Union Of India Represented By The General Manager Metro Railway vs M/s. B.C.L. Secure Premises (Pvt.) Limited & Ors

We have heard learned senior counsel for the appellant, Union of India represented by the General Manager, Metro Railway, Kolkata (hereinafter referred to as the 'buyer') and the respondent no. 1, M/s. B.C.L. Secure Premises (Pvt.) Limited (hereinafter referred to as the 'supplier').

The appeal by the buyer is against the judgement of the learned single Judge refusing to intervene in proceedings initiated by the supplier under the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as the '2006 Act'). The two grounds urged by the buyer before the learned single Judge through the writ petition were that the proceedings before the Facilitation Council under the 2006 Act involves matters which require a reference to be made to the High Court under Section 113 of the Code of Civil Procedure and also that the proceedings pending before the Facilitation Council require to be transferred to the High Court invoking Article 228 of the Constitution. The learned single Judge repelled the plea. Hence this appeal.

The learned senior counsel appearing for the appellant pointed out that in terms of Section 113 of CPC and Article 228 of the Constitution of India, matters which fall within the format of those provisions are not to be left for adjudication by the Facilitation Council under the 2006 Act. His further argument before us is that the Facilitation Council of Gurgaon, Haryana has proceeded with the matters pending with that Authority as between the parties by striking off the defence of the appellant/buyer and the buyer is, therefore, incapacitated from contesting those proceedings now. It is further argued by him that the respondent/supplier had invoked the jurisdiction of this Court under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the '1996 Act') and at present there is a proceeding before the learned single Judge under the 1996 Act marked as AP 247 of 2019. He further argued that the doctrine of election would stare at the respondents and the proceeding under the 1996 Act having been initiated, the provisions of the 2006 Act cannot be independently invoked.

The learned counsel for the respondent no.1 argued that the Facilitation Council at Gurgaon, Haryana has jurisdiction to deal with matters falling under that Act, insofar as the transaction between the supplier and the buyer is concerned. It is, therefore, argued that since the said Facilitation Council is acting in terms of the statutory provisions, no interference is called for. He further points out that whatever would fall for consideration of the Facilitation Council may not be available for consideration in a proceeding under the 1996 Act, if such issues get considered under the 2006 Act.

Section 113 of the Code of Civil Procedure is a provision that enables reference to the High Court. The said provision is applied by any Court, provided the conditions in Section 113 CPC are satisfied, to those cases which fall within the proviso to Section 113 CPC which are fundamentally those which involve a question as to the validity of an Act or Ordinance or Regulation or any provision contained in an Act, Ordinance or Regulation, determination of which is necessary for the disposal of the case and that Court is, prima facie, of the view that such provision of the Act, Ordinance or Regulation is invalid or inoperative but has not been so declared by the jurisdictional High Court. It is only under such circumstance, the Courts subordinate to the High Court would make reference to the High Court under Section 113 of the CPC. Section 113 CPC is not a provision which enables the High Court to order a reference or take reference on its own motion. The primary adjudication and consideration as to whether a particular question arises as stated in Section 113 CPC and whether such question is required to be decided for deciding the case before it are matters which the Court before which the case is pending has to take a call on. For these reasons, we do not find any arbitrariness, infirmity or jurisdictional illegality in the judgment of the learned single Judge in not having accepted the plea of the writ petitioner/appellant relying on Section 113 CPC.

Article 228 of the Constitution which enjoins transfer of cases apply to those cases which involve substantial questions of law as to the interpretation of the Constitution, the determination of which is necessary for the disposal of the case. No issue relating to the interpretation of the Constitution much less which is required for the determination of the matter pending before the Facilitation Council under the 2006 Act is projected for consideration for transfer of cases under Article 228 of the Constitution. For these reasons, the learned single Judge was abundantly justified in rejecting the plea of the appellant/petitioner based on the provisions of Article 228 of the Constitution.

Having stated as aforesaid, we may here now mention that we have not gone into the question whether the Facilitation Council under the 2006 Act would be a Court for the purpose of Article 228 of the Constitution or Section 113 of the CPC. We may not be taken as having expressed any opinion either way on that issue.

Chapter V of the 2006 Act deals with delayed payment to micro, small and medium enterprises. Section 17 makes it statutorily mandatory on the part of the buyer to pay the amount that would be payable under Section 16 with interest thereon. Chapter V of the 2006 Act operates as a mechanism for providing the mode of ensuring that the supplier gets the amount due for the supplies made to the buyer. Section 24 of the 2006 Act provides that the provisions of Section 15 to 23 shall have effect notwithstanding anything inconsistent therein contained in any other law for the time being in force. Bearing all these provisions in mind, it can be noticed that if matters fall under the 2006 Act, the Facilitation Council is eligible to consider them subject to all just objections and exceptions as may be taken by a buyer in opposition to the application of the supplier before the Facilitation Council.

The question whether the doctrine of election applies with such rigour as to exclude the supplier from initiating a proceeding under the 2006 Act on a ground referable to the notice for appointment of issued under the 1996 Act and the consequential steps taken before the High Court at Calcutta under the provisions of the 1996 Act are matters to be raised as objection before the Facilitation Council by the buyer. If they intend to do so, they would not generate a substratum where there could be a judicial exercise either under writ jurisdiction or by passing interlocutory order in matters pending under the 1996 Act before the High Court. The plea of the appellant/writ petitioner as to the effect of proceedings before the High Court on the proceedings before the Facilitation Council under the 2006 Act is a matter to be raised in objection to proceedings pending before the Facilitation Council under the 2006 Act. We may immediately notice that the learned counsel for the respondent no. 1/the supplier has pointed out that a basket of claims which are attempted to be pushed for arbitration under the provisions of 1996 Act would be those which are otherwise than those that would fall for consideration by the Facilitation Council in terms of Chapter V of the 2006 Act. We, therefore, notice that a clear difference may be maintained in jurisdiction under the 2006 Act and the 1996 Act but it may be open to the parties to agree for arbitration under the 1996 Act for all issues taken together. However, it is not for us to now impose any such prescription on the parties. Fundamentally to take recourse to arbitration is a matter of agreement of parties as would be recognised in terms of the provisions of the 1996 Act.

All that now remains is the anxiety of the appellant/writ petitioner, that it is likely to be condemned unheard by the Facilitation Council at Gurgaon, Haryana under the 2006 Act. Learned counsel for the respondent no. 1 points out that pursuant to notice, the appellant/writ petitioner had participated in proceedings before the Facilitation Council and ultimately, did not place its objection and, therefore, the proceedings had to go ahead without waiting further for the response of the appellant. He says that while the proceedings have now gone to the extent of requiring the applicant before it, i.e. the supplier, to place written submission his client has no objection to the writ petitioner/appellant applying to the Facilitation Council to hear its version also on merits and thereupon have an adjudication appropriately carried out by giving opportunity to raise objection as would be available in law.

In the result-

1) We affirm the impugned judgment of the learned single Judge;

2) The appeal is ordered directing the first respondent in this appeal, viz., M/s. B.C.L. Secure Premises (Pvt.) Limited to present a copy of this judgment before the Micro and Small Enterprises Facilitation Council of Haryana and Mr. C.B. Jaglian, Retried District and Session Judge and Sole Arbitrator, both authorities having been impleaded as respondent nos. 2 and 3 respectively in this appeal. Those Authorities will ensure that the proceedings as between the supplier M/s. B.C.L. Secure Premises (Pvt.) Limited and the buyer/writ petitioner/appellant, Union of India represented by Metro Railway, are carried forward after providing opportunity to the buyer to contest those proceedings on merits.

We, however, record that being a matter falling under the provisions of the 2006 Act, due regard being given to the object and purpose of such legislation, the appellant/writ petitioner will utilize this opportunity to appear and contest the matter before the Facilitation Council or the Arbitrator, as the case may be, and those Authorities will render decision without delay.

We clarify that nothing stated in this order will affect the contentions of the parties before the Facilitation Council and the Arbitrator as well as the learned single Judge where matters are pending under the 1996 Act. This order is being issued only to facilitate the completion of proceedings in Gurgaon, Haryana and the issue of territorial jurisdiction as raised by the respondent will remain open.

The appeal and connected stay application are disposed of.