The court upheld the obligation of the petitioners to pay the undisputed amount along with statutory interest, emphasizing that the Council's failure to follow proper procedures rendered the award invalid.

JUDGMENT :

1. Union Territory of Jammu and Kashmir through Chief Engineer, M&RE Wing, Srinagar, alongwith Executive Engineer Electric Division, Kupwara have filed this petition under Article 227 of the Constitution of India for seeking quashment of an award dated 20-04-2021 passed by the Secretary, Micro and Small Enterprises Facilitation Council, Kashmir Division, Srinagar, in case titled Northern Transformers v. Chief Engineer, M&RE Wing, Srinagar, as also an order dated 13-06-2023 passed by the court of learned Additional District Judge (Bank Cases) Srinagar [‘the executing Court’].

2. Briefly stated the facts projected by the petitioners in this petition are that on 08-06-2020 the respondent filed an application under the Micro Small and Medium Enterprises Development Act, 2006 [‘MSMED Act, 2006’] regarding delayed payments before the Secretary, Micro and Small Enterprises Facilitation Council, Kashmir Division, Srinagar [‘the Council’]. On receipt of reference the Secretary of the Council vide its communication dated 14-07-2020 called upon the petitioner No.2 to furnish the details in respect of the reference received, within a period of seven days with regard to; (i) date of completion of supply order; (ii) payment made, if any; and (iii) pending payments as on date. This was followed by another communication of the Secretary of the Council dated 17-08-2020 calling upon the petitioner No.2 to pay an amount of Rs. 70,16,280/- to the respondent within 15 days from receipt of notice, intimating further to the petitioner No.2 that, in case of failure, the case shall be registered by the Council. It seems that the aforesaid notices issued by the Secretary to the Council were not responded to by the petitioners and the requisite payment demanded by the respondent was not released. The Secretary of the Council invoked the provisions of Section 18(2) of the MSMED Act, 2006 and called upon both the parties to appear before it for mutual settlement. It is, however, not clear from the pleadings as to whether the parties attended the settlement meeting fixed by the Council. It is, however, the grievance of the petitioners that they suddenly received an award dated 20-04-2021 passed by the Secretary of the Council, holding the respondent entitled to a payment of Rs, 70,16,280/- alongwith compound interest at the rate of 12.75 % Per annum with effect from 28-04-2019 till the payment was made to the respondent through J&K SICOP.

3. When the award dated 20-04-2021 was not complied with by the petitioners, the respondent filed an execution petition before the executing Court in which the executing Court, vide order impugned dated 13-06-2023, attached all accounts operated by the petitioner No.2, excluding the salary account, as also all the official vehicles belonging to the petitioner department. The award, as well as the order passed by the executing Court referred to above, are subject matter of challenge in this petition.

4. The award has been challenged by the petitioners inter alia on the ground that the Council has not followed the mandate of Section 18 of the Act of 2006 in its right perspective. It is submitted that no conciliation proceedings in terms of sub-Section 2 of Section 18 were ever conducted nor was the dispute between the parties amicably settled in such proceedings. It is thus argued that in the absence of failure of conciliation proceedings, it was not available to the Council to initiate the arbitral proceedings. To put it more clearly, the learned counsel for the petitioners argued that the award, which has been put to execution before the executing Court, is neither on account of any amicable settlement made during the conciliation proceedings conducted under sub Section (2) of Section 18 nor the same can be termed as an award passed by the Arbitral Tribunal under Section 18(3) of the Act of 2006. It is thus argued that the impugned award, which has been put to execution by the respondent, is nullity in the eye of l