JUDGMENT

18.06.2024

Chakradhari Sharan Singh, CJ.

1. In the present intra-Court appeal, the appellant has put to challenge an order dated 22.04.2022 passed by a learned Single Judge of this Court in W.P.(C) No.5935 of 2022.

2. Learned Single judge, by the impugned order, has quashed the entire proceeding of MSEFC Case No.68 of 2021, pending before the Micro and Small Enterprises Facilitation Council, Odisha („MSEFC, Odisha‟ in short) instituted under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 („MSMED Act‟, in short) mainly on the ground that the appellant (opposite party No.4 in the writ application) was registered under the MSMED Act after the award of contract by the writ petitioner (respondent No.1 herein). The learned Single Judge, by the impugned order, has allowed the writ application filed by respondent No.1 also on the ground that the MSEFC consisting of four members had commenced the arbitration proceeding, which was not permissible under the Arbitration and Conciliation Act, 1996 („1996 Act‟, in short), which stipulates an Arbitral Tribunal consisting of uneven number of members.

3. We have heard Mr. Gouri Mohan Rath along with Mr. S. S. Padhy, learned counsel appearing for the appellant, Mr. Shiv Shankar Banerjee, learned counsel for respondent No.1 and Mr. Debakanta Mohanty, learned Additional Government Advocate for respondents

No.2 to 4.

4. The facts, which are not in dispute, are that respondent No.1 had awarded the appellant a work order for “Fabrication, Erection and Painting etc. of Structural Steel Work in connection with the Power Plant Area of M/s. Bhusan Energy Ltd., at Dhunkanal, Orissa”. Various amendments to the original work order dated 11.06.2010 were made, the last amendment being dated 25.06.2015. It is the case of the appellant that in accordance with the said work order and its amendments, the appellant continued to supply materials and rendered services to respondent No.1 and raised periodic account bills during the years-2016, 2017 and 2018, which were paid in part. It is also the appellant‟s case that it continued to work till 10.05.2018 on which date the assigned work was admittedly completed, whereupon the respondent No.1 had issued completion certificate. After the completion of work, the appellant pursued respondent No.1 for release of its contractual dues including final bills arising out of the work, and issued various letters and e-mails dated 30.09.2019, 21.05.2020,

21.06.2020 and 07.08.2020, in that regard.

It is the further case of the appellant that it being a registered

Small Scale Industrial Enterprise („MSME‟, in short), approached MSEFC, Odisha by making a reference under Section 18 of the MSMED Act, alleging nonpayment of the amount that was due to it (the supplier) by the respondent No.1 (the buyer), which came to be registered as MSEFC Case No.68 of 2021.

5. A notice was issued by the MSEFC to respondent No.1 in the said MSEFC Case No.68 of 2021. After receipt of the notice, and more than three years after completion of work, respondent No.1, vide letter dated 26.09.2021 invoked arbitration clause under the terms of the agreement for adjudication of its „so-called‟ claims, which were never raised earlier. Further, at no point of time, till such invocation of the arbitration clause, respondent No.1 had ever raised any demand against the appellant or had ever levied any liquidated damages or had issued any correspondence in connection with any demand whatsoever. Only after initiation of action by the appellant invoking provisions of the MSMED Act, as a counter-blast and with an oblique motive to frustrate the appellant‟s claim, invoked the arbitration. Further, after knowing about the institution of the MSEFC Case No.68 of 2021

before MSEFC, Odisha, respondent No.1 filed an application vide AP No.538 of 2021 before the Calcutta High Court without disclosing about the pendency of the MSEFC Case No.68 of 2021. Six months after being aware of the pendency o