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2024 Supreme(Online)(GUJ) 3412
HIGH COURT OF GUJARAT
MS. JUSTICE VAIBHAVI D. NANAVATI, J
M/S SANGANER ENVIRO PROJECT DEVELOPMENT – Appellant
Versus
ADVENT ENVIROCARE TECHNOLOGY PVT. LTD. – Respondent
R/SPECIAL CIVIL APPLICATION NO. 20961 of 2023
MR RASHESH SANJANWALA, SENIOR ADVOCATE with MR HARSH K RAVAL(9068) for the Petitioner(s) No. 1 MR SHALIN MEHTA, SENIOR ADVOCATE with MR ARJUN SHETH for the Respondent(s) No. 1,2
The jurisdiction of the MSME Facilitation Council is valid under the Micro, Small and Medium Enterprises Development Act, 2006, and challenges to its awards must follow the procedures outlined in the Arbitration and Conciliation Act, 1996.
Headnote:(A) Micro, Small and Medium Enterprises Development Act, 2006 - Section 19 - Arbitration and Conciliation Act, 1996 - Jurisdiction of MSME Facilitation Council - The writ-applicant challenged the Arbitral Award on grounds of jurisdiction and public policy, asserting that the contract was a works contract not amenable to MSMEFC jurisdiction. The court held that the award was valid and the challenge was not maintainable. (Paras 17.1, 17.12, 20)
(B) Jurisdiction - The court reiterated that the only remedy available to the writ-applicant was to appeal under Section 37 of the Arbitration Act, as previous challenges had been dismissed. (Paras 17.10, 17.11)
Facts of the case:
The writ-applicant, an SPV, entered into a contract with Respondent No.1 for an effluent treatment plant, which was not completed. The MSME Council initiated arbitration, leading to an award against the writ-applicant.
Findings of Court:
The court found that the writ-applicant's challenge to the award was not maintainable and previous orders had attained finality.
Issues: The main issues were the jurisdiction of the MSME Council and the maintainability of the writ-application.
Ratio Decidendi: The court ruled that the MSME Council had jurisdiction and the writ-application was not maintainable due to previous final orders.
Result: Writ-application dismissed.
| Table of Content |
|---|
| 1. contract for effluent treatment (Para 2) |
| 2. contract nullified (Para 3 , 4 , 5) |
| 3. arbitration initiated (Para 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14) |
| 4. writ-applicant's submissions (Para 15) |
| 5. respondent's opposition (Para 16) |
| 6. court's ruling on maintainability (Para 17 , 18) |
ORAL ORDER
1. Heard Mr. R. S. Sanjanwala, the learned Senior Advocate assisted by Mr. H. K. Raval, the learned advocate appearing for the writ-applicant and Mr. Shalin Mehta, the learned Senior Advocate assisted by Mr. Arjun Sheth, the learned advocate who having instructions to appear for the respondent No.1.
Registry to accept the Vakalatnama of Mr. Arjun Sheth, the learned advocate appearing for the respondent No.1.
2. The writ-applicant is a Special Purpose Vehicle (SPV) Company incorporated under the provision of the Companies Act, 2013. The writ-applicant in pursuance to the directions from the State Government of Rajasthan and other authorities and Hon'ble Rajasthan High Court, the association of various small and big textile unit viz. Sanganer Kapda Rangai Chapai Association (for short referred to as ‘SKRCA’) was required to build effluent treatment plan for the textile processing Units in Sanganer, Jaipur, Rajasthan.
3. The contract dated 24.07.2015 between SKRCA and Respondent No.l stood nullified by execution of Contract Agreement dated 03.09.2016 between the writ-applicant i.e., SEPD and the Respondent No.1 AETPL.
4. The Project under consideration was not completed by the Respondent No.1 and further on account to the tune of Rs.128 crores were mobilized and still the Respondent No.1 have been demanding the funds towards such incomplete project. Further there were various lapses and faults on the part of the Respondent No.1 and there were certain issues regarding CGST etc.
5. The writ-applicant received notice from the Respondent No.2 Council, wherein the writ-applicant appeared online before Respondent Council and participated in the conciliation proceedings and remained present in the meeting held by the Respondent No.2 contesting the application and submitting that no dues are pending and on the contrary the work is incomplete.
6. The Respondent No.2 Council terminated the conciliation proceedings as unsuccessful by order dated 23.11.2020 and decided to itself initiate and act as an Arbitrator in the Arbitral Proceedings wherein the Individuals who acted as Conciliator were also the same as the individual functioning as Arbitrator.
7. Pursuant to the aforesaid, the Respondent No.1 filed Claim Statement before the Respondent No.2 wherein claimed Rs.62,17,03,764/- from the writ-applicant. The writ-applicant herein submitted reply to the claim statement raising preliminary objection that the respondent No.2 Council has no jurisdiction or power to entertain reference under Section 18 of the Act, 2006. Inspite of the aforesaid preliminary objection, the respondent No.2 proceeded in the arbitration proceedings.
8. Being aggrieved by the aforesaid, the writ-applicant herein preferred Special Civil Application No.6436 of 2021 wherein the order passed by the Council taking up the matter as Arbitrator was challenged. The said writ-application came to be disposed of by order dated 9.4.2021 directing the respondent No.2 to decide the preliminary issue whether the Micro and Small Enterprises Facilitation Council is empowered to act as an Arbitrator since the council itself has acted as a conciliator by the said order dated 9.4.2021.
9. Without considering the provisions of the Act, 2006 and the Act, 1996 in correct perspective the respondent No.2 passed an order dated 6.8.2021 which was subject matter of challenge by filing the Special Civil Application No.12639 of 2021 whereby the prayer to stay the arbitral proceedings before the Facilitation Council came to be rejected vide order dated 27.9.2021.
10. Being aggrieved by the said order the writ-applicant preferred Letters Patent Appeal No. 989 of 2021 on 25.10.2022 and on 03.09,2021 the Facilita
