EM-II filing discretionary for micro/small enterprises beyond 180 days; MSMED reference limitation starts from buyer's post-investigation denial, not supply date; narrow Section 34 scope upholds award absent patent illegality.

JUDGMENT :
Sandeep Sharma, J.

Instant petition lays challenge to award dated 5.3.2018 published on 19.3.2018 by the Sole Arbitrator, awarding therein sum of Rs. 4,80,35,154/- as principal amount plus interest Rs.50,38,09,370/-, totaling sum of Rs. 55,18,44,524/-.

2. For having bird’s eye view, key facts relevant for adjudication of case at hand, as emerge from the pleadings as well as documents adduced on record by the parties to the lis are that respondent No.1 registered itself as an entity with the District Industries Centre (DIC), Nahan District Sirmaur on 22.12.2004. Pursuant to the registration, respondent No. 1 came to be granted permission for production of TS Indicator Board, Road pavement markers, Signage etc. w.e.f. 30.04.2005 (Annexure R-2 available at Page 280). In the month of May 2007, petitioner issued various purchase orders in favour of respondent No.1 for supply of certain items. Pursuant to aforesaid purchase orders, respondent No.1 supplied the material to the petitioner and at no point of time, objection, if any, ever came to be raised with regard to quality of material supplied by the respondent. In the month of June/July 2007, the Office of the Controller of Stores issued instructions to stop the payment against the purchase orders including those for which the material had already been supplied and delivered on the ground that material was supplied at much higher rate (Annexure R-7 available at page 297). Initially, vigilance proceedings were initiated, but subsequently, matter was handed over to CBI for investigation.

3. On 2.10.2006, the Micro, Small and Medium Enterprises Development Act, 2006 (herein after referred to as the MSMED Act) came into force vide S.O. 1154(E), dated 18.07.2006. On 12.10.2007, Government of Himachal Pradesh framed the rules called Himachal Pradesh Micro and Small Enterprise Facilitation Council Rules 2007, (in short the “Facilitation Council Rules”). Respondent No.1 applied for Part-II Memorandum on 10.3.2008, which was granted on 23.10.2008. EM-II registration gives reference to the registration dated 30.4.2005 i.e. the date from which respondent No.1 was allowed to start production. With effect from afore date, respondent No.1 had been manufacturing TS indicator board, road pavement markers, signage etc. and same were being supplied to various institutions including the Northern Railways.

4. Since CBI was unable to find evidence, if any, adduced on record suggestive of the fact that material supplied by the petitioner in terms of purchase orders issued in the month of May 2007, was purchased on higher rates and as such, it submitted closure report in the CBI Court. On 7.1.2012, CBI Court accepted the closure report (Annexure R-6 available at page 284). After acceptance of closure report, respondent No.1 submitted representation to the petitioner praying therein to release the payments (Annexure R-7 page 305). Though respondent was assured that payments shall be made expeditiously, but since no steps were taken in that regard