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IN THE HIGH COURT OF ALLAHABAD
Sudhir Agarwal, Rajeev Misra, JJ.
TBED (India) Transformer Private Limited - Petitioner
Versus
U.P. Micro And Small Enterprises And Another - Respondents
Writ - C No. - 8038 of 2020
Decided On : 22-04-2020
Constitution of India – Article 226 – Arbitration and Conciliation Act, 1996 – Companies Act, 2013 – Micro Small and Medium Enterprises Development Act, 2006 – Section 20 – Companies Act, 1956 – To issue a writ of certiorari to quash order dated 23.12.2019 passed by respondent-1 i.e. U.P. Micro and Small Enterprises Facilitation Council and to issue a writ of mandamus to call for record of Claim Petition – Held, Arbitration clause, if any, in the agreement between the parties will not prevail over the provisions of Section 18 and respondent-1 is well within its jurisdiction – MASEF Council having acted as Conciliator is not barred from working as Arbitral Tribunal to arbitrate the dispute under Section 18(3) and such jurisdiction of MASEF Council has been given overriding effect by virtue of Section 18(4) and Section 24 which have to be given complete swing in the area covered by same. The argument, therefore, advanced otherwise by learned counsel for petitioner is hereby rejected. The question, formulated above, is answered against petitioner and we hold that MASEF Council is not prohibited from working as Arbitrator itself for adjudication of dispute between the parties and it is not obliged to refer the matter to any other body.
Facts of the Case:
Since there is an arbitration clause in the agreement and parties themselves have resolved to refer the matter to arbitration to the person nominated by petitioner, respondent-1 has no jurisdiction to proceed under Section 18 but that issue has not been decided, hence present writ petition
Finding of the Court:
Arbitration clause, if any, in the agreement between the parties will not prevail over the provisions of Section 18 and respondent-1 is well within its jurisdiction – MASEF Council having acted as Conciliator is not barred from working as Arbitral Tribunal to arbitrate the dispute under Section 18(3) and such jurisdiction of MASEF Council has been given overriding effect by virtue of Section 18(4) and Section 24 which have to be given complete swing in the area covered by same. The argument, therefore, advanced otherwise by learned counsel for petitioner is hereby rejected. The question, formulated above, is answered against petitioner and we hold that MASEF Council is not prohibited from working as Arbitrator itself for adjudication of dispute between the parties and it is not obliged to refer the matter to any other body.
Result: Petition dismissed
JUDGMENT :
Sudhir Agarwal, J.
1. Heard Sri Akshay Saprey, holding brief of Mr. Sarvanand Pandey, learned counsel for petitioner and perused the record.
2. This writ petition under Article 226 of Constitution of India has been filed by petitioner, TBEA (India) Transformer Private Limited having its registered Office at Revenue Survey No.745-Lot 3, TBEA Green Energy Park, N.H.-8, Village-Miyagam Karjan Vadodara, Gujarat (hereinafter referred to as 'petitioner') with a prayer to issue a writ of certiorari to quash order dated 23.12.2019 passed by respondent-1 i.e. U.P. Micro and Small Enterprises Facilitation Council (hereinafter referred to as “MASEF Council”) having its Office at Udyog Bhawan, Kanpur Nagar and also to issue a writ of mandamus to call for record of Claim Petition No. 216 of 2019 on the ground that parties have agreed to settle their dispute through arbitration under the provisions of Arbitration and Conciliation Act, 1996 (hereinafter referred to as “Act, 1996”) and Council has no jurisdiction to proceed with arbitration.
3. Facts in brief giving rise to this petition are that petitioner is a Private Limited Company incorporated under Companies Act, 2013 (hereinafter referred to as “Act, 2013”). It is engaged in the business of design, manufacture as well as service of Transformers and Reactors. Respondent-1 is a body established by Government of State of U.P. under Section 20 of Micro Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as “MSMED Act, 2006”). Respondent-2, M/S Osama Engineering Works having its registered office at 96B DAUD Nagar Naini, Prayagraj is also a Private Limited Company incorporated under Companies Act, 1956 (hereinafter referred to as “Act, 1956”) and continued to function under Act, 2013 being an existing company. It is also allegedly registered as Micro Enterprise under MSMED Act, 2006 and engaged in the business of manufacture of Transformer tanks, Yoke clamp, RTCC panels and Marshaling box etc.
4. For supply of certain work components of Transformer being manufactured by respondent-2, a letter of intent was issued by petitioner vide E-Mail dated 16.10.2018. Respondent-2 was to supply 42 Transformer Tanks as per above letter of intent. The delivery was to be made by 05.12.2018. Respondent-2 committed default in supply of goods and thus committed breach of contract. Even the items supplied were not of requisite specifications or quality. Consequently, petitioner issued a cancellation order dated 21.12.2018 and terminated purchase order. Respondent-2 instead of realizing its mistake, issued a legal notice dated 12.03.2019 upon petitioner requiring it to pay Rs. 4,79,009.70 along with interest which was computed to Rs. 4,10,803/-. Petitioner submitted his reply dated 20.04.2019 to the aforesaid notice disputing claim of respondent-2.
5. Thereafter, respondent-2 moved an application/representation dated 26.07.2019 before MASEF Council stating that petitioner is liable to pay in respect of goods supplied by respondent-2 in terms of provisions of MSMED Act, 2006 and since payment has been delayed, therefore application under Section 18(1) is being filed by Supplier to direct petitioner to pay to pay Rs. 4,79,009/-and interest thereon.
6. The claim of respondent-2 was contested by petitioner by submitting reply dated 04.11.2019 stating that entire claim was false and in fact petitioner himself has suffered huge loss which are to be liquidated by respondent-2 and required respondent-2 to withdraw its claim which is based on erroneous presentation of facts. Reply was submitted by petitioner after receiving notice from respondent-1 for conciliation under Section 18(1) but after receiving reply of petitioner, respondent-1 concluded that parties have failed to conciliate the matter and thereafter by impugned order it has directed to proceed for arbitration.
7. Petitioner pleaded before respondent-1 that since there is an arbitration clause in the agreement and parties themselve
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