IMPORTANT POINT
Important Point : The court established that statutory remedies must be exhausted before invoking writ jurisdiction against awards under the MSMED Act.

JUDGMENT :

(Arun R. Pedneker, J.)

1. By the present petition, the petitioner challenges the impugned order (award) dated 02.02.2024, in case No.MH/04/ard/00100 for being in violation of the statutory law, for being patently illegal, invalid and against the principles of natural justice. The petitioner has invoked the jurisdiction of this court to challenge the ‘Award’, contending that the award is ex-facie illegal and does not constitute an award within the meaning of and as contemplated under Section 18 of the Micro Small and Medium Enterprises Development Act, 2006 (for brevity “MSMED Act”) and, as such, submits that without invoking the remedy of appeal as is available under Section 34 of the Arbitration Act, the petitioner has approached this court invoking jurisdiction of this court under Articles 226 227 of the Constitution of India for quashing the said order as being patently illegal.

2. Facts as pleaded in the petition are briefly summarized as under:

A] The petitioner is a private limited company registered under the provisions of the Companies Act having it’s registered office at Gut No.1258/1259, Sanaswadi, Nagar Road, Pune.

B] The petitioner entered into a supplier agreement with respondent no.3 effective from 12.04.2019. The petitioner, also entered into separate agreements i.e. duroshox supplier agreement and duroshox supplier quality agreement dated 07.05.2019 as reflected in e-mail dated 03.06.2019 and 22.10.2019 and other correspondence between the parties, which includes supply manual and other forms of binding contracts between the parties.

C] It is the contention of the petitioner that respondent no.3 was mandated to manufacture and supply the material, as specified in the agreement and in the purchase orders raised by the petitioner. It is contended that the petitioner later on realized that the material supplied by respondent no.3 was lacking in quality and faulty in nature and the same was duly communicated to respondent no.3 along with the demand of undertaking corrective measures. The faulty nature of the material was also testified by various audits and tests conducted by the petitioner. It is further stated that after the serious of communications regarding supply of the defective materials and acknowledgment of the respondent no.3 to the same, the petitioner through communication in this regard rejected the materials supplied by respondent no.3. As respondent no.3 failed to remediate / replace defective supplies, the petitioner was exposed to incur huge remediation costs, cost for replacement of materials, transportation cost and cost for packaging.

D] Respondent no.3 being a medium and small scale industry under Section 18 of the MSMED Act filed a claim i.e. application No.UDYAM-HM-04-0017041/s/00002, thereby demanding an outstanding amount of Rs.4,53,87,615/- (Rupees Four Crore Fifty Three Lakhs Eighty Seven Thousnad Six Hundred and Fifteen) and the interest of Rs.31,46,612/- (Rs. Thirty One Lakhs Fourty Six Thousand Six Hundred Twelve). It is stated that the matter was taken up by the MSME Council on 11.04.2023, wherein the Roznama entry is reproduced is as under:

“OTHER LANGUAGE”

ENGLISH TRANSLATION “The plaintiff has given the copy of the petition and other related documents to the defendant today, the defendant should submit their statement by 02.05.2023, after which further action will be taken, before that efforts should be made for the mutual settlement.”

E] It is further stated that the petitioner in response to the claim had filed the details reply dated 02.05.2023 and a counter claim dated 02.05.2023 and an application under Section 25 of the Arbitration and Conciliation Act, 1996 (for brevity “the Arbitration Act”) for dismissal of the application no.UDYAM-HM-04-0017041 /s / 00002 and / or case No.MH/04/ard/00100.

F] It is further stated that the matter was then taken up by the court, on 16.05.2023, wherein respondent no.3 was given time till 29.05.2023 to file reply to the counter claim dated 0