2017 (4) TMI 928 - SC - Indian Laws

State Government permissibility to enact Rule 5 of the Rules for recovery of the amount as arrears of land revenue - Madhya Pradesh Micro and Small Enterprises Facilitation Council Rules, 2006 - whether speedy remedy could have been provided under the Rules framed under the Act of 2006? Held that - Section 30 of the Act of 2006 extracted above clearly authorizes the State Government to frame the rules to carry out the provisions of the Act and the power is general, as is apparent from reading of section 30(1), 30(2) and 30(2)(b). The objective of the Act is to provide protection to the micro, small and medium enterprises and to facilitate their development. In order to carry out the objective of the Act speedy recovery mechanism has been provided under Rule 5 of the Rule by providing that amount awarded in an arbitral award can be recovered as arrears of land revenue. No doubt that Rule 5 is inconsistent with the provisions contained in section 36(1) of the Act of 1996 which provides recovery mechanism under Order 21 of CPC as a decree, but, in the matter of providing such remedies, it is open to legislate different remedies which may be inconsistent. It is a question of electing a remedy. Election of a remedy for recovery of the amount would depend upon the choice of the award-holder. Both the provisions i.e. section 36 of the Act of 1996 as well as Rule 5 of the Rules of 2006 intend to recover the amount though by different procedures. Intendment of provisions is same. There is no question of any prejudice being caused to the judgment debtor. Thus, the submission raised by learned senior counsel on behalf of the appellant that Rule 5 is inconsistent and repugnant to the provisions of section 36 of the Act of 1996 cannot withstand judicial scrutiny and is liable to be rejected on the anvil of the aforesaid reasoning. The submission was raised on behalf of the appellant that Order 21 of the CPC provides more safeguards under different rules, which are referred to above, to a judgment debtor to raise various kinds of objections to file suits and has a right to object also at various stages. No doubt that a detailed procedure is provided under the CPC. But by now it is well known that after a decree is obtained, it has become more difficult to ensure its speedy execution due to misuse of the provisions by unscrupulous judgment debtors of a detailed procedure prescribed for execution of a decree in CPC which was never envisaged. Thus, providing a speedy recovery by way of arrears of land revenue, in fact, was the need of the day and Rule 5 has been rightly enacted to ensure speedy recovery and to ensure that small, micro and medium industries do not suffer. Thus the procedure for recovery of land revenue envisaged under Rule 5 of the Rules could not be said to be discriminatory, it being quite reasonable procedure. It cannot be said to be harsh or drastic but is quite a reasonable procedure and it furthers the mandate of the Act. The difference between the procedure of execution of Rule 5 and that of CPC cannot be said to be unconscionable so as to attract the vice of discrimination.

Issues Involved:
1. Constitutionality and validity of Rule 5 of the Madhya Pradesh Micro and Small Enterprises Facilitation Council Rules, 2006.
2. Whether Rule 5 is ultra vires, arbitrary, and violative of Article 14 of the Constitution of India.
3. Whether Rule 5 is repugnant to Section 36 of the Arbitration and Conciliation Act, 1996.
4. Whether the State Government exceeded its powers under Section 30 of the Micro, Small and Medium Enterprises Development Act, 2006.
5. Whether the recovery mechanism under Rule 5 is harsh and unreasonable.
6. Whether providing multiple remedies for recovery is permissible.

Detailed Analysis:

1. Constitutionality and Validity of Rule 5:
The appellant challenged Rule 5 of the Madhya Pradesh Micro and Small Enterprises Facilitation Council Rules, 2006, which allows for recovery of awarded amounts as arrears of land revenue, arguing it was ultra vires and arbitrary. The Supreme Court upheld the validity of Rule 5, stating it is in strict conformity with the Act of 2006 and aims to provide a speedy recovery mechanism for micro, small, and medium enterprises.

2. Ultra Vires, Arbitrary, and Violative of Article 14:
The appellant contended that Rule 5 is ultra vires and violates Article 14 of the Constitution due to its harshness and lack of procedural safeguards provided under the Code of Civil Procedure (CPC). The Court rejected this argument, stating that the provision for recovery as arrears of land revenue is reasonable and aligns with the objective of the Act of 2006 to facilitate the development of small enterprises. The Court emphasized that providing a speedier recovery mechanism is not arbitrary or violative of Article 14.

3. Repugnancy to Section 36 of the Arbitration and Conciliation Act, 1996:
The appellant argued that Rule 5 is repugnant to Section 36 of the Act of 1996, which provides for the enforcement of arbitral awards as a decree of the court under the CPC. The Court held that it is permissible to have multiple remedies for recovery, and the choice of remedy depends on the award-holder. The Court cited the principle that plural remedies are valid even if inconsistent, as long as they serve the legislative intent.

4. Exceeding Powers under Section 30 of the Act of 2006:
The appellant claimed that the State Government exceeded its rule-making powers under Section 30 of the Act of 2006 by enacting Rule 5. The Court found that Section 30 authorizes the State Government to make rules to carry out the provisions of the Act, including providing a speedy recovery mechanism. The rule-making power is broad and encompasses the objective of the Act to protect and develop micro, small, and medium enterprises.

5. Harshness and Unreasonableness of Recovery Mechanism:
The appellant argued that the recovery mechanism under Rule 5 is harsh and lacks the procedural safeguards of the CPC. The Court dismissed this argument, noting that the detailed procedures of the CPC often lead to delays and misuse by judgment debtors. The Court held that a speedy recovery mechanism is essential for the survival of small enterprises and is not harsh or unreasonable.

6. Permissibility of Multiple Remedies:
The Court addressed the issue of whether providing multiple remedies for recovery is permissible. It cited precedents to establish that plural remedies are valid and do not constitute repugnancy. The Court emphasized that the choice of remedy lies with the award-holder, and providing an additional remedy under Rule 5 does not invalidate the existing remedy under Section 36 of the Act of 1996.

Conclusion:
The Supreme Court dismissed the appeal, upholding the validity of Rule 5 of the Madhya Pradesh Micro and Small Enterprises Facilitation Council Rules, 2006. The Court ruled that the rule is consistent with the objective of the Act of 2006, provides a reasonable and speedy recovery mechanism, and does not violate Article 14 of the Constitution. The Court also affirmed that providing multiple remedies for recovery is permissible and does not constitute repugnancy. The appellant was ordered to bear the costs of ?50,000.

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