IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
UJJAL BHUYAN, N. TUKARAMJI, JJ.
The National Small Industries Corporation Ltd. NSIC - Petitioner
Versus
The State of Telangana, Rep. by its Pr. Secretary, Industries Department & Others. – Respondents
Writ Petition No.2358 of 2023
Decided On : 16-02-2023
Constitution of India,1950 - Article 226 and 227 - Micro, Small and Medium Enterprises Development Act, 2006 - Section 19 and 18 - Haryana Value Added Tax Act, 2003 - Section 33 - Arbitration and Conciliation Act, 1996 - Section 34 - Relief sought for by petitioner - Excise and Taxation Officer-cum-Assessing Authority - Petitioner is a statutory Government of India enterprise and acts as a facilitator to Micro, Small and Medium Enterprises - Facilitator, it had facilitated procurement of contract by 3rd respondent by entering into consortium amongst MSMEs in respect of tenders floated by respondent - Respondent cannot be fastened onto petitioner - Held, Legislation to protect and further interest of MSMEs - Act provides for a dedicated dispute resolution mechanism under Section 18 - To ensure that interest of MSME is protected and to weed out frivolous challenge to an award passed by Facilitation Council under Section 18, statute has put in a caveat any challenge to such an award would be entertained only upon deposit of 75% of the awarded amount - Writ Petition is dismissed
ORDER :
(Ujjal Bhuyan, J.)
1. Heard Mr. J.Prabhakar, learned Senior Counsel representing Ms. D.Venkata Padmaja, learned counsel for the petitioner. We have also heard Mr. H.Venugopal, learned Government Pleader for Industries and Commerce Department for respondent No.1; Mr. Gollakota Satya Jagannat, learned counsel for respondent No.3; and Mr. P.Govind Reddy, learned Special Counsel representing State of Andhra Pradesh (respondent Nos.5 & 6).
2. By filing this petition under Article 226 of the Constitution of India, petitioner has prayed for setting aside of the award dated 03.11.2022 passed by the Telangana State Micro and Small Enterprises Facilitation Council, Ranga Reddy Region (briefly referred to hereinafter as ‘the Facilitation Council’) in Case No.236/MSEFC/2020.
3. Learned Senior Counsel for the petitioner submits that petitioner is a statutory Government of India enterprise and acts as a facilitator to Micro, Small and Medium Enterprises (briefly referred to hereinafter as ‘MSMEs). Petitioner is not a supplier within the meaning of Section 2(n) of the Micro, Small and Medium Enterprises Development Act, 2006 (briefly referred to hereinafter as ‘the MSME Act’). As a facilitator, it had facilitated procurement of contract by the 3rd respondent by entering into consortium amongst MSMEs in respect of tenders floated by respondent Nos.5 & 6. Petitioner is not liable to pay the amount claimed by the 3rd respondent which are in fact recoverable from respondent Nos.5 & 6. Liabilities of respondent Nos.5 & 6 cannot be fastened onto the petitioner. This being a jurisdictional error, the writ petition is maintainable. Therefore, this Court in exercise of its jurisdiction under Article 226 of the Constitution of India may set aside the award and direct respondent Nos.5, 6 & 7 to make payment to the petitioner in terms of the award.
4. At the outset, we are a little perplexed by the nature of the relief sought for by the petitioner. On the one hand, petitioner seeks quashing of the award, but on the other hand, petitioner seeks a direction to respondent Nos.5, 6 & 7 to make payment to the petitioner in terms of the aforesaid award.
5. Be that as it may, we are not inclined to entertain the writ petition for two reasons. Firstly it is now trite law that an award passed by the Facilitation Council under Section 18 of the MSME Act can be questioned under Section 34 of the Arbitration and Conciliation Act, 1996 (briefly referred to hereinafter as ‘the 1996 Act’).
5.1. We see no reason to by-pass the remedy provided under the 1996 Act read with the MSME Act and entertain the writ petition.
5.2. When this was pointed out to learned Senior Counsel for the petitioner, he has placed reliance on a decision of the Supreme Court in Godrej Sara Lee Ltd. v. Excise and Taxation Officer-cum-Assessing Authority, 2023 SCC OnLine SC 95, to contend that notwithstanding the alternative remedy, the writ petition would be maintainable when it is a question of jurisdiction.
5.3. That was a case where the High Court had declined to entertain the writ petition assailing an order of assessment and had relegated the petitioner to the remedy of appeal under Section 33 of the Haryana Value Added Tax Act, 2003. It was in that context Supreme Court held that mere availability of an alternative remedy of appeal or revision would not oust the jurisdiction of the High Court under Article 226 of the Constitution of India and render a writ petition non-maintainable. Drawing a distinction between maintainability and entertainability of a writ petition, Supreme Court has observed that entertainability of a writ petition is entirely within the realm of discretion of the High Court, writ remedy being discretionary. Even though a writ petition may be maintainable, yet the same may not be entertained by the High Court for various reasons.
5.4. We are afraid the decision of the Supreme Court in Godrej Sara Lee Ltd. (supra) is not an authority for the proposition that chall
The main legal point established in the judgment is the requirement of complying with the provisions of Section 19 for challenging an award under the Act of 1996 and the limitations on entertaining a....
An award passed by the Micro and Small Enterprises Facilitation Council under the MSMED Act is an award under the Arbitration and Conciliation Act, 1996, and therefore, it cannot be challenged by way....
A writ petition challenging an award under the MSME Act is not maintainable unless the petitioner deposits 75% of the awarded amount, as mandated by Section 19 of the MSME Act, 2006.
The High Court cannot entertain writ petitions challenging awards of the Micro and Small Enterprises Facilitation Council without the mandatory deposit of 75% of the awarded amount as per Section 19 ....
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