Arbitration Petition (L) No. 2464 of 2015 with Notice of Motion (L) No. 3696 of 2015 and Notice of Motion (L) No. 14, 15 of 2016. Case: Maharashtra State Electricity Distribution Company Limited and Others Vs M/s. Deltron Electronics. High Court of Bombay (India)
| Case Number | Arbitration Petition (L) No. 2464 of 2015 with Notice of Motion (L) No. 3696 of 2015 and Notice of Motion (L) No. 14, 15 of 2016 |
| Counsel | For Appellant: Mr. Gaurav Joshi, Senior Advocate a/w Ms. Neeta Jain, Nirav Shah and Anuj Jaiswal i/b Little & Co. and For Respondents: Mr. Suresh Dhole a/w Pushpa Shinde, Advs. |
| Judges | S.C. Gupte, J. |
| Issue | Micro, Small and Medium Enterprises Development Act, 2006 - Section 18(3); Arbitration and Conciliation Act, 1996 - Sections 31(1)(2), 80, 43 |
| Judgement Date | November 15, 2016 |
| Court | High Court of Bombay (India) |
Judgment:
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This Arbitration Petition challenges an award passed by the Micro and Small Enterprises Facilitation Council, Konkan Division, Thane under Section 18(3) of Micro, Small and Medium Enterprises Development Act, 2006 ("Small Enterprises Act"). By consent, the petition is admitted and taken up for final hearing forthwith.
2 The short facts of the case may be stated as follows:
2.1 The Petitioners are successors of erstwhile Maharashtra State Electricity Board (MSEB) and are distributors of electricity in their area of operation in Maharashtra. The Respondent is a small scale enterprise duly registered with the District Industries Centre, Thane and is governed by the Small Enterprises Act.
2.2 The Petitioners had floated a tender for distribution of transformers. Pursuant to it, the Respondent submitted its offer. The offer was accepted by the Petitioners and a letter of award was issued to the Respondent. Pursuant to the letter of award, the Petitioners placed ten purchase orders on the Respondent. The contract between the parties stipulated payment of 100% value of the contract by account payee cheque within 60 days from the date of receipt of the entire quantity as per the monthly delivery schedule. The purchase orders pertain to the period between 1 August 1994 to 10 October 2000. Through this period the Respondent supplied the materials against the purchase orders under various invoices. The Petitioners accepted the materials and paid the bills submitted by the Respondent from time to time in respect of the same.
2.3 By its letter dated 9 June 2004, the Respondent for the first time raised its claim for interest on delayed payments on the various contracts of purchase represented by the purchase orders. An aggregate sum of Rs.83,54,695/- was claimed in respect of such interest. The Petitioners refused to pay these delayed payment charges.
2.4 In the premises, on 21 September 2005, the Respondent filed a reference before the Industries Facilitation Council Bench, Thane under the provisions of Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 ("Interest on Delayed Payments Act"). The council, by its letter dated 24 January 2006, served a copy of the reference on the Petitioners directing them to file their reply to the reference.
2.5 During the pendency of the reference, on 16 June 2016, the Interest on Delayed Payments Act was repealed by the Small Enterprises Act which made appropriate provisions for Small Scale and Ancillary Industrial Undertakings. The Council was redesignated as Micro and Small Scale Enterprises Facilitation Council ("Council"). Section 32 of the Small Enterprises Act which provided for repeal of the former Act inter alia contained a clause to the effect that anything done or any action taken under the repealed Act shall be deemed to have been done or taken under the corresponding provisions of the Small Enterprises Act.
2.6 By its notice dated 30 November 2012, under Section 18 read with Section 17 of the Act, the Council called upon the Petitioners to file their submissions/say on the reference petition filed by the Respondent.
2.7 By its letter dated 24 December 2013, the Respondent called upon the Petitioners to hold a conciliation meeting in terms of Section 18 of the Act. The Petitioners did not comply with this requisition.
2.8 On 18 January 2014, in the premises, the Respondent through its Advocate informed the Council that the parties had failed to arrive at any amicable settlement and required the Council to place the matter for arbitration under the provisions of Section 18(3) of the Small Enterprises Act.
2.9 The Council, by its order dated 30 January 2014, terminated the conciliation proceedings and took up the matter for arbitration under Section 18(3) of the Small Enterprises Act.
2.10 By its award dated 31 January 2015, the Council awarded the Respondent's claim for interest on delayed payment together with further interest. The impugned award is not signed by chairperson of the Council/Arbitral Tribunal. The remark to be found on the award states that he was "transferred". It appears that some other members of the Council/Arbitral Tribunal have also signed the award on different dates other than 31 January 2015.
2.11 The impugned award was received by the Petitioners on 18 May 2015.
2.12 Whilst the Petitioners were contemplating steps to challenge the award, the Petitioners received a letter dated 24 August 2015 from the Council proposing a rehearing of the reference petition. The letter mentioned that due to technical and administrative reasons, the award was not signed by the Chairman of the Council and the matter was required to be reviewed as per the discussions of the Council held on 11 August 2015. The rehearing was fixed on 4 September 2015.
2.13 On 31 August 2015, the Respondent filed an application challenging the decision taken by the Arbitral Tribunal/Council for rehearing of the matter. No meeting was called by the Arbitral Tribunal/Council for hearing of that application. The rehearing of the reference petition was, however, adjourned to 5 September 2015. It appears that no effective rehearing took place on either the scheduled date or the adjourned date.
2.14 It appears that on 29 September 2015, the Council...
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