Nbcc (India) Ltd vs State Of Assam And 3 Ors

Heard Mr. A. Thakur, learned counsel for the petitioner. Also heard Mr. D. Nandi for the respondent No. 3. Dr. B. Ahmed appears for the

respondent Nos. 1 and 2.

The petitioner has prayed for setting aside the extract of the meeting minutes of the Micro & Small Enterprise Facilitation Council held on

12.03.2018, in the office chamber of the Commissioner of Industries & Commerce, Assam, by which the petitioner has been directed to make

payment of the Principal & Local Freight Charges with interest to the respondent No.3.

The petitioner’s counsel submits that the respondent No. 3 is a Small Scale Industrial Unit, who had supplied materials to the petitioner.

The respondent No. 3 thereafter, made a claim against the petitioner for realisation of unpaid dues, which are as follows:-

“(a) For realisation of Rs. 23,968/- being the principal amount for materials supplied to the defendants.

(b) Rs. 33,199.30 being the price of escalation,

(c) Rs. 18,060.23 being the local freight charges,

(d) Rs. 14,06,052.48 being the interest upto 31-07-2000 as per the provisions contained in the interest on Delayed payment to a Small Scale and

Ancillary Undertaking Act, 1992 and also for pendete lite and future interest.â€​

The respondent No. 3 thereafter, filed a money suit in the Court of the Senior Civil Judge, Guwahati which was registered as Money Suit No.

192/2000, claiming payment of unpaid dues from the petitioner. The same was dismissed vide Judgment & Order dated 12.07.2007. The respondent

No. 3 thereafter, filed an appeal before this Court, which was registered as RFA No. 13/2008. The same was dismissed vide Judgment & Order

dated 26.06.2015.

The respondent No. 3 thereafter, filed a claim petition before the Micro & Small Enterprise Facilitation Council claiming payment of unpaid dues.

The Micro & Small Enterprise Facilitation Council (hereinafter referred to as the Council), directed payment of Principal & Local Freight Charges

with interest payable by the petitioner to the respondent No. 3, vide its meeting minutes held on 12.03.2018 in the office chamber of the Commissioner

of Industries & Commerce, Assam.

The counsel for the petitioner submits that the claim of unpaid dues having been rejected by the learned Trial Court and this Court vide Money Suit

No. 192/2000 and RFA No. 13/2008, the respondent No. 3 could not have re-agitated the same issue before the Council under the Micro, Small and

Medium Enterprises Development Act, 2006 (hereinafter referred to as the 2006 Act). He submits that the Council did not facilitate any conciliation

between the parties, though an attempt for the same had been made. Also the provisions of the Arbitration & Conciliation Act, 1996 not having been

applied, the issuance of a direction for payment of money by the Council in favour of the respondent No. 3 and against the petitioner is in excess of

the jurisdiction of the Council. He accordingly prays for setting aside the direction passed by the Council in its meeting minutes dated 12.03.2018, held

in the office chamber of the Commissioner of Industries & Commerce, Assam.

The counsels for the respondent Nos. 1 to 3 submit that there is no infirmity with the decision taken by the Council, as the power of the Council to

decide an issue under the 2006 Act has not been limited by rejection of the claim of the respondent No. 3 by the Civil Courts.

I have heard the learned counsels for the parties.

The claim of the respondent No. 3 for payment of his alleged unpaid dues having been rejected by the Trial Court and this Court in Money Suit

No. 192/2000 and RFA No. 13/2008, the respondent No. 3 has approached the Council under the 2006 Act. Section 18 of the 2006 Act provides for

an arbitration proceeding to take place with regard to the dispute between the parties, as per the Arbitration & Conciliation Act, 1996, provided that

conciliation is not possible between the parties. In this respect, for easy reference, Section 18 of the 2006 Act is reproduced below:-

Reference to Micro and Small Enterprises Facilitation Council.â€

(1) Notwithstanding anything contained in any other law for the time being in force, any party to a dispute may, with regard to any amount due under

section 17, make a reference to the Micro and Small Enterprises Facilitation Council.

(2) On receipt of a reference under sub-section (1), the Council shall either itself conduct conciliation in the matter or seek the assistance of any

institution or centre providing alternate dispute resolution services by making a reference to such an institution or centre, for conducting conciliation

and the provisions of sections 65 to 81 of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to such a dispute as if the conciliation was

initiated under Part III of that Act.

(3) Where the conciliation initiated under sub-section (2) is not successful and stands terminated without any settlement between the parties, the

Council shall either itself take up the dispute for arbitration or refer to it any institution or centre providing alternate dispute resolution services for such

arbitration and the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall then apply to the dispute as if the arbitration was in

pursuance of an arbitration agreement referred to in sub-section (1) of section 7 of that Act.

(4) Notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council or the centre

providing alternate dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator under this section in a dispute between the

supplier located within its jurisdiction and a buyer located anywhere in India.

(5) Every reference made under this section shall be decided within a period of ninety days from the date of making such a reference.â€​

The letter dated 05.04.2018 issued by the Additional Director (DIC), office of the Commissioner of Industries & Commerce, Assam, which is

addressed to the petitioner and the respondent No. 3, states that the extract of the meeting minutes of the Micro & Small Enterprise Facilitation

Council held on 12.03.2018, in the office chamber of the Commissioner of Industries & Commerce, Assam has been forwarded. The operative portion

of the meeting minutes dated 12.03.2018 states as follows:-

“In the 6th meeting NBCC was represented by Sri.D.V. Singh, Sri. Subash Chad and Sri. Jai Prakash. The unit was represented by Sri. B.P. Siotia

and Sri. N. Siota.

The Council after hearing both the parties was of the view that despite the correspondences from the Council dated 18.12.15 and 18.03.16 asking the

buyer to submit observations on the petition of the supplier, the buyer has not claimed making any payments other than those detailed in the statement

of accounts by the supplier to establish that the buyer is no way liable for any payments to the supplier. A mere perusal of the statement of account

furnished by the supplier showing details of bills and payments received clearly establishes that the buyer had not paid the amounts due within the

agreed appointed day i.e., fourteen days, but delayed the payments and made last part payment on 03.10.2000 for the supplies made in the year 1993

and till date there is balance due to the supplier. Moreover, at no point of time, the buyer had asked for rates of goods to be quoted including

transportation, loading and unloading charges and the rates quoted by the supplier always excluded transportation, loading and unloading etc. The rates

quoted by the buyer in their quotation dated 09.02.93 was excluding transportation, loading and unloading etc. as demanded by the buyer in their N.I.T

dated 29.1.93 and as such it would be unfair to burden the SSI unit with charges towards transportation, loading and unloading. As because the rate of

materials were excluding transportation, loading and unloading charges, and the delivery at buyers’ sites at Guwahati were never envisaged by the

N.I.T. but the rates quoted were excluding transport, loading and unloading, it is only fair and reasonable that the burden be borne by the buyer and not

the supplier SSI unit which had never consented to free transportation, loading and unloading etc.

Hence, after perusal of the other documents the Council directed that NBCC should furnish a copy of the submission submitted before the Council to

the supplier. Further, the Corporation should also submit the reason for denying the price escalation clause within 7 days. However, the Council

directed NBCC to pay the principal & local freight charges with interest applicable as per the Act for delayed payment of bills between due date and

date of actual payment as per Section 16 of the Act of 2006 from appointed day after 14 days.

NBCC has submitted a reply to the Council on 01/08/2016 and stated that the application of M/s Siotia Steel Ltd may be dismissed as per decision of

the Hon’ble Guwahati High Court order on 26/06/2015.

In the 7th meeting, NBCC was represented by Sri.B.Singh & Sri. G. Kalita. The unit was represented by Sri. B.P. Siotia and Sri. N. Siota. The

representative from M/s Siotia Steel has opined that though the Facilitation Council has directed for payment, the NBCC has neither paid any payment

nor submitted any reason for denial of the Price escalation. The unit then submitted documents related with the price escalation, Copies of NIT,

Quotation, Negotiation, letter of SAIL, supply order of NBCC. The Council then asked NBCC, the reasons for not following the order passed in the

6th meeting. The representative from NBCC has informed the Council that they will stick to the decision of the High Court.

After deliberation, the members of the Council has observed that regarding payment of Principal & local freight charges with interest payable by

NBCC to the unit, order has already been passed in the 6th meeting. Regarding payment for price escalation, the Council has observed that since

NBCC has not submitted any reason for price escalation, hence the Council has concluded that the amount of price escalation is admissible.â€​

The letter dated 05.04.2018 and the extract of the meeting minutes dated 12.03.2018, clearly show that no conciliation was affected between the

parties, with regard to the dispute raised by the respondent No. 3. Further, the very fact that a direction has been issued by the Council during a

meeting in the office chamber of the Commissioner of Industries & Commerce, Assam clearly shows that the issue raised by the respondent No. 3,

with regard to non-payment of his alleged dues has not been decided by way of arbitration, under the provisions of the Arbitration & Conciliation Act,

1996. It is settled law that where a power is given to do a certain thing in a certain way, they must be done in that way or not at all. All other methods

of performance are forbidden. The facts, as stated above, show that the Council could not have issued the orders/directions to the petitioner, in

violation of Section 18 of the 2006 Act. Accordingly, as the Council did not have the power to issue directions for payment of money in the manner it

has done, without a source of power being in existence for the same, the Council’s orders/directions passed are without jurisdiction and are

arbitrary.

Besides the above, the claim of the petitioner having been rejected by the Civil Court and the High Court earlier, this Court finds that the direction

passed by the Council in its meeting minutes dated 12.03.2018, in the office chamber of the Commissioner of Industries & Commerce, Assam is not

sustainable. Accordingly, the same is set aside.

Writ Petition is accordingly allowed.