IMPORTANT POINT
The MSMED Act, 2006 provides a specific dispute resolution mechanism that overrides private arbitration agreements, making writ petitions not maintainable when an alternative remedy exists.

ORDER :

Narendra Kumar Vyas, J.

1. The petitioners have filed this writ petition under Article 226 of the Constitution of India for quashing the proceedings initiated by respondent No. 2 under the Micro, Small and Medium Enterprises Development Act, 2006 (for short “the MSMED Act, 2006”) before respondent No. 1 by which he has claimed for payment of extended balance of Rs. 2,47,10,093.63 plus accrued interest against contract dated 14.10.2016 towards enabling work of Coke Ovens Battery under rebuilding of Coke Ovens Battery 7 & 8 in Coke Ovens & Coal Chemical Department at Bhilai Steel Plant.

2. The brief facts as reflected from records are that work order was issued in favour of respondent No. 2 and as per the contract agreement, there is arbitration Clause in Article 9 of the work agreement. The Clause 9.1 of the Article clearly provides that any dispute differences, whatsoever arising between the parties out of or relating to the construction, meaning, scope, operation or effect of the contract shall be settled between the employers and contractors amicably and if they are not able to settle it will be settled through conciliation and if conciliation is failed through arbitration. This Clause further provides that arbitration Clause is to be invoked by the parties to the contract only on failure of conciliation proceeding to amicably settle the issue. The Clause further provides that the arbitration shall be governed in accordance with the provisions of Arbitration and Conciliation Act, 1996 (for short “the Act, 1996”). Accordingly, respondent No. 2 has sent a letter dated 27.01.2020 requesting the petitioner company for invoking the arbitration Clause as per Article 9 of the said agreement. It is case of the petitioner that the petitioner on 10.07.2021 has sent a letter to respondent No. 2 to depute their team for cost estimate for penalizing foreclosure and also to obtain no dues clearance from Industrial Relation Department but before appointment of arbitrator or settling the dispute, respondent No. 2 has moved an application before respondent No. 1 on 20.10.2021 wherein he has claimed Rs.90,09,600/- as due to supplier from buyer and the buyer i.e. the petitioner company has failed to make payment to the supplier within 45 days from the date of acceptance or the date of deemed acceptance as per provisions of Section 15 of the MSMED Act, 2006. Accordingly, respondent No. 1 issued notice to the petitioner on 18.05.2022. This notice as well as initiation of proceedings have been assailed by the petitioner in this writ petition.

3. Respondent No. 2 has filed its return raising objection about maintainability of the writ petition before this Court firstly contending that the petitioner has challenged the proceeding initiated by the Jharkhand Facilitation Council situated at Jharkhand, under Article 226 & 227 of the Constitution of India. As such, the territorial jurisdiction would be of Hon'ble Jharkhand High Court and not Hon'ble Chhattisgarh High Court, as such the writ petition deserves to be dismissed on the count of territorial jurisdiction of this Court. Secondly, It has been submitted that the petitioner has already participated in the proceedings initiated by the Jharkhand Facilitation Council and has not taken any objection, as such as per principle of approbate and reprobate, the writ petition is not maintainable. Thirdly, he would submit that in view of the law laid down by Hon’ble the Supreme Court, the proceeding before respondent No. 1 is maintainable as respondent No. 2 is a registered unit under the MSMED Act, 2006 and would pray for vacating the interim order dated 26.08.2022 and dismissal of the writ petition.

4. I have heard learned counsel for the parties and perused the documents placed on record with utmost satisfaction.

5. From the above-stated factual matrix and extensive submissions made by both the counsels, the point emerged for determination of this Court, is:-

“Whether against the proceedings initiated b