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TMI Blog2025 (1) TMI 1090X X X X Extracts X X X X X X X X Extracts X X X X ..... rbitral proceedings. The statute further prescribes an undoubtedly high rate of interest three times the Reserve Bank rate of interest presently 6.5 per cent i.e. 19.5 per cent. The interest is compounded with monthly rests - Pre-deposit is a condition for hearing a decision on the objections to the award. The issue therefore which arises and needs consideration is whether there would be an absolute and complete bar to invoke writ jurisdiction under Article 226 of the Constitution even in exceptional and rare cases where fairness, equity and justice may warrant the exercise of writ jurisdiction. The access to High Courts by way of a writ petition under Article 226 of the Constitution of India, is not just a constitutional right but also a part of the basic structure. It is available to every citizen whenever there is a violation of their constitutional rights or even statutory rights. This is an inalienable right and the rule of availability of alternative remedy is not an omnibus rule of exclusion of the writ jurisdiction, but a principle applied by the High Courts as a form of judicial restraint and refrain in exercising the jurisdiction. The power to issue prerogative writs unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 (26 of 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 (26 of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicate the dispute and make an award. Proceedings for conciliation and arbitration cannot be clubbed." 5. Thereupon, referring to the facts in the case, this Court struck down the order dated 06.08.2012 passed by the MSEFC as being nullity and contrary to the provisions of the MSMED Act and the mandatory provisions of the Arbitration and Conciliation Act, 1996. For short, "A&C Act". This court observed that the order under challenge was not an award in the eyes of law and hence the recourse to Section 34 of the A&C Act was not required. The writ petition was held to be maintainable notwithstanding the objections on account of delay and laches. 6. Another Division Bench of this Court in Gujarat State Civil Supplies Corporation Limited v. Mahakali Foods Private Limited (Unit 2) and Another, (2023) 6 SCC 401 without noticing the judgment in Jharkhand Urja Vikas Nigam Limited (supra), observed that the specific non-obstante clauses in sub-sections (1) and (4) of Section 18 of the MSMED Act have the effect of overriding any other law for the time being in force, including the A&C Act, and, consequently, the MSEFC can act as a conciliator, and thereupon itself take up the dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t petition under Articles 226/227 of the Constitution was not maintainable as Section 18 of the MSMED Act provides for recourse to a statutory remedy for challenging an award under Section 34 of the A&C Act. A particular reference was made to Section 19 of the MSMED Act which states that no application for setting aside a decree, award or order made by the MSEFC/institution/centre providing for alternate dispute resolution services shall be entertained by a court unless the appellant (not being a supplier) has deposited with it seventy-five per cent of the amount in terms of the decree, award or order in the manner as directed by the court. Proviso to the Section 19 of the MSMED Act states that pending disposal of the application for setting aside of the decree, award or order, the court shall order that such percentage of the amount deposited shall be paid to the supplier, as it considers reasonable under the circumstances of the case and on such conditions as it deems necessary to impose. 19. Application for setting aside decree, award or order.--No application for setting aside any decree, award or other order made either by the Council itself or by any institution or centre pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay compound interest with monthly rests to the supplier on that amount from time the appointed day or, as the case may be, from the date immediately following the date agreed upon, at three times of the bank rate notified by the Reserve Bank. 17. Recovery of amount due.--For any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the amount with interest thereon as provided under Section 16. 9. It would be appropriate at this stage to refer to the basic facts of the present case. The appellant - Tamil Nadu Cements Corporation Limited For short, 'TANCEM' is a wholly-owned undertaking of the Government of Tamil Nadu. It is registered under the Companies Act, 1956 and has two cement manufacturing units at Alangulam and Ariyalur. For the units at Ariyalur, TANCEM had called for tender on 27.01.2010 on turnkey basis for design, supply, erection and commissioning of two Electrostatic Precipitators For short, 'ESP' for clinker coolers at a total contract value of Rs.7.50 crores under the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and commissioning of the ESPs. Thereafter, on 08.04.2014, TANCEM sent a letter to M/s Unicon Engineers stating that cooler ESPs commissioned by it were not running to its full efficiency and requested it to submit an action plan for rectification. On 27.05.2014, 19.06.2014 and 01.10.2014, TANCEM had sent letters to M/s Unicon Engineers to attend to the problems being faced with the ESPs. It is alleged that M/s Unicon Engineers failed to rectify the issues cropping up in the ESPs and hence, TANCEM issued a work order in favour of M/s Perfect Engineers to repair ESP insulation amounting to Rs.4,02,417/-. On 14.10.2014, MSEFC, M/s Unicon Engineers was directed to produce documentary evidence in support of its case and to rectify the issues with the ESPs. MSEFC on 04.06.2016, held that this was the fourth hearing of the case, and adequate opportunities had been given to TANCEM, and the council was of the opinion that the conciliation proceedings had failed. Accordingly, M/s Unicon Engineers was free to approach the MSEFC for arbitration. Sections 15 and 16 of the MSMED Act are simply quoted by the MSEFC to issue directions to TANCEM to pay Rs.39,66,144, along with the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest with monthly rest, at three times of the Bank rate notified by the Reserve Bank of India as stipulated in the MSMED Act 2006 from the appointed due dates respectively as above, to, the petitioner, till the date of settlement. With this order, the petition filed before the council on 17.01.2014 by the petitioner stands disposed." On 30.06.2016, M/s Unicon Engineers herein sent a letter to TANCEM to release the payment as per the order dated 04.06.2016 passed by the MSEFC. On 19.09.2016, TANCEM filed a petition under Section 33 of the A&C Act to recall/set aside the order/award dated 04.06.2016 passed in favour of M/s Unicon Engineers. On 26.09.2016, M/s Unicon Engineers sent a letter to MSEFC requesting to reject the petition filed by TANCEM on the grounds that it was barred by limitation and that TANCEM had not furnished 75% of the amount as pre-deposit, as mandated by Section 19 of the MSMED Act. TANCEM filed a detailed reply on 06.10.2016 qua the objections raised by M/s Unicon Engineers. Similar objections were again raised by M/s Unicon Engineers to the response filed by TANCEM. Thereafter, MSEFC passed an order dated 25.10.2016 dismissing the recall petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osited the differential amount of Rs.1,41,66,443/- as against the 75% of the decretal amount since it had already remitted Rs.3 crores. M/s Unicon Engineers filed an application before the High Court of Judicature at Madras to withdraw Rs. 3 crores which was deposited by TANCEM. The Single Judge vide order dated 31.07.2019 allowed M/s Unicon Engineers to withdraw Rs.1.50 crores. On appeal by TANCEM, the Division Bench vide order dated 06.08.2019 directed that M/s Unicon Engineers will furnish an undertaking that if TANCEM succeeds before the executing court it would refund the sum of Rs.1,50,00,000/- with interest @ 6% per annum from the date of receipt to the date of refund. The disbursement of Rs.1,50,00,000/- to the decree holder was subject to the final decision of the executing court. The Master of the Court vide order dated 16.08.2019 directed to issue a cheque of Rs. 1.5 crore in favour of M/s Unicon Engineers. TANCEM filed an SLP against the order dated 06.08.2019 of the Division Bench before this Court. This Court vide order dated 11.01.2021, after recording the statement of TANCEM that the amount deposited had not been withdrawn, directed that the order of withdrawal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n cannot be challenged by contending that the award was null and void. After the said judgment was pronounced, M/s Unicon Engineers pursued the execution petition in the High Court of Judicature at Madras and the executing court vide order dated 14.12.2022 directed to bring the property of TANCEM for sale. In such circumstances referred to above, TANCEM has filed the present SLP. 10. In our opinion, there is a direct confrontation between the judgment of the two Judges Bench of this Court in Jharkhand Urja Vikas Nigam Limited (supra) and Gujarat State Civil Supplies Corporation Limited (supra). 11. We also have reservations on the dictum in M/s India Glycols Limited (supra) which holds that a writ petition is not maintainable against any order passed by the MSEFC and the only recourse available is in terms of Section 34 of the A&C Act, and that too would require a deposit in terms of Section 19 of the A&C Act. 12. This is a case of statutory arbitration that is mandatory. It is possible to argue that it bars a party from moving the court of law under Section 9 of the Code of Civil Procedure, 1908. For short, 'CPC' Section 18 also overrides the principle of party autonomy when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay exercise writ jurisdiction at least in three contingencies - i) where there is a violation of principles of natural justice or fundamental rights; ii) where an order in a proceeding is wholly without jurisdiction; or iii) where the vires of an Act is challenged. Noticeably, the MSEFC as a statutory authority performs a statutory role and functions within the four corners of the law. 14. Following the aforesaid dictum, this Court in Harbanslal Sahnia and Another v. Indian Oil Corporation and Others ( 2003 ) 2 SCC 107, had taken notice of the fact that the High Court had referred to the arbitration clause which the writ petitioner could take recourse to, to hold that the rule of exclusion of writ jurisdiction is a rule of discretion and not of compulsion. In an appropriate case, in spite of availability of alternative remedy, the writ courts can exercise its jurisdiction at least in three contingencies, as referred to above. In the facts of the said case, this Court interfered observing that there were peculiar circumstances as the dealership had been terminated on an irrelevant and non-existence cause. Therefore, there was no need to drive the parties to initiate arbitration pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exceptional cases, writ jurisdiction can still be exercised as a power to access the court for justice and relief. It is in this context, that a Constitution Bench of five Judges way back in 1954 in Himmatlal Harilal Mehta v. State of Madhya Pradesh and Others ( 1954 ) 1 SCC 405 had observed that the principle that the High Court should not issue a prerogative writ when an alternative remedy is available may not apply when the remedy under the statutes is onerous and burdensome in character, such as when the party has to deposit the whole amount of the tax before filing an appeal. An alternative remedy must be equally efficacious and adequate. While examining the scope of the right to file a writ petition when the statute requires a pre-deposit of tax--an obligation argued as imposing an onerous condition on the right to appeal--this Court in Shyam Kishore and Others v. Municipal Corporation of Delhi and Another , ( 1993 ) 1 SCC 22 after relying upon several other decisions, observed that the validity of rigid provisions banning entertainment of appeal when taxes are not paid have been upheld so long as the conditions are not so onerous as to amount to unreasonable restriction. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying the language of the proviso to read: "no appeal shall be disposed of until the tax is paid". Short of this, however, there is no reason to restrict the powers unduly; all he has to do is to ensure that the entire tax in dispute is paid up by the time the appeal is actually heard on its merits. We would, therefore, read clause (b) of Section 170 only as a bar to the hearing of the appeal and its disposal on merits and not as a bar to the entertainment of the appeal itself." 16. Equally important are the observations with reference to the right to file a writ petition under Articles 226 and 227 of the Constitution in certain situations. In this regard, this Court in Shyam Kishore (supra) has observed: "45. If the provision is interpreted in the manner above suggested, one can steer clear of all problems of constitutional validity. The contention on behalf of the Corporation to read the provision rigidly and seek to soften the rigour by reference to the availability of recourse to the High Courts by way of a petition under Articles 226 and 227 in certain situations and the departmental instructions referred to earlier does not appear to be a satisfactory solution. The departm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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