The court affirmed that a non-signatory can be held liable if it creates a party to an agreement, reinforcing jurisdictionality under the MSME Act.

ORDER

1] This petition has been filed by the petitioner under Article 226 of the Constitution of India against the order dated 23.12.2022, passed in MSEFC/871/2018 by the respondent no.5/M.P Micro Small and Medium Enterprises Facilitation Council. Vide the impugned order, the facilitation council has held that despite the fact the petitioner/non-applicant no.1 is not a signatory in the agreement which was executed between the respondent no.1/applicant and the respondent nos.2 to 4/non-applicants, still he cannot wriggle out of his responsibility to make payment to the applicant. Since, the petition is against the order passed by Facilitation Council which is an arbitration tribunal, the writ petition is being entertained under Art.227 of the Constitution.

2] In brief, facts of the case are that the respondent no.1/applicant M/S Protek Aqua Solutions Pvt. Ltd entered into an agreement with the respondents no.2,3 and 4/ non-applicants no.2 to 4 for supply of water cooler filters and other accessories which were to be used during “Simhasta, 2016”. In the aforesaid agreement, there was also a reference of the petitioner Agrawal Panchayat Nyas Ujjain as the body which had created “Agrawal Samaj Simhasta Samiti Ujjain” as a registered society.

3] Admittedly, after the execution of the aforesaid agreement, certain dispute arose between the applicant and the non-applicant no.2 to 4, which led the applicant/respondent no.1 M/s Protek Aqua Solutions Pvt. Ltd to lodge its claim before Facilitation Council, Bhopal under Section 18 of the M.P. Micro Small & Medium Enterprises Act, 2006 (hereinafter to be referred to as “MSME Act”). In the said case, the replies have also been filed by the petitioner/non-applicant no.1 as also by respondents no.2,3 and 4/non-applicant no.2,3 and 4 and the final award was passed on 28.12.2021 (Annexure P-11) directing the non-applicant to pay the sum of Rs.18,85,935/- as principal amount, and Rs.52,01,415/- as interest, thus, the total amount comes to Rs.70,87,350/-. The aforesaid award was challenged by the petitioner in W.P.No.9085/2022 (Agrwal Panchayat Nyas Ujjain Vs. M/s Protek Aqua Solution Pvt and others) which was decided by the Co-ordinate Bench of this Court on 03.08.2022. In the aforesaid petition the petitioner's claim was that it is neither a buyer nor a supplier and is not a signatory to the agreement dated 09.02.2016, and is purely a separate entity registered under the M.P. Public Trust Act , but despite specific objections having raised before the Facilitation Council there was no adjudication of the said issue, hence, this Court, while considering the fact that the objections raised by the petitioner has not been considered and decided by the MSME Council, the matter has been remanded back to the Facilitation Council to decide the objections raised by the petitioner regarding maintainability of the reference qua petitioner under the provisions of the MSME Act.

4] After the matter was remanded back, Facilitation Council has again decided matter vide impugned order dated 23.12.2022(Annexure P-11), holding that the petitioner cannot escape its liability to make the payment on behalf of the respondents no.2 to 4.

5] Shri Ankur Modi, learned counsel appearing for the petitioner has submitted that the Facilitation Council has erred in holding that the petitioner is also a necessary party in the case despite holding that it is neither the signatory to the agreement dated 09/02/2016, nor the purchaser of the goods but has still held that it is liable to make the payment to the applicant.

6] It is further submitted by Shri Modi, that the petitioner is a public trust created under the Public Trust Act whereas respondent no.2 Agrawal Panchayat Nyas Ujjain is a Society registered under the Societies Registrikaran Adhiniyam, 1973 , and as such both of them are different distinct entities, created under different laws, hence, the petitioner cannot be held liable of the acts of respondent/non-applicant no.2.

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