Point of Law: Wrong order can never be a good precedent.

JUDGMENT :

Vivek Singh Thakur, J.

Petitioner Firm has approached this Court for quashing impugned order dated 24.4.2019 (Annexure P-15) passed by Himachal Pradesh, Micro and Small Enterprises Facilitation Council, Shimla (respondent No. 2) (for short ‘Council’), whereby by observing that for already existing arbitration clause in agreement executed between supplier (petitioner) and buyer (respondent No. 1), reference from the proceedings of the Council was decided to be dropped with advise to the parties to act as per already existing arbitration clause at the first instance, respondent No. 2 has been directed to refer the dispute, between petitioner and respondent No. 1, to Arbitrator as per provisions of Section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 (for short ‘MSMED Act’).

2. Petitioner Firm is duly registered under provisions of MSME Act since 2009 and is engaged in manufacturing of Distribution Transformers.

3. Respondent No. 2-Punjab State Power Corporation Limited (PSPC), a Public Sector Company, is engaged in power distribution in the State of Punjab.

4. In response to tender invited by respondent No. 1 for supply of Transformers, petitioner participated in the process and was awarded purchase orders for supply of ‘Distribution Transformers’ and in furtherance whereof, petitioner supplied ‘Distribution Transformers’ to respondent No. 1.

5. Petitioner’s claim is that for supply of Distribution Transformers, some of payments were made by respondent No. 1 on time, however, majority of payments were made beyond period of 45 days, the agreed time for making the payment and, therefore, petitioner raised demand for payment of interest as per MSMED Act on the delayed payments.

6. For non-payment of interest on delayed payments, as claimed by petitioner, respondent No. 2-Council was approached by the petitioner by filing Reference Application under Section 18(1) of the MSMED Act, wherein respondent No. 1 was summoned. After filing reply to the reference, Council conducted conciliation itself and tried to resolve the matter amicably between the parties, but conciliation failed, whereupon respondent No. 2-Council passed the impugned order.

7. Petitioner’s case is that petitioner Firm is registered unit under the provisions of MSMED Act and, therefore, for adjudication and resolution of dispute in reference, provisions of MSMED Act were applicable notwithstanding any terms and conditions contained in the contract, purchase orders or any other law in terms of provisions of Section 24 of MSMED Act, which provide that Sections 15 to 23 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force and, therefore, instead of relegating the parties to avail the recourse in terms of arbitration clause in the agreement, the Council had to follow provisions of Section 18 of MSMED Act, which provides that in case conciliation 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 alternative dispute resolution services for such arbitration and, therefore, it has been canvassed that impugned order is not sustainable and deserves to be set aside with direction to respondent No. 2-Council to adjudicate the matter by acting as Arbitrator or to refer the dispute for arbitration as per provisions of Section 18(3) of the MSMED Act.

8. Learned counsel for the petitioner, to substantiate plea of overriding effect of provisions of Section 18 of MSMED Act, has referred pronouncement of this High Court in Simplex Infrastructures Ltd. Vs. Himachal Pradesh Micro and Small Facilitation Council and Another, Latest HLJ 2022 (HP) (1) (113), wherein it has been observed that Section 24 of MSMED Act has given overriding effect to the provisions of Sections 15 to 23 including Section 18 and, therefore, Arbitrator appointed by the Faci