1. Challenge to the validity of a state rule allowing recovery of awards under the MSMED Act, 2006 as arrears of land revenue. (Para 2 , 3 , 4 , 5 )
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2017 Supreme(SC) 369
SUPREME COURT OF INDIA
ARUN MISHRA, S. ABDUL NAZEER, JJ.
POWER MACHINES INDIA LIMITED – APPELLANT(S)
VERSUS
STATE OF MADHYA PRADESH & ORS. – RESPONDENT(S)
CIVIL APPEAL NO.5317 OF 2017 (Arising out of S.L.P.(C) No.29266 of 2016)
Decided On : 17-04-2017
Important Points
IMPORTANT POINTS
It is open to legislate different remedies which may be inconsistent and there is no question of repugnancy in providing multiple remedies. Election of a remedy for recovery of the amount is the choice of the award-holder.
Rule 5 is not illegal or arbitrary or discriminatory.
It is open to legislate different remedies which may be inconsistent and there is no question of repugnancy in providing multiple remedies. Election of a remedy for recovery of the amount is the choice of the award-holder.
Rule 5 is not illegal or arbitrary or discriminatory.
Subject
Arbitration and Conciliation - Recovery of Arbitral Awards
Act Referred
ARBITRATION AND CONCILIATION ACT: S.36(1)
BIHAR ACT: S.48
CANTONMENTS ACT: S.280(2)(c)
CIVIL PROCEDURE CODE: O.21 R.58, O.21 R.66, O.21 R.69, O.21 R.89, O.21 R.22, O.21 R.26, O.21 R.92
CONSTITUTION OF INDIA: Art.14, Art.245
MICRO SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT: S.21(3), S.18(3), S.30, S.40
MICRO SMALL AND MEDIUM ENTERPRISES DEVELOPMENT RULE: R.5
BIHAR ACT: S.48
CANTONMENTS ACT: S.280(2)(c)
CIVIL PROCEDURE CODE: O.21 R.58, O.21 R.66, O.21 R.69, O.21 R.89, O.21 R.22, O.21 R.26, O.21 R.92
CONSTITUTION OF INDIA: Art.14, Art.245
MICRO SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT: S.21(3), S.18(3), S.30, S.40
MICRO SMALL AND MEDIUM ENTERPRISES DEVELOPMENT RULE: R.5
Headnote
(a) Madhya Pradesh Micro and Small Enterprises Facilitation Council Rules, 2006 – Rule 5 r/w section 30, Act 2006 and section 36, Arbitration and Conciliation Act, 1996 – Act 2006 authorising State Government to frame the Rules – Rule 5, by way of speedy recovery mechanism providing for recovery of amount as land revenue – Inconsistent with section 36 of Act 1996 – Order XXI, CPC – Held, it is open to legislate different remedies which may be inconsistent – Election of a remedy for recovery of the amount – Choice of the award-holder – No question of repugnancy in providing multiple remedies. (Para 13, 14)
(1992) 4 SCC 196 – Relied upon
(b) Interpretation of statute – Multiple remedies – Inconsistency and repugnancy – Two provisions dealing with remedies – Principle that special provision excludes the application of general provision should not be applied – Such provisions should be harmonised. (Para 15)
(2004) 4 SCC 311 – Relied upon
(c) Madhya Pradesh Micro and Small Enterprises Facilitation Council Rules, 2006 – Rule 5 – Recovery of amount as arrears of land revenue – Resorted to after adjudication process after passing of arbitral award and not objected to – CPC cannot be the only remedy – The procedure not illegal or arbitrary – Not violative of Article 14 of the Constitution, (Para 17, 29)
(1997) 5 SCC 516; (2004) 8 SCC 747; (1987) 1 SCC 618; (2011) 8 SCC 274; (1988) 2 SCC 351; (1988) 2 SCC 360; (1955) 1 SCR 448; AIR 1955 SC 13; (1974) 2 SCC 402 – Relied upon
(d) Madhya Pradesh Micro and Small Enterprises Facilitation Council Rules, 2006 – Rule 5 and section 21, CPC – Procedure under CPC – Speedy execution becoming more difficult – Rule 5 providing speedy recovery – Need of the day – Safeguarding small, micro and medium industries. (Para 18)
Facts of the case:
This case challenges the vires of Rule 5 of Madhya Pradesh Micro and Small Enterprises Facilitation Council Rules, 2006.
Finding of the Court:
Contention that Rule 5 is inconsistent and repugnant to the provisions of section 36 of the Act of 1996 is liable to be rejected.
Result: Appeal dismissed with cost.
Legal Category Hierarchy
- administrative law
- civil law
- constitutional law
- practice and procedure
Table of Contents
2. Whether a rule providing recovery as arrears of land revenue is ultra vires, arbitrary, and repugnant to the Arbitration and Conciliation Act, 1996 and CPC. (Para 6 , 7 )
3. The court analyzed the rule-making power under the MSMED Act and the validity of providing plural, potentially inconsistent, remedies for speedy recovery of dues. (Para 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 )
4. Plural remedies, even if inconsistent, are valid; the award-holder may elect the remedy, and speedier recovery mechanisms can be legislated to fulfill the parent Act's objective. (Para 13 , 14 , 15 , 16 )
5. Appeal dismissed; Rule 5 held valid; bank accounts to be de-frozen upon deposit of awarded amount and interest. (Para 29 )
6. Can a statute provide multiple, inconsistent remedies for the recovery of a sum?
Yes, the validity of plural remedies cannot be doubted. Even if two remedies are inconsistent, they remain available for the person concerned to choose from until one is elected for application. (Para 13 , 14 , 15 , 16 )
7. Can delegated legislation provide a recovery mechanism different from a general central law if it serves the parent Act's objective?
Yes, if the rule-making power is general and the rule is ancillary to the parent Act's objective—such as ensuring speedy recovery for small enterprises—it is valid and does not exceed the delegate's authority. (Para 9 , 13 , 20 , 21 )
8. Is recovery of an arbitral award as arrears of land revenue considered arbitrary or violative of Article 14?
No, such a procedure is reasonable, not inherently harsh or drastic, and is permissible after an adjudication process has occurred and the time for challenging the award under the Arbitration and Conciliation Act has expired. (Para 17 , 18 , 19 , 28 )
JUDGMENT
ARUN MISHRA, J.
1. Leave granted.
2. This appeal has been preferred by the appellant – Power Machines India Ltd., aggrieved by the judgment and order dated 18.7.2016 passed by the High Court of Madhya Pradesh at Jabalpur, thereby dismissing the Writ Petition filed by the appellant for declaring Rule 5 of Madhya Pradesh Micro and Small Enterprises Facilitation Council Rules, 2006 (hereinafter referred to as “the Rules’) ultra vires, which had been framed by the Government of Madhya Pradesh in exercise of the power conferred by section 30 read with section 21(3) of the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as “the Act of 2006”). Rule 5 provides for recovery of the amount for which award is passed under section 18(3) of the Act of 2006 as arrears of land revenue thereby providing additional remedy for recovery of the awarded sum than the one provided in section 36(1) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act of 1996”).
3. It is pertinent to mention that the award was passed under the Act of 2006 by which the appellant was directed to pay awarded sum to respondent No.3 i.e. Lakshmi Engineering Industries (Bhopal) Pvt. Ltd. The award was passed by the Madhya Pradesh Facilitation Council for a sum of Rs.1,15,77,630/-along with an amount of Rs.1,04,96,746/-towards interest up to 10.1.2013. Payment of actual amount of interest was @ three times of the bank rate as notified by the Reserve Bank of India to be paid within 30 days of the award. The award was passed on 15.1.2014.
4. The Collector, Noida, initiated recovery of the amount as per letter dated 2.4.2016 issued by the Madhya Pradesh Micro and Small Enterprises Facilitation Council under the Rules. The recovery citation was served upon the appellant on 20.4.2016 purported to be one under the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950. Another citation was received by the appellant on 16.5.2016 which was issued on 20.4.2016. Thereafter, appellant filed a writ petition before the Allahabad High Court for quashing the recovery proceedings. However, Tehsildar of Dadri, Gautam Buddha Nagar on 23.5.2016 withdrew an amount of Rs.1,18,78,588.14/-from the appellant’s bank account with ICICI Bank pursuant to the recovery citation. On 24.5.2016, it is averred by the appellant that a further amount of Rs.2,12,33,618.57/-was recovered from the bank account of the appellants with the State Bank of India. The appellant filed Writ Petition [C] No.11824 of 2016 in the High Court of Madhya Pradesh for declaring Rule 5 as ultra vires. The appellant filed another W.P. [C] No.12127 of 2016 for quashing the recovery proceedings on the ground that the recovery was not in compliance with Rule 5 . The said writ petition questioning the rule had been dismissed. Writ Petition [C] No.12127 of 2016 had been allowed by the High Court of Madhya Pradesh and it permitted respondent No. 3 to initiate recovery proceedings under the rule de novo and in accordance with law. The petition filed in the High Court of Allahabad was dismissed in view of the fact that the aforesaid writ petition had been allowed by the High Court of Madhya Pradesh.
5. The Tehsildar, Dadri issued fresh recovery proceedings under Rule 5 for recovery of Rs.5,29,58,937/-as per the award dated 15.1.2014. Fresh recovery citation was served on the petitioner on 19.9.2016. The High Court of Madhya Pradesh in the impugned judgment and order has held that Rule 5 is not ultra vires and is in strict conformity with the Act of 2006. Aggrieved thereby, the appeal has been preferred.
6. It was submitted by Mr. P. Chidambram and Dr. A.M. Singhvi, learned senior counsel representing the appellant that Rule 5 is ultra vires, arbitrary and violative of Article 14 of the Constitution of India and is repugnant to the provisions contained in section 36 of the Act of 1996 read with the provisions contained in section 18 of the Act of 2006.
