IMPORTANT POINT
The Facilitation Council must adhere to the procedural requirements of both the MSMED Act and the Arbitration Act, and failure to do so renders any award issued a nullity, which can be challenged outside the framework of Section 34 of the Arbitration Act.

JUDGMENT :

Anubha Rawat Choudhary, J.

This Letters Patent Appeal has been filed against the judgment dated 03.03.2016 passed in W.P.(C) No. 6 of 2014 dismissing the writ petition holding that the challenge to the award passed by Jharkhand Micro and Small Enterprises Facilitation Council (hereinafter referred to as “Facilitation Council”) communicated through memo no. 3342 dated 12.12.2013 should not be entertained in a proceeding under Article 226 of the Constitution of India. However, a liberty has been reserved with the appellant no.1 namely M/s. G.P.T. Infraprojects Limited (hereinafter referred to as “the buyer”) to avail the statutory remedy available under law. While dismissing the writ petition, the learned writ Court has also observed that the buyer is also under an obligation to make deposit of 75% of the awarded amount before his application under section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act of 1996”) is entertained by the concerned Court.

2. The writ petition was filed for quashing of the impugned order/award dated 12.12.2013 passed by the Facilitation Council under the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as “the Act of 2006”) in Case No. JHMSEFC No. 01 of 2013 on a reference made by Messrs Miki Wires (P) Limited (hereinafter referred to as “the supplier”).

3. The buyer had challenged the award, inter alia, on the ground of composition of the Tribunal by stating that the same was not in accordance with the provisions of section 21 of the Act of 2006 as there were more than five members. The challenge was also based on the ground that Facilitation Council had without evolving any procedure, proceeded to decide the claim by a cryptic order which did not contain any reason as to admissibility of the amount claimed by way of adequate proof. It was asserted that though the provisions of Code of Civil Procedure (hereinafter referred to as “CPC”) and Evidence Act were not applicable, but the claim was required to be established. It was also asserted that the State Government had failed to frame any Rules laying down procedure to be followed by the Facilitation Council in entertaining such reference to adjudicate claims in terms of section 30 of the Act of 2006. It was asserted that the award impugned in the writ proceedings suffered from jurisdictional irregularity which required interference under Article 226 of the Constitution of India.

4. A counter-affidavit was filed by the supplier before the learned writ Court. It was argued by the learned Senior counsel appearing on behalf of the supplier that the writ petitioners, after surrendering to the jurisdiction of the Facilitation Council and after having failed to obtain any stay in respect of the proceedings from Hon’ble Calcutta High Court, had chosen to challenge the award on untenable grounds relating to composition of Tribunal or the procedure followed by the Tribunal. It was also asserted that the provisions of the Act of 1996 were to be followed in terms of section 18(3) by the Facilitation Council while deciding the dispute on reference in the manner of an arbitration proceeding and the Tribunal had the jurisdiction to follow the Rules of procedures which the parties agreed or on failure thereof, to conduct the proceedings in a manner it considers appropriate. It was asserted that the writ petitioners had the alternative remedy under section 34 of the Act of 1996 to challenge the award, but the writ petition was filed only to escape the liability to deposit 75% of the awarded amount in terms of the provisions of the Act of 2006. It was submitted on merits that when the claim of the applicant/supplier was not resisted by any written statement, the Facilitation Council was fully justified in declaring the award after considering materials available on rec