Dismissed

Nesco Utility v. Premier Cables and Conductors(P)Ltd.

Orissa HC23 Mar 2021WP(C)/3214/2021

Case brief

AI extract

What is this about?

The Court dismissed a writ petition challenging an arbitration award by the MSEFC under the MSME Act. It held that since the award is governed by the Arbitration and Conciliation Act, 1996, the proper remedy is not under Article 226 of the Constitution but before the appropriate statutory forum.

What did the court decide?

Application disposed of with liberty to question the award before the appropriate statutory forum under the Arbitration and Conciliation Act, 1996.

Nesco Utility Vs Premier Cables and Conductors(P)Ltd. — Arbitration | Orissa HC (2021)

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W.P.(C) No.3214 of 2021

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23.03.2021 This matter is taken up through hybrid arrangement (virtual/physical) mode.

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The Petitioner, by filing this application, has invoked the jurisdiction of this Court under Article 226 of the Constitution for setting aside the award passed by the Micro Small Medium Enterprises Facilitation Counsel (MSEFC) in an arbitration proceeding under sub-section 3 of section 18 of the Micro Small Medium Enterprises Development Act, 2006 (MSME Act), upon failure of the conciliation and termination of the said reference for non settlement of the dispute between the Parties.

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Learned counsel for the Petitioner submits that this Petitioner has not been given the opportunity of hearing in the said proceeding before the MSEFC and the award has been passed without following the principles of natural justice providing the scope to the petitioner in placing his side of the case as also the evidence. Referring to the award dated 20.08.2020, which is under challenge, he submits that on 16.11.2019, the conciliation is said to have failed and thereafter the MSEFC having not specifically passed any order that it would either itself sit over as arbitrator over the matter or refer it to any institution or centre, has straightway proceeded with the matter. It is further submitted that the order is without any sort of discussion as to the rival case or the evidence. According to him, this award does not satisfy

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the legal requirements as provided under the Arbitration and Conciliation Act, 1996.

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Keeping in view the submission made, I have perused the award under challenge as at Annexure-3.

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On going through the award in question, it appears that after failure of the conciliation when the reference stood terminated without any settlement being arrived at between the Parties, the MSEFC having proceeded to arbitrate over the dispute have passed the award allowing the claim of the Opposite Party to the extent of Rs.3,19,54,784.30 towards the principal and Rs.2,90,64,386.69 towards the interest as on 30.09.2018.

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Section 18 of the MSME Act provides for reference to MSEFC. In case of any dispute, any Party to a dispute may with regard to any amount due under section 17, make a reference to the said MSEFC. Above being the provision of sub-section-1 of section 18; sub-section 2 of said section provides that upon receipt of such reference, the MSEFC 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 shall then apply to such a dispute as if the conciliation was initiated under Part III of that Arbitration and Conciliation Act, 1996. Sub-section 3 of section 18 of

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MSME Act contains the provision as to what course has to be adopted when the conciliation initiated under sub-section (2) is not successful and the reference in that regard stands terminated without any settlement between the parties. It appears that the MSEFC then 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 shall then also apply to the dispute resolution process. It contains a deeming provision that the arbitration, pursuant to the said provision, would be deemed to have been in pursuance of an arbitration agreement as referred to in sub-section 1 of section 7 of the Arbitration and Conciliation Act, 1996.

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So, the provision of section 18 of MSME Act makes it clear that once a reference is made to the MSEFC in terms of sub-section 1 of Section 18 of the MSME Act, the proceeding for conciliation would commence and from that time onwards in so far as the conciliation as also the arbitration, which is the subsequent step in case of failure of conciliation, the provisions of Arbitration and Conciliation Act, 1996 would come to govern the process and have their play. So the award which is the subject matter of this proceeding being one under the Arbitration and Conciliation Act, 1996, the party aggrieved by the same has to take recourse to the remedy as provided in said Act so as to set aside the award and for that

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invocation of the jurisdiction under Article 226 of the Constitution would not be permissible.

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In that view of the matter, while being not inclined to entertain this application so as to invoke the extraordinary writ jurisdiction of this court in interfering with the award as impugned herein; the application stands disposed of granting liberty to the Petitioner to question the award as at Annexure3 before the appropriate forum as provided in law.

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Issue urgent certified copy of this order as per rules.

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………………….. D. Dash, J.

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Basu

Nesco Utility v. Premier Cables and Conductors(P)Ltd.

Case brief

What is this about?

What did the court decide?

Nesco Utility v. Premier Cables and Conductors(P)Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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