Jammu & Kashmir High Court – Srinagar Bench
Ut Of Jammu & Kashmir vs M/S Gulati Metals & Alloys on 10 February, 2025
Author: Rahul Bharti
Bench: Rahul Bharti
HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT SRINAGAR
Reserved on : 13.03.2024.
Pronounced on : 10.02.2025.
Case:- CM(M) No. 385/2023
1. UT of Jammu & Kashmir
through Chief Engineer System & Operation Wing, Kashmir.
2. Executive Engineer TLMD-IV, JKPTCL Pampore.
.....Petitioners
Through: Mr. Ab. Rashid Malik, Sr. Advocate with
Mr. Mohd Younis Hafiz, Advocate
Vs
M/s Gulati Metals & Alloys, Lane No. 3, Phase-II
SIDCO Industrial Complex, Bari Brahmana, Jammu
through its Sole Proprietor
Sh. Sandeep Gulati, Aged 55 years,
S/o Late Sh. Wazir Chand Gulati,
C/o Lane No. 3, Phase-II SIDCO Industrial Complex,
Bari Brahmana, Jammu.
..... Respondent
Through: Mr. Karman Singh Johal, Advocate
Coram: HON'BLE MR. JUSTICE RAHUL BHARTI, JUDGE
JUDGMENT
01. This petition filed by reference to article 227 of the
Constitution of India by two petitioners finds its nemesis at the very
first outing by a very sharp and short submission of Mr. Karman
Singh Johal, Advocate for the respondent-caveator submitting that
there is no scope for the petitioners to invoke and no
maneuverability for this Court to grant indulgence for supervisory
jurisdiction under article 227 of the Constitution of India in the
2 CM(M) No. 385/2023
present matter in view of legal position unambiguously settled by
the Hon’ble Supreme Court of India which leaves no scope
whatsoever for the petitioners to enjoy any foothold to agitate and
assail, by a non-statutory route, an award passed under the Micro,
Small & Medium Enterprises Development Act, 2006 (“MSMED Act,
2006” in short). In fact, Mr. Karman Singh Johal, Advocate meets
this Court upfront to submit that in view of the judgment in the
case of “M/s India Glycols Limited and another Vs Micro and
Small Enterprises Facilitation Council, Medchal – Malkajgiri
and others” (2024 AIR SC 285) this Court cannot even venture to
scan and survey the factual contents of the case at the asking of the
petitioners except by over-reaching the mandate of the Hon’ble
Supreme Court of India’s judgment supra and doing an exercise in
futility.
02. Through the medium of this petition, the Chief Engineer,
System & Operation Wing, Kashmir and the Executive Engineer
TLMD-IV, JKPTCL Pampore are the ones asking for setting aside of
an award dated 30.11.2023 passed by the Micro & Small
Enterprises Facilitation Council, (in short “MSEFC”), Jammu in
case No. JK/19/S/11117 under section 18 of MSMED Act, 2006.
03. The award in reference bears a direction unto the two
petitioners to release an amount to the tune of Rs.10,59,460/- (Rs.
86,973/- as principal amount and Rs.9,72,487/- on account of
interest on delayed payments) which is outstanding in respect of
P.O.No. CE/PMM/P-32/S-I/2011-12/8618-29 dated 28.12.2011 as
3 CM(M) No. 385/2023
per claim statement upto 31.12.2019 furnished by the MSE duly
certified Gupta Gupta & Associates LLP and an amount of Rs.
1,42,94,633/- on account of an interest on delayed payment which
is outstanding in respect of P.O.No.CE/PMM/P-06/S-I/2011-
2012/7157-57 dated 02.12.2011 as per statement upto
31.10.2019 furnished by the MSE duly certified Gupta Gupta
Associates LLP.
04. As against the arguments made by Mr. Abdul Rashid
Malik, learned Sr. AAG representing the petitioners aiming to hit at
the said award from all sides,factual as well as legal, Mr. Karman
Singh Johal, Advocate for the respondent draws the attention of this
Court towards para 15 of the Hon’ble Supreme Court of India’s
judgment in the case of “M/s India Glycols Limited” (supra),
wherein it is observed that when the High Court of Telangana had
come to hold that a petition under section 227 of the Constitution of
India was not maintainable in assailing an award under MSMED
Act, 2006, then it was unnecessary for the High Court to have
entered upon the merits of the controversy which arose before the
Facilitation Council.
05. It is by reference to this paragraph of the judgment of the
Hon’ble Supreme Court of India, Mr. Karman Singh Johal, Advocate
sets up a caveat and constraint for this Court not to undertake an
exercise of factual enquiring into the case except at the cost of
precious loss of court’s time and energy and by missing the
mandate of the judgment of the Hon’ble Supreme Court of India.
4 CM(M) No. 385/2023
06. In the aforesaid case of M/s India Glycols Limited and
another, the Facilitation Council, Medchal – Malkajgiri passed an
award on 28.10.2021 decreeing the claim of the MSME governed
unit for a principal amount of Rs.40,29,862/- with interest of
monthly rests at three times the bank rate prevailing on the date of
the award which came to be challenged by recourse to article
226/227 of the Constitution of India which was allowed by the
Single Judge of the High Court of Telangana by holding that the
claim was barred by limitation but the Division Bench came to
reverse the said judgment of the Single Judge by holding that the
petition under article 226/227 of the Constitution of India was not
maintainable in view of the specific remedies provided under
MSMED Act, 2006, but nevertheless the Division Bench had also
came to examine case on merits to hold that the claim was time
barred.
07. The Hon’ble Supreme Court of India refused to entertain
and approve submission that since the judgment of the Division
Bench was suffering from a perversity and, as such, a petition
under article 226 of the Constitution of India ought to have been
entertained. The Hon’ble Supreme Court of India reminded that
once section 18 of the MSMED Act, 2006 provides for recourse to a
statutory remedy for challenging an award under the Act of 1996
and which remedy is subject to the discipline of complying with the
provisions of section 19, then an entertainment of a petition under
article 226/227 of the Constitution of India just in order to obviate a
5 CM(M) No. 385/2023
requisite compliance of requirement of 75% pre-deposit of award
amount under section 19, would defeat the object and purpose of
the special enactment which has been legislated upon by the
Parliament.
08. Mr. Karman Singh Johal, Advocate brings to the notice of
this Court the essence of the particular provisions of the MSMED
Act, 2006 bearing which in perspective it is urged that in case this
Court starts extending indulgence, be it under writ jurisdiction or
supervisory jurisdiction, under article 226/227 of the Constitution
of India, then the very leitmotif of MSMED Act, 2006 is doomed to
suffer frustration and also meaning to provide two hits against an
award one under MSMED Act, 2006 and other under the
Constitution of India through its articles 226/227.
09. Mr. Karman Singh Johal, Advocate, draws out the essence
of MSMED Act, 2006 by referring to and reading of para 20, 21 & 22
of the judgment of the Hon’ble Supreme Court of India in the case of
“Gujarat State Civil Supplies Corporation Ltd. Vs Mahakali
Foods Pvt. Ltd. & another,” 2022 AIR SC 5545. Para 20, 21 & 22
of the said judgment are reproduced hereunder:-
“20. Keeping in view the afore-stated principles of statutory
interpretations as also the proposition of law laid down by this Court
with regard to the general rules of construction, let us proceed to
examine whether the MSMED Act, 2006 is a special enactment
having an effect overriding the Arbitration Act, 1996 which is
perceived to be a general enactment? As stated earlier, the very
object of enacting MSMED Act, 2006 was to facilitate the promotion
and development, and enhance the competitiveness of micro, small
and medium enterprises. The Act also aimed to ensure a timely and
6 CM(M) No. 385/2023smooth flow of credit to the micro, small and medium enterprises,
and to minimize the incidence of sickness. One of the main objects of
the Act was to delete the Interest on Delayed Payments to Small
Scale and Ancillary Industry Undertakings Act, 1993, and to include
stringent provisions as also to provide dispute resolution mechanism
for resolving the disputes of non-payment of dues to the micro and
small enterprises. Thus, the seed of MSMED Act, 2006 had sprouted
from the need for a comprehensive legislation to provide an
appropriate legal framework and extend statutory support to the
micro and small enterprises to enable them to develop and grow into
medium ones.
21. Section 15 to 25 contained in Chapter-V of the MSMED Act,
2006 pertain to the ‘delayed payments to micro and small
enterprises.’ A bare perusal of the said provisions contained in
Chapter-V shows that a strict liability is fastened on the buyer to
make payment to the supplier who supplies any goods or renders
any services to the buyer, prescribing the time limit in Section 15.
Section 16 further fastens the liability on the buyer to pay
compound interest if any buyer fails to make payment to the
supplier as required under Section 15. Such compound interest is
required to be paid at three times of the bank rate notified by the
Reserve Bank, notwithstanding contained in any agreement between
the buyer and supplier or in any law for the time being in force. An
obligation to make payment of the amount with interest thereon as
provided under Section 16 has been cast upon the buyer and a right
to receive such payment is conferred on the supplier in Section 17.
Thus, Section 17 is the ignition point of any dispute under MSMED
Act, 2006. Section 18 thereof provides for the mechanism to enable
the party to the dispute with regard to any amount due under
Section 17, to make a reference to the Micro and Small Enterprises
Facilitation Council.
22. Section 18 starts with a non obstante clause i.e.,
‘notwithstanding anything contained in any other law for the time
being in force’. It means that the said provision has been enacted
with the aim to supersede other laws for the time being in force.
Further a dedicated statutory forum i.e., the Micro and Small
Enterprises Facilitation Council (As established under Section 20 of
the MSMED Act, 2006), has been provided to which a reference
could be made by any party to the dispute. Sub-section (2) of Section
18 empowers the Facilitation Council, on receipt of such reference
made under sub-section (1), to conduct Conciliation in the matter or
7 CM(M) No. 385/2023seek assistance of any institution or centre providing alternate
dispute resolution services by making a reference to such an
institution or centre, for conducting Conciliation, as contemplated in
Section 65 to 81 of the Arbitration Act, 1996. If the conciliation
initiated under sub-section (2) is not successful and stands
terminated without any settlement between the parties, the Council
is further empowered under sub-section (3) to either itself take up
the dispute for arbitration or refer to it any institution or centre
providing alternate dispute resolution services for such arbitration.
The provisions of Arbitration Act, 1996 are then made applicable to
the dispute as if the arbitration was in pursuance of an arbitration
agreement referred to in sub-section (1) of Section 7 of the
Arbitration Act, 1996. Sub-section (4) of Section 18 again starts with
a non obstante clause i.e., ‘notwithstanding anything contained in
any other law for the time being in force’, and confers jurisdiction
upon the Facilitation Council to act as an arbitrator or a conciliator
in a dispute between the supplier located within its jurisdiction and
a buyer located anywhere in India. Sub-section (5) of Section 18 fixes
the time limit of ninety days to decide such reference. Section 19
prescribes the procedure to be followed when any application is
made in the court for setting aside any decree, award or other order
made either by the Council itself or by any institution or centre to
which reference is made by the Council. Section 24 of the MSMED
Act, 2006 states that the provisions of Section 15 to 23 shall have an
effect notwithstanding anything inconsistent therewith contained in
any other law for the time being in force.”
10. In the light of the aforesaid clear and categoric position of
law which was supposed to have been known to the petitioners
themselves also without taxing or hazarding even a reminder, the
very act of institution of the present petition under article 227 of the
Constitution of India on the part of the petitioners can be said to be
an exhibit of the very time frozen mindset of acting
mechanically/ritualistically in the matter of discharge of
administrative duties for unshackling which the Union Parliament
was led to go for the enactment of MSMED Act, 2006 so as to instill
8 CM(M) No. 385/2023
and activate a due sense of an urgency and efficiency at the end of
the Public/Govt., Authorities/Departments/Officials to act with due
dispatch and drive in the matter of timely releasing/clearing of due
payments in favour of goods/service suppliers and providers to the
Public/Govt., Department/Establishment more particularly when
the goods/service providers happen to be Micro, Small & Medium
Enterprises, for whom the timely inflow of money demands/dues is
as important for keeping their business cycle in motion as is
essential for a water stream to have the inflow of water so as to save
the stream from going dry and extinct.
11. Mr. Abdul Rashid Malik learned Sr. AAG has come up with
submissions placing heavy reliance upon the fact that in the case of
“Jharkhand Urja Vikas Nigam Limited Vs State of Rajasthan and
others” 2021(9) SCR 497 the Hon’ble Supreme Court of India had
come to recognize the scope for intervention in the matter under
MSMED Act, 2006 against an award passed there-under for the writ
jurisdiction under article 226 of the Constitution of India.
12. Mr. Abdul Rashid Malik learned Sr. AAG further draws
reliance from Single Bench judgment of this Court in the case of
“Union Territory of J&K and others Vs Aibak Electric
Industries” bearing CM(M) No. 287/2023 read with judgment in
the case of “UT of J&K and others Vs Northern Transformers,”
2024 AIR J&K 22.
13. On the strength of said three judgments, Mr. Abdul Rashid
Malik, learned Sr. AAG has beseeched this Court to hear the cause
9 CM(M) No. 385/2023
on merits that since the impugned award, both on substantive side
as well as procedural side, is misconceived and, as such, this Court
should not be reluctant in coming to exercise supervisory
jurisdiction under article 227 of the Constitution of India as
solicited through the medium of the present petition.
14. Mr. Karman Singh Johal, Advocate, learned counsel for the
respondent, on the other hand makes a very pertinent observation
to deflate Mr. Abdul Rashid Malik, learned Sr. AAG’s reliance upon
said three judgments, to be taken note of by this Court that the
Hon’ble Supreme Court’s judgment in the case of Jharkhand Urja
Vikas Nigam Ltd. (supra), so cited is all prior to the passing of three
Judges’ judgment dated 06.11.2023 of the Hon’ble Supreme Court
of India in the case of M/s India Glycols Limited and another Vs
Micro and Small Enterprises Facilitation Council, Medchal –
Malkajgiri and others” (2024 AIR SC 285).
15. In this behalf, Mr. Karman Singh Johal, Advocate refers to
the date of judgment of the Hon’ble Supreme Court of India by its
two Judge Bench in the case of “Jharkhand Urja Vikas Nigam
Limited Vs State of Rajasthan and Others” to be of 15.12.2021,
judgment of the learned Single Bench of this Court in the case of
Union Territory of J&K and others Vs Aibak Electric Industries to be
dated 14.12.2023 and in the case of UT of J&K and others Vs
Northern Transformers also dated 14.12.2023.
16. Mr. Karman Singh Johal, Advocate by exploit of his
preparedness to meet this petition head on draws the attention of
10 CM(M) No. 385/2023
this Court that a Co-ordinate bench of this Court in the case of “UT
of J&K and Others Vs AL Karam Barzulla, Srinagar” CM(M) No.
326/2023 dated 22.11.2023 refused to entertain a petition under
article 227 of the Constitution of India against an award passed
under MSMED Act, 2006.
17. Thus, it is being pleaded and for very apt right reason that
the judgment of the learned Single Bench of this Court in the case of
UT of J&K and Others Vs Aibak Electric Industries Limited and UT
of J&K and others Vs Northern Transformers are to be read in
alignment with the three Judge Bench judgment of the Hon’ble
Supreme Court of India in the case of M/s India Glycols Limited and
another (supra).
18. A comparative reading of two judgments of the Hon’ble
Supreme Court of India first in the case of ‘Jharkhand Urja Vikas
Nigam Limited Vs State of Rajasthan and Others‘ and second in
the case of ‘M/s India Glycols Limited and Another Vs Micro and
Small Enterprises Facilitation Council, Medchal – Malkajgiri and
Others‘ would show an apparent contrasting position but given the
fact that the judgment in the case of ‘M/s India Glycols Limited and
another‘ (supra) being of a larger bench of three Judge and later in
point of time is to have a binding effect as against the judgment of
two Judge Bench in the case of ‘Jharkhand Urja Vikas Nigam
Limited (supra) which being prior in time.
19. In this regard the observations of the Hon’ble Supreme
Court of India in the case of “Dashrath Rupsingh Rathod Vs. State
11 CM(M) No. 385/2023
of Maharashtra & Anr., 2014(9) SCC 129, comes to guide this
Court wherein in paragraph-5 it has been held that once a decision
of a larger Bench has been delivered it is that decision which
mandatory has to be applied.
20. In the light of the aforesaid fact and circumstances, this
Court holds that the present petition so filed by the petitioners is
nothing but a misconceived exercise may be intended to bypass the
mandate of deposit of 75% in case the appellate side remedy under
the Arbitration & Conciliation Act, 1996 would have been resorted
to by the petitioners, but then this Court is nobody to advice or lend
any prudence to the petitioners in the matter of figuring out
appropriate legal course of action which ought to have been self-
attended by them, therefore, this Court dismisses the present
petition. However, in case the petitioners would come up with a
statutory appeal against the impugned award then the time spent in
the institution and pendency of this writ petition till its disposal will
not be reckoned against the petitioners.
(RAHUL BHARTI)
JUDGE
SRINAGAR
10.02.2025
Muneesh
Whether the judgment is speaking: Yes / No
Whether the judgment is reportable : Yes / No
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