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M/s. Bharat Heavy Electricals Limited v/s State of U.P. & Others


Company & Directors' Information:- BHARAT HEAVY ELECTRICALS LIMITED [Active] CIN = L74899DL1964GOI004281

Company & Directors' Information:- U P ELECTRICALS LIMITED [Active] CIN = L31200DL1971PLC005666

Company & Directors' Information:- S T ELECTRICALS PRIVATE LIMITED [Active] CIN = U31909PN1998PTC012975

Company & Directors' Information:- V S ELECTRICALS PRIVATE LIMITED [Active] CIN = U40104WB1995PTC075508

Company & Directors' Information:- ELECTRICALS INDIA PVT LTD [Active] CIN = U74210MH1977PTC004605

    Civil Misc. Writ Petition No. 11535 of 2014

    Decided On, 24 February 2014

    At, High Court of Judicature at Allahabad

    By, THE HONOURABLE CHIEF JUSTICE DR. DHANANJAYA YASHWANT CHANDRACHUD & THE HONOURABLE MR. JUSTICE DILIP GUPTA

    For the Appellant: Kashif Zaidi, Advocate. For the Respondents: -------.



Judgment Text

1. The third respondent filed a claim petition before the Uttar Pradesh State Micro and Small Enterprises Facilitation Council on 19 November 2012. The grievance of the third respondent is that it supplied goods amounting to Rs. 6.87 lacs during the period from 27 September 2010 to 23 April 2012 to the Petitioner in spite of which payment has not been made. In pursuance of the aforesaid claim petition, a notice was issued by the Council, which is impleaded as the second respondent, to the petitioner on 3 December 2012. On 7 January 2013, the petitioner filed an objection u/s 8 of the Arbitration and Conciliation Act, 1996 stating that there is an arbitration agreement between the parties and submitted that the dispute be referred to arbitration in terms of the arbitration agreement. On 27 May 2013, the petitioner was asked to appear before the Member of the Facilitation Council at Lucknow for conciliation. Thereafter, further proceedings have taken place and on 30 December 2013, an order has been passed observing that the conciliation has not been successful. On 17 January 2014, a notice was issued to the petitioner to file its reply failing which it has been stated that action would be taken in terms of the provisions of the Micro, Small and Medium Enterprises Development Act, 2006. The petitioner has filed this proceeding seeking the intervention of this Court and prays for a certiorari quashing all the proceedings before the Uttar Pradesh State Micro and Small Enterprises Facilitation Council and a direction to the Council to decide the objection filed u/s 8 of the Arbitration and Conciliation Act, 1996.

2. The petitioner has relied upon the arbitration agreement which is contained in the contract between the parties, which is in the following terms:

23. ARBITRATION:

In all cases of disputes emanating from and in reference to this Purchase Order the matter shall be referred to the arbitration of the sole arbitration of the Executive Director/GM of BHEL, Bhopal or any other person (including an employee of BHEL, even though he had to deal with the matter relating to this P.O. in any manner) nominated by the said Executive Director/GM to act as sole arbitrator. The arbitration shall be under THE ARBITRATION AND CONCILIATION ACT OF 1996' and the rules there under. The arbitrator may from time to time with the consent of the parties enlarge the time for making and publishing the award.

3. Parliament enacted the Micro, Small and Medium Enterprises Development Act, 2006 for facilitating the promotion and development and enhancing the competitiveness of micro, small and medium enterprises and for matters connected therewith. Section 7 provides for the classification of enterprises as micro enterprises, small enterprises and medium enterprises respectively. Under the said Act, the State Government is required to establish Micro and Small Enterprises Facilitation Councils. Section 15 provides that where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day. The proviso, however, stipulates that in no case would the period agreed upon between the supplier and the buyer in writing exceed forty-five days from the date of acceptance or the deemed date of acceptance. 'Appointed day' has been defined in Section 2(b) to mean the day following immediately after the expiry of the period of fifteen days from the day of acceptance or the day of deemed acceptance of any goods or any service by a buyer from a supplier. Section 18 empowers a reference of disputes being made to the Council by any of the parties to the dispute. Section 18 is in the following terms:

18. (1) Notwithstanding anything contained in any other law for the time being in force, any party to a dispute may, with regard to any amount due u/s 17, make a reference to the Micro and Small Enterprises Facilitation Council.

(2) On receipt of a reference under sub-section (1), the Council shall either itself conduct conciliation in the matter or seek the assistance of any institution or centre providing alternate dispute resolution services by making a reference to such an institution or centre, for conducting conciliation and the provisions of Sections 65 to 81 of the Arbitration and Conciliation Act, 1996 shall apply to such a dispute as if the conciliation was initiated under Part III of that Act.

(3) Where the conciliation initiated under sub-section (2) is not successful and stands terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer it to any institution or centre providing alternate dispute resolution services for such arbitration and the provisions of the Arbitration and Conciliation Act, 1996 shall then apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in sub-section (1) of Section 7 of that Act.

(4) Notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council or the centre providing alternate dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator under this section in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India.

(5) Every reference made under this section shall be decided within a period of ninety days from the date of making such a reference.

4. Section 18 empowers the Council, upon receipt of a reference, to conduct a conciliation in terms of the provisions of Sections 65 to 81 of the Arbitration and Conciliation Act, 1996. Where the conciliation is not successful and is terminated without a settlement between the parties, the Council is empowered to itself take up the dispute for arbitration or refer it to any institution or centre providing alternate dispute resolution services. Sub-section (4) of Section 18 begins with a non obstante clause which operates notwithstanding anything contained in any other law for the time being in force. Under sub-section (4), the Council or as the case may be, the centre providing alternative dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India.

5. The Act thus provides for a statutory remedy of an arbitration in sub-section (4) to Section 18 notwithstanding anything to the contrary contained in any other law for the time being in force.

6. In the present case, the Council is seized of the reference on a claim petition filed by the second respondent.

7. In this view of the matter, the relief of certiorari for quashing all the proceedings before the Council is manifestly misconceived. The proceedings had been entertained by the Council in pursuance of the provisions of the Ac

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t. Though there may be an arbitration agreement between the parties, the provisions of Section 18(4) specifically contain a non obstante clause empowering the Facilitation Council to act as an Arbitrator. Moreover, Section 24 of the Act states that Sections 15 to 23 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. 8. The petitioner has appeared before the Council and we see no reason to interdict the proceedings before the Council at this stage. Once the conciliation is unsuccessful, the Council will necessarily have to act in pursuance of the provisions of Section 18. Hence, no case for interference is made out. The petition is, accordingly, dismissed. There shall be order as to costs.
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