ANDHRA PRADESH HIGH COURT AT AMARAVATI
A.V.Sesha Sai, V.Srinivas, JJ.
Transmission Corporation of Andhra Pradesh Limited – Appellant
Versus
Haryana Micro And Small Enterprises Facilitation Council – Respondent
W.P. Nos. 34399 of 2018
Decided On : 08-09-2022
ARBITRATION - INTEREST ON DELAYED PAYMENTS ACT, 1993 - MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 - ARBITRATION AND CONCILIATION ACT, 1996 - CALCULATION OF 75% DEPOSIT - NATURAL JUSTICE - NOTICE AND OPPORTUNITY OF HEARING - REVIEW OF AWARD - JURISDICTION - WRIT PETITION - MAINTAINABILITY - PRINCIPLES OF NATURAL JUSTICE - VIOLATION - ORDER SETTING ASIDE - REMAND FOR FRESH CONSIDERATION.
Fact of the Case:
Petitioners challenged the order passed by the Haryana Micro and Small Enterprises Facilitation Council, Chandigarh, allowing the claim petition filed by the 2nd respondent under the Interest on Delayed Payments Act, 1993, claiming interest on delayed payments. The petitioners contended that the order was passed without issuing any notice to them and without affording them an opportunity to contest the matter, violating the principles of natural justice.
Finding of the Court:
The court held that the order passed by the 1st respondent-Council was in violation of the principles of natural justice as it was passed without giving notice and opportunity of hearing to the petitioners. The court also held that the objection of the learned counsel for the 2nd respondent that, unless the petitioners herein deposit 75% of the amount in terms of the Award, they cannot maintain the Writ Petition is unacceptable and cannot be approved by this Court.
Issues: 1. Whether the order passed by the 1st respondent-Council was in violation of the principles of natural justice? 2. Whether the petitioners were required to deposit 75% of the amount in terms of the Award as a condition for maintaining the Writ Petition?
Ratio Decidendi: 1. The court held that the order passed by the 1st respondent-Council was in violation of the principles of natural justice as it was passed without giving notice and opportunity of hearing to the petitioners. The court relied on the settled and well established principle of law that, any action, which has civil consequences must necessarily be preceded by notice and opportunity of hearing to the persons likely to be effected by such action. 2. The court held that the objection of the learned counsel for the 2nd respondent that, unless the petitioners herein deposit 75% of the amount in terms of the Award, they cannot maintain the Writ Petition is unacceptable and cannot be approved by this Court. The court observed that the quantum of Award is in dispute and on one hand, petitioners contend that they made such deposit in accordance with the provisions of law and on the other hand, respondent No.2 denies the same.
Final Decision: The court allowed the Writ Petition, setting aside the order passed by the 1st respondent in case No.7 and remanded the matter to the 1st respondent-Council for fresh consideration, after issuing due notice and opportunity of hearing to the petitioners.
JUDGMENT
A.V.SESHA SAI, J. - In this Writ Petition, petitioners herein are challenging the order dtd. 11/7/2018, passed by the Haryana Micro and Small Enterprises Facilitation Council, Chandigarh, represented by its Member Secretary, 1st respondent herein in Case No.7.
2. Briefly, stated the case of the petitioners in the present Writ Petition is as follows:
"2.1 During the year 1998, M/s.Equipment Conductors and Cables Limited, New Delhi-2nd respondent herein, supplied electric conductors to the predecessor of the petitioners herein. Predecessor of the petitioners and the petitioners herein paid the entire amounts to the 2nd respondent as per the invoices, however with some delay and the 2nd respondent received the said amounts without any protest.
2.2 The 2nd respondent herein initiated the Arbitration proceedings under the Arbitration and Conciliation Act, 1996, by filing the Claim Petition vide Case No.07 before the 1st respondent-Council, under the provisions of the "Interest on Delayed Payments Act, 1993, claiming interest on delayed payments for 45 claims".
2.3 Petitioner No.1 herein, after receipt of notices in the said Claim Petition Case No.07, filed a counter and also an additional defence statement and contested the matter. Respondent No.1-Council, partly allowed the said Claim Petition, vide Award No.HMSEFC/2010/08, dtd. 21/6/2010, and claims 26-45 were allowed and claims 1-25 were disallowed, on the ground that they were hopelessly barred by limitation.
2.4 Towards claims 26-45, the 1st respondentCouncil granted a sum of Rs.22, 42, 619.00 and as against the said Award dtd. 21/6/2010, petitioner No.1 herein filed Arbitration Original Petition No.523 of 2010, before the Court of the Chief Judge, City Civil Court, Hyderabad, under Sec. 34 of the Arbitration and Conciliation Act, 1996, r/w Sec. 19 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.
2.5 As per Sec. 19 of the Act, petitioner No.1 herein deposited 75% of the awarded amount. Against the aforesaid Award dtd. 21/6/2010, to the extent the same went against the 2nd respondent, 2nd respondent herein filed A.C.No.399 of 2010 before the Court of the District Judge, Chandigarh. Subsequently, Arbitration O.P.No.523 of 2010 was transferred from the Court of the Chief Judge, City Civil Court, Hyderabad, along with 75% deposit to the Court of the District Judge, Chandigarh, and was renumbered as Arbitration Case No.580 of 2010. 2nd respondent herein had withdrawn the said deposited 75%.
2.6 Vide order dtd. 28/8/2014, the Chief Judge, Chandigarh, dismissed Arbitration Case No.580 of 2010, filed by petitioner No.1 herein.
2.7 Vide order dtd. 28/8/2014, the Chief Judge, Chandigarh, allowed Arbitration Case No.399 of 2010 and remanded the matter to respondent No.1-Council, for fresh decision on claims 1-25.
3. Aggrieved by the aforesaid orders dtd. 28/8/2014, in Arbitration Cases 580 of 2010 and 399 of 2010, petitioner No.1 herein filed Appeals vide FAO No.34 of 2015 and 68 of 2015 respectively, before the High Court for the States of Punjab and Haryana. The Punjab and Haryana High Court passed a common order, dtd. 29/1/2016, in the said two Appeals and other two Appeals and set aside the orders impugned therein and remanded the matters. The operative portion of the said order reads of follows:
"Accordingly the order passed by the objecting court remanding the matter back is hereby set aside. As regards the objections filed by the appellant against the award aforementioned. It would be apt to refer Sec. 19 of the Act statutorily provides deposit of 75% of the amount. Sec. 19 of the Act reads thus:
"Application for setting aside decree, award or order:-No application for setting aside any decree, award or other order made either by the council itself or by any institution or centre providing alternate dispute resolution services to which a reference is made by the Council, shall be entertained by any Court unless the appellant (not being a supplier) has depos
An order passed by an authority without giving notice and opportunity of hearing to the affected parties is in violation of the principles of natural justice.
Jurisdictional challenges to arbitration awards must be raised under Section 34 of the Arbitration Act, and the pre-deposit requirement under Section 19 of the MSME Act is mandatory.
The mandatory deposit requirement under Section 19 of the MSMED Act must be fulfilled before entertaining applications to set aside arbitration awards, ensuring fairness to MSMEs and compliance with ....
The High Court cannot entertain writ petitions challenging awards of the Micro and Small Enterprises Facilitation Council without the mandatory deposit of 75% of the awarded amount as per Section 19 ....
The mandatory pre-deposit requirement under Section 19 of the MSMED Act, 2006 for challenging an award and the overriding effect of the MSMED Act, 2006 over the Arbitration Act, 1996 in specific disp....
The main legal point established is that arbitration proceedings under the MSMED Act must adhere to the procedural requirements of the Act and the Arbitration and Conciliation Act, 1996.
Validity of MSME registration and qualification as a 'Supplier' under the MSME Act of 2006.
The entitlement of the award holder to MSME status, the quantification of interest claimed, and the reasoning behind the arbitral award were central legal points established in the judgment.
The court affirmed its jurisdiction to review its orders while highlighting that a mere filing of a review petition does not grant a stay on award enforcement unless complying with statutory requirem....
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