidoaward,otheopetitioneroNo.o1oadoptedoaolaido backoapproachoandoafteroaoperiodoofo5otoo6omonthsoono4tho Septembero2018ohasoapproachedothisoCourtobyoinvokingo writoJurisdiction.oTheorespondentoNo.o2ohasoalreadyofiledo executiono applicationo beingo Specialo Executiono ApplicationoNo.o4oofo2018obeforeotheolearnedoCiviloJudge,o VISHAL SHARMA Karjanoandotherefore,oonceotheorespondentoNo.o2oinitiatedo CWP-8814-2022o&oconnectedopetitionsoo -31-o o theo executiono proceedingso thereo waso noo optiono foro theo petitionerobutotoochallengeotheoawardounderoSectiono34oofo theoArbitrationoActoandoasotheopetitionerohasoapproachedo thiso Courto aftero filingo ofo theo executiono petition,o sucho petitionoisorequiredotoobeorejectedoonlyoonothatoground.oo Xxxo xxxo xxxo xxxo xxxo xxxo xxxo xxxo xxxo o o 15.o Havingo heardo theo learnedo advocateso foro theo respectiveopartiesoandohavingogoneothroughotheomaterialso ono record,o theo onlyo question,o whicho ariseso foro considerationoofothisoCourtoisowhetherotheorespondentoNo.o 1,o theo Microo Smallo Enterpriseso Facilitationo Council,o Gujaratowasojustifiedoinopassingoexoparteoawardoagainsto theopetitionerounderotheoprovisionsoofotheoMSMEoActooro not.oo Xxxo xxxo xxxo xxxo xxxo xxxo xxxo xxxo xxxo o o 21.o Consideringo theo provisionso ofo MSMEo Act,o ito appearso thato theo respondento no.o 1o Councilo haso actedo contraryo too theo provisiono ofo Sectiono 18(3)o becauseo Sectiono 18(3)o provideso foro initiationo ofo arbitrationo proceedings,oIfotheorespondentono.o1oCounciloarrivesoatoaoo decisiono thato anyo reconciliationo initiatedo undero sub-sectiono (2)o iso noto successfulo ando standso terminatedo withouto anyo settlemento betweeno theo parties,o theo respondentono.o1oCouncilooughtotoohaveoeitherotakenoupo theodisputeoforoarbitrationoorotooreferoitotooanyoinstitutiono oro centreo providingo alternativeo disputeo resolutiono serviceso foro sucho arbitrationo ando theo provisionso ofo theo ArbitrationoActowouldothenoapplyotootheodisputeoasoifotheo arbitrationowasoinopursuanceoofoanoarbitrationoagreemento referredotooinosub-osection(1)oofosectiono7oofoArbitrationo Act.o Therefore,o theo respondento No.o 1-Councilo waso requiredotooinitiateoarbitrationoproceedingsoonoitsoownooro refero theo mattero too anyo institutiono oro centreo providingo CWP-8814-2022o&oconnectedopetitionsoo -32-o o alternativeo disputeo resolutiono serviceso foro sucho arbitration.oHowever,otheorespondentoNo.o1-Councilohaso passedo theo impugnedo awardo withouto followingo theo procedureoprescribedounderoSectiono18(3)oofotheoMSMEo Act.oSectiono18(3)oofotheoMSMEoActoclearlyoprovidesothato theoarbitrationoonofailureoofoconciliationoinitiatedounder-Subsectiono (2)o ofo Sectiono 18,o theo respondento no.o 1o Counciloisorequiredotooinitiateoarbitrationoproceedingsoaso perotheoprovisionsoofotheoArbitrationoAct.oHowever,oinotheo factso ofo theo caseo insteado ofo followingo theo procedureo prescribedoundero theo provisionso ofotheo Arbitrationo Act,o theorespondentoNo.o1-Councilohasopassedotheoimpugnedoexo parteo award.o Therefore,o onlyo conclusiono whicho cano beo arrivedoat,oisothatotheoimpugnedoawardoisopassedowithouto jurisdictiono ando contraryo too theo provisionso ofo Sectiono 18(3)o ofo theo MSMEo Act.o Ino sucho circumstances,o theo petitionoisorequiredotoobeoallowedobyoquashingoandosettingo asideotheoimpugnedoawardopassedobyotheorespondentoNo.o 1-MSMEo Councilo ando theo mattero iso requiredo too beo remandedo backo too passo ao fresho deo novoo ordero ino consonanceowithotheoprovisionsoofoSectiono18(3)oofotheo MSMEo Act,o too initiateo arbitrationo proceedingso ino consonanceowithotheoprovisionsoofoSectiono18(3)oofotheo MSMEoAct."o

27.o o Relianceowasoalsooplacedoonotheojudgmentoofo"PrincipaloChiefo EngineeroversusoManibhaioandoBrothers"oofoGujaratoHighoCourtoreportedo aso2012oSCCoOnlineoGujarato2422otoocontendothatowhereotheoconciliationo proceedingsowereorecordedotoohaveofailedoinotheomatteroandotheosameowasoputo upoforoarbitration,otheocouncilohasotooinformotheopartiesoofosuchofailureoandoitso proceedingso too conducto arbitrationo soo aso too enableo themo too leado theiro evidence,o ifo theyo soo desire.o Aso theo councilo failedo too followo theo saido procedure,otheoawardowasosetoaside.oTheorelevantoextractoisoasounder:o CWP-8814-2022o&oconnectedopetitionsoo -33-o o o "4.o Theo learnedo Singleo Judgeo haso dismissedo theo writopetitionofiledobyotheopetitionerobyowhichotheoallegedo awardo datedo 21.8.2010o haso beeno challengedo byo theo appellantoonotheogroundothatothisoisonotoanoawardobutoiso anoorderopassedoinoconciliationoproceedings.oTheolearnedo counseloforotheorespondentono.o1oonotheootherohand,ohaso vehementlyo urgedo thato thiso iso ano awardo ando noto conciliationo ordero ando therefore,o theo appellanto haso ao statutoryoremedyoofofilingoanoapplicationounderoSectiono34o ofotheoArbitrationoandoConciliationoAct,o1996o(Foroshorto "TheoAct").oTheolearnedocounselofororespondentono.o1ohaso takenousotooSectionso18oando19oofoTheoMicro,oSmalloando Mediumo Enterpriseso Developmento Act,o 2006o (foro shorto "MSMEDo Act")o aso wello aso theo provisionso ofo Theo ArbitrationoandoConciliationoAct,o1996.oOnotheoargumentso advancedo byo theo learnedo counselo foro theo parties,o Ito appearsothatoinoFebruary,o2010,otheoappellantohasofiledo hisowrittenoargumentsowhereinoinopara-6oitowasostatedobyo himo thato theo Microo ando Smallo Enterpriseso Facilitationo Councilo(Foroshorto"Council")ohasotooholdoandodeclareo thatoconciliationoproceedingsohaveofailed.oInotheirolettero No.o MBSC/2009-10/163o datedo 25.2.2010,o ino theo lasto paragraph,oitoisostatedothatosinceotheobuyerohasocontendedo thatoconciliationoproceedingsobeotreatedoasofailed,oundero theocircumstances,otheorespondentorequestedotheolearnedo counselotoocommenceotheonextostepoasoprovidedounderotheo Actoandotheonextostepowasoarbitrationotoobeoconductedobyo theocouncilooroanyoinstituteoundertakingoarbitrationoarido requestotheocouncilotooconductoarbitrationoprocess.o o 5.o Weo haveo goneo througho theo impugnedo order/awardo datedo 21.8.2010o ando weo doo noto findo thato anywhereo ito haso beeno recordedo thato ono whato dateo theo conciliationoproceedingsohaveobeenotreatedotoohaveofailedo byotheocouncil.oFromotheooriginalorecordoproducedobeforeo VISHAL SHARMA us,o weo doo noto findo anyo ordero passedo byo theo councilo CWP-8814-2022o&oconnectedopetitionsoo -34-o o whereino ito haso beeno recordedo thato conciliationo proceedingso areo treatedo too haveo too beo failedo ando haveo comeo too ano endo ando nexto stepo ofo arbitrationo iso nowo conductedobyotheocouncil.oThoughonoticesowereoIssuedoono

20.5.2010ofixingo31.5.2010oasonextodate,oitoalsoodoesonoto mentionothatotheonextoarbitrationoproceedingsowouldobeo takeno upo oro hearingo ono merits,o wouldo commenceo oro partiesomayoleadotheiroevidenceoandoproceedowithotheiro arguments.o Theo councilo ifo wantedo too proceedo ino theo arbitration,o theno theo councilo hado too informo theo partieso thato conciliationo haso falledo ando ito iso proceedingo too conductoarbitrationoandoforothatopurpose,otheopartiesomayo leadotheiroevidenceoifotheyosoodesireoafterofixingotheodateo foroevidenceoofotheoparties;ofixotheodateoofohearing;oando thereafteroconductohearingoinoaccordanceowitholawoando passoanoaward.oThisowasonotodoneoinotheopresentocase.o o 6.oFurther,olearnedocounseloforotheoappellantohaso alsoo submittedo thato heo haso filedo ano applicationo undero Sectiono8oofotheoAct,oono5.11.2009oonowhichonooorderohaso beenopassedobyotheocouncil.oRecordsohaveobeenoshownobyo theo learnedo counselo foro respondento no.o 2o too learnedo counselofororespondentono.o1oandotheoappellant,obutotheyo haveo failedo too findo anyo ordero decidingo theo applicationo underoSectiono8oofotheoActonoroorder-sheetomentionsothato anyohearingotookoplaceoonotheoapplicationounderoSectiono8o ofo theo Act.o Learnedo counselo foro theo partieso agreeo thato interestoofojusticeowouldobeoservedoifotheomatteroisosento bankotootheocouncil.oLearnedocounseloforotheopartiesoagreeo thatothiso Courto mayo treato thato conciliationo proceedingso haveofailedoandotheomatteroshouldobeoproceededoforonexto stepoforoarbitration.o o 7.oInoviewoofothisostatementomadeobyotheolearnedo counselo forotheo partieso ando ino viewoofotheo submissionso madeobeforeotheocouncil,oinotheirowrittenoargumentooroino CWP-8814-2022o&oconnectedopetitionsoo -35-o o theo letter,o whereino ito iso statedo thato conciliationo proceedingso haveo failedo ando theo nexto stepo haso too beo conductedobyotheocouncil.oBeforeoconductingotheonextostepo foroarbitration,ocouncilohasotoodecideotheoapplicationofiledo byotheoappellantodatedo5.11.2009ounderosectiono8oofotheo Actoandoafterodecidingoitoandoservingoaocopyoofotheoordero onotheoappellant,othereafter,oshalloproceedotoofixotheodateo foropartiesotooleadotheoevidenceoinosupportooforespectiveo claimsoandothereafterofixotheodateoforohearingoafterogivingo sufficientonoticeotootheopartiesoandothereafteroproceedotoo passoarbitraloawardoinoaccordanceowitholaw.oTheolearnedo SingleoJudgeohasodismissedoSpecialoCiviloApplicationoNo.o 2471oofo2011oonotheogroundoofoalternativeoremedy.oInoouro opinion,o theo ordero passedo byo theo learnedo Singleo Judgeo cannoto beo maintainedo aso theo councilo proceededo too pronounceotheoawardowithoutofollowingoproperoprocedureo ando withouto recordingo ?o findingo thato conciliationo proceedingsohaveofailedoandocomeotooanoendoandofurthero theo councilo failedo too decideo theo applicationo ofo theo appellantounderoSectiono8oofotheoAct.oTheolearnedoSingleo Judgeohasocommittedoanoerroroinonotodecidingotheomattero ono meritso ando ino dismissingo theo writo petitiono ono theo groundoofoalternativeoremedy.oTheoorderopassedobyotheo learnedoSingleoJudgeosuffersofromotheoerroroapparentoono theo faceo ofo theo recordo ando therefore,o ito cannoto beo maintained.oTherefore,otheoawardopassedobyotheocouncilo datedo21.8.2010oisoillegaloandoinoviolationoofoprinciplesoofo naturalojusticeoandoisoliableotoobeosetoaside.o o 8.o Ino theo result,o thiso Appealo succeedso ando iso allowed.oTheoorderodatedo21.8.2010opassedobyotheocouncilo isosetoaside.oTheomatteroisoremandedobackotootheocouncilo too proceedo witho theo arbitrationo proceedingso ando aftero servingoaocopyoofotheosameoonotheoappellant,othereafter,o shallo proceedo too fixo theo dateo foro partieso too leado theo VISHAL SHARMA evidenceoinosupportooforespectiveoclaimsoandothereafterofixo CWP-8814-2022o&oconnectedopetitionsoo -36-o o theodateoforohearingoafterogivingosufficientonoticeotootheo partiesoandothereafteroproceedotoopassoarbitraloawardoino accordanceowitholaw.oTheoorderodatedo11.10.2011opassedo byotheolearnedoSingleoJudgeoinoSpecialoCiviloApplicationo No.o 1997o ofo 2011o iso seto aside.o Ito shallobeo openo too theo partiesotooraiseoalloobjectionsowhichohaveobeenoraisedoino thisoAppealoandotheowritopetitionowhichotheyowantotooraiseo beforeo theo counsel.o Theo councilo shallo decideo theo applicationodatedo5.11.2009opreferredobyoappellantoundero sectiono8oofotheoActoasoexpeditiouslyoasopossible.oAsotheo Appealoisoallowed,oCiviloApplicationodoesonotosurvive.o

28.o o RelianceowasoalsooplacedoonotheojudgmentoofothisoCourtodatedo

07.10.2021o ino theo mattero ofo "Steelo Authorityo ofo Indiao Limitedo versuso Districto Levelo Microo ando Smallo Enterpriseso Facilitationo Council,o Fatehgarho Sahibo ando another"o ino CWPo No.o 185290o &o 15772-2021o too contendo thato principleso ofo naturalo justiceo hado beeno violatedo sinceo theoo petitionerowasonotogivenoadequateoopportunityotoopresentoitsocaseobeforeotheo Counciloandohasobeenoburdenedowithosubstantialoliability.oNoticingothatotheo petitionero waso situatedo ino Westo Bengalo ando theo periodo waso relateableo too CovidoPandemic,oitowasonotopossibleoforoitotoodeputeoitsoofficialotooremaino presentoonotheodateoofohearing,otheoawardowasosetoasideoandodirectionsowereo givenotootheoFacilitationoCouncilotoopassoaofreshoawardoafteroaffordingoano opportunityotootheoparties.oo

29.o o Pero contra,o counselo foro respondentso haveo referredo too theo judgmento ino theo mattero ofo "Whirlpoolo Corporationo versuso Registraro ofo TradeoMarks,oMumbaioreportedoaso1998o(8)oSCCo1otoocontendothatoremedyo ofowritopetitionowouldonotobeomaintainableowhenoanoalternative,oeffectiveoando efficaciousoremedyoisoavailableotootheopetitioner.oTheorelevantoextractoofotheoo judgmentoreadsothuso:oVISHAL SHARMA CWP-8814-2022o&oconnectedopetitionsoo -37-o o o "13.o Undero Articleo 226o ofo theo Constitution,o theo HighoCourt,ohavingoregardotootheofactsoofotheocase,ohasoao discretionotooentertainooronototooentertainoaowritopetition.o Buto theo Higho Courto haso imposedo upono itselfo certaino restrictionso oneo ofo whicho iso thato ifo ano effectiveo ando efficaciousoremedyoisoavailable,otheoHighoCourtowouldonoto normallyo exerciseo itso jurisdiction.o Buto theo alternativeo remedyohasobeenoconsistentlyoheldobyothisoCourtonototoo operateoasoaobaroinoatoleastothreeocontingencies,onamely,o whereotheowritopetitionohasobeenofiledoforotheoenforcemento ofo anyo ofo theo Fundamentalo Rightso oro whereo thereo haso beeno ao violationo ofo theo principleo ofo naturalo justiceo oro whereo theo ordero oro proceedingso areo whollyo withouto JurisdictionoorotheoviresoofoanoActoisochallenged.oo

30.o o ReferenceowasoalsoomadeotootheojudgmentoofothisoCourtopassedo ino LPAo No.o 63o ofo 2022o ino theo caseo titledo aso "Indiano Drugso &o Pharmaceuticalso Limitedo versuso Stateo ofo Haryanao ando others"o too substantiateotheoabove.o

31.o o Referenceo waso alsoo madeo too theo judgmento ofo theo Hon'bleo Supremeo Courto ino theo mattero ofo "Bhaveno Constructiono througho itsoo authorizedo signatoryo Premjibhaio K.o Shaho versuso Executiveo Engineero SardaroSarovaroNarmadaoNigamoLtdo&oanother"oreportedoaso2022o(1)oSCCo 75otoocontendothatoitowouldonotobeoprudentoforoaojudgeotooexerciseodiscretiono andoallowojudicialointerferenceoinoanoarbitraloprocessounderoArticleso226/227o ofotheoConstitutionoofoIndiaounlessoitoisoaocircumstanceoofoexceptionalorarity,o whereinooneopartyoisoleftoremedilessounderotheoStatueooroaoclearobadofaithohaso beenoshownobyooneoofotheoparties.ooTheorelevantoextractoofotheosaidojudgmento readsothus:-o o "17.oInoanyocase,otheohierarchyoinoourolegaloframework,o mandateso thato ao legislativeo enactmento cannoto curtailo ao CWP-8814-2022o&oconnectedopetitionsoo -38-o o Constitutionaloright.oInoNiveditaoSharmaov.oCellularoOperatorso AssociationoofoIndia,o(2011)o14oSCCo337,othisoCourtoreferredotoo severalojudgmentsoandoheld:o o "11.o Weo haveo consideredo theo respectiveo arguments/submissions.oThereocannotobeoanyodisputeothato theopoweroofotheoHighoCourtsotooissueodirections,oorderso orowritsoincludingowritsoinotheonatureoofohabeasocorpus,o certiorari,o mandamus,o quoo warrantoo ando prohibitiono underoArticleo226oofotheoConstitutionoisoaobasicofeatureoofo theo Constitutiono ando cannoto beo curtailedo byo parliamentaryolegislationoL.oChandraoKumarov.oUnionoofo India,o(1997)o3oSCCo261.oHowever,oitoisooneothingotoosayo thatoinoexerciseoofotheopowerovestedoinoitounderoArticleo226o ofotheoConstitution,otheoHighoCourtocanoentertainoaowrito petitionoagainstoanyoorderopassedobyooroactionotakenobyo theoStateoand/oroitsoagency/oinstrumentalityooroanyopublico authorityo oro ordero passedo byo ao quasi-judicialo body/authority,oandoitoisoanoaltogetherodifferentothingotoo sayothatoeachoandoeveryopetitionofiledounderoArticleo226oofo theoConstitutionomustobeoentertainedobyotheoHighoCourtoaso aomatteroofocourseoignoringotheofactothatotheoaggrievedo personohasoanoeffectiveoalternativeoremedy.oRather,oitoiso settledolawothatowhenoaostatutoryoforumoisocreatedobyolawo fororedressaloofogrievances,oaowritopetitionoshouldonotobeo entertainedoignoringotheostatutoryodispensation."o o o o o o o o (emphasisosupplied)o o Ito iso therefore,o prudento foro ao Judgeo too noto exerciseo discretionotooallowojudicialointerferenceobeyondotheoprocedureo establishedo undero theo enactment.o Thiso powero needso too beo exercisedo ino exceptionalo rarity,o whereino oneo partyo iso lefto remedilessounderotheostatuteooroaoclearo'badofaith'oshownobyooneo ofotheoparties.oThisohighostandardosetobyothisoCourtoisoinotermsoofo theo legislativeo intentiono too makeo theo arbitrationo fairo ando CWP-8814-2022o&oconnectedopetitionsoo -39-o o o 18.oInothisocontextoweomayoobserveoM/s.oDeepoIndustrieso Limitedov.oOiloandoNaturaloGasoCorporationoLimited,o(2019)o SCCo Onlineo SCo 1602,o whereino interplayo ofo sectiono 5o ofo theo Arbitrationo Acto ando Articleo 227o ofo theo Constitutiono waso analyzedoasounder:o o "15.o Mosto significanto ofo allo iso theo non-obstanteo clauseo containedo ino Sectiono 5o whicho stateso thato notwithstandingoanythingocontainedoinoanyootherolaw,oino mattersothatoariseounderoPartoIoofotheoArbitrationoAct,onoo judicialo authorityo shallo interveneo excepto whereo soo providedo ino thiso Part.o Sectiono 37o grantso ao constrictedo rightoofofirstoappealoagainstocertainojudgmentsoandoorderso ando noo others.o Further,o theo statutoryo mandateo alsoo provideso foro oneo biteo ato theo cherry,o ando interdictso ao secondoappealobeingofiledo(SeeoSectiono37(2)oofotheoAct)oo o 16.o Thiso beingo theo case,o thereo iso noo doubto whatsoeverothatoifopetitionsowereotoobeofiledounderoArticleso 226/227o ofo theo Constitutiono againsto orderso passedo ino appealso undero Sectiono 37,o theo entireo arbitralo processo wouldo beo derailedo ando wouldo noto comeo too fruitiono foro manyo years.o Ato theo sameo time,o weo cannoto forgeto thato Articleo227oisoaoconstitutionaloprovisionowhichoremainso untouchedobyotheonon-obstanteoclauseoofoSectiono5oofotheo Act.oInotheseocircumstances,owhatoisoimportantotoonoteoiso thato thougho petitionso cano beo filedo undero Articleo 227o againsto judgmentso allowingo oro dismissingo firsto appealso underoSectiono37oofotheoAct,oyetotheoHighoCourtowouldobeo extremelyo circumspecto ino interferingo witho theo same,o takingointooaccountotheostatutoryopolicyoasoadumbratedobyo usohereinoaboveosoothatointerferenceoisorestrictedotooorderso thatoareo passedo whicho areo patentlyo lackingo ino inherento Jurisdiction."o o 19.oInotheoinstantocase,oRespondentoNo.o1ohasonotobeeno ableotooshowoexceptionalocircumstanceoorobadofaith'oonotheoparto CWP-8814-2022o&oconnectedopetitionsoo -40-o o ofotheoAppellant,otooinvokeotheoremedyounderoArticleo227oofotheo Constitution.oNoodoubtotheoambitoofoArticleo227oisobroadoando pervasive,ohowever,otheoHighoCourtoshouldonotohaveousedoitso inherentopowerotoointerjectotheoarbitraloprocessoatothisostage.oIto isobroughtotooouronoticeothatosubsequentotootheoImpugnedoordero ofotheosoleoarbitrator,oaofinaloawardowasorenderedobyohimoono merits,o whicho iso challengedo byo theo Respondento No.o 1o ino ao separateoSectiono34oapplication,owhichoisopending.o

32.o o Referenceo waso alsoo madeo too theo judgmento ofo theo Hon'bleo SupremeoCourtoinotheomatteroofo"GujaratoStateoCiviloSuppliesoCorporationo Ltd.oversusoMahakalioFoodsoPvt.oLtd.o(Unito2)oandoanother"oreportedoasoo 2022o SCCo OnLineo SCo 1492.o Theo relevanto extracto ofo theo sameo readso aso under:-o o o o "3.oo Theobroadooutlineoofotheoimpugnedoordersoino eachoappealomayobeostatedoasounder:-o Xxo xxxo xxxo xxxo xxxo xxxo xxxo xxxo xxo o

(V)oCA………..oofo2022o(@SLPo(C)oNo.o7375/2020)o o Theo appellanto Bharato Electronicso Ltd.o &o Anr.o (OriginaloPetitioners)ohaveochallengedotheoOrderodatedo

20.01.2020o passedo byo theo Higho Courto ofo Judicatureo ato BombayoinoW.P.oNo.o7899/2017,owherebyotheoHighoCourto hasodismissedotheosaidopetitionoalongowithotheoW.P.oNo.o 9356/2018,o holdingo thato wheno theo Facilitationo Councilo hadoconductedotheoarbitrationoproceedingsoandopassedoano awardounderoSectiono18(3)oofotheoMSMEDoAct,o2006otheo remedyoofotheoaggrievedopartyowouldobeotootakeorecourseo too Sectiono 34o ofo theo Arbitrationo Act.o Theo Higho Courto reliedouponotheoratiooinocaseoofoSBPo&oCompanyov.oPatelo EngineeringoLtd.owhichodisapprovedotheopracticeoofoHigho CourtsoentertainingopetitionsounderoArticleo226/227oofotheo Constitutiono ofo Indiao challengingo theo ordersopassedobyo CWP-8814-2022o&oconnectedopetitionsoo -41-o o Xxo xxxo xxxo xxxo xxxo xxxo xxxo xxxo xxo o

34.o Theoupshotoofotheoaboveoisothat:o o (v)oTheoFacilitationoCouncil/institute/centreoactingo asoanoarbitralotribunalobyovirtueoofoSectiono18(3)oofotheo MSMEDoAct,o2006owouldobeocompetentotooruleoonoitsoowno jurisdictionoasoalsootheootheroissuesoinoviewoofoSectiono16o ofotheoArbitrationoAct,o1996.o

35.o Thougho afore-statedo discussionso ando conclusionso coveroallotheoissuesoinvolvedoinotheoappeals,oitowouldobeo appropriateotoodealowithoeachoofotheoAppealsoindividually.o V)oC.A…………..oofo2022o(@SLPo(C)oNo.o7375oofo2020)o o(i)oTheoappealoisodirectedoagainstotheojudgmentoandoordero datedo20.01.2020opassedobyotheoHighoCourtoofoJudicatureo atoBombay,owherebyotheoHighoCourtodismissedotheowrito petitionsofiledobyotheoappellantso(originalowritopetitioners)o holdingothatotheopartyoaggrievedobyotheoorderopassedobyo theo Arbitralo tribunalo haso too challengeo theo sameo ino accordanceo witho theo provisionso ofo theo Arbitrationo Act,o 1996.oInotheosaidocase,otheopresentorespondentono.o1oIBEXo Integratedo Businesso Expresso Privateo Limitedo (originalo respondento no.o 1-supplier)o hado approachedo theo FacilitationoCounciloforotheorecoveryoofoitsoduesoagainsto theo appellants.o Theo appellantso appearedo beforeo theo Counciloandoraisedoaopreliminaryoobjectionowithoregardo tootheomaintainabilityoofotheoreferenceoonotheogroundothato thereo waso ano arbitrationo clauseo containedo ino theo agreementoexecutedobetweenotheoparties.o

(ii)oTheosaidopreliminaryoobjectionowasorejectedobyotheo Facilitationo Councilo video theo Ordero datedo 20.12.2014.o Theo Councilo thereaftero proceededo furthero witho theo referenceo ino whicho theo appellantso filedo theiro replyo ono meritsotootheoclaimomadeobyotheorespondentoIBEX,oandotheo Facilitationo Councilo eventuallyo passedo ano awardo ono CWP-8814-2022o&oconnectedopetitionsoo -42-o o

31.03.2017,o allowingo theo saido referenceo filedo byo theo IBEX.oBeingoaggrievedobyotheosaidoawardoasowelloasotheo earlieroorderodatedo20.12.2014opassedobyotheoFacilitationo Council,o theoappellantsoapproachedotheoHigho Courtobyo filingotwoowritopetitions.oTheoHighoCourtodismissedobotho theopetitionsovideotheoimpugnedoorderoholdingothatowheno theo Facilitationo Councilo hado conductedo theo arbitrationo proceedingso ando passedo ano award,o theo remedyo ofo theo partyoaggrievedowouldobeotootakeorecourseotooSectiono34o ofotheoArbitrationoAct,o1996.o

(iii)o Aso heldo earlier,o theo proceedingso beforeo theo Facilitationo Council/institute/centreo actingo aso ano arbitratoroareogovernedobyotheoArbitrationoAct,o1996oando thereforeo anyo ordero passedo oro awardo madeo byo sucho council/institute/centreohasotoobeochallengedoasoperotheo Arbitrationo Act.o Theo Appealo thereforeo deserveso too beo dismissedoandoisodismissed."o

33.o o Referenceo waso alsoo madeo too theo judgmento ofo theo Hon'bleo SupremeoCourtoinotheomatteroofo"M/soSterlingoIndustriesoversusoJayprakasho AssociatesoLimitedoandoothers"oreportedoaso2019oo(3)oR.C.R.o(Civil)o844otoo contendothatooHighoCourtocannotosetoasideoanoarbitraloawardoinoexerciseoofoitso jurisdictionounderoArticleso226o&o227oofotheoConstitutionoofoIndia.o

34.o o ReferenceowasoalsoomadeotootheojudgmentoofoMadyaoPradesho HighoCourtoinotheomatteroofo"JabalpuroTreasureoIslandoPvt.oLtd.oversuso StateoofoMadhyaoPradeshoandoothers"opassedoinoWritoPetitionoNo.o369oofo 2020odecidedoono30.12.2021ooreportedoaso2022o(1)oM.P.L.J.o347ootoocontendo thatoonceoaonoticeoisoservedoonoaopartyounderoSectiono18oofotheooMSMEDoActo 2006,oitowouldoholdogoodoforoconciliationoproceedingsoasoalsooarbitrationo proceedingsotoobeotakenoupobyotheoFacilitationoCouncil,oafteroconciliationo CWP-8814-2022o&oconnectedopetitionsoo -43-o o proceedingsohaveofailed,oandonooseparateonoticeoisorequiredotoobeoservedobyo theocounciloforoinitiationoofoarbitrationoproceedings.oo

35.o o Inoviewoofotheoaforesaidojudicialopronouncements,otheopositiono ofolawowhichothusoemergesoisothatowhereoaopartyoaggrievedohasoanoefficaciouso alternativeoremedyounderotheostatue,oaoremedyoofowritoagainstosuchoanoawardo wouldonotobeoordinarilyoavailable.oSuchojurisdictionoisotoobeoexercisedoonlyoino anoexceptionalorarity.oTheoHon'bleoSupremeoCourtoofoIndiaohasoemphasizedo ino theo mattero ofo "Radhao Krishano Industrieso versuso Stateo ofo Himachalo Pradesh"o reportedo aso (2021)o 6o SCCo 771o thato wheno ao statutoryo forumo iso createdobyolawofororedressaloofoaogrievance,oaowritopetitionoshouldonotobeo ordinarilyo entertainedo ignoringo sucho statutoryo dispensation.o Theo relevanto extractoofotheosaidojudgmentoreadsothus:-o o o o "27.oo Theoprinciplesoofolawowhichoemergeoareothato:o o o(i)oTheopowerounderoArticleo226oofotheoConstitutiono too issueo writso cano beo exercisedo noto onlyo foro theo enforcemento ofo fundamentalo rights,o buto foro anyo othero purposeoasowell;o o o(ii)o Theo Higho Courto haso theo discretiono noto too entertainoaowritopetition.oOneoofotheorestrictionsoplacedoono theo powero ofo theo Higho Courto iso whereo ano effectiveo alternateoremedyoisoavailableotootheoaggrievedoperson;o o o(iii)o Exceptionso too theo ruleo ofo alternateo remedyo ariseowhereo(a)otheowritopetitionohasobeenofiledoforotheo enforcementoofoaofundamentalorightoprotectedobyoPartoIIIo ofotheoConstitution;o(b)othereohasobeenoaoviolationoofotheo principlesoofonaturalojustice;o(c)otheoorderooroproceedingso areo whollyo withouto jurisdiction;o oro (d)o theo vireso ofo ao legislationoisochallenged;o CWP-8814-2022o&oconnectedopetitionsoo -44-o o o o(iv)oAnoalternateoremedyobyoitselfodoesonotodivesto theo Higho Courtoofoitso powerso undero Articleo226oofotheo Constitutionoinoanoappropriateocaseothoughoordinarily,oao writo petitiono shouldo noto beo entertainedo wheno ano efficaciousoalternateoremedyoisoprovidedobyolaw;oo o (v)oWhenoaorightoisocreatedobyoaostatute,owhichoitselfo prescribeso theo remedyo oro procedureo foro enforcingo theo rightooroliability,oresortomustobeohadotoothatoparticularo statutoryo remedyo beforeo invokingo theo discretionaryo remedyounderoArticleo226oofotheoConstitution.oThisoruleoofo exhaustiono ofo statutoryo remedieso iso ao ruleo ofo policy,o convenienceoandodiscretion;oando o o(vi)oInocasesowhereothereoareodisputedoquestionsoofo fact,otheoHighoCourtomayodecideotoodeclineojurisdictionoino aowritopetition.oHowever,oifotheoHighoCourtoisoobjectivelyo ofotheoviewothatotheonatureoofotheocontroversyorequiresotheo exerciseoofoitsowritojurisdiction,osuchoaoviewowouldonoto readilyobeointerferedowith."o

36.o o Thereoisonoodisputeotootheopropositionoofolawolaidodownobyotheo Hon'bleo Supremeo Court.o Ito iso thuso foro theo Higho Courto too examineo aso too whethero sucho circumstanceso existo whereo ito shouldo exerciseo itso writo jurisdiction.oo

37.o o Theo caseo ofo theo petitionerso ino theo writo petitionso iso thato conciliationoproceedingsohaveonotobeenoconductedoasoperomandateoofotheoActo andothatoinotheoabsenceoofoconductingoconciliationounderoSectiono18o(2)oofotheo MSMEDo Acto 2006,o arbitrationo ofo theo disputeo couldo noto haveo beeno commenced.oo

38.o o Ao perusalo ofo Sectiono 18o (3)o showso thato arbitrationo iso too beo invokedoafterotheoconciliationoinitiatedounderoSectiono18o(2)oisounsuccessfulo andoisoterminatedowithoutoanyosettlement.oo CWP-8814-2022o&oconnectedopetitionsoo -45-o o

39.o o oSimilaroprocedureoisoalsooprescribedounderoSectiono22o-Co(4)oofo theoLegaloServicesoAuthoritiesoAct,o1987.oTheoaboveosaidoactoempowersotheo Permanento Loko Adalato too undertakeo adjudicationo ino caseo theo conciliationo proceedingsofailedotooreachoatoaosettlement.oWhileointerpretingotheoscheme,o theoHon'bleoSupremeoCourtoofoIndiaoheldothatotheoconciliationoproceedingso areomandatoryobeforeoPermanentoLokoAdalato(PublicoUtilityoServices)ocano decideoaodisputeoonomerits.oOnceotheoschemeoofotheostatueogivesoaostepobyo stepo procedureo too beo followed,o theo stepso prescribedo areo requiredo too beo adheredotooandotheostepoempoweringoinitiationoofoarbitrationocanobeoattainedo onlyoafteroattemptingoandofailingotooarriveoatoaosettlementoasoperotheopreviouso step.ooRelevantoextractoofotheoJudgmentoofotheoHon'bleoSupremeoCourtoinotheo matteroofo"CanaraoBankoversusoG.S.oJayarama"oobearingoAppealoNo.o3872-2022odecidedoono19.05.2022oisoreproducedoasounder:o C.2oMandatoryonatureoofoconciliationoproceedingso o 23oWeomustonowoaddressotheofirstoissue,oi.e.,owhetherotheo conciliationo proceedingso beforeo theo Permanento Loko Adalatsoareomandatoryobeforeoitocanodecideoaodisputeoono itsomerits.o

24.oThisoissueoisoclearlyoresolvedofromoaobareoreadingoofo Sectiono 22-C.o Sectiono 22-Co provideso ao step-by-stepo schemeo ono howo ao mattero iso too proceedo beforeo theo PermanentoLokoAdalat.oTheofirstostepoisotheofilingoofotheo applicationo whicho oustso theo jurisdictiono ofo othero civilo courts,oinoaccordanceowithosub-Sectionso(1)oando(2).oTheo secondostepoisotheopartiesofilingorequisiteosubmissionsoando documentso beforeo theo Permanento Loko Adalat,o ino accordanceowithosub-Sectiono(3).oOnotheocompletionoofo theo thirdo stepo too itso satisfaction,o theo Permanento Loko Adalato cano moveo too theo fourtho stepo ofo attemptingo conciliationobetweenotheoparties,oinoaccordanceowithosub-CWP-8814-2022o&oconnectedopetitionsoo -46-o o Sectionso(4),o(5)oando(6).oSubsequently,oinotheofifthostepoino accordanceo witho sub-Sectiono (7),o theo Permanento Loko Adalatohasotoodrawoupotermsoofosettlementoonotheobasisoofo theo conciliationo proceedings,o ando proposeo themo too theo parties.oIfotheopartiesoagree,otheoPermanentoLokoAdalato hasotoopassoanoawardoonotheobasisoofotheoagreedoupono termsoofosettlement.oOnlyoifotheopartiesofailotooreachoano agreemento ono theo fiftho step,o cano theo Permanento Loko Adalatoproceedotootheofinalostepoandodecideotheodisputeoono itsomerits.o o 25o Sucho ano interpretationo iso alsoo supportedo byo theo decisiono ofo ao two-Judgeo Bencho ofo thiso Courto ino Baro CounciloofoIndiao(supra),owhereotheoconstitutionalityoofo ChapteroVI-AoofotheoLSAoActowasoupheld.oSpeakingoforotheo Bench,oJusticeoRoMoLodhaohighlightedothatotheoPermanento LokoAdalatsowouldoproceedotooadjudicationoofoaodisputeo onoitsomeritsoonlyoafteroattemptingoandofailingotoogenerateo aosettlementobetweenotheoparties:o

22.oChapteroVI-Aoinsertedobyotheo2002oAmendmento Actoinotheo1987oAct,oasoitsotitleosuggests,oprovideso foro pre-litigationo conciliationo ando settlemento procedure...Theodisputesoinorelationotoopublicoutilityo serviceoneedourgentoattentionowithofocusoonotheiro resolutiono ato theo thresholdo byo conciliationo ando settlementoandoifoforoanyoreasonosuchoeffortofails,o thenotoohaveosuchodisputesoadjudicatedothroughoano o appropriateo mechanismo aso earlyo aso mayo beo o possible...o

23.o Theo Statemento ofo Objectso ando Reasonso itselfo spellsooutotheosalientofeaturesoofoChapteroVI-A.oByo bringingo ino thiso law,o theo litigationo concerningo publicoutilityoserviceoisosoughtotoobeonippedoinotheo budobyofirstoaffordingotheopartiesotoosuchodisputeoano opportunityo too settleo theiro disputeo througho theo CWP-8814-2022o&oconnectedopetitionsoo -47-o o endeavourso ofo theo Permanento Loko Adalato ando ifo suchoeffortofailsothenotoohaveotheodisputeobetweeno theopartiesoadjudicatedothroughotheodecisionoofotheo PermanentoLokoAdalat...o [...]o

26.oItoisonecessaryotoobearoinomindothatotheodisputeso relatingo too publico utilityo serviceso haveo beeno entrustedo too Permanento Loko Adalatso onlyo ifo theo processo ofo conciliationo ando settlemento fails.o Theo emphasiso iso ono settlemento ino respecto ofo disputeso concerningo publico utilityo serviceso througho theo mediumo ofo Permanento Loko Adalat.o Ito iso foro thiso reasonothatosub-sectiono(1)oofoSectiono22-Costateso ino noo unambiguouso termso thato anyo partyo too ao disputeomayobeforeotheodisputeoisobroughtobeforeo anyocourtomakeoanoapplicationotootheoPermanento Loko Adalato foro settlemento ofo dispute.o Thus,o settlementoofodisputeobetweenotheopartiesoinomatterso ofo publico utilityo serviceso iso theo maino theme.o However,owhereodespiteotheoendeavoursoandoeffortso ofo theo Permanento Loko Adalato theo settlemento betweenotheopartiesoisonotothroughoandotheopartieso areorequiredotoohaveotheirodisputeodeterminedoando adjudicated,o too avoido delayo ino adjudicationo ofo disputeso relatingo too publico utilityo services,o Parliamentohasointervenedoandoconferredopoweroofo adjudicationouponotheoPermanentoLokoAdalat.o (emphasisosupplied)o o

26.oo Theoappellant'soargument,ohowever,oisothatoifotheo oppositeopartyodoesonotoappearobeforeotheoPermanentoLoko Adalat,oitocanodispenseowithotheoconciliationoproceedingso ando straightawayo adjudicateo theo disputeo undero Sectiono 22-C(8).oWeoareounableotooacceptothisosubmission.oEvenoifo theooppositeopartyodoesonotoappear,otheoPermanentoLoko CWP-8814-2022o&oconnectedopetitionsoo -48-o o Adalatoisostilloboundotoofollowotheostep-by-stepoprocedureo laido downo byo Sectiono 22-C.o Undero Sectiono 22-C(3),o ito wouldorequireotheopartyobeforeoitotoofileotheirosubmissionso andodocuments,oandomakeotheobestoeffortsotoocommunicateo themo too theo oppositeo partyo foro theiro response.o Ifo ito iso satisfiedothatonooresponseoisoforthcomingofromotheoabsento oppositeo party,o theo Permanento Loko Adalato shallo stillo attempto too settleo theo disputeo througho settlemento undero Sectiono22-C(4).oItoisoimportantotoorememberothatoSectiono 22-C(5)oimposesoaodutyouponotheoPermanentoLokoAdalato too beo independento ando impartialo ino attemptingo too amicablyo settleo theo dispute,o whileo Sectiono 22-C(6)o imposeso ao dutyo upono theo partyo presento beforeo theo Permanento Loko Adalato too cooperateo ino goodo faitho ando assisto theo Permanento Loko Adalat.o Thereafter,o theo PermanentoLokoAdalat,obasedoonotheomaterialsobeforeoit,o shalloproposeotermsoofosettlementoandocommunicateothemo toobothoparties,oregardlessoofowhetherotheyoparticipatedoino theo proceedings.o Ifo theo partyo presento beforeo theo PermanentoLokoAdalatodoesonotoagreeooroifotheoabsento partyodoesonotorespondoinoaoosufficientoperiodoofotime,oonlyo theno cano theo Permanento Loko Adalato adjudicateo theo disputeoonoitsomeritsounderoSectiono22-C(8).oKeepingoino mindo theo principleso enshrinedo ino Sectiono 22-D,o theo PermanentoLokoAdalatoshalloonceoagainonotifyotheoabsento partyo ofo itso decisiono too adjudicateo theo disputeo ono itso merits,oinocaseoitowishesotoojoinotheoproceedingsoatothato stage.o 27oSectiono22-C(8)oisoamplyoclearothatoitoonlyocomesointoo effecto onceo ano agreemento undero Sectiono 22-C(7)o haso failed.oTheocorollaryoofothisoisothatotheoproposedotermsoofo settlemento undero Sectiono 22-C(7),o ando theo conciliationo proceedingsoprecedingoit,oareomandatory.oIfoPermanento LokoAdalatsoareoallowedotoobypassothisostepojustobecauseo ao partyo iso absent,o ito wouldo beo tantamounto too decidingo CWP-8814-2022o&oconnectedopetitionsoo -49-o o disputesoonotheiromeritoexoparteoandoissuingoawardsowhicho willobeofinal,obindingoandowillobeodeemedotoobeodecreesoofo civilo courts.o Thiso waso simplyo noto theo intentiono ofo theo ParliamentowhenoitointroducedotheoLSAoAmendmentoAct.o Itsomainogoalowasostillotheoconciliationoandosettlementoofo disputesoinorelationotoopublicoutilities,owithoaodecisionoono meritsoalwaysobeingotheolastoresort.oTherefore,oweoholdo thatoconciliationoproceedingsounderoSectiono22-Coofotheo LSAoActoareomandatoryoinonature."o o

40.o o TheoschemeoofotheoMSMEDoAct,o2006oalsooprescribesoaostepobyo stepoprocessoforoinvokingotheojurisdictionoofotheoFacilitationoCounciloandotheo stepsothatoareorequiredotoobeoexhaustedobyotheoFacilitationoCouncilobeforeoito proceedsowithotheoprocessoofopassingoaofinaloandoaobindingoawardobetweenotheo parties.oTheoaboveoratioowouldoapplyoalsootootheocaseoinohand.oTheostepso prescribedounderotheoMSMEDoActoareorequiredotoobeofollowedohaveotoobeo compliedowithoandothatoconciliationoproceedingsoareorequiredotoobeoresortedo too&oresultoinofailureobeforeoaoreferenceoisomadeoforoarbitrationobetweenotheo parties.oo

41.o o Inotheojudgmentoofo"VijetaoConstructionoversusoIndusoSmelterso Ltd.oandoanother"oreportedoaso2021oSCCoOnLineoSCo3436,otheoApexoCourto hasofurtheromadeoitoclearothatoonceotheoprocedureounderoSectiono18o(2)oiso followed,o o Arbitrationo proceedingso willo commenceo onlyo thereaftero ando observedoasounder:-o o "13.o Aso pero Sub-Sectiono (3)o ofo Sectiono 18o aftero conciliationofailsounderoSub-Sectiono(2)oofoSectiono18oofo theo MSMEDo Act,o ando conciliationo Initiatedo undero sub-sectiono (2)o iso noto successful,o conciliationo standso terminatedo withouto anyo settlemento betweeno theo parties,o theo Councilo shallo eithero itselfo takeo upo theo disputeo foro CWP-8814-2022o&oconnectedopetitionsoo -50-o o arbitrationo oro refero ito too anyo institutiono oro centreo providingo ADRo serviceso foro sucho arbitrationo ando theo provisionsoofotheoArbitrationoandoConciliationoAct,o1996o shallothenoapplyotootheodisputeoasoifotheoarbitrationowasoino pursuanceo ofo ano arbitrationo agreemento referredo too ino subsectiono (1)o ofo sectiono 7o ofo thato Act.o Thereforeo onlyo afterotheoprocedureounderoSub-Sectiono(2)oofoSectiono18oiso followedoandotheoconciliationofallsoandothenoandothenoonlyo theo arbitrationo proceedingso commenceso ando thereaftero theoprovisionsoofotheoArbitrationoActoshallothenoapply."o o o o o o o ooooooooo(EmphasisoSupplied)o

42.o o ItoisothusoheldothatotheoFacilitationoCouncilohasotoofirstoundertakeo theoconciliationoproceedingsounderoSectiono18o(2)oofotheoMSMEDoActoando theoreferenceoforoarbitrationounderoSectiono18o(3)ocanobeodoneoonlyoaftero failureoofotheoconciliationotooarriveoatoaosettlement.oo

43.o o Thisonowoleadsotootheosecondoquestionoasotoowhetheroaoseparateo noticeoisotoobeosentotootheopartiesoatotheostageoofoproceedingsounderoSectiono18o

(3)o ofo theo MSMEDo Act,o 2006.o Theo arbitrationo proceedingso undero theo MSMEDo Acto areo parto ofo ao compositeo schemeo ando ino continuityo too theo conciliation.oTheoproceedingsobeingobackotooback,othereoseemsonoologicooro purposeo too beo servedo ino mandatingo servingo ofo ao fresho noticeo beforeo Arbitrationo iso initiatedo undero Sectiono 18o (3)o ofo theo MSMEDo Act.o Introductiono ofo anyo sucho requiremento wouldo causeo introductiono ofo ano additionaloproceduralorequirementonotoprescribedoinotheostatue.oTheopetitionero musto establisho beforeo thisoCourto asotoohowo theo endsoofo justiceo wouldo beo defeatedoorotheoobjectoofotheoActowouldonotobeowelloservedoifoaosecondonoticeo atotheostageoofoArbitrationoisonotoissued.ooNoosuchorationaleohasobeenobroughto beforeothisoCourt.oIntroductionoofoanyosuchoprocedureowouldoinvariablyomeano CWP-8814-2022o&oconnectedopetitionsoo -51-o o aso ifo theo Arbitrationo Proceedingso areo independento ofo ando un-relatedo too conciliationoproceedingsounderoSectiono18o(2)oofotheoMSMEDoAct,o2006.o OnceothisoCourtohasoalreadyoheldothatoconductoofoconciliationoproceedingso underoSectiono18o(2)oisoaomandatoryopre-requisiteotooarbitrationounderoSectiono 18o(3)oofotheoMSMEDoAct,o2006,otheoproceedingsobecomeocontinuous,ointer-dependentoandointer-related,otheyocannotobeoseenoindependentoofoeachoother.oo

44.o o IoalsoofindosupportoofomyoviewofromotheojudgmentoofoMadhyao PradeshoHighoCourtoinotheomatteroofoJabalpuroTreasureoIslandoPvt.oLtd.o (supra).oIofailotoofindomyselfoinoagreementowithotheoHon'bleoGujaratoHigho CourtoinotheomatteroofoPrincipaloChiefoEngineero(Supra)oforotheoprimaryo reasonothatotheostatutoryoschemeoandoimportoofoSectiono18o(2)o&oSectionoooooo 18(3)oasowelloasotheirointer-dependenceoorocontinuityohasonotobeenoconsideredo byotheoHon'bleoGujaratoHighoCourt.oBesides,othereoisonooconsiderationoofotheo lawothatoSectiono18o(2)oisoaomandatoryopre-requisiteotooSectiono18o(3).ooo

45.o o Theootherojudgmentsoreferredotoobyotheopetitionerodoonotorelateo tootheoaboveoissueoandohaveobeenopassedoonomeritsoofotheoproceedingsoandotheo natureoofotheoinitialonoticeoitself.ooOnceonoticeohasobeenoissuedoonotheoparties,o theyoareodeemedotooknowotheostatutoryoprocedureoandotheoconsequencesothato followoatoeachostage.oTheyocannotobeopermittedotoopleadoignoranceoofolawotoo delayotheoproceedingsowhichoinoturnodelaysoachievingotheostatutoryoobjective.oo

46.o o Theocontentionoofotheopetitionersoforoaofreshonoticeoatotheostageo ofoSectiono18o(3)oofotheoMSMEDoAct,o2006oisoaccordinglyorejected.oo

47.o o Theosameowouldonowoleadotootheodeterminationoofotheomeritsoofo theocasesoandotheoissueoasotoowhetherotheoproceedingsoinoquestionowereodulyo heldooronotoinocasesootherothanoCWP-14235oofo2022oasowelloasoinoCWP-18313oofo2022.oTheocaseoofotheopetitioneroinootherocasesoitselfoisothatotheo CWP-8814-2022o&oconnectedopetitionsoo -52-o o conciliationoproceedingsodidotakeoplaceoandofairlyoconcededowhenoconfrontedo byotheorespondents.oHe,ohowever,oconfinesotheoaboveoargumentoinoCWP-14235-2022.o Ino CWP-18313o ofo 2022o theo petitionero submitso thato theo conciliationoproceedingsotookoplaceobutodidonotosubscribeotootheospiritoofotheo MSMEDoAct,o2006oasoadequateoopportunityoforoconciliationohadonotobeeno grantedotootheopetitioner.oo

48.o o SinceotheoproceedingsoinoCWP-18313-2022owereosoughtotoobeo impugnedoonotwinoaspects,ofirstlyothatotheoNoticeoofoconciliationodidonotogranto adequateoopportunityoandosecondlyothatotheoNoticeowasonotoproper,oitowouldo beoappropriateotooreferotootheonoticeosentounderoSectiono18oofotheoMSMEDo Act.oTheorelevantoextractoofotheoNoticeoreadsothus:o o "Throughothisonoticeoonotheoaboveomentionedoclaimo Petitionoyouoareoherebyoinformedotoobeopresentoinopersono oro througho authorizedo representativeo foro (Conciliation/Arbitration)oofoaboveocaseoono05.07.2021oato 11:00AMo ino theo officeo ofo Chairperson,o Microo &o Smallo Enterpriseso Facilitationo Council,o Administrativeo Block.o FatehgarhoSahib.o Inocaseoyouofailotoorepresentoyourocaseoinowritingooroino person,oitowillobeopresumedothatoyouohaveonothingotoosay,o andotheocaseowillobeodecidedoonomerit."o

49.oo o Counseloforotheopetitionerocontendsothatotheoaforesaidonoticeoiso vagueoandomentionedobothotheoaspectsoi.e.oConciliation/Arbitrationowithouto specifyingotheonatureoofotheoproceedingoandowasomoreoofoanoorderoinsteadoofo anoinvitation.ooRelianceowasoplacedoonotheojudgmentoofotheoHon'bleoGujarato HighoCourtotoocontendothatotheolanguageoofotheonoticeowasonotoconduciveotoo anoinvitationoandowasoratheroinotheonatureoofoaocommand.ooo CWP-8814-2022o&oconnectedopetitionsoo -53-o o

50.oo o Ito noto ino disputeo thato theo noticeo ino questiono hado beeno dulyo receivedobyotheopetitioneroinotheoaboveowritopetitionoandothatoitohadofailedotoo appearoonotheoinitialodateoandothereafteroanoofficerohadobeenodeputedobyoit.oNoo conciliationo was,o however,o arrivedo ato whereupono theo proceedingso wereo terminatedo ando adjudicationo waso initiated.o Theo counselo contendso thato theo noticeowasonotoproperoandodidonotoaffordoadequateoopportunityotoohim.oHeo hasoplacedoheavyorelianceoonotheojudgmentoofoGujaratoHighoCourt.oo

51.o o Pero contra,o counselo foro theo respondento haso referredo too theo judgmentoofotheoMadhyaoPradeshoHighoCourtooinotheomatteroofoJabalpuro TreasureoIslandoPvt.oLtd.(supra)owhichoohasoheldothatoonceoaonoticeohasobeeno servedoonoaopartyounderoSectiono18oofotheoAct,o2006,oitowouldoholdogoodoforo conciliationoproceedingsoasowelloasooarbitrationoproceedingsotoobeotakenoupobyoo theo Facilitationo Councilo aftero theo conciliationo haso failed.o Theo Madhyao PradeshoHighoCourtohadoreliedoonotheojudgmentoofotheoHon'bleoSupremeo CourtoinotheomatteroofoGoodyearoIndiaoLimitedo(Supra)obeforeocomingotoo suchoconclusion.oo

52.o o Theostatutoryoschemeodoesonotoprovideoforoseparateonoticesotoobeo issuedotootheoconcernedopartiesoatoeachostageoi.e.oatotheostageoofoconciliationoo andothereafteroatotheostageoofoarbitrationoofotheodisputeooespeciallyowhenobotho theo process/proceedingso areo beingo undertakeno byo theo Facilitationo Councilo itself.oOnceotheopetitionerowasoinoreceiptoofotheonoticeoofoconciliationoandotheo proceedingsobeingocontinuouso&ointer-related,oIodoonotofindoanyogroundsoasotoo howotheorightoofotheopetitionerowouldobeoprejudicedowithotheolanguageoofotheo noticeothatohasobeenoextractedoabove.ooMerelyobecauseotheonoticeomentionso botho i.e.o Conciliation/Arbitrationo ito doeso noto meano thato theo noticeo iso improper.ooTheoobjectoofonoticeoisotoocommunicateoandoitohasotoobeoreadoino CWP-8814-2022o&oconnectedopetitionsoo -54-o o relationotootheostageoatowhichotheoproceedingsoareopending.oItoisoalsooevidento fromoaoperusaloofotheojudgmentoreliedobyotheopetitionerothatotheonoticeothereino wasonon-informative.oTheolanguageoofotheonoticeohereinoisoinformativeoando informso abouto consequenceo ofo non-appearance.o Theo sameo cannoto beo perceivedo aso ano ordero buto aso ano advisoryo too enableo theo partyo too takeo ao decisionoaboutojoining/absentingoonceoitoisoawareoofotheoconsequence.oTheo noticeocanonotobeolabeledoasopre-judgingomerelyobecauseoofointimationoabouto proceedingo ex-parteo ino theo absenceo ofo non-appearance.o Theo aboveo saido notice,oinoitsoplainoreadingodoesonotosuggestoanyodeterminationoofoissueooroano expressionoonomeritsoofotheocase.oMereouseoofosuchoanoexpressionocannotobeo construedoasoanoexpressionoonotheomeritoofotheoclaimoand/orobeoreadoasofailureo tooprovideoaofairoopportunityotooparticipateoinotheoconciliation.oTheojudgmento wouldonotobeoapplicableotootheofactsoofotheopresentocase.ooo

53.o o Eveno though,o theo petitionero contendso thato noo effectiveo opportunityoforoconciliationowasoextendedotoohimowhichodoesonotoseemotoo findosupportofromofactsoofotheocase.ooItoisoevidentofromoaoperusaloofotheoreplyo thatonoticeowasodulyoreceivedo&oaoresponseowasoalsoofiledobyotheopetitioner.oIto opposedo theo continuationo ofo theo proceedingso &o jurisdictiono aparto fromo expressingonon-willingnessotooparticipateoinotheoprocessobyoreferringotootheo proceedingsounderoSectiono138oofotheoNegotiableoInstrumentsoAct,o1881.oTheo responsibilityoofotheoauthorityoisotooaffordoopportunityotoopartiesotoopleadoando establishotheirocase.oThereocanobeonooobligationoonotheoAuthorityotooawaito indefinitelyotilloaoresponseoisofiled.oTheoconsequenceohavingobeenoinformed,oo itoisodeemedo too beo ao consciouso decisionoofo theopetitionerotoonoto joinotheo proceedings.oHeothusocannotoclaimoprejudiceoandopleadoforoequity.oo o CWP-8814-2022o&oconnectedopetitionsoo -55-o o

54.o o oEvenoinotheopresentopetition,otheopetitionerohasonotocomeofortho withoanyoofferoseekingotooresolveotheodispute.oItoseemsothatotheoobjectionoquao sufficientoopportunityoforoconciliationohavingonotobeenoextendedolacksobonao fideo ando haso beeno raisedo merelyo foro impugningo theo awardo thato haso beeno passedoagainstoit.oIfotheopetitionerowasosanguineoaboutoresolvingotheoissue,oito oughtotoohaveocomeoupowithoresolutionoplan.oNoosuchoattemptohasobeenomadeo eitheroinotheopetitionooroduringotheocourseoofoargumentsoofotheocase.oTheopleao ofonotobeingoprovidedosufficientoopportunityoforoconciliationoisohenceomerelyo anoeye-washo&oanoattemptotoodelayofinalizationoofotheoissue.oo

55.o o Theo caseo ofo petitionero duringo theo proceedingso beforeo theo Councilo beingo specifico &o expressingo unwillingnesso too participate,o theo decisionoofotheoCouncilotooterminateoconciliationo&oproceedowithoarbitrationo cannotobeoheldotoobeobad.ooo

56.o o Evenootherwise,otheoschemeoofotheoActomandateotheoFacilitationo Councilotoodecideotheoreferenceoinoaotimeoboundomanneroandothatomerelyo becauseotheoFacilitationoCouncilohasoexpeditedotheoprocessoinoconsonanceo withotheomandateoofoSectiono18o(5)oandoobjectoofotheoMSMEDoActoofo2006,oao partyo mayo noto beo permittedo too sayo thato ito waso noto affordedo adequateo opportunityotooexploreoconciliatoryoeffortsofororesolvingotheodispute.oo

57.o o oThereo iso thuso noo exceptionalo circumstanceso whicho wouldo necessitateo interferenceo ino theo caseo ino ao writo jurisdictiono insteado ofo theo petitioneroraisingoaochallengeotootheomeritsoofotheocaseoasoperotheoprocedureso prescribedounderotheoAct.oItocannotoalsoobeoheldoinotheofactsoofotheocaseothato PrinciplesoofoNaturaloJusticeohaveobeenoviolatedoorotheoorderosuffersofromoanyo illegalityoatothisostage.ooTheosameomayoinvolveocertainofactualoaspectsowhicho CWP-8814-2022o&oconnectedopetitionsoo -56-o o mayoneedotoobeogoneointo,owhichoshallobeoconsideredobyotheocompetentoCourt,o inotheoeventoofoanyochallengeoonomeritsomadeobyotheopetitioner.oo

58.o o oInsofaroasotheoCWP-14235-2022oisoconcerned,otheopositionohaso remainouncontrovertedothatonooconciliationoproceedingsowasorecordedoinotheo zimnioordersotoohaveotakenoplace.oEvenothough,ocounseloforotheorespondentso haveoemphasizedothatoconciliationoproceedingsohadoactuallyotakenoplaceoando suchoconciliationoproceedingsohadobeenodulyorecordedoinoallootheromatters,oIo wouldo rathero findo forceo ino theo argumento raisedo byo theo counselo foro theo petitionero thato wheno theo Facilitationo Councilo iso dulyo recordingo abouto theo conciliationoproceedingsoinoallootheromatters,othereowasonoooccasionoasotoo whyo theo saido proceedingso waso noto soo recordedo ino theo presento case.o Theo inferenceoisothusoagainstotheorespondents.oo

59.o o Insofaroasotheocontentionoofotheopetitioneroinotheoaboveosaidowrito petitionsoasoregardsotheoclaimoofotheorespondent-claimantobeingobadosinceotheo respondent-claimanto hado noto appliedo undero theo MSMEo Unito categoryo iso concernedo ando thato resultantly,o ito cannoto beo permittedo initiationo ofo proceedingso undero theo MSMEDo Act,o 2006,o theo saido submissiono failso too impressothisoCourt.o

60.o o oAo perusaloofo theo Noticeo Invitingo Tenderso showso thato certaino concessionso hado althougho beeno definitelyo extendedo too theo MSMEo Units,o however,otheosaidoclauseodoesonotospecifyothatoMSMEoUnitowasosupposedotoo applyoonlyounderotheosaidoconditionoandothatoinotheoeventoofotheoMSMEonoto applyingoafteroavailingotheosaidobenefits,oitsostatusoasoMSMEoUnitowouldonoto beooperative.oTheosuggestiveoargumentoofotheopetitioneroisothusobasedoonoano inferenceowhichoisonotosupportedofromotheoplainoreadingoofotheolanguageousedo ino theo Noticeo Invitingo Tendero itself.o o Merelyo because,o theo respondent-CWP-8814-2022o&oconnectedopetitionsoo -57-o o claimantodidonotoavailocertainobenefits/concessionsoprovidedounderotheoNoticeo InvitingoTenderocannotooustotheojurisdictionoofotheoActoofo2006oand/orotheo protectionoofotheoActoofo2006oprovidedotoosuchounits.oFurther,otheoreadingoofo theoActoofo2006oalsooclearlyoshowsothatotheoprovisionsoofosuchoActoareotootakeo effecto notwithstandingo anyo othero lawo and/oro agreemento too theo contrary.o Hence,otheoconditionoofotheotenderocouldonotobeointerpretedosooasotoooverrideo theoobject,oprotectionoandotheoschemeoofotheoActoofo2006.oHence,oevenoonotheo saidoscore,otheoargumentoadvancedobyotheocounseloforotheopetitioneroisoliableo toobeorejected.oo

61.o o TheoaimoandoobjectoofotheoActobeingotooresuscitateotheoMicroo SmalloandoMediumoEnterprisesobyoexpeditiousoadjudicationoofotheirofinancialo disputesoandotooensureothatotheyoareonotofinanciallyostrangulatedobyolargero players,osucholaudableoobjectiveooughtonototoobeopermittedotoobeodefeatedobyo acceptingo anyo sucho argument.o Ino caseosucho ao contentionoisoaccepted,o theo Smallo Scaleo Microo Enterpriseso cano beo strangulatedo easilyo byo theo largero playersomerelyobyoincorporatingosuchoconditionsoinotheotenderoandotoowriggleo outoofotheostatutoryoobligationoespeciallyowhenoMicrooandoSmalloEnterpriseso areolargelyodependantoonootherounitsoforotheirosurvival.oo

62.o o oConsideringofromoeitheroofotheosaidoperspectives,otheoargumento advancedo byo theo counselo forotheopetitionero failso tooimpressothiso Courtooro deserveso too beo upheld.o Theo saido contentiono iso accordinglyo rejected.o Theo respondento wouldo noto beo stoppedo fromo resortingo too MSMEDo Acto foro redressaloofohisogrievances.oForoanoestoppelotootakeoeffect,othereohasotoobeoao consciousoexerciseoofooptionoandoawarenessoofotheoconsequences.oIfoanoactiono isothereafterotakenoandopositionsobetweenotheopartiesoisoalteredoonotheobasisoofo sucho assuranceo ando action/optiono beingo awareo ofo theo consequenceso thato CWP-8814-2022o&oconnectedopetitionsoo -58-o o wouldofollow,otheoprinciplesoofoestoppelomayobeobroughtoinoaction.ooNoosucho circumstancesoemanateofromoaoplainoreadingoofotheoClauseo17oofotheoNoticeo InvitingoTenderoandothatoitocannotobeoheldothatoaobidderoshallobeoestoppedo fromotakingorecourseotootheoprovisionsoofotheoMSMEDoAct,o2006oforoseekingo recoveryoofohisoduesomerelyoonoaccountoofonotohavingosoughtotheoconcessionso providedoinotheobidodocumentoforotheoMSMEoUnits.ooTheocontentionoisothuso rejected.oo

63.o o Theopositionoofolawobeingowellosettledothatoordinarilyotheowrito jurisdictiono wouldo noto beo applicableo too caseso whereo ao statutoryo forumo iso createdobyolawofororedressaloofogrievance,oIofindothatonoosuchoexceptionaloando overwhelmingocircumstanceoexistoinotheopresentosetoofocasesoforoexaminingo theovalidityoofotheoawardothroughowritojurisdictionoofothisoCourtoespeciallyo whenotheopartiesowouldohaveotheirooptionotootakeorecourseotooremediesoasopero lawotooimpugnotheosaidoaward.oItohasobeenoheldobyotheoHon'bleoSupremeo CourtoofoIndiaoinotheojudgmentoofo"RadhaoKrishanoIndustrieso(supra)othato exceptionotootheoruleoofoalternativeoremedyoarisesoinoaosituationowhereotheo orderooroproceedingsoareowhollyowithoutojurisdictionoorosufferofromoillegality.oo Sinceotheorespondentsohaveofailedotoodispelothatonooconciliationoproceedingso tookoplaceoinoCWP-14235oofo2022,ohence,otheoarbitraloawardoisonotocomplianto ofotheoprocedureomandatedounderoSectiono18o(2)oofotheoMSMEDoAct,obeforeo conductingo proceedingso undero Sectiono 18o (3)o ando foro passingo ano arbitralo award.o Theo absenceo ofo conciliationo proceedingso wouldo thuso vitiateo theo arbitraloaward.oEvenothoughotheoaboveogroundoisoalsooavailableotooaopartyotoo beoraisedoinoanoappeal,ohowever,oconsideringotheoobjectiveoofotheostatuteoando theodelayothatowouldoaccrueoasoaoresultoofotheoaboveoonlyotoore-iterateowhato hasobeenoheldoabove,oitowouldobeoanoexerciseoinofutilityooandomerelyodelayotheo CWP-8814-2022o&oconnectedopetitionsoo -59-o o process.o Theo saido awardo alreadyo fallso withino ano exceptiono too theo ruleo ofo alternativeo remedy.o Theo proceedingo havingo beeno conductedo withouto followingotheomandatoryoprocess.oAccordingly,oCWP-14235-2022oisoherebyo allowedoandotheoawardodatedo23.08.2022o(AnnexureoP-2)oinotheoclaimo petitionoNo.PTL/MSEFC/18oinoCWP-14235-2022oisosetoaside.oTheopartieso ino theo saido caseo areo relegatedotoo appearo beforeotheo Facilitationo Council,o Patialao ono 24.07.2023o whereupono theo conciliationo proceedingso shallo beo initiatedobetweenotheopartiesoandofurtheroproceedingsoinoaccordanceowitholawo shallobeoundertaken.oAllootherowritopetitionsoare,ohowever,odismissedoatothiso stageo foro theo reasonso giveno aboveo ando giveno availabilityo ofo alternativeo remedies.oTheopartiesomay,oifosooadvised,otakeorecourseotootheoalternativeo remediesoavailableotoothemoasoperogrievanceoredressalomechanismoprovidedo inotheostatute.oo o o oo o o o o o ooooo(VINODoS.oBHARDWAJ)oo MAYo29,o2023o o o o o o oo oJUDGEo VishaloSharmao o o o Whetherospeaking/reasonedo :o Yes/Noo o o o WhetheroReportableo o :o Yes/Noo