The main legal point established is that statutory authorities must adhere to the prescribed procedures and cannot act in contravention of them. The existence of an alternate remedy does not necessarily bar the exercise of extraordinary writ jurisdiction.

Tarlok Singh Chauhan, Judge

Petitioners approached this Court claiming the following substantial reliefs:

“(i). Issue a writ of certiorari or direction in the nature of writ of certiorari quashing setting aside order dated 28.2.2013 passed by respondent No.1 in Reference Case No. 6 of 2011.

(ii) Issue a writ of mandamus or direction in the nature of writ of mandamus directing the respondent No.1 to proceed with the reference No. 6 of 2011 again and dispose of the same in accordance with law.”

2. The specific case of the petitioners is that once their matter had been referred to the Arbitrator in terms of Section 18 (3) of the Micro, Small and Medium Enterprises Development Act, 2006 (for short 2006 Act’) read with Rule 10 of the Micro and Small Enterprises Facilitation Council Rules, 2007 (for short ‘Rules’), then the Arbitrator so appointed could not close the proceedings by not resorting to further steps as contemplated in these provisions thereby leaving the petitioners in lurch.

3. It is not disputed that a reference under Section 18 (1) of the Act for recovery of Rs.32,26,760/- (Principal) as delayed payment Rs.70,20,386/- (Interest) as interest on delayed payment for the goods supplied to the respondent No.2 by the petitioner No.1 firm, was made to the council. In these proceedings certain recoveries were made and thereafter the council tried to bring the parties to an agreement for payment of the balance amount of principal and interest but the parties remained adamant on the respective stands and the council in its 8th meeting held on 28th February, 2013 unanimously decided that the reference be dropped from the proceeding of the H.P. Micro and Small Facilitation Council and advised the parties to the reference to redress and sort out their matter regarding balance payment of principal and interest due at an appropriate legal forum. The operative portion of the order is thus:

“.....In all these meetings of the council, the council tried to bring the parties to the reference to an agreement for the payment of balance amount of principal & interest. But the parties remained adamant on their respective stands. The council in its 8th meeting held on 28th February, 2013 unanimously decided that the reference be dropped from the proceeding of the H.P. Micro and Small Facilitation Council and advised the parties to the reference to redress and sort out their matter regarding balance payment of principal and interest due at an appropriate legal forum.”

4. In this background, it is apt to reproduce Section 18 of the Act as under:

“18. Reference to Micro and Small Enterprises Facilitation Council.

(1) Not withstanding anything contained in any other law for the time being in force, any party to a dispute may, with regard to any amount due under Section 17, make a reference to the Micro and Small Enterprises Facilitation Council.

(2) On receipt of a reference under sub-section (1), the Council shall either itself conduct conciliation in the matter or seek the assistance of any institution or centre providing alternate dispute resolution services by making a reference to such an institution or centre, for conducting conciliation and the provisions of Sections 65 to 81 of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to such a dispute as if the conciliation was initiated under Part III of that Act.

(3) Where the conciliation initiated under sub-section (2) is not successful and stands terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer it to any institution or centre providing alternate dispute resolution services for such arbitration and the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall then apply to the disputes as if the arbitration was in pursuance of an arbitration agreement referred to in subsection(1) of Section 7 of the Act.

(4) Notwithstanding anything contained in any other law for the time being