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2023 Supreme(Mad) 1009

IN THE HIGH COURT OF JUDICATURE AT MADRAS
P.D. AUDIKESAVALU, J.
Metalman Auto Pvt. Ltd. – Appellant
Versus
Micro and Small Enterprises Facilitation Council – Respondent
W.P. No. 29870 of 2022 and W.M.P. Nos. 29258 and 29260 of 2022
Decided on : 25-01-2023

Advocates:
Advocate Appeared:
For the Appellant : Mr. Karthik Sundaram for Ms. Anusha Peri
For the Respondents: Mr. T.Arunkumar, Mr. T.K.Bhaskar

Headnote:

Constitution of India,1950 - Article 226 and 32 - Micro, Small and Medium Enterprises Development Act, 2006 - Section 19, 15 to 25 - Arbitration and Conciliation Act, 1996 - Section 34 read with Section 2(4) - Value of goods supplied with interest calculated in terms - Requirement of pre-deposit - Second Respondent made a claim in Case No. MSEFC/CBER before the First Respondent under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 - Held, Proof and examined witnesses before the First Respondent. Having not even taken any efforts to convince that it has evidence to repudiate liability, there is no justification for the Petitioner to find fault with the First Respondent for having arrived at the conclusion based on the materials available on record - Writ Petition dismissed

ORDER :

Prayer:- Writ Petition filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorarified Mandamus, calling for the records relating to the impugned Order in Reference No. MSEFC/CBER/111/2021, Online Application No. UDYAM-TN-11-0012041/M/00002 dated 25.02.2022 passed by the First Respondent and quash the same as illegal.

Heard Mr. Karthik Sundaram, Learned Counsel appearing for the Petitioner, Mr. T.Arunkumar, Learned Additional Government Pleader appearing for the First Respondent and Mr. T.K.Bhaskar, Learned Counsel for the Second Respondent and perused the materials placed on record, apart from the pleadings of the parties.

2. The Second Respondent made a claim in Case No. MSEFC/CBER/111/2021 before the First Respondent under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as 'the MSMED Act' for short), for payment of Rs. 86,89,416/- from the Petitioner towards the value of goods supplied with interest calculated in terms of that Act, in which an order dated 25.02.2022 was passed holding that the Petitioner was liable to pay the sum of Rs. 86,89,416/- together with compounded interest with monthly rests at three times of the Bank rate notified by the Reserve Bank of India as stipulated in MSMED Act from the invoices dated from 09.12.2020 to 04.05.2021 till the date of realization of dues, which is assailed in this Writ Petition.

3. Learned counsel for the Second Respondent has raised preliminary objections regarding the maintainability of the Writ Petition by contending that if the Petitioner is aggrieved by the impugned order, it has only to resort to filing of an application under Section 34 read with Section 2(4) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the A & C Act' for short), to have it set aside as an arbitral award, and that in any event, a Writ Petition to set aside an arbitral award cannot be prosecuted without complying with the requirement of pre-deposit of 75% of the amount involved in terms of Section 19 of the MSMED Act.

4. In response, Learned Counsel for the Petitioner contends that when the First Respondent has not conducted the arbitral procedure as required to be followed under the A & C Act read with MSMED Act, the Petitioner is justified in invoking the plenary jurisdiction of this Court under Article 226 of the Constitution to impeach it placing reliance on the decision of the Hon'ble Supreme Court of India in Jharkhand Urja Vikas Nigam Limited -vs- State of Rajasthan (Order dated 15.12.2021 in Civil Appeal No. 2899 of 2021) and the decision of the Division Bench of this Court in M/s. Super Steam Boilers Engineers Pvt. Ltd. -vs- Micro, Small Enterprises Facilitation Council, Coimbatore Region (Order dated 07.03.2022 in W.A. No. 2655 of 2021) in that regard. It is further submitted that the requirement of pre-deposit of 75% of the amount involved as stipulated in Section 19 of the MSMED Act cannot be made applicable to Writ Petitions under Article 226 of the Constitution as held by this Court in the decision in Sri Valli Process -vs- Micro Small Enterprises Facilitation Council [(2022) 5 MLJ 489].

5. The pivotal question that arises for consideration in this case is whether a Writ Petition under Article 226 of the Constitution could be entertained to challenge the order passed under Section 18 of the MSMED Act and if so, whether the requirement of pre-deposit of 75% of the amount involved as required under Section 19 of the MSMED Act would not be applicable to such case?

6. At this juncture, it must be noticed that Section 34(2)(v) of the A & C Act provides that an arbitral award may be set aside by the jurisdictional Court on an application made by the aggrieved party when the arbitral procedure is not in accordance with the provisions of that Act. It must, at once, be emphasized that the Hon'ble Supreme Court of India in Assistant Collector of Central Excise -vs- Dunlop India Limited [

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