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HIGH COURT OF ANDHRA PRADESH
DHIRAJ SINGH THAKUR,CHALLA GUNARANJAN
TAMIL NADU POWER DISTRIBUTION CORPORATION LTD – Appellant
Versus
AP MICRO AND SMALL ENTERPRISES FACILITATION COUNCIL – Respondent
WA 211/2025
(A) Micro, Small and Medium Enterprises Development Act, 2006 - Sections 18, 19, and 32 - Arbitration and Conciliation Act, 1996 - Sections 7, 29(A), 34, and 37 - Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 - Section 6 - Constitution of India - Articles 226 and 227 - Maintainability of writ petition against arbitral award - Existence of alternative remedy under Section 34 of the 1996 Act - Requirement of pre-deposit under Section 19 of the 2006 Act - Limitation for challenging award - Entertaining a writ petition to obviate statutory pre-deposit is impermissible. (Paras 12-24)
(B) Arbitration - Challenge to award - Alternative remedy - Existence of an efficacious alternative remedy under the special statute must be exhausted - High Court should not entertain a writ petition under Article 226/227 challenging an arbitral award when the party has a remedy under Section 34 of the 1996 Act. (Paras 12-18)
(C) Limitation - Writ jurisdiction - High Court cannot entertain a writ petition challenging an arbitral award after the expiry of the statutory period prescribed under Section 34 of the 1996 Act, as doing so would defeat the legislative intent and scheme of the Act. (Paras 20-24)
(D) Pre-deposit - Section 19 of the MSMED Act - Entertaining a petition under Article 226/227 to avoid the mandatory pre-deposit of 75% of the award amount is impermissible and would defeat the object of the special enactment. (Paras 18-19) (E) Repeal and savings - Section 32(2) of the MSMED Act - Any action taken under the repealed Act of 1993 is deemed to have been done under the corresponding provisions of the Act of 2006. (Paras 8-11)
Facts of the case:
The appellant, an electricity board, entered into purchase orders with a supplier. The supplier, claiming non-payment, approached the Facilitation Council under the Act of 1993 for a claim. The Council entertained the claim, issued notices, and eventually passed an award directing payment of principal and interest. The appellant challenged this award by filing a writ petition before the High Court. The single judge dismissed the writ petition, holding that the remedy under Article 226 was not available as the award could be assailed under the Act of 1996. The present appeal is against this dismissal.
Findings of Court:
The court held that the Facilitation Council's action in resorting to arbitration without conciliation was protected under the savings clause of the 2006 Act. On the main issue of maintainability, the court held that a writ petition challenging an arbitral award is not maintainable when an alternative remedy under Section 34 of the 1996 Act exists. The court further held that entertaining a writ petition to avoid the mandatory pre-deposit under Section 19 of the 2006 Act is impermissible. Additionally, the court ruled that challenging an award beyond the 120-day limitation period under Section 34 of the 1996 Act through a writ petition cannot be permitted, as it defeats the legislative intent of the special statute. The writ appeals were dismissed.
Issues: The main issues were: (1) whether the Facilitation Council could pass an award without first resorting to conciliation under Section 18(2) of the Act of 2006; and (2) whether a writ petition under Article 226/227 is maintainable to challenge an arbitral award passed under the MSMED Act, given the existence of an alternative remedy under the Arbitration and Conciliation Act.
Ratio Decidendi: The court ruled that a writ petition challenging an arbitral award is not maintainable when the party has an efficacious alternative remedy under Section 34 of the Act of 1996. Further, entertaining a writ petition to avoid the statutory pre-deposit requirement under Section 19 of the MSMED Act, or to bypass the limitation period prescribed under Section 34, is impermissible and would defeat the object and purpose of the special enactment.
Result: All writ appeals dismissed. No costs. Pending miscellaneous applications, if any, shall stand closed. (Para 24)
| Table of Content |
|---|
| 1. common issues in multiple appeals allow consolidated order. (Para 1) |
| 2. factual background of disputed payments and facilitation council claim. (Para 2 , 3 , 4) |
| 3. challenge to award: lack of conciliation before arbitration under section 18(2) of msmed act. (Para 5) |
| 4. interpretation of section 18 of msmed act and savings clause section 32. (Para 6 , 8 , 9 , 10 , 11) |
| 5. unsuccessful conciliation prerequisite for arbitration under msmed act. (Para 7) |
| 6. maintainability of writ against arbitral award under article 226/227. (Para 12 , 13 , 14 , 15 , 16 , 17 , 18) |
| 7. writ jurisdiction cannot circumvent section 34 limitation for challenging arbitral award. (Para 19 , 20 , 21 , 22 , 23 , 24) |
Per DHIRAJ SINGH THAKUR, CJ:
The present set of three appeals arises out of a common judgment and order, dated 10.01.2025, rendered in W.P. Nos.2771, 2778 and 2779 of 2013. Since the issues of law and fact which arise in all the three writ appeals are the same and since the judgment impugned before us is also a common judgment for all the three writ petitions, we propose to deal with the issues by way of a common order.
2. We will refer to the facts in reference to W.A. No.208 of 2025 to understand the genesis of the controversy before us. The appellant i.e., Tamil Nadu Electricity Board now rechristened as Tamil Nadu Generation and Distribution Corporation Limited, called for tenders for supply of ACSR/AAA conductors for which six purchase orders were placed with respondent No.2 M/s. Rajam Aluminium Metal Products Pvt. Ltd on 29.12.1997, 28.10.1998, 2011.1999, 16.12.1999, 05.10.2000 and 31.10.2000.
The amount, according to the supplier, not having been paid in accordance with the terms and conditions of the purchase order led respondent No.2 to approach the A.P. Industries Facilitation Council, which was first constituted under the Interest On Delayed Payments To Small Scale And Ancillary Industrial Undertakings Act, 1993, now called „the Andhra Pradesh Micro and Small Enterprises Facilitation Council‟ after the coming into force of the Micro, Small and Medium Enterprises Development Act of 2006 (hereinafter referred to as „the Act of 2006‟), by way of a claim in Form-I on 02.08.2004.
3. From the record, it appears that the Facilitation Council entertained the claim on 04.08.2006 and issued notice to the Tamil Nadu Electricity Board as also the Council for the Electricity Board requiring them to cause appearance on 19.08.2006 before the said Council, failing which it was made clear that the Council would continue to proceed and make an Award on the basis of evidence before it.
4. A second notice was also served on the appellant, dated 17.12.2009, on the Chief Engineer, Material management, of the appellant Board as also the Counsel for the Board. It then appears that counter statement was filed by the appellant before the Facilitation Council in which apart from other grounds, the ground taken was that in terms of provisions of Section 18(3) of the Act of 2006, arbitration cannot proceed unless there was a process of conciliation initiated under Sub-section (2) of Section 18 of the Act of 2006.
The Facilitation Council, however, allowed the claim of respondent No.2 claimant and directed the payment of Rs.14,17,823/- towards principal and Rs.57,21,619/- as interest totaling Rs.71,30,442/- as on 30.06.2004 being the price of goods, supplied to the respondents together with interest due from 12.02.1998 to 30.06.2004. Apart from this, interest at the rate of 1½ times of prime lending rate charged by the State Bank of India compounded with monthly rests with effect from 01.07.2004 was also directed to be paid.
5. Aggrieved of the Award, dated 11.11.2011, passed by the Facilitation Council, W.P. No.2771 of 2013 came to be filed by the appellant herein, which too came to be dismissed inter alia on the following grounds:
“29. The provisions contained in the MSMED Act with the aid of the 1996 Act are self-contained, providing therein the statutory
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