Rolta India Ltd. Vs Micro and Small Enterprises Facilitation Council and another (Orissa High Court)
Summary: The Orissa High Court considered a writ petition challenging an award dated 10 December 2019 passed by the Micro and Small Enterprises Facilitation Council in MSEFC Case No. 35 of 2019. The petitioner contended that the Council had proceeded directly to make an award without complying with the mandatory conciliation procedure under Section 18(2) of the Micro, Small and Medium Enterprises Development Act, 2006. It was argued that the Council was required either to conduct conciliation itself or to seek assistance from an appropriate institution before proceeding further. The petitioner also referred to a moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016, and disputed the Council’s treatment of its letter dated 21 June 2019 as an admission of liability. According to the petitioner, that letter raised disputes, referred to contractual terms and sought additional time to respond.
The supplier opposed the petition, submitting that the petitioner had failed to file any further response before the Council despite requesting an extension. It argued that the Council was entitled to draw an inference from the petitioner’s conduct and that the statutory remedy under Section 19 of the MSMED Act was available. During the proceedings, the petitioner relied on Whirlpool Corporation v. Registrar of Trade Marks, Mumbai, Jharkhand Urja Vikas Nigam Limited v. State of Rajasthan, Dr. Bal Krishna Agarwal v. State of U.P., and Union of India v. Tantla Construction (P) Ltd. to contend that an alternative remedy did not bar writ jurisdiction where mandatory statutory requirements had been disregarded. Particular reliance was placed on the Supreme Court’s ruling in Jharkhand Urja Vikas Nigam Limited concerning the necessity of conciliation before arbitration under the MSMED Act.
The High Court nevertheless noted that a coordinate Bench had already taken a view in M/s Anupam Industries Ltd. v. State of Odisha and others by an order dated 22 September 2021, which had been confirmed by a Division Bench on 10 December 2021. Although the petitioner argued that the Supreme Court decisions justified a different approach, the Court considered itself bound by judicial discipline to follow the coordinate Bench ruling as affirmed in appeal. Consequently, it found no room for interference and dismissed the writ petition. The order did not independently determine the petitioner’s objections concerning the moratorium or the Council’s interpretation of the correspondence.
Cases Discussed:
- Southco Utility and others v. Director of Industries and others — SLP(C) No. 10248 of 2020, order dated 26 October 2020 (Supreme Court of India).
- Whirlpool Corporation v. Registrar of Trade Marks, Mumbai — AIR 1999 SC 22 (Supreme Court of India).
- M/s Anupam Industries Ltd. v. State of Odisha and others — W.P.(C) No. 20234 of 2020, order dated 22 September 2021 (Orissa High Court); appellate order dated 10 December 2021.
- Jharkhand Urja Vikas Nigam Limited v. State of Rajasthan and others — Civil Appeal No. 2899 of 2021, judgment dated 15 December 2021 (Supreme Court of India).
- Dr. Bal Krishna Agarwal v. State of U.P. — (1995) 1 SCC 614 (Supreme Court of India).
- Union of India and others v. Tantla Construction (P) Ltd. — (2011) 5 SCC 697 (Supreme Court of India).
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
The writ petition was moved on 29th November, 2021 and paragraph nos. 1 to 4 in order made that day, reproduced below:
“1. Mr. Jan, learned advocate appears on behalf of petitioner and submits, impugned is order dated 10th December, 2019 passed in MSEFC Case no.35 of 2019 (parties own case) before the Council. According to him, the award was straightaway made without compliance with mandate in sub-section (2) in section 18 of Micro, Small and Medium Enterprises Development Act, 2006, for the Council to either itself conduct conciliation or seek the assistance of any institution or centre providing alternate dispute resolution services. Without fulfillment of this mandate, the Council could not have proceeded to award in the reference. He submits further, he has other points regarding there having been order of moratorium under section 14 of Insolvency and Bankruptcy Code, 2016, in respect of his client as corporate debtor. He submits still further, purported reason for the award is that his client accepted petitioner’s claim by counter of his client, received by the Council on 22nd June, 2019. He draws attention to his client’s letter dated 21st June, 2019 and submits, this letter was treated by the Council to be his client’s counter. In it, dispute was raised and more importantly, operation of general terms and conditions of supply relied upon. Discussion was also mentioned and extension of time of thirty days to reply each point individually was requested. There is no order of the Council on record granting the extension. Instead reliance on the writing as purported acceptance by his client.
2. Mr. Agarwal, learned advocate appears on behalf of opposite party no.2. He submits, his client is supplier under the Act. Though there was request made for extension of time but no further material by way of pleading or otherwise was filed by petitioner before the Council. In the circumstances, the Council duly inferred acceptance on part of petitioner, to make and pass the award. There is efficacious remedy provided under the Act under section 19. There should be no interference.
3. On hearing parties Court has nothing to go on to have satisfaction that mandate in section 18, requiring conciliation, was fulfilled. Mr. Agarwal relies on several orders in writ petitions dealt with by Coordinate Bench and order dated 26th October, 2020, by which Petition for Special Leave to Appeal(C) no.10248 of 2020 ( Southco Utility and others v. Director of Industries and others) was dismissed. He submits, those orders were on respective petitioners, for them to appeal as provided under section 19.
4. On query from Court it has been ascertained that execution proceeding has been launched by opposite party no.2. There was an order of moratorium, which subsisted for some time. Court is of view that provisions for adjudication and recovery in the Act are to be strictly construed on fulfillment of the mandate. There must have been intent and purpose of Parliament to legislate in section 18, requirement for conciliation. Without having conciliation, for the Council to straightway pass award appears to be an act without jurisdiction, to warrant interference under article 226, in spite of available alternative remedy. Reliance was placed on judgment of Supreme Court in Whirlpool Corporation v. Registrar of Trade Marks, Mumbai reported in AIR 1999 SC 22, by Mr. Jan. “
2. On 15th December, 2021 following order was recorded, reproduced below:
“Mr. Agarwal, learned advocate appears on behalf of opposite party no.2 and relies on firstly, order dated 22nd September, 2021 made by co-ordinate Bench in W.P.(C) no.20234 of 2020 (M/s. Anupam Industries Ltd. vs. State of Odisha and others) and secondly, order dated 10th December, 2021 by a Division bench of this Court dismissing the appeal therefrom.
2. Mr. Jan, learned advocate appears on behalf of petitioner. His comments on these orders and reliance thereon as precedent by opposite party no.2, will be heard on adjourned date.
3. List on 20th December, 2021, at the top marked under heading “For Orders”.”
3. Today, Mr. Jan relies on three judgments of the Supreme Court. They are listed as under.
(i) Judgment dated 15th December, 2021 in Civil Appeal no.2899 of 2021 (Jharkhand Urja Vikas Nigam Limited vs. The State of Rajasthan and others), paragraphs 11 to 13. He submits, it would appear from the judgment that opposite party in the conciliation under the Act, failed to appear. The Supreme Court said that the facilitation council could, at best, have recorded the failure of conciliation and proceeded to initiate arbitration proceeding. In the case, on the very first date of appearance, order was passed directing payment. The order was declared to be a nullity as running contrary not only to the provisions of the Act of 2006 but also the Arbitration and Conciliation Act of 1996.
(ii) Dr. Bal Krishna Agarwal vs. State of U.P. reported in (1995) 1 SCC 614, paragraph 10 reproduced below.
“10.Having regard to the aforesaid facts and circumstances, we are of the view that the High Court was not right in dismissing the writ petition of the appellant on the ground of availability of an alternative remedy under Section 68 of the Act especially when the writ petition that was filed in 1988 had already been admitted and was pending in the High Court for the past more than five years. Since the question that is raised involves a pure question of law and even if the matter is referred to the Chancellor under Section 68 of the Act it is bound to be agitated in the court by the party aggrieved by the order of the Chancellor, we are of the view that this was not a case where the High Court should have non-suited the appellant on the ground of availability of an alternative remedy. We, therefore, propose to go into the merits of the question regarding inter se seniority of the appellant and Respondents 4 and 5. We may, in this context, mention that Respondent 4 has already retired in January 1994. “
(iii) Union of India and others v. Tantla Construction (P) Ltd. reported in (2011) 5 SCC 697, paragraph 33 reproduced below:
“33. Apart from the above, even on the question of maintainability of the writ petition on account of the Arbitration Clause included in the agreement between the parties, it is now well-established that an alternative remedy is not an absolute bar to the invocation of the writ jurisdiction of the High Court or the Supreme Court and that without exhausting such alternative remedy, a writ petition would not be maintainable. The various decisions cited by Mr. Chakraborty would clearly indicate that the constitutional powers vested in the High Court or the Supreme Court cannot be fettered by any alternative remedy available to the authorities. Injustice, whenever and wherever it takes place, has to be struck down as an anathema to the rule of law and the provisions of the Constitution.”
4. He also submits, order dated 10th December, 2021 made by the 1st Division Bench of this Court in dismissing appeal against order dated 22nd September, 2021 made by coordinate Bench in Anupam Industries Ltd. (supra) cannot bind this Bench, in the circumstances of law declared by the Supreme Court.
5. Committee of Court demands that view taken by order dated 22nd September, 2021 in Anupam Industries Ltd. (supra) by coordinate Bench, confirmed in appeal by order dated 10th December, 2021, be followed. As such, there is no room for interference.
6. The writ petition is dismissed.
