Orissa High Court
Rajdhani Coir vs Micro on 17 January, 2025
Author: K.R. Mohapatra
Bench: K.R. Mohapatra
Signature Not Verified
Digitally Signed
Signed by: SASANKA SEKHAR SATAPATHY
Reason: Authentication
Location: HIGH COURT OF ORISSA CUTTACK
Date: 20-Jan-2025 11:50:18
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No.22514 of 2022
(An application under Articles 226 and 227 of the
Constitution of India)
*****
Rajdhani Coir, Bhubaneswar, a
Proprietorship concern, represented
through Shri Pratap Kumar Panda,
having its Office at Plot No.61,
Giridurga Market Complex, Unit- III,
Janpath, Bhubaneswar .... Petitioner
-versus-
1. Micro, Small Enterprises
Facilitation Council, Nagpur,
Maharashtra, having its address at
office of Joint Director of Industries
(Nagpur Region), Udyog Bhavan, 2nd
Floor, Civil Lines, Nagpur-444001,
2. M/s Aerocom Cushions Private
Limited, represented through its
Director, Mr.Kuldip Mohanlal Gupta,,
having its office at F-14/2, MIDC,
Hingna Road, Nagpur, Maharashtra,
having its factory AT/PO: Satasankh,
Via: Sakhigopal, Dist: Puri, Odisha,
PIN-752046 .... Opp. Parties
Advocate for the parties
For Petitioner : Mr.Rama Chandra Panigrahy, Advocate
For Opposite Parties: Mr. Shib Shankar Mahanty, Advocate
(For Opposite Party No.2)
CORAM:
MR. JUSTICE K.R. MOHAPATRA
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Heard and disposed of on 17.01.2025
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JUDGMENT
W.P.(C)No.22514 of 2022 Page 1 of 12
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Signed by: SASANKA SEKHAR SATAPATHY
Reason: Authentication
Location: HIGH COURT OF ORISSA CUTTACK
Date: 20-Jan-2025 11:50:18
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1. This matter is taken up through hybrid mode.
2. Petitioner, in this writ petition, seeks to assail the
award/order dated 25th November, 2020 (Annexure-1) passed by
the Micro, Small Enterprises Facilitation Council, Nagpur,
Maharashtra (for brevity, ‘the Council’) in Reference
No.MH/20/S/NGR/572 to 575 of 2018.
3. Mr. Panigrahy, learned counsel submits that the
Petitioner is a Dealer of coir mattresses operating in the State of
Odisha having its Head office at Bhubaneswar, Odisha. Opposite
Party No.2, namely, M/s Aerocom Cushions Private Limited with
an intention of selling its mattresses approached the Petitioner
with various lucrative offers/schemes. Accordingly, Opposite
Party No.2 supplied its product to the Petitioner on agreed terms
and conditions and raised invoices at different points of time. A
dispute arose in course of business with regard to assurances
made by Opposite Party No.2 for achieving sales target. On
mutual discussion, both parties agreed to resolve their disputes
and differences, if any, within the jurisdiction of Bhubaneswar.
Thus, the parties submitted themselves to the exclusive
jurisdiction of Bhubaneswar for resolution of their dispute, if
any. However, the Opposite Party No.2, allegedly made a
reference under Section 18(1) of the Micro, Small and Medium
Enterprises Development Act, 2006 (for brevity ‘MSMED Act‘)
on 13th March, 2018 before the Council at Nagpur in the State of
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Signed by: SASANKA SEKHAR SATAPATHY
Reason: Authentication
Location: HIGH COURT OF ORISSA CUTTACK
Date: 20-Jan-2025 11:50:18
// 3 //
Maharashtra, which had no jurisdiction to entertain and arbitrate
the alleged dispute under the said Act. The Petitioner received
notices through auto-generated emails on various dates ranging
from 15th December, 2018 to 24th September, 2020 without any
option to reply. Thus, the said communications cannot be treated
to be notices under the MSMED Act, as reply to the said auto-
generated emails was restricted. Again, on 14th March, 2018, the
Opposite Party No.2 demanded the disputed amount from the
Petitioner. The same also cannot be treated to be a notice to refer
the matter to Arbitrator as per Section 21 of the Arbitration and
Conciliation Act, 1996 (for brevity ‘Arbitration Act‘). In the said
demand, Opposite Party No.2 did not disclose pendency of the
Reference No.MH/20/S/NGR/572 to 575 of 2018 before the
Council at Nagpur. However, the Petitioner in its reply dated 27 th
March, 2018, disputed the same. In the process, Opposite Party
No.2 obtained an ex-parte award/order under Annexure-1. The
auto-generated emails did not accompany the statement of claim
and documents filed by Opposite Party No.2 before the Council
at Nagapur. As such, the same is in violation of Section 24 (3) of
the Arbitration Act. No conciliation as contemplated under
Section 18(2) of the MSMED Act was made by the Council
before proceeding for purported arbitration under Section 18 (3)
of the MSMED Act.
3.1 Subsequently, Opposite Party No.2 filed Execution
Petition No.31 of 2021 before learned Civil Judge (Senior
Division), Commercial Court, Khurda at Bhubaneswar, which is
W.P.(C) No.22514 of 2022 Page 3 of 12
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Reason: Authentication
Location: HIGH COURT OF ORISSA CUTTACK
Date: 20-Jan-2025 11:50:18
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pending for adjudication. Upon receipt of notice in the Execution
Case, the Petitioner became aware of the impugned ex-parte
order/award under Annexure-1 passed by the Council at Nagpur.
On its appearance, the Petitioner filed a petition under Section 47
CPC. In the said application, the Petitioner specifically stated that
so-called ex-parte award put to execution is a nullity, as it was
passed without following mandatory provision of law, i.e., the
MSMED Act and Arbitration Act. In the meantime, said
application under Section 47 CPC has already been dismissed.
3.2 It is further submitted that provisions of Sections 65 to 81
of the Arbitration Act are applicable to the disputes raised before
the Council as if conciliation was initiated under Part-III of the
Arbitration Act. Further, the provision under Section 21 of the
Arbitration Act provides that arbitral proceeding in respect of a
particular dispute shall commence on the date on which a request
is made to refer the dispute for arbitration is received by the
disputant. Thus, the Council before proceeding to arbitrate the
dispute ought to have followed the provisions under Sections 23
and 24 of the Arbitration Act. In the instant case, no conciliation
whatsoever was conducted in terms of Section 18(2) of the
MSMED Act. Thus, a proceeding under Section 18 (3) of the
MSMED Act does not arise at all. Hence, the order/award under
Annexure-1 is a nullity in the eye of law.
3.3 In support of his submission, Mr. Panigrahi, learned
counsel for the Petitioner placing reliance upon the case law in
the case of Kusum Ingots and Alloys Limited Vs. Union of
W.P.(C) No.22514 of 2022 Page 4 of 12
Signature Not Verified
Digitally Signed
Signed by: SASANKA SEKHAR SATAPATHY
Reason: Authentication
Location: HIGH COURT OF ORISSA CUTTACK
Date: 20-Jan-2025 11:50:18
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India and another; (2004) 6 SCC 254 submits that this Court
has jurisdiction to entertain the writ petition filed under Article
227 of the Constitution against the impugned order/award,
although the same was passed by the Council at Nagpur in the
State of Maharashtra, as cause of action for the disputed claim
arose within the jurisdiction of this Court and the parties have
mutually submitted to the jurisdiction of Bhubaneswar in the
State of Odisha to resolve their disputes, if any. He further
submits that order under Annexure-1 cannot be said to be an
arbitral award. As such, the provision of Section 34 of the
Arbitration Act read with Section 19 of the MSMED Act has no
application to the instant case. A bare perusal of the order under
Annexure-1 would make it clear that it lacks the characteristic of
an arbitral award. Hence, he prays for setting aside the order
/award under Annexure-1 as well as other consequential
actions/proceedings in pursuance thereof.
4. Mr. Mohanty, learned counsel for Opposite Party No.2 by
filing counter affidavit submits that the Petitioner itself admitted
in the writ petition that notices were sent in its email-id by the
Council at Nagpur on different dates. The Petitioner, upon receipt
of such notices neither entered appearance nor participated in the
conciliation proceeding initiated under Section 18(2) of the
MSMED Act. Thus, recording culmination of the conciliation
proceeding, the Council proceeded to arbitrate the dispute under
Section 18 (3) of the MSMED Act. Notices of arbitration were
also received by the Petitioner through emails, but for the reasons
W.P.(C) No.22514 of 2022 Page 5 of 12
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Signed by: SASANKA SEKHAR SATAPATHY
Reason: Authentication
Location: HIGH COURT OF ORISSA CUTTACK
Date: 20-Jan-2025 11:50:18
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best known it did not respond to the same. As such, the Council
had no other option than to pass the award under Annexure-1.
Perusal of the award would make it clear that notices on different
dates both before conciliation and arbitration were sent to the
Petitioner, but it failed to appear before the Council and
participate in the proceeding. Further, there was paper
publication of the notice of arbitration where the Petitioner
ordinarily carries on its business, i.e., at Bhubaneswar. In spite of
sincere efforts by the Council when the Petitioner did not
participate and cooperate, the impugned award was passed. As
such, the only remedy available to the Petitioner is under Section
34 of the Arbitration Act read with Section 19 of the MSMED
Act for redressal of its grievances. The writ petition under Article
227 of the Constitution would not be maintainable before this
Court.
4.1 In support of his submission, Mr. Mohanty, learned
counsel for Opposite Party No.2 placed reliance upon the case
law in the case of Sterling Industries Vs. Jayaprakash
Associates Limited and others; (2021) 18 SCC 367, wherein, the
Hon’ble Supreme Court relying upon the case law in the case of
SBP and Company Vs. Patel Engineering Limited and another;
(2005) 8 SCC 618, disapproved maintainability of a petition
under Articles 226 and 227 of the Constitution and held that
violation of any provision of the Arbitration Act can also be
decided by a competent Court in an application under Section 34
of the Arbitration Act. It is also submitted that the grounds taken
W.P.(C) No.22514 of 2022 Page 6 of 12
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Reason: Authentication
Location: HIGH COURT OF ORISSA CUTTACK
Date: 20-Jan-2025 11:50:18
// 7 //
in the present writ petition were also taken in the application
under Section 47 CPC, which is already dismissed. Thus, the
present writ petition is not maintainable and is liable to be
dismissed.
5. Heard learned counsel for the parties. Perused the case
record and the case laws relied upon by learned counsel for the
parties. Primary question that arises for consideration is whether
the present writ petition should be entertained against the
order/award under Annexure-1? Before delving into the
aforesaid technical aspect, this Court perused the impugned
order/award under Annexure-1. Para-03 (sic ’02’) of Annexure-1
reads as under:-
“03. On-going through documents placed on record,
verifying the status of the applicant under the said Act (sic
‘act’), as the location of the applicant enterprise is within
council jurisdiction, notice for acceptance of reference &
appearance was sent to NA. The proof of service of notice
to NA is on record, however, NA did not appear. Notice
u/s 18(2) for conciliation under the said Act was issued on
15.05.2018, however, NA did not appear during the
hearing on 09.01.2019 & 15.04.2019, the service of notice
is on record, however, NA neither appeared nor has given
any intimation for their absence. Conciliation was
terminated & notice u/s 18 (3) for arbitration was issued
on 30.04.2019, the proof of service to NA is on record.
The matter was listed for Arbitration on 27.11.2019,
22.01.2020, 26.02.2020 & 19.08.2020, here again NA did
not turn up. Council directed the applicant to publish final
notice in Daily Newspaper published from (sic ‘form’)
normal place of business of the NA. Applicant placed on
record the Paper named “Sarbasadharan dated
15.10.2020” published from Bhuvaneswar, the normal
place of business of the NA, in which the notice to NA for
appearing before the council on 25.11.2020 was
published. The notice was also delivered on the What’s
upon of the NA also. As NA has not appeared in spite ofW.P.(C) No.22514 of 2022 Page 7 of 12
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Signed by: SASANKA SEKHAR SATAPATHY
Reason: Authentication
Location: HIGH COURT OF ORISSA CUTTACK
Date: 20-Jan-2025 11:50:18// 8 //
proper service, Council decided to close the matter for
Final orders,”
The Petitioner has been described as ‘None-Applicant’ (NA) in
the impugned order/award. On perusal of the relevant portion of
the impugned order/award, it is manifest that notice for
acceptance of the Reference and appearance was sent to the
Petitioner. The proof of service of notice on the Petitioner was
also available in the record of the Council. Notice under Section
18 (2) of the MSMED Act for conciliation under the said Act
was issued on 15th May, 2018, but the Petitioner did not appear
during the conciliation proceeding on 19th January, 2019 and 15th
April, 2019. The Petitioner in the present writ petition also
admitted to have received the auto-generated emails of the
proceeding before the Council. In spite of notice, Petitioner did
not appear before the Council; thus the conciliation proceeding
was terminated by the Council and notices under Section 18(3) of
the MSMED Act was issued on 30th April, 2019 for arbitration.
But the Petitioner did not appear before the Council at Nagpur.
Arbitration was taken up on 27th November, 2019, 22nd January,
2020, 26th February, 2020 and 19th August, 2020, but the
Petitioner did not participate in spite of valid service of notice. It
also appears from the award that the Council directed the
Applicant to publish the final notice of arbitration in daily
newspaper published from the place where the Petitioner
ordinarily carries on its business. Accordingly, paper publication
was made in newspaper ‘Sarbasadharan” on 15th October, 2020
W.P.(C) No.22514 of 2022 Page 8 of 12
Signature Not Verified
Digitally Signed
Signed by: SASANKA SEKHAR SATAPATHY
Reason: Authentication
Location: HIGH COURT OF ORISSA CUTTACK
Date: 20-Jan-2025 11:50:18
// 9 //
at Bhubaneswar. Notice was also delivered to the Petitioner on its
WhatsApp number. Service of notice on the Petitioner is also
admitted to have received from the Council through auto-
generated emails in between 15th December, 2018 to 24th
September, 2020. Admittedly, the Petitioner did not appear
before the Council. The issue raised in the present writ petition
with regard to the inherent jurisdiction of the Council as well as
compliance of mandatory provisions of MSMED Act could have
been raised by the Petitioner by participating in the proceeding
before the Council.
6. There cannot be any quarrel on the ratio decided in the
case laws relied upon by the Petitioner. Exercising discretionary
power under Article 227 of the Constitution as an alternative to
the efficacious remedy under Section 34 of the Arbitration Act
read with Section 19 of the MSMED Act is an exception and not
a rule. In the case of Kusum Ingots and Alloys Limited (supra),
the Hon’ble Supreme Court held as under:-
“Forum Conveniens We must, however, remind
ourselves that even if a small part of cause of action arises
within the territorial jurisdiction of the High Court, the
same by itself may not be considered to be a determinative
factor compelling the High Court to decide the matter on
merit. In appropriate cases, the Court may refuse to
exercise its discretionary jurisdiction by invoking the
doctrine of forum conveniens……”
6.1 In the instant case, although it is submitted by
Mr. Panigrahy, learned counsel for the Petitioner that a part of
cause of action arose within the local jurisdiction of this Court,
but that itself does not compel this Court to decide the matter on
W.P.(C) No.22514 of 2022 Page 9 of 12
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Signed by: SASANKA SEKHAR SATAPATHY
Reason: Authentication
Location: HIGH COURT OF ORISSA CUTTACK
Date: 20-Jan-2025 11:50:18
// 10 //
merit. In the instant case, more particularly when the question
with regard to opportunity to the Petitioner before the Council
has been raised, this Court feels it appropriate not to exercise its
extraordinary jurisdiction by invoking doctrine of “Forum
Conveniens”. In the case of M/s Gulf Oil Corporation (New
GOCL), Hyderbad Vs. the Andhra Pradesh Micro and Small
Enterprises Facilitation Council, Vijayawada; 2020 SCC
OnLine AP 9, it is held as under:-
“……Though the contention of the learned counsel for the
petitioner that the order passed by the Council is contrary
to the provisions of procedure prescribed
under Arbitration and Conciliation Act, such issue can be
decided by the statutory authority provided under Section
19 of MSMED Act or under Section 34 of the Arbitration
and Conciliation Act. Hence, the contention of the learned
counsel for the petitioner is rejected, while upholding the
contention of the learned counsel for the respondent,
giving liberty to raise issue before the competent statutory
authority under Section 19 of MSMED Act or
under Section 34 of Arbitration and Conciliation Act.
xx xx xx
As per the law declared in long line of perspective
pronouncements, the jurisdiction of this Court
under Article 226 of Constitution of India, after
commencement of arbitration proceedings, is limited and
more particularly against an award passed under the Act,
as such the Court cannot exercise power under Article
226 of Constitution of India to issue any order in this writ
petition.(2004) 10 SCC 656 AIR 1999 SC 463 MSM,J In
view of my foregoing discussion, I find no merit in the writ
petition and the writ petition deserves to be dismissed, as
not maintainable.”
In the case of M/s India Glycols Limited and another Vs. Micro
and Small Enterprises Facilitation Council Medchal Malkajgiri
W.P.(C) No.22514 of 2022 Page 10 of 12
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Reason: Authentication
Location: HIGH COURT OF ORISSA CUTTACK
Date: 20-Jan-2025 11:50:18
// 11 //
and others; 2023 SCC OnLine SC 1852, Hon’ble Supreme
Court took a similar view.
6.2 Further, violation of any provisions of the Arbitration Act
and/or the MSMED Act can be effectively adjudicated by
competent Court in an application under Section 34 of the
Arbitration Act read with Section 19 of the MSMED Act.
7. It would not be out of context to record that the matter
was listed on 19th December, 2024 when Mr. Panigrahy, learned
counsel for the Petitioner prayed for adjournment to take
instruction as to whether any application under Section 47 CPC
raising the grounds stated in the writ petition was filed in the
Execution Case or not. Today, Mr. Panigrahy, learned counsel
for the Petitioner submits that in the meantime application under
Section 47 CPC has already been dismissed. It is, however,
submitted that the grounds taken in the writ petition was not
raised before the Executing Court in the application under
Section 47 CPC. But, Mr. Mohanty, learned counsel for the
Opposite Party No. 2 seriously disputes the same and submits
that it is on the grounds taken in the writ petition, the petition
under Section 47 CPC was filed. Be that as it may, the
application under Section 47 CPC was not placed before this
Court for its perusal to appreciate the aforesaid submission.
However, it can safely be said that the Petitioner could have
raised the grounds taken in this writ petition before the Executing
Court in the application under Section 47 CPC.
W.P.(C) No.22514 of 2022 Page 11 of 12
Signature Not Verified
Digitally Signed
Signed by: SASANKA SEKHAR SATAPATHY
Reason: Authentication
Location: HIGH COURT OF ORISSA CUTTACK
Date: 20-Jan-2025 11:50:18
// 12 //
8. In view of the foregoing discussions, this Court is of the
firm opinion that factual adjudication of the disputed questions of
fact is involved in the present writ petition. But, the Petitioner,
without availing the efficacious statutory remedy, has
approached this Court under Articles 226 and 227 of the
Constitution for which this Court is not inclined to exercise its
discretionary power under Article 227 to entertain the instant writ
petition.
9. Accordingly, the writ petition stands dismissed.
However, dismissal of the writ petition shall not be a bar for the
Petitioner to avail the statutory remedy in accordance with law.
In the facts and circumstances of the case, there shall be no order
as to costs.
10. Interim order dated 14th September, 2022 passed in IA
No.11992 of 2022 stands vacated.
(K.R. Mohapatra)
Judge
High Court of Orissa, Cuttack
Dated the 17th day of January, 2025/s.s.satapathy
W.P.(C) No.22514 of 2022 Page 12 of 12
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