2023 (11) TMI 1240 - SC - Indian Laws

Time Limitation - challenge to award of the Facilitation Council - award set aside on the ground that the claim was barred by limitation - Articles 226/227 of the Constitution - HELD THAT - The appellant failed to avail of the remedy under Section 34. If it were to do so, it would have been required to deposit seventy-five per cent of the decretal amount. This obligation under the statute was sought to be obviated by taking recourse to the jurisdiction under Articles 226/227 of the Constitution. This was clearly impermissible. The appellant sought to urge that the view of the Facilitation Council to the effect that the provisions of the Limitation Act 1963 have no application, which has been affirmed by the Division Bench in the impugned judgment, suffers from a perversity, and hence a petition under Article 226 of the Constitution ought to have been entertained. This submission cannot be accepted for the simple reason that Section 18 of the MSMED Act 2006 provides for recourse to a statutory remedy for challenging an award under the Act of 1996. However, recourse to the remedy is subject to the discipline of complying with the provisions of Section 19. The entertaining of a petition under Articles 226/227 of the Constitution, in order to obviate compliance with the requirement of pre-deposit under Section 19, would defeat the object and purpose of the special enactment which has been legislated upon by Parliament. The decision of the Division Bench is affirmed by holding that it was justified in coming to the conclusion that the petition under Articles 226/227 of the Constitution instituted by the appellant was not maintainable - appeal disposed off.

Summary

Issues involved:
The issues involved in the judgment include the maintainability of a writ petition under Articles 226/227 of the Constitution when specific remedies are provided under the Micro Small and Medium Enterprises Development Act, 2006 [MSMED Act], and the applicability of the provisions of Section 34 of the Arbitration and Conciliation Act, 1996 [Act of 1996] in challenging an award of the Facilitation Council.

Issue 1: Maintainability of Writ Petition:
The second respondent, governed by the MSMED Act, filed a claim before the Facilitation Council, which decreed the claim in a specific sum with interest. The award was challenged in a writ petition under Articles 226/227 of the Constitution, which was initially allowed by a Single Judge of the High Court but reversed by a Division Bench. The Division Bench held that the writ petition was not maintainable as specific remedies were available under the Act of 1996, specifically under Section 34 for arbitration. The High Court emphasized that the objective of the MSME Act and the provisions therein required adherence to the statutory remedies provided.

Issue 2: Applicability of Section 34 of Act of 1996:
Section 18 of the MSMED Act provides for reference to the Facilitation Council, with subsequent provisions for conciliation and arbitration. Section 19 of the Act outlines the recourse against an award of the Facilitation Council, requiring the appellant to deposit seventy-five percent of the amount in terms of the award for an application to set aside the award to be entertained by any court. The judgment highlighted that the provisions of the Act of 1996 would govern an award of the Facilitation Council, and the remedy under Section 34 of the Act of 1996 should have been pursued by the appellant. Failure to comply with the requirements of Section 19 rendered the writ petition impermissible.

Conclusion:
The Supreme Court affirmed the decision of the Division Bench that the writ petition challenging the award of the Facilitation Council was not maintainable due to the availability of specific statutory remedies under the Act of 1996. The Court emphasized the importance of adhering to the statutory provisions and the requirement of complying with Section 19 regarding depositing the amount in terms of the award. The judgment underscored that resorting to writ jurisdiction to bypass the statutory requirements would defeat the purpose of the special enactment by Parliament. The appeal was disposed of accordingly, affirming the finding that the writ petition was not maintainable.