ORDER :

(Prayer: Writ Petition filed under Article 226 of the Constitution of India for issuance of a Writ of Certiorarified Mandamus, calling for the records of the 1st respondent culminating in the impugned dismissal order MSEFC/CBER/82/2020- online application No.TN020E0045478/S/00002 dated 07.09.2021 and quash the same and consequently direct the 1st respondent to refer the parties to arbitration in terms of section 18 of the Mirco, Small and medium enterprises Development Act, 2006 (MSMED Act), 2006.)

1. This writ petition has been filed challenging the impugned order passed by the 1st respondent dated 07.09.2021 and for a consequential direction to the 1st respondent to comply with the mandatory requirements under Section 18 of the Micro, Small & Medium Enterprises Development Act, 2006 (hereinafter referred to as “MSMED Act”).

2. The case of the petitioner is that they are Micro Manufacturing enterprises registered with the MSME and they are in the business of software and hardware service. They entered into an agreement with All India Institute of Medical Sciences (AIIMS), New Delhi for hardware and software service through Agreement dated 25.05.2015. Pursuant to this agreement, they had also rendered services to the 2nd respondent. The 2nd respondent did not make the payments in spite of the petitioner raising several invoices between the year 2017 to 2019. Thereby, the petitioner is claiming that the total of amount of Rs.86,45,861/- is due and payable to the petitioner.

3. The petitioner filed a petition before the 1st respondent under Section 18 of the MSMED Act seeking for a direction to the 2nd respondent to make the payments with interest.

4. The grievance of the petitioner is that the 1st respondent without following any of the procedure under Section 18 of the MSMED Act, straight away proceeded to dismiss the petition on a ground which is unsustainable in law. Aggrieved by the same, the present writ petition has been filed before this Court.

5. Heard Mr.M.Santhanaraman, learned counsel appearing on behalf of the petitioner and Mr.C.Selvaraj, learned Additional Government Pleader appearing on behalf of the 1st respondent. There is no requirement to issue any notice to the 2nd respondent in this case, since the 1st respondent did not dismiss the petition on merits and this Court finds that the very dismissal itself is in gross violation of the procedure contemplated under Section 18 of the MSMED Act.

6. This Court has carefully considered the submissions made on either side and also the materials available on record.

7. The Apex Court in Silpi Industries etc., vs. Kerala State Road Transport Corporation and Another reported in 2021 SCC Online SC 439 has succinctly extracted the procedure to be followed by the Council when a petition is made and the same is extracted hereunder:

20. From a reading of Section 18(3) of the 2006 Act it is clear that when the conciliation initiated under sub-section (2) of Section 18 of the said Act is not successful, the Council shall either itself take up the dispute for arbitration or refer to any institution for arbitration. Further Section 18(3) of the said Act also makes it clear that the provisions of 1996 Act are made applicable as if there is an agreement between the parties under sub-section (1) of Section 7 of the 1996 Act. Section 23 of the 1996 Act deals with the statement of claim and defence. Section 23(2A), which gives a right to respondent to submit a counter claim or plead set-off with regard to claims within the scope of the arbitration agreement, is brought into Statute by Amending Act 3 of 2016. If we look at the Statement of Objects and Reasons of the Amending Act, same is also enacted to provide for speedy disposal of cases relating to arbitration with least court intervention. Clause 11 of the Bill, by which sub-section (2A) was proposed to be inserted, states that sub-section (2A) was intended to give an opportunity to the respondent, in support of his case, to