The directive from the Micro & Small Enterprises Facilitation Council was held not to be an executable arbitral award due to failure to adhere to required arbitration procedures post-conciliation.

JUDGMENT

Prateek Jalan, J. (Oral)--The petitioner seeks execution of an "order" dated 22.09.2020 passed by the Micro & Small Enterprises Facilitation Council, Coimbatore Region ["the Council"]. The proceedings have been filed on the premise that the said order is an arbitral award capable of execution under Section 36 of the Arbitration and Conciliation Act, 1996 ["the Act"].

2. The petitioner is a "small enterprise" within the meaning of the Micro, Small & Medium Enterprises Development Act, 2006 ["the MSMED Act"]. The respondent issued a work order dated 29.05.2015 in favour of the petitioner for erection of pollution control equipment. The value of the work awarded was to the tune of Rs.6.47 crores. The claim of the petitioner was that the respondent failed in making timely payment on account of which, a sum of Rs.1,76,45,947/- became due from the respondent. It proceeded under Section 18 of the MSMED Act by making a complaint before the Council constituted under Section 20 thereof.

3. The proceedings resulted in the impugned order dated 22.09.2020. The order narrates the proceedings over six sittings, culminating in the hearing held on 22.09.2020. The proceeding of the 6th hearing held on 22.09.2020 are summarised in the following terms:

"During the hearing held on 22.9.2020 through Video Conference, the Petitioner was present and represented by Thiru P. Ponram, Managing Partner and the Respondent was represented by Thiru Sidharth Tiwary and Thiru Akshat Bajbai. This was the 6th hearing. After lapse of 6 hearings there is no conciliation among the Petitioner and Respondent. The Petitioner Enterprise has submitted a revised due amount of Rs.1,67,37,737/- vide their letter No.FIN/107/2020-21 dated 16.7.2020, and the revised claim for cost is Rs.5,41,35,658/- Subsequently, the Respondent has also acknowledge the outstanding due of Rs.167,37,737/- vide their e mail dated 22.9.2020."

[Emphasis supplied]

4. The Council has thereafter held as follows:

"Based on a detailed and critical examination of the claims made by the Petitioner along with available materials on record, the Council decided to issue final orders directly that the Respondent was liable to pay Rs.167.37,737/- [Rupees one Crores sixty seven lakhs seven hundred and thirty seven only] to the Petitioner with compounded interest with monthly rests, at three times the Bank rate notified by the Reserve Bank of India as stipulated in the Section 15 and 16 of MSMED Act, 2006 [and claim for Rs.5,41,35,658/- referred to HAC, Chennai for arbitration.]

In this regard, Section 15 of the MSMED Act 2006 is extracted hereunder:

"Where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefore on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day:

Provided that in no case, the period agreed upon between the supplier and the buyer in writing shall exceed forty- five days from the day of acceptance or the day of deemed acceptance."

Section 16 of the MSMED Act 2006 is extracted hereunder:

"Where any buyer fails to make payment of the amount to the supplier, as required under section 15, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay compound interest with monthly rests to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, a