Arbitration Case No. 05 of 2022 · The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK ARBA Nos.9 and 11 of 2023 (From the judgments dated 29.10.2022 passed in Arbitration Case No.05 of 2022 and 28.03.2023 passed in Review Petition No.01 of 2022 by the Learned District Judge, Sundargarh, arising out of award dated 16.11.2019 passed by the Micro and Small Enterprises Facilitation Council, Cuttack, Odisha in M.S.E.F.C. Case No.9 of 2019) (Both in ARBA Nos.9 & 11 of 2023) M/s Anupam Industries Ltd. -versus- M/sBharat Industrial Projects Pvt. Limited. Advocates appeared in the case: For Appellant : …. …. Appellant Respondent Mr.SureshTripathy, Adv. Mr.AnupamDwivedi, Adv. Mr. S. Agarwal, Adv. For Respondent : Mr.ChakradharPanigrahi, Adv. -versus- CORAM: DR.JUSTICE S.K. PANIGRAHI DATE OF HEARING:-27.07.2023 DATE OF JUDGMENT:-24.08.2023 Dr. S.K. Panigrahi, J. 1. ARBA No.11 of 2023 has been filed against the judgment dated 29.10.2022 passed in Arbitration Case No.05 of 2022 and ARBA No.9 of 2023 has been filed against the judgment dated 28.03.2023 passed in Arbitration Review Petition No.01 of 2022 by the Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 1 learned District Judge, Sundargarharising out of award dated 16.11.2019 passed by the Micro and Small Enterprises Facilitation Council, Cuttack, Odisha, under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “A & C Act”). As both the Appeals are preferred against the judgments arising out of the same award, it is considered prudent to deal with them together. I. FACTUAL MATRIX OF THE CASE: 2. M/s Anupam Industries Ltd. (hereinafter referred to as “Appellant”) is a company incorporated in the Companies Act, 1956. The Appellant is a manufacturer of wide range of Electric Overhead Travelling (“EOT”) Cranes for various applications to meet the requirements of sectors like Steel, Power, Construction etc. 3. The Appellant had entered into a Contract with M/s. Steel Authority of India for supply and services of 22 Nos. of EOT cranes with attachment. For undertaking the scope of work, the Appellant placed a Letter of Intent dated 01.11.2013 bearing reference no. AL/SER/RSP-2641 to2662/13-14/003 upon Bharat Industrial Projects Pvt. Ltd. (“Respondent”) to act as a sub- contractor. The scope of work under the domain of the Respondent was mentioned in the Letter of Intent. Further, vide letter bearing reference no. DGM (P)/AKC/NPM/231/ 2164 dated Signature Not Verified
Legal Reasoning
Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 2 06.12.2013 the Steel Authority of India approved the Respondent to act as a sub-contractor. 4. The Respondent supplied erection of EOT Cranes at RSP to the Appellant during the year 2013-15 and accordingly, the Respondent raised bills. However, the Appellant alleged that the Respondent blatantly violated the terms of the Letter of Intent and in this regard the Appellant time and again called upon the Respondent to rectify the said violations. The Respondent, however, did not adhere to the bonafide concerns raised by the Appellant. 5. Then, the Appellant receive a notice dated 13.09.2019 sent by the Micro & Small Enterprises Facilitation Council (MSEFC), Cuttack, Odisha (“the Council”) which was admittedly received by the Appellant on21.09.2019. By way of the said notice, the Appellant was directed to appear before the 74th sitting of the Council on 20.09.2019; in reference to a case bearing MSEFC No. 09/2019 filed by the Respondent against the Appellant under the MSMED Act, 2006. Since the said notice was admittedly received on 21.09.2019, the Appellant could not appear before the Council on the asked date. 6. Admittedly, the Appellant neither received any notice of any conciliation proceedings under the MSMED Act nor that of the initiation of Arbitration Proceedings including filing of any claim application by the Respondent. Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 3 7. Consequentially, the Council passed an ex-parte award dated 16.11.2019 in the favour of the Respondent and against the Appellant to the tune of Rs.2,73,54,640.21/- as principal along with Rs.1,17,76,604.34/- as interest up to 31.08.2018. It is also alleged that the said award was not even communicated to the Appellant despite repeated letters and requests by the Appellant. 8. The Appellant, on 09.12.2019, filed a Writ Petition (C) No.248592019 before this Court, praying for the repealment of the proceedings of the MSEFC Case No.9 of 2019 wherein the Appellant was informed by the Respondent that an ex-parte award had already been passed by the Council on 16.11.2019. The said writ petition was later withdrawn, with leave of this court, to file a better application comprising all the relevant issues of this case. 9. Later, writ petitions were filed by the Appellant in this court and then the Supreme Court only to be dismissed only on the ground of availability of alternative remedy against an ex-parte award. Therefore, the Appellant, on 18.04.2022, filed an Arbitration Petition No.05/2022, under section 34 of the A&C Act, challenging the said ex-parte award. Subsequently, the said Arbitration Petition No.05/2022, under section 34 of the A&C Act, was filed before the District Judge, Sundargarh, Odisha. 10. The District Judge/ Appellate Court categorically observed and held that the Respondent, herein, was not having the due Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 4 registration under the provisions of sections 7 and 8 of the new Act of 2006 at the relevant time and as such, the Respondent was not entitled to avail remedies under chapter V of the MSMED Act, 2006. Yet, the court allowed the Petition under section 34 of the A&C Act whereby the matter was reverted to the Arbitral Tribunal/ Ld. Council for fresh adjudication of the case. 11. Against, and limited to, such reverting the matter, the Appellant, on 21.11.2022, filed a Review Petition No.01/2022, under Order XLVIIRule 1 CPC, before the District Judge, Sundargarh. Admittedly, the Respondent did not challenge the setting aside of the ex-parte award dated 16.11.2019 or the observations/finding of the District Judge/ Appellate Court vide judgment dated 29.10.2022 and hence, the same attained finality against the Respondent. 12. The Division Bench of the District Court dismissed the Review Petition No.01/2022 and held that the previous order had adjourned the proceedings under section 34 of the A&C Act and remitted back the matter to the Council. 13. The Appellant has preferred this appeal on the ground that the impugned award dated 16.11.2019 as well as the erroneous retroceding of the application to the Council under Section 34 of the Act by the District Court by way of order dated 28.03.2023 are illegal, arbitrary, perverse and suffer from gross non-application of mind. Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 5 14. Now that the facts leading up to the instant Appeals have been laid down, this Court shall endeavour to summarise the contentions of the Parties and the broad grounds that have been raised to seek the interference of this court. II. APPELLANT’S SUBMISSIONS
Legal Reasoning
15. The counsel for the Appellant assails the judgment of the Learned District Judge mainly on the ground that the District Judge mis- interpreted Section 34 of the A&C Act to send the matter back to the Arbitral Tribunal/ Ld. Council for fresh adjudication of the case. 16. It is submitted that the District Judge, while passing the impugned order dated 28.03.2023, failed to appreciate and follow the ratio laid in the judgments passed by the Supreme Court in KinnariMullick v.Ghanshyam Das Damani,1and Radha Chemicals v.Union of India2 wherein it was held that the court while deciding a section 34 petition has no jurisdiction to remand the matter to the Arbitrator for a fresh decision. 17. In light of the above, it was argued that the order of the District Judge limited to the remission of the dispute back to the Council is contrary to this judgement; as a result of which both the judgements of the Single Judge as well as the Division Bench have to be set aside.It is submitted that there has been an apparent error, as regards the law settled by the Supreme Court, 1 (2017) SCCOnline SC 528 2 (2018) 11 SCC 328 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 6 which the District Judge failed to appreciate and follow and which ought to have been considered and reviewed under the provisions of Order XLVII CPC. 18. It is submitted that the limited remedy available under Section 34(4) is required to be invoked by the party to the arbitral proceedings before the award is set aside by the Court. The limited discretion available to the Court under Section 34(4) can be exercised only upon a written application made in that behalf by a party to the arbitration proceedings. Moreover, before formally setting aside the award, if the party to the arbitration proceedings fails to request the Court to defer the proceedings pending before it, then it is not open to the party to move an application under Section 34(4) of the Act. 19. It was submitted that the ex-parte award dated 16.11.2019 was rendered against the Appellantin breach of the statutory prescriptions of the MSMED Act. The Council lacked the jurisdiction to arbitrate the disputes as the Respondent did not have the registration under Chapter V of the Act at the time when the alleged supply was made (during November 2013-2015) to the Appellant. The claim is buttressed by the fact that the District Judge, Sundargarh also affirmed the fact about the non- registration of the Respondent as per the Act and the Respondents did not, admittedly, challenge the setting aside of the ex-parte award dated 16.11.2019 or the observations/finding Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 7 of the District Judge/ Appellate Court vide judgment dated 29.10.2022. It is argued that the same having not appealed against, it attained finality as far as the Respondent is concerned. 20. It is submitted that any other submission not made before the Court below on this limited point cannot be permitted to be made before this Court, particularly when Appellant is in appeal and not the Respondent. Ignorance of this elementary procedure perhaps is the cause of confusion by the Respondent. 21. The counsel for the Appellant relied on Section 8 (c) of the Act, which mandates that any person having a registration, prior to the commencement of the Act of 2006, within 180 days from the commencement of the Act, may, if it so chooses, in order to get the benefits under the said Act, file a Memorandum seeking registration as provided in the subsequent provisions of the said Section. It is argued that the Respondent that he did not apply for the registration by taking recourse to the above provision. Unequivocally, the status of the Respondent was not that of a registered enterprise. 22. Automatically, it is argued that as the Respondent is not registered in the manner recognised under the Act, Respondent is and would be disentitled from invoking the arbitration mechanism for the arbitration under Section 18 of the Act is between buyer and a supplier. Registration is mandatory when seen in the underlying context of the Act. Buyer is entitled to Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 8 know the exact status of the supplier whether he is a registered under the Act or he is dealing with an entity unregistered. 23. In terms of law extracted above, starting point to seek reference is the “date of entering into the contract” and not the subsequent registration as the subsequent registration is wholly irrelevant for invocation of proceeding under Section 18 of the Act. 24. Ultimately, it is submitted that the impugned order to revert the case to the Arbitral Tribunal/ Council is indefensible against the invalidity of the proceedings itself and liable to be interfered with as it is contrary to facts and law. III. RESPONDENT’S SUBMISSIONS: 25. Per contra, learned counsel for the Respondent submitted that, MSEFC Case No.9 of 2019 was filed in the Council on 15.1.2019. Thereafter, the Council started resuming hearing on 04.02.2019 and thereafter, the claim application was forwarded to the Appellant on 23.2.2019 by registered post with A.D. but no counter was filed by the Appellant within 161 days and the award was passed on 16.11.2019. The claim made by the Appellant that no opportunity was given to them, is totally baseless and far from truth. 26. It is further mentioned, as per section 18(5) of the MSMED Act, 2006 the Council is mandated to decide the case within 90 days. Therefore, when the Council even afterlapse of 161 days did not receive any counter from the Appellant, hearing was resumed Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 9 and the Council again sent notices on 24.7.2019 and 07.09.2019 by registered post with AD followed by newspaper publication on 18.9.2019. 27. Therefore, sufficient opportunity was given to the Appellant and as claimed by the Appellant that, no opportunity was given to them to file counter, is false and fabricated. IV. ISSUES FOR CONSIDERATION: 28. Having heard the parties and perused the materials available on record, this court here has identified the following solitary issue to be determined: A. Whether the
Decision
order of the District Judge warrants interferencekeeping in mind the limitations of this court’s powers under Section 34 of the A&C act? B. Whether the arbitration proceeding under MSMED Act against non-registration of the party prior to the contract valid? V. ISSUE A: WHETHER THE ORDER OF THE DISTRICT JUDGE WARRANTS ANY INTERFERENCE KEEPING IN MIND THE LIMITATIONS OF THIS COURT’S POWERS UNDER SECTION 34 OF THE A&C ACT? 29. The At the outset, this Court duly notes that, if the plea taken by the Appellant in relation to the concluding part of the impugned judgment - of sending the award back to the Arbitral Tribunal for recording reasons - was to be accepted, we may not be required to dilate on any other argument. Inasmuch as the learned Single Judge allowed the application under Section 34 of the Act for Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 10 setting aside of the award preferred by the Appellants; and the Division Bench has already affirmed the conclusion recorded by the Single Judge while dismissing the review preferred by the Appellant pertaining to the remission of the matter back to the council. Thus, the award has been set aside on that count. The Respondent has not challenged that part of the impugned judgment and has allowed it to become final. 30. Now, to answer the question at hand, this bench may advert to Section 34(4) of the Act which is the repository of power invested in the Court. A bare reading of this provision would make it clear the Court can defer the hearing of the application filed under Section 34 for setting aside the award on a written request made by a party to the arbitration proceedings to facilitate the Arbitral Tribunal by resuming the arbitral proceedings or to take such other action as in the opinion of Arbitral Tribunal will eliminate the grounds for setting aside the arbitral award. The quintessence for exercising power under this provision is that the arbitral award has not been set aside. Further, the challenge to the said award has been set up under Section 34 about the deficiencies in the arbitral award which may be curable by allowing the Arbitral Tribunal to take such measures which can eliminate the grounds for setting aside the arbitral award. No power has been invested by the Parliament in the Court to remand the matter to the Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 11 Arbitral Tribunal except to adjourn the proceedings for the limited purpose mentioned in sub-section 4 of Section 34. 31. This legal position has been expounded in the case of McDermott International Inc.v. Burn Standard Co. Ltd:3 “8…..parliament has not conferred any power of remand to the Court to remit the matter to the arbitral tribunal except to adjourn the proceedings as provided under sub- section (4) of Section 34 of the Act. The object of sub-section (4) of Section 34 of the Act is to give an opportunity to the arbitral tribunal to resume the arbitral proceedings or to enable it to take such other action which will eliminate the grounds for setting aside the arbitral award.” (emphasis supplied) 32. The counsel for the Appellant has also cited the Supreme Court Judgement in KinnariMullick and Anr. v. Ghanshyam Das Damani(supra) which is rather useful in the matter in hand: “In any case, the limited discretion available to the Court under Section 34(4) can be exercised only upon a written application made in that behalf by a party to the arbitration proceedings. It is crystal clear that the Court cannot exercise this limited power of deferring the proceedings before it suomoto. Moreover, before formally setting aside the award, if the party to the arbitration proceedings fails to request the Court to defer the proceedings pending before it, then it is not open to the party to move an application under Section 34(4) of the Act. For, consequent to disposal of the 3(2006) 11 SCC 181 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 12 main proceedings under Section 34 of the Act by the Court, it would become functus officio. In other words, the limited remedy available under Section 34(4) is required to be invoked by the party to the arbitral proceedings before the award is set aside by the Court.” 33. In the present case, the award given by the arbitration panel was quashed in its entirety and the appeal under Section 34 is no more pending before the Court. Therefore, invoking the powers conferred under sub-section (4) of Section 34 of the Arbitration Act to facilitate the arbitration panel to take rectificatory steps is not an option in this matter. Moreover neither of the contesting party in this dispute have applied for an additional award and therefore it may not be appropriate to direct the arbitration panel to re-decide on the six un-decided claims of the contractor.” 34. The Supreme Court, in the case of Radha Chemicals (supra) has reaffirmedthat the court, while deciding a Section 34 petition, has no jurisdiction to remand the matter to the Arbitrator for a fresh decision. It is, therefore, clear that the Single Judge’s judgment is contrary to this judgment as a result of which both the judgments of the Single Judge as well as the Division Bench have to be set aside. 35. A priori, it must follow that the Division Bench committed manifest error in issuing direction in the concluding part of the impugned judgment. Such direction could not have been issued in the fact situation of the present case. The impugned direction Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 13 suffers from the vice of jurisdictional error and thus cannot be sustained. We have no option but to quash and set aside the same. VI. ISSUE B:WHETHER THE ARBITRATION PROCEEDING UNDER MSMED ACT AGAINST NON-REGISTRATION OF THE PARTY PRIOR TO THE CONTRACT VALID? 36. A perusal of the pleadings indicate that pursuant to the transaction, the Respondent company was not registered as a Micro or Small Enterprise within the meaning of Section 2(n)of the MSMED Act as a ‘supplier’: "supplier" means a micro or small enterprise, which has filed a memorandum with the authority referred to in sub-section (1) of section 8, and includes,-- the registered under (i) the National Small Industries Corporation, being a the company, Companies Act, 1956 (1 of 1956); Industries Development Small (ii) Corporation of a State or a Union territory, by whatever name called, being a company registered under the Companies Act, 1956 (1 of 1956); (iii) any company, co-operative society, trust or a body, by whatever name called, registered or constituted under any law for the time being in force and engaged in selling goods produced by micro or small enterprises and rendering services which are provided by such enterprises;” 37. Through the submission of the Appellant and the silence of the Respondent over this matter it is now undisputed that at the time when the transaction took place and at the time when supply was Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 14 made, the respondent unit was not a ‘supplier’ as defined under Section 2(n), and as such, there appears to be a force in the contention raised by the petitioner that it has no locus to avail remedy of Chapter-V and to take advantage thereof. 38. It is also clear that the procedure established by Section 8 of the Act has not been complied with. The same was also affirmed by the District Judge in his concerned order. Since, this requirement of Section 8 appears to have not been complied with as the form of Memorandum which is required to be filled in has not been done at all and the same is mandated by the statute that every person intending to establish a Micro, Small or Medium Enterprise shall file a Memorandum with the State Government or the Central Government, as the case may be; it appears that the respondent ought not to be in a position to avail the services of the Arbitration Council under Chapter-V of the Act of 2006. 39. Apart from this, even the reference could not have been made in view of the fact that the status of Small Enterprises has not been obtained prior to entering into transaction as well as within a period of 2 years as per the requirement of statute and the claim cannot be availed by resorting to Chapter-V of the Act. Herein, the instant case, the registration was obtained by the Respondent only on 15.01.2019 i.e. nearly 4 years post the transaction of goods. As a result of this, the matter could not have been referred to at all for arbitration. Consequentially, since the respondent has Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 15 failed in complying with the requirement of the statute cannot take advantage of its own negligence and the effect of statutory provision cannot be a bypass. Resultantly, the reference which has been made under Section 18 itself is impermissible. 40. Since the proceedings are held to be invalid before respondent No.4 and the reference itself is not maintainable, the Court has chosen to refrain from commenting anything further on merit of the claim. 41. The contentions raised by the learned counsel for the petitioner have got its own impact and the Court is therefore, inclined to accept the petition by granting relief as prayed for. 42. In wake of aforesaid situation if the decisions which have been cited by respective sides to be looked into, it appears that the judgments cited by the counsel appearing for the Appellant have been important for the matter in hand. The first judgment which is relied upon is the decision delivered by M/S EasunReyrolle Limited v. M/S Nik San Engineering Co Ltd.4 In the said decision, the Gujarat High Court had analysed the very provision of Act of 2006 and has made certain observations on the issue of the company being supplier or not within the meaning of Section 2(n). Some of the observations contained therein since relevant quoted hereinafter: “Sub-section (1) of Section 18 of the Act 2006 anything envisages ’notwithstanding that 42019 SCC OnLineGuj 2474 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 16 contained in any other law for the time being in force, any party to a dispute may, with regard to any amount due under section 17, make a reference to the Micro and Small Enterprises Facilitation Council’. The expression "any party" in this clause draws its reference from Sections 15, 16 and 17 i.e. it must be a supplier which, in turn, is defined under Section 2(n) of the Act, 2006. Since it is the supplier alone who can avail the benefit under the Act 2006 and respondent no.3 being not the supplier in context to the dispute in question, it was beyond the jurisdiction of the Council to have entertained the reference under Section 18 of Act 2006. It having addressed the facts in wrong manner assumed the jurisdiction in respect of the dispute in question. The assumption of jurisdiction by the Council in respect of dispute in question cannot be approved. Therefore, the impugned Award deserves to be and is hereby set aside." 43. Other decisions which have been pressed into service is a decision delivered by the Supreme Court in Silpi Industries v Kerala State Road Trasportation Corporation5 wherein the court clarified its stance: “27. …... In our view, to seek the benefit of provisions under MSMED Act, the seller should have registered under the provisions of the Act, as on the date of entering into the contract. In any event, for the supplies pursuant to the contract made before the registration of the unit under provisions of the 52021 SCC OnLine SC 439 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 17 MSMED Act, no benefit can be sought by such entity, as contemplated under MSMED Act. While interpreting the provisions of Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, this Court, in the judgment in the case of Shanti Conductors Pvt. Ltd. v. Assam State Electricity Board has held that date of supply of goods/services can be taken as the relevant date, as opposed to date on which contract for supply was entered, for applicability of the aforesaid Act. Even applying the said ratio also, the appellant is not entitled to seek the benefit of the Act. There is no acceptable material to show that, supply of goods has taken place or any services were rendered, subsequent to registration of appellant as the unit under MSMED Act, 2006. By taking recourse to filing memorandum under sub-section (1) of Section 8 of the Act, subsequent to entering into contract and supply of goods and services, one cannot assume the legal status of being classified under MSMED Act, 2006, as an enterprise, to claim the benefit retrospectively from the date on which appellant entered into contract with the respondent.The appellant cannot become micro or small enterprise or supplier, to claim the benefits within the meaning of MSMED Act 2006, by submitting a memorandum to obtain registration subsequent to entering into the contract and supply of goods and services. If any registration is obtained, same will be prospective and applies for supply of goods and services subsequent to registration but cannot operate retrospectively. Any other interpretation of the provision would lead to absurdity and Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 18 confer unwarranted benefit in favour of a party not legislation.”(Emphasis supplied) intended by 44. The judgement delivered by the Madhya Pradesh High Court is also relevant in this context: “Since it is the supplier alone who can avail the benefit under the Act 2006 and respondent no.3 being not the supplier in context to the dispute in question, it was beyond the jurisdiction of the Council to have entertained the reference under Section 18 of Act 2006. It having addressed the facts in wrong manner assumed the jurisdiction in respect of the dispute in question. The assumption of jurisdiction by the Council in respect of dispute in question cannot be approved. Therefore, the impugned Award deserves to be and is hereby set aside.” 45. It is also not in dispute that the Respondent filed entrepreneur memorandum under Section 8 of the MSMED Act 2006 many years past the impugned supply and later approached the Council invoking the provisions of MSMED Act by filing application under Section 18 of the Act. It is the specific case of the Appellant that the Respondent has delivered the faulty work having made deficient and defective supplies and dishonouring the letter of intent. In that view of the matter, this Court is of the firm view that the Respondent is not entitled to invoke the provisions of Chapter V and seek reference to arbitration under Section 18 of the MSMED Act, 2006. Further, as it is also not in dispute Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 19 that there is an agreement for arbitration between the parties for resolution of disputes pursuant to their contract, as such, we are of the view that the District Court has erroneously reverted the case to the Council for fresh adjudication for the reasons already mentioned in the above issues. VII. CONCLUSION AND ORDER: 46. The Arbitrator is a Judge chosen by the parties and his decision is final as long as it is founded in fairness and justice. “Quialiquidstatuerit parte inauditaaltera, aequum licet dixerit, baud aequumfecerit” that is, “justice should not only be done but should manifestly be seen to be done”.A decision must be fair, reasonable and objective. On the obverse side, anything arbitrary and whimsical would obviously not be a determination which would either be fair, reasonable or objective. The award cannot be passed on the ipse dixit of the arbitrator. Since an award is subject to judicial review, it is important that such award must disclose the mind of the arbitrator. 47. The MSEFC as established by the Government of Odisha in furtherance of the MSMED Act has a paramount purpose to perform. Its aim is to provide an effective, expeditious and equitable dispute settlement system to the micro and small enterprises so that they too may flourish in this power packed economy of ours. These small players are usually more susceptible to hurt and they rarely have the means to recover. Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 20 However it should not be used to cover and shield instances and behaviour of negligence. While procedural requirements can be tweaked to create a level playing field for the benefit of the disadvantaged, it should not render it futile in form of negative discrimination. . 48. In light of the discussion above, keeping the settled principles of law in mind and for the reasons given above, this Court is of the considered view that the MSEFC award dated 16.11.2019 was correctly set aside by the learned District Judge in his impugned order. However, the order pertaining to the remission of the case to the Council is bad in law and as such, is quashed; to that extent. 49. Therefore, the challenge in ARBA No.9 and 11 of 2023 is allowed. 50. Accordingly, both the ARBAs are disposed of. (Dr.S.K. Panigrahi) Judge Orissa High Court, Cuttack, Dated the 24th August, 2023/ Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: Assistant Registrar-cum-Senior Secretary Reason: Authentication Location: HIGH COURT OF ORISSA, CUTTACK Date: 29-Sep-2023 15:30:22 pg. 21