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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.C. GUPTE, J.
Maharashtra State Electricity Distribution Company Limited And Others - Petitioners
Versus
M/s Deltron Electronics - Respondent
ARBITRATION PETITION (L) NO. 2464 OF 2015 WITH NOTICE OF MOTION (L) NO. 3696 OF 2015 AND NOTICE OF MOTION (L) NO. 15, 14 OF 2016
Decided On : 15-11-2016
No doubt, under the scheme of the Arbitration and Conciliation Act, 1996, the award within the meaning of the Act is really an award of the majority of the Arbitral Tribunal and the award of any dissenting minority is no award. That still does not dispense with the requirement of participation of all Arbitrators in the reference and in the deliberations for making of the award. Sub- section (2) of Section 31 of the Act, requires that if the award is not signed by all members of the arbitral tribunal, the reason for omitted signature/s must be stated. What this means is that not just that the reason must be stated mechanically and as a matter of form, but that such reason must be adequate and germane for fulfilment of the requirement of the law that though the arbitrator/s whose signature/s is/are omitted actually participated in the hearings and deliberations for making of the award, his/their signature/s is/are justifiably not appended to the award.
The justifiable reason may be absence or unavailability of the arbitrator/s at the time of signing (which is merely a ministerial act) or his/their refusal on the ground of any dissention or disagreement with the majority or the like. Such adequate and germane reason is clearly absent in the present case. In the premises, the impugned award cannot be termed as a valid award in the eyes of law. The want of signature of the Chairman of the Arbitral Tribunal/Council cannot be attributed simply to any administrative exigency or ministerial lapse or difficulty or even his having taken a dissenting view. It rather goes to the root of the award and undermines its validity.
Micro, Small and Medium Enterprises Development Act, 2006 - Section 18(3)-Arbitration and Conciliation Act, 1996, Section 7(1) and 43-Limitation Act, 1963-Preamble-Arbitration under Section 18(3) of Act.-Provisions of Limitation Act apply to arbitrations under Section 18(3) of Small Enterprises Act.
By virtue of the provisions of Section 18 of the Small Enterprises Act, all provisions of the Arbitration and Conciliation Act, 1996 are made applicable to any arbitration carried out by the Council or its designate under Section 18(3) of the Small Enterprises Act as if the arbitration was in pursuance of an arbitration agreement referred to in sub - Section (1) of Section 7 of the Arbitration and Conciliation Act, 1996.
There is no exception made in respect of Section 43 of the Arbitration and Conciliation Act, 1996. Accordingly, the provisions of the Limitation Act apply to arbitrations under Section 18(3) of the Small Enterprises Act, just as they would apply to arbitrations arising out of an arbitration agreement entered into between the parties under sub - Section (1) of Section 7 of the Arbitration and Conciliation Act, 1996.
This Arbitration Petition challenges an award passed by the Micro and Small Enterprises Facilitation Council, Konkan Division, Thane under Section 18(3) of Micro, Small and Medium Enterprises Development Act, 2006 (“Small Enterprises Act”). By consent, the petition is admitted and taken up for final hearing forthwith.
2. The short facts of the case may be stated as follows :
2.1 The Petitioners are successors of erstwhile Maharashtra State Electricity Board (MSEB) and are distributors of electricity in their area of operation in Maharashtra. The Respondent is a small scale enterprise duly registered with the District Industries Centre, Thane and is governed by the Small Enterprises Act.
2.2 The Petitioners had floated a tender for distribution of transformers. Pursuant to it, the Respondent submitted its offer. The offer was accepted by the Petitioners and a letter of award was issued to the Respondent. Pursuant to the letter of award, the Petitioners placed ten purchase orders on the Respondent. The contract between the parties stipulated payment of 100% value of the contract by account payee cheque within 60 days from the date of receipt of the entire quantity as per the monthly delivery schedule. The purchase orders pertain to the period between 1 August 1994 to 10 October 2000. Through this period the Respondent supplied the materials against the purchase orders under various invoices. The Petitioners accepted the materials and paid the bills submitted by the Respondent from time to time in respect of the same.
2.3 By its letter dated 9 June 2004, the Respondent for the first time raised its claim for interest on delayed payments on the various contracts of purchase represented by the purchase orders. An aggregate sum of Rs.83,54,695/- was claimed in respect of such interest. The Petitioners refused to pay these delayed payment charges.
2.4 In the premises, on 21 September 2005, the Respondent filed a reference before the Industries Facilitation Council Bench, Thane under the provisions of Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (“Interest on Delayed Payments Act”). The council, by its letter dated 24 January 2006, served a copy of the reference on the Petitioners directing them to file their reply to the reference.
2.5 During the pendency of the reference, on 16 June 2016, the Interest on Delayed Payments Act was repealed by the Small Enterprises Act which made appropriate provisions for Small Scale and Ancillary Industrial Undertakings. The Council was re-designated as Micro and Small Scale Enterprises Facilitation Council (“Council”). Section 32 of the Small Enterprises Act which provided for repeal of the former Act inter alia contained a clause to the effect that anything done or any action taken under the repealed Act shall be deemed to have been done or taken under the corresponding provisions of the Small Enterprises Act.
2.6 By its notice dated 30 November 2012, under Section 18 read with Section 17 of the Act, the Council called upon the Petitioners to file their submissions/say on the reference petition filed by the Respondent.
2.7 By its letter dated 24 December 2013, the Respondent called upon the Petitioners to hold a conciliation meeting in terms of Section 18 of the Act. The Petitioners did not comply with this requisition.
2.8 On 18 January 2014, in the premises, the Respondent through its Advocate informed the Council that the parties had failed to arrive at any amicable settlement and required the Council to place the matter for arbitration under the provisions of Section 18(3) of the Small Enterprises Act.
2.9 The Council, by its order dated 30 January 2014, terminated the conciliation proceedings and took up the matter for arbitration under Section 18(3) of the Small Enterprises Act.
2.10 By its award dated 31 January 2015, the Council awarded the Respondent's claim for interest on delayed payment together with further interest. The impugned award is n
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