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TMI Blog2022 (3) TMI 949X X X X Extracts X X X X X X X X Extracts X X X X ..... he period between April, 2010 to March, 2014. The supply of drugs and medicines were delivered by the Operational Creditor at various warehouses as per directions given by the Corporate Debtor in the various supply order and the Corporate Debtor and the Applicant had acknowledged the receipt of the materials. 3. The Operational Creditor had been approached by the Corporate Debtor for the supply of drugs and medicines vide different Tenders vide Number 007/Drugs/KMSCL/2010 dated 07.01.2010 for the year 2010-2011, Tender No. KMSCL/DRGED(I)/RC/2012/001 dated 10.01.2012 and KMSCL/DRGE(I)RC/2013/001 dated 12.06.2012 for the year 2012-2013, KMSCL/DRGED(I)/ RC/2013/001 dated 22.12.2012 for the year 2013-2014. The Operational Creditor placed the Tender and the Corporate Debtor accepted the same. 4. On receipt of the supply of drugs and medicines, the Corporate Debtor was to make payments to the Operational Creditor. For the period between the financial year April, 2010 to March, 2014 the business transaction value between the Operational Creditor and the Corporate Debtor was Rs. of Rs. 7,02,08,303/- (Rupees Seven Crore Two Lakh Eight Thousand Three Hundred and Three Only). Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by them for the years 2010-2011 to 2013-2014 and had been awarded the contract for the supply of various drugs and other supplies. There were four different tenders having different tender conditions and are not part of a running contract. The disputes between the applicant and the Corporate Debtor arose out of each of the tenders are to be separately considered and decided as per the separate tender conditions including those for settlements of disputes agreed upon between the applicant and the respondent. On account of various faults, failures, deficiencies, and other violations of tender conditions, the applicant had been penalized at different stages during the currency of the agreements between the parties. Finally, the applicant was also blacklisted by the Corporate Debtor for a period of three years vide an order dated 27.3.2014. Against the said order the applicant filed W.P.(C) 15153/14 before the Hon'ble High Court of Kerala which was disposed of vide order dated 30.6.2014 with a direction that the appellant be heard and the appeal of the petitioner be disposed of by the Appellate Authority and the court extended the interim order dated 17.6.14 till the date of disposa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no Arbitration on the failure of Conciliation as required under Micro Small and Medium Enterprises Development Act 2006 (hereinafter referred as 'the MSME Act'], and the Madhya Pradesh Micro and Small Enterprises Facilitation Council Rules, 2017 but has proceeded to issue Order dated 16.4.2018 behind the back of the Corporate Debtor/ respondent without offering it an opportunity to contest the case in Arbitration which is required to be done in case Conciliation fails. 11. The learned counsel for the Corporate Debtor further argued that the Order of the MSEFC dated 16.4.2018 is ex facie, not an Award pursuant to Arbitration as provided in the MSME Act, the Arbitration and Conciliation Act, 1996 ('the A&C Act') or the MP MSEFC Rules. It was an "Order" issued without holding Arbitration on the only ground that conciliation had failed. As such, the Order is non-est and void ab initio. The respondent/ Corporate Debtor in such a case can very well invoke the writ jurisdiction of an appropriate constitutional court to challenge the Order without having to approach the statutory appellate forum after adhering to statutory requirements. The respondent/ Corporate Debtor, therefore, filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings filed before the service of the demand notice". Findings: 13. We have heard Shri. Kumarpal R Chopra, learned counsel for the Operational creditor and Shri. M Ajay, learned counsel for the Corporate Debtor and have gone through the documents provided and the judicial Orders filed relating to the dispute between the parties. 14. On a clear scrutiny of the application, we found that M/s DJ Laboratories Pvt Ltd is a Private Limited Company, and being a small-scale industry, the provisions of the Micro Small and Medium Scale Industries Act are applicable to them. The Corporate Debtor floated tender for the supply of Drugs & Medicines vide Tenders vide Number 007/Drugs/KMSCL/2010 dated 07.01.2010 for the year 2010-2011, Tender No.KMSCL/DRGED(I)/RC/2012/001 dated 10.01.2012 and KMSCL/DRGE(I)/RC/2013/001 dated 12.06.2012 for the year 2012-2013, KMSCL/DRGED(I)/ RC/2013/001 dated 22.12.2012 for the year 2013-2014. The applicant was one of the successful bidders for the year 2012-13 and 2013-14. After entering into an agreement with the Corporate Debtor abiding by all the tender conditions for the supply of drugs and the provisions of Drugs and Cosmetics Act 1945 and the rules mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Drugs and Cosmetics Act were violated by the applicant. The applicant included misbranded and adulterated drugs The packing of drugs was not as per the requirement of tender. A house fly was seen in one of the bottles of Cloxacillin injection. Numerous complaints regarding the quality of drugs supplied by the applicant herein were received from the Corporate Debtor's warehouses. The Corporate Debtor requested the applicant to replace the damaged and adulterated drugs. However, they did not respond to this request. Therefore, the Corporate Debtor sent a notice to the applicant asking them to appear in person to explain why they should not be blacklisted for non-adherence of tender conditions and violation of Drugs and Cosmetics Act. Since the explanation of the Operational Creditor was not satisfactory, the Corporate Debtor blacklisted the Operational Creditor and they deducted an amount of Rs. 74,97,427/- from the payment to the applicant as per the applicable tender clauses towards the value of the non-standard quality items and penalty for the non-execution of purchase order quantities. The applicant/ Operational creditor filed a Writ Petition [C] No. 14640/16 before the Hon ..... 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