Andhra Pradesh High Court – Amravati
Tirumala Tirupathi Devasthanams vs M/S Micro And Small Enterprises … on 28 March, 2025
1
*HIGH COURT OF ANDHRA PRADESH :: AMARAVATI
+WRIT PETITION No.28931 of 2023
Between:
#Tirumala Tirupathi Devasthanams ...PETITIONER
AND
$M/s Micro And Small Enterprises Facilitation Council ...RESPONDENT(S)
and Others
JUDGMENT PRONOUNCED ON 28.03.2025
THE HON'BLE DR.JUSTICE K. MANMADHA RAO
1. Whether Reporters of Local newspapers
may be allowed to see the Judgments?
- Yes -
2. Whether the copies of judgment may be marked to Law
Reporters/Journals
- Yes -
3. Whether Their Ladyship/Lordship wish to see the fair
copy of the Judgment?
- Yes -
___________________________________
DR.JUSTICE K. MANMADHA RAO
2
* THE HON'BLE DR.JUSTICE K. MANMADHA RAO
+WRIT PETITION No.28931 of 2023
% 28.03.2025
# Between:
#Tirumala Tirupathi Devasthanams ...PETITIONER
AND
$M/s Micro And Small Enterprises Facilitation Council ...RESPONDENT(S)
and Others
! Counsel for the Petitioner : Sri V. Venugopal rAo
Ms. V. Dyumani
! Counsel for Respondents: Sri G. Pedababu
Sri P. Venkata Subbaiah
<Gist :
>Head Note:
? Cases referred: 1. MANU/AP/1256/2022:AIR 2022 AP 150
2. 2021 SCC OnLine SC 439
3. (2023) 6 SCC 401
4 (2009) 1 SCC 267
5 (2005) 8 SCC 618
6 (2020) 15 SCC 706
7 (2022) SCC 75
8 (2023) 6 SCC 401
9. CRP Nos.112 of 2022 & batch dated 2.2.2022
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APHC010558812023
IN THE HIGH COURT OF ANDHRA PRADESH
AT AMARAVATI [3310]
(Special Original Jurisdiction)
FRIDAY ,THE TWENTY EIGHTH DAY OF MARCH
TWO THOUSAND AND TWENTY FIVE
PRESENT
THE HONOURABLE DR JUSTICE K MANMADHA RAO
WRIT PETITION NO: 28931/2023
Between:
Tirumala Tirupathi Devasthanams ...PETITIONER
AND
M/s Micro And Small Enterprises Facilitation Council and ...RESPONDENT(S)
Others
Counsel for the Petitioner:
1. V.DYUMANI (SC for TTD)
Counsel for the Respondent(S):
1. G RAMA CHANDER RAO
2. VENKATA SUBBAIAH POGULA
The Court made the following:
ORDER:
This writ petition is filed under Article 226 of the Constitution of India for
the following relief:
“…..to issue a writ order or direction particularly in the nature of a Writ of Prohibition restraining
the 1st Respondent in continuing the proceedings in Reference No 21C/IFC/2022/1669 Application No
UDYAMAP100007461/S/00002 and to declare the proceeding in the Reference No 21C/IFC/2022/1669
Application No IJDYAMAP10 0007461/S/00002 as without jurisdiction and beyond the jurisdiction and
scope of the 1st Respondent under the Micro Small and Medium Enterprises Act 2006 and consequently
direct the 1st Respondent to forthwith drop all further proceedings pursuant to Reference No 2
IC/IFC/2022/1669 Application No UDYAMAP100007461/S/00002 and pass……”
4
2. Brief facts of the case are that the 1st Respondent issued an
“Intimation” dated 25-05-2021 to the petitioner demanding payment of an
amount of Rs. 58,50,23,610/-. Challenging the said Intimation, the petitioner
filed W.P.No.18584 of 2021 before this Court and this Court permitted the
petitioner to treat the said intimation as a show cause notice and submit its
objections. But subsequent to filing of the said writ petition, the claim of the
respondents No.2 and 3 was settled and the same was brought to the notice
of the 1st respondent vide Memo dated 30.08.2022. As the claims between
the petitioner and the respondents No.2 and 3 were settled, the petitioner
asked the 1st respondent to drop all further proceedings before it. However, to
the shock and surprise of the petitioner, the 3 rd respondent filed reply Memo
dated 21.11.2022 stating that the no-due certificate ‘was forced out of’ it for
the purpose of paying bills, which is illegal and unlawful. It is stated that the
1st respondent should have dropped all further proceedings before it in the
light of the Memo filed by the petitioner and the communication addressed to it
by respondent No. 2 and 3. Instead, the respondents No.2 and 3 are trying to
make the 1st respondent adjudicate on the application that was withdrawn by
them. The 1st respondent is entertaining such requests and forcing the
petitioner to participate in the proceedings before it. The conduct of the
respondents in this regard is illegal and arbitrary. It is stated that
Respondents 2 and 3 initiated Arbitration proceedings against the Petitioner.
The Sole Arbitrator appointed by Respondents 2 and 3 was proceeding at
lightning speed and was about to grant the entire claim and that the Petitioner
5
timely took steps against the said proceedings as the Arbitrator had no
jurisdiction under the said Construction Agreement. The construction
Agreement provided for Arbitration for disputes below Rs.50,000/-. The
Agreement also specifically provides that all claims above Rs.50,000/- have to
be adjudicated by a competent Civil Court by way of a Civil Suit. Considering
the same, this Hon’ble Court in CMA 220 of 2021, filed by the Petitioner,
granted stay of all further proceedings before the said Arbitrator. The said
CMA is still pending before this Hon’ble Court. The Respondents 2 and 3, later
withdrew their claim before the said Arbitrator after their dues were settled in
October/November 2021. It is stated that in addition to all the amounts
received from the petitioner, the respondents No.2 and 3 have initiated the
complaint before the 1st respondent seeking a sum of Rs.55,30,81,823/- plus
interest to the tune of Rs.35,05,84,167/- (Total : Rs.90,36,65,990/-), which is
illegal and arbitrary. Hence, the present writ petition.
3. This Court vide order dated 04.11.2023, while issuing Notice before
admission, has granted direction as under:
“……..Since the jurisdiction of the respondent No.1 is raised in this writ
petition, the matter is Admitted and stay of all further proceedings before the
respondent No.1 is granted, pending further orders.”
4. The counter affidavit has been filed by the respondents No.2 and 3.
While denying the allegations made in the petition, inter alia, contended that,
these respondents have lodged two complaints online, UDAYAM-AP-10-
0007461.5/00001, on 25-05-2021 for a principal amount of Rs.73,61,14,782/-
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and UDAYAM-AP-10-0007461.S/00002 for another principal amount of
Rs.58,50,23,610/- on 25-05-2021. The Petitioner filed a writ petition
challenging only UDAYAM-AP-10-0007461.S/00002 through WP No. 18584 of
2021, and the Hon’ble Court has permitted to treat the same as show cause
notice and submit its objections. Subsequently, the 2nd Respondent has
withdrawn the said UDAYAM-AP-10-0007461.S/00002, and as such, the
same has become infructuous. It is stated that the 2nd Respondent has raised
his claims in addition to the 44th & Final Bill, for Rs. 7,64,15,841 on 05-11-
2020, out of which Rs.2,64,15,841/-was paid on 05-12-2020 and 07-12-2020.
The Writ petition’s outstanding amount of Rs. 5,00,00,000/- was due. Before
the 44th & Final Bill was paid, the 2nd respondent was appointed M.
Jaganmohan Rao and that the said M. Jaganmohan Rao unilaterally
appointed himself as arbitrator and issued notices to the Writ Petitioner and
this Respondent. Upon receipt of the notices, Writ Petitioner stopped
payment of the admitted amount under the 44th and Final Bill, due to which,
the 2nd Respondent was in severe financial distress.
It is stated that the Indian Bank, Seethammadhara Branch, on
22.04.2021 issued notices for regularization of Open Cash Credit (OCC) limit
and on 12.05.2021, the bank issued a notice asking the 2 nd respondent to pay
a minimum of Rs. 10.00 crores, failing which the same will be flagged as NPA
on 31-05-2021 and SARFAESI proceedings will be started on 01-06-2021. As
this Respondent was reeling under severe financial distress, it approached the
Writ petitioner for payment of the outstanding admitted 44th & Final Bill, and
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on 21-09-2021, the Writ Petitioner agreed (a) to release the balance payment
of Rs. 5,00,00,000/- passed under 44th & Final Bill; (b) to release service tax
component @4.944% for the work done in the GST regime i.e., from
01.07.2017; (c) It was decided to Release labour cess recovered in the final
bill as per agreement conditions. Despite agreeing to release the payments
without doing so on 11-10-2021, Executive Engineer-III, requested these
respondents to withdraw all the cases filed against the TTD, withdraw the
appointment of the sole arbitrator and submit a receipt for full and final
settlement of all claims against the TTD relating to the subject work so as to
release the balance payment.
It is further stated in the counter affidavit that on 30.10.2021, 44 th bill
has been released. However, other payments were not released, so on
01.11.2021, then this respondent again addressed a letter to the Executive
Officer, TTD, for the release of service Tax reimbursement, the release of
2.5% retention money, reimbursement of labour cess payment, release of
original bank guarantees, issuance of experience certificate and withdrawl of
all civil and criminal cases filed by TTD against M/s M.Nagireddy & Company
and this respondent as agreed in the meeting held on 21.09.2021. It is further
stated that as the sole arbitrator has unilaterally appointed himself, even prior
to the meeting, these respondents, have decided to withdraw the same and
accordingly in CMA 220 of 2021, these respondents have submitted the same
to the Hon’ble Division bench. The complaint before the lokayuktha was in
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relation to the non-release of the 44th and Final Bill. As it was agreed to pay
the said amount, it was withdrawn.
It is mainly stated in the counter that the 2nd respondent is a registered
small entity under the MSMED Act, 2006 so the 2nd respondent is entitled to
file their claims before the 1st Respondent. As held by this Hon’ble Court in
Dalapathi Constructions vs. The State of Andhra Pradesh and Ors. 1 ,
wherein, it was held that there is nothing in the MSME Act which provides that
the registration for a particular activity will render an enterprise liable not to be
regarded as a micro, small or medium enterprise for any other activity. Once
registered, the status of the enterprise is that of a registered enterprise under
the MSME Act, and all the provisions of the MSME Act have to apply with full
force. Further as held by the Hon’ble Supreme Court M/s. Silpi Industries vs
Kerala State Road Transport Corporation 2 and Gujarat State Civil
Supplies Corporation Ltd., vs. Mahakali Foods (P) Ltd.,3 , on the issue of
jurisdiction of the council, it was held that :
“52.1. Chapter V of the MSMED Act, 2006, would override the
provisions of the Arbitration Act, 1996. 52.2. No party to a dispute with regard
to any amount due under Section 17 of the MSMED Act, 2006 would be
precluded from making a reference to the Micro and Small Enterprises
Facilitation Council, though an independent arbitration agreement exists
between the parties.”
1
MANU/AP/1256/2022: AIR 2022 AP 150
2
2021 SCC OnLine SC 439
3
(2023) 6 SCC 401
9
So, the 1st Respondent is entitled to be approached by the 3rd
Respondent for adjudication of claims, including a determination as to whether
full satisfaction was given under duress or not. Therefore, prayed to dismiss
the present writ petition as devoid of merits.
5. Heard Sri V. Venugopal Rao, learned Senior counsel representing
Ms. V.Dyumani, learned counsel appearing for the petitioner and Sri G.
Pedababu, learned counsel representing Sri P. Venakata Subbaiah, learned
counsel appearing for the respondents.
6. On hearing, learned Senior Counsel while reiterating the contents
made in the petition, submits that, the Respondents 2 and 3 have initiated
Arbitration proceedings against the Petitioner and that the Sole Arbitrator
appointed by Respondents 2 and 3 was proceeding at lightning speed and
was about to grant the entire claim. He submits that the Petitioner timely took
steps against the said proceedings as the Arbitrator had no jurisdiction under
the said Construction Agreement. The construction Agreement provided for
Arbitration for disputes below Rs.50,000/-, and that the Agreement also
specifically provides that all claims above Rs.50,000/- have to be adjudicated
by a competent Civil Court by way of a Civil Suit. Considering the same, this
Hon’ble Court in CMA 220 of 2021, filed by the Petitioner, granted stay of all
further proceedings before the said Arbitrator and the said CMA is still pending
consideration before this Hon’ble Court. He further submits that the
Respondents 2 and 3, later withdrew their claim before the said Arbitrator after
their dues were settled in October/November 2021. He further submits that
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the respondents No.2 and 3 have initiated a complaint against the Petitioner
before the Lokayukta. Later, once the claim was settled as aforesaid and after
the amount was paid, the Respondents 2 and 3 withdrew the complaint before
the Lokayukta as well. He further submits that the Micro, Small and Medium
Enterprises Development Act, 2006 was enacted by the Union Government
for facilitating promotion, development and enhancing competitiveness of
Micro, Small and Medium Enterprises and for matters connected there with or
incidental thereto and the said Act is applicable to Micro, Small and Medium
Enterprises which are defined in the said Act in Clauses (e), (g) and (h) of
Sec.2 of the Act. He further submits that among other requirements, a Micro
Enterprise is defined as an Enterprise where investment in Plant and
Machinery does not exceed Rs.25 lakhs. A Small Enterprise is defined as an
Enterprise where the Plant and Machinery is more than Rs.25 lakhs, but does
not exceed Rs.5 crores. Similarly a Medium Enterprise is defined as an
Enterprise where the investment in Plant and Machinery is more than Rs.5
crores, but does not exceed Rs.10 crores.
7. Learned Senior counsel further submits that the Act applies to
“Buyer” and “Supplier” within the meaning of those expressions in Clauses (d)
and (n) of Sec.2 of the Act. The “Buyer” is whoever buys any goods or
receives any services from a “Supplier” for consideration. Similarly, “Supplier”
means a Micro or Small Enterprise which has filed Memorandum under Sec.
8(1) of the Act. A plain perusal of the above statutory scheme would make it
amply clear that the said Act has no application to the petitioner or to
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respondents No.2 and 3. He further submits that the claim of the respondent
is way beyond the monetary limits imposed under the statute. At any rate, the
petitioner is not a buyer and the respondents No.2 and 3 are not suppliers
within the meaning of those expressions under the Act. He further submits
that the 1st respondent has no authority to entertain the claim per se. At any
rate, the conduct of the 1st respondent in continuing the proceedings despite
the representations given by the petitioner and the respondents No.2 and 3
withdrawing the said proceedings, is illegal and arbitrary. Therefore learned
counsel requests this court to pass appropriate orders.
8. Per contra, learned counsel appearing for the respondents also while
reiterating the contents made in the counter affidavit, argued that, on
30.10.2021 the 44th Bill has been released. However, other payments were
not released. So, on 01.11.2021 the petitioner addressed a letter to the
Executive Officer, TTD, for the release of service tax reimbursement, the
release of 2.5% retention money, reimbursement of labour cess payment,
release of original bank guarantees, issuance of experience certificate and
withdrawal of all civil and criminal cases filed by TTD against M/s M.
Nagireddy & Company and the petitioner as agreed in the meeting held on
21.09.2021. Reminder letters through email were issued on 17-11-2021 and
18-11-2021 and that on 18-11-2021, the Superintending Engineer-III, through
Roc.No.TTD.56021(31)/24/2019-SE III SEC-TTD, issued an urgent note to
Executive Engineer-III for (1) releasing the Service Tax amounts; (2) Withdraw
all the Civil & Criminal Cases by T.T.D. against the contractor; and (3) Any
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other relevant pending payments. He further submits that in January 2022,
2.5% retention money was released, but to date, service tax reimbursement
and reimbursement of labour cess payments have not been paid despite
agreeing in the meeting on 21-09-2021. Learned Senior Counsel mainly
contended that under Section 18 (3) of the MSMED Act, 2006, after the failure
of the conciliation under Section 18 (2), the 1st Respondent will either act as
an arbitrator or refer the dispute to an institution or centre providing alternate
dispute resolution services for such arbitration and the provisions of Arbitration
and Conciliation Act, 1996 will apply. So, the arbitrator will be competent to
decide whether a full and final settlement letter was issued under duress or
not.
9. Learned Senior counsel further submits that , as the sole arbitrator
has unilaterally appointed himself, even prior to the meeting, the respondents
have decided to withdraw the same in CMA No.220 of 2021 and accordingly,
they have submitted the same before a Division Bench of this Court. Furterh,
the complaint before the lokayukta was in relation to the non-releas of the 44th
and Final Bill as it was agreed to pay the said amount, it was withdrawn. He
further submits that as the respondents are a registered small entity under the
MSMED Act 2006, so they are entitled to file their claims before the 1 st
respondent.
10. To support his contentions, learned counsel for the respondents
has relied upon a catena of decisions of Hon’ble Supreme Court (1) In a case
13
of National Insurance Co. Ltd v. Boghara Polyfab (P) Ltd.,4, wherein the
Apex Court held that :
Some illustrations (not exhaustive) as to when claims are arbitrable and when they are not, when
discharge of contract by accord and satisfaction are disputed, to round up the discussion on this subject
:
(i) A claim is referred to a conciliation or a pre-litigation Lok Adalat. The parties negotiate and arrive at a
settlement. The terms of settlement are drawn up and signed by both the parties and attested by the
Conciliator or the members of the Lok Adalat. After settlement by way of accord and satisfaction, there
can be no reference to arbitration.
(ii) A claimant makes several claims. The admitted or undisputed claims are paid. Thereafter
negotiations are held for settlement of the disputed claims resulting in an agreement in writing settling all
the pending claims and disputes. On such settlement, the amount agreed is paid and the contractor also
issues a discharge voucher/no claim certificate/full and final receipt. After the contract is discharged
by such accord and satisfaction, neither the contract nor any dispute survives for consideration. There
cannot be any reference of any dispute to arbitration thereafter.
(iii) A contractor executes the work and claims payment of say Rupees Ten Lakhs as due in terms of the
contract. The employer admits the claim only for Rupees six lakhs and informs the contractor either in
writing or orally that unless the contractor gives a discharge voucher in the prescribed format
acknowledging receipt of Rupees Six Lakhs in full and final satisfaction of the contract, payment of the
admitted amount will not be released. The contractor who is hard pressed for funds and keen to get the
admitted amount released, signs on the dotted line either in a printed form or otherwise, stating that the
amount is received in full and final settlement. In such a case, the discharge is under economic duress
on account of coercion employed by the employer. Obviously, the discharge voucher cannot be
considered to be voluntary or as having resulted in discharge of the contract by accord and satisfaction.
It will not be a bar to arbitration.
(2) SBP & Co. versus Patel Engineering Ltd. And another 5 ;
(3) Deep Industries Limited versus Oil and Natural Gas
Corporation Limited and another6;
(4) Bhaven Construction through authorized signatory
Premjibhai K.Shah versus Executive Engineer, Sardar Sarovar Narmada
Nigam Limited and another7
(5) Gujarat State Civil Supplies Corporation Limited versus
Mahakali Foods Private Limited (Unit 2) and another8 , wherein it was held
that :
The upshot of the above is that:
(i) Chapter-V of the MSMED Act, 2006 would override the provisions of the Arbitration Act, 1996.
(ii) No party to a dispute with regard to any amount due under Section 17 of the MSMED Act, 2006
would be precluded from making a reference to the Micro and Small Enterprises Facilitation Council,
though an independent arbitration agreement exists between the parties.(iii) The Facilitation Council,4
(2009) 1 Supreme Court Cases 267
5
(2005) 8 Supreme Court Cases 618
6
(2020) 15 Supreme Court Cases 706
7
(2022) 1 Supreme Court Cases 75
8
(2023) 6 Supreme Court Cases 401
14which had initiated the Conciliation proceedings under Section 18(2) of the MSMED Act, 2006 would be
entitled to act as an arbitrator despite the bar contained in Section 80 of the Arbitration Act.
(iv) The proceedings before the Facilitation Council/institute/centre acting as an arbitrator/arbitration
tribunal under Section 18(3) of MSMED Act, 2006 would be governed by the Arbitration Act, 1996.
11. Learned counsel for the respondents while relying upon the above
decisions of Hon’ble Supreme Court, submits that, the 1st respondent is
entitled to be approached by the 3rd respondent for adjudication of claims,
including a determination as to whether full satisfaction was given under
duress or not. Therefore, in view of the above facts and circumstances,
learned counsel for the respondents prayed to dismiss the writ petition and
vacate the interim order granted by this Court on 4.11.2023 as well.
12. Perused the material on record.
13. It is the contention of the petitioner’s counsel that the respondents
No.2 and 3 have initiated a complaint against the petitioner before the 1st
respondent seeking for a sum of Rs.55,30,81,823/- plus interest to the tune of
Rs.35,05,84,167/- (total Rs.90,36,65,690/-), which is illegal and arbitrary.
Further it is also contended that as per Articles of Agreement (22.1 and 22.2)
settlement of disputes; settlement of claims and jurisdiction, stated as follows:
22.1 If any dispute of difference of any kind whatsoever arises between the department and
the Contractor in connection with, or arising out of the Contract, whether during the progress of the
works or after their completion and whether before or after the termination, abandonment or breach of
the Contract, it shall in the first place, be referred to and settled by the Engineer-in-charge who shall,
within a period of thirty days after being requested by the Contractor to do so. give written notice of his
decision to the Contractor. Upon receipt of the written notice of the decision of the Engineer-in-Charge
the Contractor shall promptly proceed without delay to comply with such notice of decision.
22.2 If the Engineer-in-Charge fails to give notice of his decision in writing within a period of
thirty days after being requested or if the Contractor is dissatisfied with the notice of the decision of the
Engineer-in-Charge, the Contractor may within thirty days after receiving the notice of decision appeal to
the Department who shall offer an opportunity to the contractor to be heard and to offer evidence in
support of his appeal, the Department shall give notice of his decision within a period of thirty days after
the Contractor has given the said evidence in support of his appeal, subject to arbitration, as hereinafter
provided. Such decision of the Department in respect of every matter so referred shall be final and
15binding upon the Contractor and shall forthwith be given effect to by the Contractor, who shall proceed
with the execution of the works with all due diligence whether he requires arbitration as hereinafter
provided, or not. If the Department has given written notice of his decision to the Contractor and no claim
to arbitration, has been communicated to him by the Contractor within a period of thirty days from receipt
of such notice the said decision shall remain final and binding upon the Contractor. If the Department fail
to give notice of his decision, as aforesaid within a period of thirty days after being requested as
aforesaid, or if the Contractor be dissatisfied with any such decision, then and in any such case the
contractor within thirty days after the expiration of the first named period of thirty days as the case may
be, require that the matter or matters in dispute be referred to arbitration as detailed below:-
Settlement of Claims:
Settlement of claims for Rs.50,000/- and below by Arbitration.
All disputes or difference arising of or relating to the Contract shall be referred to the
adjudication as follows:
Claims up to a value of Rupees 10,000/-
Superintending Engineer, (or another circle in the same department).
Claims above Rs. 10,000/- and up to Rupees 50,000/-. Another Chief Engineer, [from the
Government Department of A.P.]The arbitration shall be conducted in accordance with the provisions of Indian Arbitration an
Conciliation Act 1996 or any statutory modification thereof.
The arbitrator shall state his reasons in passing the award.
Claims above Rs. 50,000/-.
All claims of above Rs.50,000/- are to be settled by a Civil Court of competent jurisdiction by of
Civil suit and not by arbitration.
A reference for adjudication under this clauses shall be made by the contractor within six mo
from the date of intimating the contractor of the preparation of final bill or his having access payment
whichever is earlier.
22.3 JURISDICTION:
For the purpose of this agreement all the transactions shall be deemed to have taken place
within the state of ANDHRA PRADESH and the courts in ANDHRA PRADESH shall have jurisdiction
over the matters arising under or out of this agreement.
14. However, it is the contention of the respondents’ counsel that the
44th Bill has been released, however payments were not released so the
respondents have addressed a letter to the Executive Officer, tTD for the
release of Service Tax reimbursement, the release of 2.5% retention money
and that in January 2022, 2.5% retention money was released. Further,
service tax reimbursement and reimbursement of labour cess payments have
not been paid despite agreeing in the meeting on 21.09.2021. it is also
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contended 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 and that the
Facilitation Council/Institute/Centre acting as an Arbitral Tribunal by virtue of
Section 18(3) of the MSMED Act 2006 would be competent to rule on its own
jurisdiction as also the other issues in view of Section 16 of the Arbitration Act
1996.
15. As seen from the Minutes of the Meeting on “Construction of Multi
Storey Complex (Sri Padmavathi Nilayam) at Tiruchanoor” with regard to
releasing of payments to the contractor, held on 21.09.2021 by the Executive
Officer, TTD, Tirupati, wherein it was observed that:
“2) Releasing of the Service Tax component @ 4.944% for the work done in
the GST regime, i.e., from1.07.2017: Service Tax component @ 4.944% deducted,
while arriving the rates for the items for the work done in GST regime, the CE is
requested to examine the same in consultation with Finance Department.
(Action: FA&CAO & CE).
3) Release of labour cess recovered in the final bill: It is decided to release the
labour cess recovered in the final bill, as per the agreement conditions.
(Action: CE)
16. A learned Division Bench of this Court in “Bhajrang Cranes v.
Shiram Transport Finance Company Ltd.9,”wherein it was held as follows:
“46. The object of minimizing judicial intervention while the matter is in the process of being
arbitrated upon, will certainly be defeated if the High Court could be approached under Article
227 or under Article 226 of the Constitution against every order made by the arbitral tribunal.
Therefore, it is necessary to indicate that once the arbitration has commenced in the arbitral
tribunal, parties have to wait until the award is pronounced unless, of course, a right of appeal
is available to them under Section 37 of the Act even at an earlier stage.
47. We, therefore, sum up our conclusions as follows:
9
C.R.P.Nos. 112 of 2022 and batch dated 02.02.2022
17
(i) xxx…………xxx……….xxx
(ii) xxx…………xxx……….xxx
(vi) Once the matter reaches the arbitral tribunal or the sole arbitrator, the High Court would
not interfere with orders passed by the arbitrator or the arbitral tribunal during the course of
the arbitration proceedings and the parties could approach the court only in terms of Section
37 of the Act or in terms of Section 34 of the Act.
(xii) xxx…………xxx……….xxx
11.Having regard to the above, it is clear that, the order passed by the Arbitral Tribunal during
Arbitration proceedings cannot be challenged either under Article 226 or 227 of the
Constitution of India, unless a remedy is provided, under Section 34 of the Act. The parties
have to wait till the award is passed and then challenge the same. However, the learned
Counsel for the petitioner would contend that, the Court has got the power to se-aside the
Order passed by the Arbitrator in exceptional cases, wherein one party is remediless under
the Statute or a clear bad faith is shown by one of the parties.”
……
13. From the observation made by the Hon’ble Apex Court and having regard to the facts in
issue, it is pellucidly clear that only after completion of arbitral proceedings and if the Tribunal
passes an Order against the petitioner, it can raise these grounds in the Appeal filed under
Section 34 of the Act. Tested on the above anvil, the argument of the Petitioner cannot be
accepted in the given set of circumstances. Having regard to the above, the Order under
challenge requires no interference and accordingly, the Civil Revision Petitions stands
disposed off giving liberty to the petitioner to raise these issues in the Appeal if filed under
Section 34 of the Act after completion of arbitral proceedings. No order as to costs”.
17. On a perusal of the above decisions of Hon’ble Supreme Court
and having regard to the facts in issue, it is pellucidly clear that only after
completion of arbitral proceedings and if the Tribunal passes an Order
against the petitioner, it can raise these grounds in the Appeal filed under
Section 34 of the Act. Therefore, whatever the contentions raised by the
petitioner cannot be accepted. Further the Council-1st respondent has no
power to review its own order that once conciliation is closed and posted
for arbitration under Section 18(3), that order to closure cannot be reviewed
as contended by the 2nd respondent and that the parties could approach
the court only in terms of Section 37 of the Act or in terms of Section 34 of
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the Act. In the instant case, the matter has been referred to Arbitrator as
per Section 18(3) of the MSMED Act. Therefore, the petitioner has a
remedy under Section 34 of the Act to challenge the award by way of an
Appeal after completion of arbitral proceedings.
18. Hence, the proceedings under challenge in this writ petition
warrant no interference. Finding no merit in the instant petition and the
same is liable to be dismissed
19. Accordingly, the Writ Petition is dismissed. No costs.. As a
sequel, all the pending miscellaneous applications shall stand closed.
______________________________
DR. K. MANMADHA RAO, J.
Date : 28 -03-2025
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HON'BLE DR. JUSTICE K. MANMADHA RAO
WRIT PETITION No. 28931 of 2023
Date : 28 .03.2025
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