South Eastern Coalfields Limited vs M/S M R Beltings

The petitioner has preferred the instant petition challenging the award dated 24.08.2016 passed by the Sole Arbitrator in Case No. 48 of 2015 whereby the claim of respondent No.1 to the extent of Rs. 14,13,557/- along with interest has partly been allowed.

By way of this petition, the petitioner has sought the following relief(s):-

“10.a. to call for the record in original concerning the award/order dated 24.08.2016, passed by the learned Sole Arbitrator in Case No. 48 of 2015;

10.b. To quash/set-aside the award/order dated 24.08.2016, passed by the learned Sole Arbitrator in Case No. 48 of 2015 and all the consequences arising thereof and related thereto;

10.c. To hold and declare that respondent No.2/Hariyana Facilitation Council has no jurisdiction whatsoever in respect to the present cause of action; and/or

10.d. To pass any order in favour of petitioner as this Hon’ble Court may deem fit and proper under the facts and circumstances of the case with cost.”

Brief facts of the case are as follows:-

a. Respondent No. 1/M R Beltings, a firm purportedly registered under the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 was awarded a contract of supply of rubber conveyor belting, required length being 5400 meters by Petitioner vide supply order dated 08.05.2014 (Annexure P/3).

b. Against the said supply order, Respondent No. 1/M R Beltings purportedly supplied - (i) 1223 meters of belting on 18.08.2014 (invoice number being 45 dated 12.08.2014 to the tune of Rs. 26,91,633); (ii) 1220 meters on 14.09.2014 (invoice number being 48 dated 10.09.2014 to the tune of Rs. 26,85,030).

c. It was claimed by Respondent No. 1/M R Beltings that against the above-detailed supply of beltings, the petitioner made following payments - (i) Rs. 13,91,166 on 05.12.2014; (ii) Rs. 25,39,358 on 08.12.2014; and (iii) Rs. 29,663 and Rs. 29,889 on 05.01.2015, thereby, failed to clear the dues to the extent of Rs. 13,86,887 and interest payable thereon.

d. In order to agitate against the perceived unpaid dues, Respondent No. 1/M R Beltings approached Respondent No. 2/Haryana MSME Facilitation Council under the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 wherein, upon the alleged failure of conciliation proceeding, Respondent No. 2/Haryana MSME Facilitation Council referred the case to the learned Sole Arbitrator for adjudication vide order/memo dated 08.08.2014.

e. As was the case before Respondent No. 2/Haryana MSME Facilitation Council, Petitioner vehemently raised the issue of maintainability of the claim of Respondent No. 1/M R Beltings on the ground of jurisdiction which was erroneously rejected by the learned Sole Arbitrator. Further, submissions on the merit of the issue so made by the Petitioner failed to sway the learned Sole Arbitrator which led to the passing of the impugned order/ award.

f. Aggrieved and bereft of options, the petitioner knocks on the doors of this Court.

The petitioner challenged the proceedings pending before respondent No.2 by way of filing WPC No.1765 of 2016. During the pendency of the Writ Petition (WPC No.1765 of 2016), the impugned award was passed by the Sole Arbitrator and this fact was brought to the notice of this Court. Finally, the petitioner was granted liberty to challenge the award after complying with the requirements of Section 19 of the MSMED Act, 2006.

Learned counsel for the petitioner would submit that according to Clause 24 of the supply order, any dispute arising out of the order shall come under the Sole Jurisdiction of Bilaspur Court and according to Clause-25 of the general terms and conditions, the Courts of the place from where the acceptance of tender has been issued, shall alone have jurisdiction to decide any dispute. It is further argued that according to Clause 29 of the general terms and conditions, all disputes arising out of the contract shall be under the jurisdiction of Bilaspur Court only, therefore the MSME Council Haryana had no jurisdiction to entertain the claim.

Learned counsel for the petitioner would further submit that respondent No.1 claimed dues to the extent of Rs.13,86,887/- and interest payable thereon against the petitioner, and reference was made to the Haryana Micro and Small Medium Enterprises Facilitation Council. An objection was raised with regard to the territorial jurisdiction. After the failure of conciliation proceedings, Mr. C. B. Jaglian, District and Sessions Judge (Retd), was appointed as the Sole Arbitrator. He would also submit that the objection raised by the petitioner was summarily rejected.

Learned counsel for the petitioner would also submit that the availability of alternative remedy is no bar upon the exercise of the jurisdiction under Article 226/227 of the Constitution of India if the order impugned suffers from the vice of lack of jurisdiction. He would further argue that Courts/Tribunals situated at Bilaspur alone had the power to take cognizance of the dispute between the parties. It is also argued that the present petition is not hit by the principle of delay and laches, and the same is not barred by the principle of res-judicata.

Heard learned counsels appearing for the petitioner and perused the documents with utmost circumspection.

From a perusal of the documents, it appears that WPC No. 1765 of 2016 was filed challenging therein the jurisdiction of the Haryana MSME Facilitation Council, as the claim was made by respondent No.1 before it.

During the pendency of the writ petition, the award was passed on 24.08.2016 and this fact was brought to the notice of the Co-Ordinate Bench, therefore, in para-9 of the order dated 21.07.2023, the Coordinate Bench made the following observations:-

“ 9. In view of the above stated legal position and law laid down by the Hon'ble Supreme Court and also considering the fact that after filing of present writ petition, the award has been passed on 24.08.2016, therefore, liberty is granted to the petitioner to challenge the said award after complying with the requirement of Section 19 of the Act, 2006 by depositing 75% of the amount as awarded by the Arbitrator appointed by the Facilitation Council within 30 days from the date of receipt of copy of this order. In the eventuality of taking recourse under Section 19 of the Act, 2006, the Court who has jurisdiction to decide the same shall not insist for delay as the writ petition was filed on 12.07.2016 before this Court.”

From a perusal of the order dated 21.07.2023, it is apparent that the relief sought by the petitioner in WPC No. 1765 of 2016 was declined and the petitioner was granted liberty to challenge the award after complying with the requirements of Section 19 of the MSMED Act by depositing 75% amount of the award. The award was passed on 24.08.2016 and the limitation provided under the provisions of Section 34 of the Arbitration and Conciliation Act, 1996 to challenge the award dated 24.08.2016 was 90+30 days = 120 days, which expired.

During the pendency of WPC No. 1765 of 2016, the petitioner did not file any application for amendment to challenge the award passed by the Sole Arbitrator, and for the first time, the petitioner has challenged the award by filing the present petition on 03.01.2024, after a lapse of more than 7 years.

In the matter of Magadh Sugar and Energy v. State of Bihar and others reported in 2021 SCC Online SC 801, the Hon’ble Supreme Court has held that the availability of an alternative remedy is not a bar upon the exercise of the jurisdiction under Article 226/227 of the Constitution of India if the order impugned suffers from the vice of lack of jurisdiction.

In the present case, the issue of jurisdiction was raised in WPC No. 1765 of 2016, and the same was decided against the petitioner vide order dated 21.07.2023, therefore, the petitioner cannot be permitted to raise the same ground in the subsequent petition.

As far as the issue of jurisdiction is concerned, in the matter of M/S Ravi Ranjan Developers Pvt. Ltd. v. Aditya Kumar Chatterjee, reported in [2022 LiveLaw (SC) 329], the Hon’ble Supreme Court while relying upon the celebrated judgment of Kiran Singh v. Chaman Paswan [ AIR 1954 SC 340], held that an order which suffers from the want of jurisdiction is a nullity and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings.

In the matter of M/s. Narmada Transmission Pvt. Ltd. v. Rajasthan Rajya Vidyut Prasaran Nigam and another reported in [(2023) 2 Raj 397 (raj) DB], it is held that when an award passed under the MSMED Act, 2006, is challenged on the ground of lack of jurisdiction, a petition under Article 226 is maintainable.

The issue of jurisdiction has already been challenged in WPC No. 1765 of 2016 and the same was turned down, therefore, these decisions touch on the issue but cannot be taken into consideration in the present petition. Further, the order passed in WPC No. 1765/2016 was not challenged before any forum and thus it attained finality.

In the matter of B.E. Simoese Von Niedenthal v. Chhattisgarh Investment Limited reported in [(2015) 12 SCC 255], the Hon’ble Supreme Court ruled in favour of the exclusive jurisdiction as was provided in the contract between the parties concerned.

In the case at hand, this issue was available to the petitioner when WPC No.1765 of 2016 was filed, but the same has already been dismissed.

In the matter of Yadaiah v. State of Telangana, reported in 2023 LiveLaw (SC) 590, the Hon’ble Supreme Court held that “only those findings, without which the Court cannot adjudicate a dispute and also form the vital cog in the reasoning of a definite conclusion on an issue on merits, constitute res judicata between the same set of parties in subsequent proceedings...”

In the concluding para of the order dated 21.07.2023 passed in WPC No. 1765 of 2016, the Co-Ordinate Bench has already dealt with the award dated 24.08.2016, passed against the petitioner and the issue with regard to the jurisdiction was already decided in that petition. Further, the petitioner has challenged the award after a lapse of more than 7 years, and that award was not challenged in WPC No. 1765 of 2016 for the reasons best known to the petitioner though WPC No. 1765/2016 remained pending from 2016 to 2023 and the award was passed on 26.08.2016.

In the matter of M/s India Glycols Limited & Anr. vs. Micro and Small Enterprise Facilitation Council, Civil Appeal No.7491 of 2023, dated 06.11.2023, the Hon’ble Supreme Court in para-10 to 13 held as under:-

“10. In terms of Section 19, an application for setting aside an award of the Facilitation Council cannot be entertained by any court unless the appellant has deposited seventy-five per cent of the amount in terms of the award. In view of the provisions of Section 18(4), where the Facilitation Council proceeds to arbitrate upon a dispute, the provisions of the Act of 1996 are to apply to the dispute as if it is in pursuance of an arbitration agreement under sub-section (1) of Section 7 of that Act. Hence, the remedy which is provided under Section 34 of the Act of 1996 would govern an award of the Facilitation Council. However, there is a super added condition which is imposed by Section 19 of MSMED Act 2006 to the effect that an application for setting aside an award can be entertained only upon the appellant depositing with the Council seventy-five per cent of the amount in terms of the award. Section 19 has been introduced as a measure of security for enterprises for whom a special provision is made in the MSMED Act by Parliament. In view of the provisions of Section 18(4), the appellant had a remedy under Section 34 of the Act of 1996 to challenge the award which it failed to pursue.

11 In the judgment of this Court in Gujarat State Civil Supplies Corporation Limited (supra), a two-Judge Bench of the Court has observed, in the course of drawing its conclusions, that: “The proceedings before the Facilitation Council/institute/centre acting as an arbitrator/Arbitral Tribunal under Section 18(3) of the MSMED Act 2006 would be governed by the Arbitration Act, 1996.”

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

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

Keeping in mind that in WPC No. 1765 of 2016, the co-ordinate Bench of this Court, while disposing of the matter, had granted 30 days to the petitioner to deposit 75% of the amount of award, and there was liberty in favour of the petitioner to take recourse to the law under Section 19 of the Act, 2006, and a direction was also issued to concerned jurisdictional Court not to insist for the delay as the Writ Petition (WPC No.1765 of 2016), was filed in the year 2016, however, the petitioner failed to avail the liberty granted by this Court, therefore, no liberty can be reserved in favor of the petitioner.

Taking into consideration the above-discussed facts and the principles of law laid down by the Hon’ble Supreme Court and the High Court of Rajasthan, in the considered opinion of this Court, no case is made out calling for any interference with the impugned award, consequently, the petition is liable to be and is hereby dismissed leaving the parties to bear their own costs.