The court reiterated that challenges to awards under the MSMED Act must follow prescribed statutory remedies, including mandatory pre-deposit as per Section 19, rendering writ petitions inadmissible.

ORDER :

Narendra Kumar Vyas, J.

1. The petitioner has filed this writ petition under Article 226 of the Constitution of India for issuance of writ in nature of certiorari quashing/ setting aside the award dated 11.11.2022 passed by respondent No. 1 in Application No. CG/14/S/CGH/00278 by which arrears of unpaid money towards supply which comes to Rs. 3,68,91,729/- and as per Section 16 & 17 of the Micro, Small and Medium Enterprises Development Act, 2006 (for short “the MSMED Act, 2006”) three times of the rate of interest fixed by the Nationalized Bank which comes to Rs. 2,55,99,678/- thus, total amount comes to Rs. 6,24,91,407/- has been directed to be paid to respondent No. 2 by the petitioner within 30 days, failing which the petitioner shall be liable to pay interest till its realization.

2. The brief facts of the case are that supply agreement dated 04.10.2018 was executed between the petitioner and respondent No. 2 for manufacturing of Indian Made Foreign Liquour (IMFL) produce required by or as per direction of the petitioner which is for supply to Chhattisgarh Stage Beverages Corporation Limited. As per the terms of the agreement, the petitioner has to share his technical know-how, manufacturing process, formula, trade secrets, brands & trade marks for Indian Made Foreign Liquor (IMFL) with respondent No. 2. The salient feature of the agreement are as under:-

As per Clause 1.8 of the agreement, the cost of goods sold (means the total price at which RBC shall manufacture and supply finished goods and includes raw material(RM), package material and other manufacturing, sale and distribution cost, sales promotion and marketing research cost, all taxes duties and levies as applicable and shall also include the profit margin of RBC. This is the price which RBC shall charge from the petitioner for the manufacturing and supply of goods under this agreement. This is the price which RBC shall withdraw from the bank account as referred to it in clause 5.4. The current cost of goods sold is mentioned in Annexure 1 of the agreement.

As per the Article 3 of the agreement, respondent No. 2 has to produce the raw materials from the suppliers approved by the petitioner. The raw materials/packing materials so procured by RBC shall not be used for manufacturing of other than for the manufacturing of IMFL. The Article 3.6 of the agreement provides that the petitioner shall advice respondent No. 2 of the sale price in favour of corporation in the State of Chhattisgarh on behalf of petitioner at the agreed terms and conditions. Clause D of this Article provides that notwithstanding any delay in collection, RBC shall make payment to the petitioner of all amount due to the petitioner under this agreement from its own sources.

3. During midst of their business transaction, a dispute had arisen between respondent No. 2 and the petitioner, therefore, respondent No. 2 filed a reference petition on 12.02.2020 (Annexure P/4) before respondent No. 1 mainly contending that it is a small scale unit as per the provisions MSMED Act, 2006. The respondent No. 2 has supplied the goods to the petitioner but has not paid the dues, which is payable within the stipulated time period as per the provisions of Section 15 of the MSMED Act, 2006, therefore, this petition has been filed and has prayed for claiming the principle amount payable Rs. 3,68,91,729/- along with interest as per Section 15 & 16 of the MSMED Act, 2006. The said reference application was registered as reference application bearing No. CG/14/S/CGH/ 00278. Respondent No. 1 issued notice to the petitioner and petitioner also appeared befor