Union of India vs M/s. B.C.L. Secure Premises (Pvt.) Limited & Ors

Debangsu Basak, J

The application is at the behest of the writ petitioner seeking a direction upon the respondents including the sole Arbitrator not to proceed with arbitration proceeding being Claim Application No.806 of 2018 initiated under Micro, Small and Medium Enterprises Development Act, 2006.

Learned senior Advocate appearing for the applicant / writ petitioner submits that, the private respondents attempted to have an arbitrator appointed at least on 4 occasions by applying under Section 11 of the Arbitration and Conciliation Act, 1996. He submits that, the last attempt to have an arbitrator appointed made by the private respondents, was by way of AP No.247 of 2019 before this Hon'ble Court. The same was adjourned by the order dated August 13, 2019. He relies upon Section 113 of the Code of Civil Procedure, 1908 and Article 228 of the Constitution of India and submits that, when, a question of law is pending for consideration before the Constitutional Court, then, the arbitrator ought not to adjudicate upon the disputes. Consequently, he submits that, the arbitration proceeding should be stayed till disposal of the writ petition. Moreover, he submits that, there is an issue of territorial jurisdiction. The private respondent approached the Tribunal at Haryana under the Act of 2006 for the purpose of adjudication of the claim.

Learned Advocate appearing for the private respondent submits that, the claim made in the arbitration proceeding under the Act of 2006 is limited to the principal claim. The private respondent has claims other than the principal amount such as, claim on account of liquidated damages. Such claims are the subject matter of the proceedings under Section 11 of the Act of 1996. Such claims are not being agitated under the Act of 2006. He submits that, the applicant herein was afforded sufficient opportunities by the Council under the Act of 2006 to contest the claim of the private respondent. The applicant did not avail of such opportunities. He relies upon (2017) 3 Calcutta Law Journal 253 (National Projects Construction Corporation Limited and Anr. - Versus - West Bengal State Micro Small Enterprises Facilitation Council and Ors.) in support of his contentions that, the private respondent can approach the Council under the Act of 2006 in the facts of the present case.

In the facts of the present case, it appears that, the applicant and the private respondent had commercial transactions between them. The relationship between the applicant and the private respondent are governed by an agreement which contains an arbitration clause. The private respondent attempted to have an arbitrator appointed in respect of the disputes arising out of the contract between the applicant and the private respondent. The last of such application being AP No.247 of 2019 is yet to be disposed of. A copy of AP No.247 of 2019 is on record.

It appears from the pleadings of the application under Section 11 of the Act of 1996 that, the claims of the private respondent are in respect of matters which do not include the claim of the private respondent on account of price of goods sold and delivered. The private respondent is before the Tribunal constituted under the provisions of the Act of 2006 for such purpose.

In National Projects (supra) the Court answered three issues raised in such writ petition. The second issue was, when there exists an arbitration agreement between the parties, and one of such party to the arbitration agreement is an entity within the meaning of the Act of 2006, there whether the Council established under the Act of 2006 will have jurisdiction to arbitrate the disputes between such parties on request made for such purpose. Such issue was answered in the affirmative holding that, the Council established under the Act of 2006 would have jurisdiction to arbitrate the disputes between the parties on a request being made for such purpose.

The fact that, the private respondent is an entity within the meaning of the 2006 Act is not disputed. The Council established under the Act of 2006 took cognizance of the complaint lodged by the private respondent. It proceeded to hold proceeding under the Act of 2006. It is this proceeding that, the applicant seeks stay of.

In course of submissions, the applicant relies upon Section 113 of the Code of Civil Procedure, 1908 and Article 228 of the Constitution of India.

Section 113 of the Code of Civil Procedure, 1908 is as follows:-

"Section-113. Reference to High Court. - Subject to such conditions and limitations as may be prescribed, any court may state a case and refer the same for the opinion of the High Court, and the High Court may make such order thereon as it thinks fit.

Provided that where the court is satisfied that a case pending before it involves a question as to the validity of any Act, Ordinance or Regulation or of any provision contained in an Act, Ordinance or Regulation, the determination of which is necessary for the disposal of the case, and is of opinion that such Act, Ordinance, Regulation or provision is invalid or inoperative, but has not been so declared by the High Court to which that Court is subordinate or by the Supreme Court, the Court shall state a case setting out its opinion and the reasons therefore, and refer the same for the opinion of the High Court.

Explanation: In this section, "Regulation" means any Regulation of Bengal, Bombay or Madras Code of Regulation as defined in the General Clauses Act, 1897 (10 of 1897), or in the General Clauses Act of a State."

Section 113 empowers any Court in which, a proceeding is pending, to stay a case and referred the same for the opinion of the High Court.

Article 228 of the Constitution of India is as follows:-

"228. Transfer of certain cases to High Court If the High Court is satisfied that a case pending in a court subordinate to it involves a substantial question of law as to the interpretation of this Constitution the determination of which is necessary for the disposal of the case, it shall withdraw the case and may

(a) either dispose of the case itself, or

(b) determine the said question of law and return the case to the court from which the case has been so withdrawn together with a copy of its judgment on such question, and the said court shall on receipt thereof proceed to dispose of the case in conformity with such judgment."

Article 228 of the Constitution of India allows the High Court to transfer a case, where it is satisfied that, such case which is pending before a Court subordinate to it involves a substantial question of law as to the interpretation of the constitution and that, such interpretation is necessary for the disposal of such case. It can withdraw such case and dispose of such case by itself or determine the question of law and return the case to the stage from which the case was withdrawn together a copy of judgment of such question and allows such Court to dispose of the case in conformity with the judgment.

In the present case, neither Section 113 of the Code of Civil Procedure, 1908, nor the provisions of Article 228 of the Constitution of India are attracted. There is no case referred to the High Court under Section 113 of the Code of 1908 for the High Court to consider. The High Court is not being invited by any of the party to hold that, a case pending in a Court subordinate to the High Court involves any substantial question of law as to the interpretation of the Constitution. High Court did not withdraw the proceeding under the Act of 2006 under Article 228 assuming that the same could be done in the facts of this case.

No ground exists directing the Council not to proceed with the proceeding under the Act of 2006.

In such circumstances, I find no merit in the present application.

CAN No.9120 of 2019 is dismissed.

No order as to costs.

Urgent certified website copies of this order, if applied for, be made available to the parties upon compliance of the requisite formalities.