Prayer

Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorari to call for records pertaining to the order passed by the first respondent in MSEFC/CR/2018 dated27.01.2020 and to quash the same.

Order

The challenge in this Writ Petition is to the order passed by the first respondent dated 27.01.2020 and to quash the same.

2. Learned counsel for the petitioner would submit that the second respondent filed a Complaint before the first respondent stating that the petitioner failed to make payment immediately upon receipt of the goods supplied by the second respondent; that the first respondent without issuing any notice to the petitioner and without conducting any conciliation proceedings passed an Award which is in total violation of Section 18 of the MSMED Act, 2006. Therefore, the learned counsel prays for setting aside the impugned order.

3. None appeared on behalf of the first respondent.

4. The learned counsel for the second respondent fairly submitted that the first respondent immediately upon receipt of the complaint from the second respondent without conducting any conciliation proceedings passed an award that too, without notice to the parties concerned, which is not only in violation of principles of natural justice but also against the provisions of Section 18 of MSMED Act.

5. Heard the learned counsel for the petitioner and the learned counsel for the second respondent. None appeared on behalf of the first respondent, despite service of notice on them and their name being printed in the causelist.

6. The second respondent made a Reference before the first respondent-Council. Therefore, the first respondent, upon receipt of such Reference/Complaint, ought to have conducted a conciliation proceedings in terms of Section 18 of the MSMED Act, since, Section 18 contemplates that, if any dispute is referred under the said Act, it is mandatory on the part of the Council or an appointed Institution to conduct conciliation followed by arbitration if needed, or in the event of any amicable settlement is arrived at between the parties during such conciliation, the same shall be reduced into writing and signed by both the parties, which bears the same legal binding force of an Arbitral Award passed under Arbitration and Conciliation Act, or, in the event, conciliation fails, Council or appointed Institutions must refer the dispute before an Arbitrator by nominating an Arbitrator after hearing both the parties.

7. However, in the present case, it appears that, the first respondent, immediately upon receipt of complaint/Reference from the second respondent, without following the procedure as contemplated under Section 18 of the MSMED Act, proceeded to pass an Award, without putting on notice to the parties concerned.

8. Therefore, this Court finds fault in the decision making process on the part of the first respondent. Hence, this Court is inclined to set aside the impugned order passed by the first respondent dated 27.01.2020, as it suffer from not only in violation of principles of natural justice, as the parties have not been heard but also against the provisions of Section 18 of MSMED Act.

9. Accordingly, this Court pass the following order/direction:-

i) The impugned order passed by the first respondent dated 27.01.2020 is set aside.

ii) The matter is remitted back to the first respondent for fresh consideration, in which case, the first respondent is directed to issue notice to the parties (viz. The petitioner and the second respondent) for conciliation in terms of Section 18 of the MSMED Act.

iii) In the event, conciliation fructifies and any amicable settlement is arrived at between the petitioner and the second respondent, the same shall be reduced into writing and signed by both the parties.

iv) In case, such conciliation fails, the first respondent shall take a decision for appointment of an Arbitrator to conduct arbitration proceedings.

v) The learned Arbitr