Neutral Citation No. ( 2025:HHC:22357 ) IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA CWP No. 6498 of 2021 a/w Arb. Case No. 72 of 2021 Reserved on 27.06.2025 Pronounced on: 11.07.2025 1. CWP No. 6498/2021. The Bihar Medical Services and Infrastructure Corp. Ltd. Patna .....Petitioner. Versus The Chairman, the HP Micro and Small Enterprises Facilitation Council and Ors. …..Respondents. _____________________________________________________________ 2. Arb. Case No. 72/2021. The Bihar Medical Services and Infrastructure Corp. Ltd. Patna .....Petitioner Versus The Himachal Pradesh Micro and Small Enterprises Facilitation Council Shimla and others. ….Respondents. Coram: The Hon'ble Mr. Justice G.S. Sandhawalia, Chief Justice. The Hon’ble Mr. Justice Ranjan Sharma, Judge. Whether approved for reporting? Yes. CWP No.6498/2021. For the petitioner: Mr. Umesh Prasad Singh, Senior Advocate (through V.C) and Mr. Shrawan Dogra, Senior Advocate with 2 Mr. Kumar Manish, Ms. Divya Sood (through V.C.), Mr. Tejasvi Dogra, Mr.Shubham Sood and Ms. Bhanvi Negi, Advocates. For the respondents: Respondents No.1 and 2 ex-parte. Mr.Samman Vardhan Gautam, Mr. Sahil Thakur, Mr. Yuyutsu Thakur, Mr. Priyam Tiwari, Mr. Harsh Raj, Ms. Khushi Sharma, and Mr. Praphull Kumar, Advocates for respondent No.3. Arb. Case No.72 of 2021 For the Petitioner: Mr. R.K Bawa, Senior Advocate with Mr.Basant Pal Thakur, Advocate. For the respondents Respondent No.1 ex-parte. Mr.Samman Vardhan Gautam, Mr. Sahil Thakur, Mr. Yuyutsu Thakur, Mr. Priyam Tiwari, Mr. Harsh Raj, Ms. Khushi Sharma, and Mr. Praphull Kumar, Advocates for respondent No.3. G.S. Sandhawalia, Chief Justice. Present proceedings arise out of an Arbitral Award passed by respondent No.2 against the petitioner/appellant at the instance of respondent No.3-M/s Medipole Pharmaceutical India Pvt. Ltd (hereinafter referred to as ‘the Supplier’). 2. Both the matters, i.e., Writ petition and the Arbitration case being inter connected, are being taken up 3 together since primarily, the issue is regarding the Award passed by the Arbitrator dated 06.04.2021 in Reference Case No. 49 of 2017, filed before the respondent No.1- Council 3. It is pertinent to mention here that after the Arbitration Case as such was filed and notice issued on 27.07.2021, under Section 34 of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as ‘the 1996 Act’) for quashing of the Award dated 06.04.2021 the purchaser/petitioner had also preferred Writ petition whereby, at the first instance on 26.10.2021, operation and execution of the said Award had been ordered to be stayed. The Arbitration case as such was only thereafter on 10.03.2022, directed to be listed along with the Writ petition and both were admitted on 16.06.2022 with Rule DB due to which we propose to decide both together. 4. Vide an ex parte Award in question, the Arbitrator dealt with the claim of the Supplier for recovery of Rs.29,83,80,909.00/- and allowed the Supplier as such to file a revised claim for Rs.66,50,74,160.00/- along with up to date penal interest as on 30.11.2019 since the matter had been remanded earlier by this Court. Therefore, while 4 keeping in view the report of a Chartered Accountant, justified the up to date claim of Rs. 95,00,70,208.00/- plus up to date penal interest and GST on the interest as on 01.04.2021 till its final realization under Section 16 of The Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as ‘the MSMED Act, 2006’) and awarded the same. The Arbitrator thereafter directed that the original of the Award be sent to the Buyer and Supplier and third Award and stamp papers be sent along with the relevant record to the Chairman of respondent No. -1- Himachal Pradesh Micro and Small Enterprises Facilitation Council, Shimla (hereinafter referred to as ‘the council’) for record while answering the reference. Argument on behalf of the Petitioner/Buyer. 5. Learned Senior Counsel Mr. R.K. Bawa with other counsel Mr. Umesh Prasad Singh Senior Advocate (through V.C.) and Shri Shrawan Dogra, Senior Advocate for the Buyer as such have argued that the ex parte proceedings are liable to be set aside as the proceedings were conducted during the time of Covid-19 and therefore, the Buyer as such could not put in appearance before the Arbitrator who had proceeded to pass an ex parte Award on 5 19.03.2021. The Head Office of the Buyer was at Patna in the State of Bihar and there were issues regarding distant travelling and transportation was not easily available at that point of time. The proceedings have been conducted in utmost haste in as much as the matter had been taken up on firstly 16.2.2021 and due to the reference being received from respondent No-1-Council. That the authorized representatives and the Council of the Supplier had already appeared on their own account and accepted the service. The Buyer as such was stated to have served through registered speed post but not present and therefore, on the basis of the mail track consignment, proceedings had been conducted ex parte on 19.03.2021. The Statement of Claims were also only filed then and the matter had been fixed for 5th of April, 2021. The affidavit in support of the claimant’s claim had been produced on 05.04.2021 and Award had been passed on the very next day and therefore, misconduct on the part of the Arbitrator is evident and therefore, the Award is not sustainable. Accordingly, it is contended that the defence could have been struck off and liberty could have been given as such to 6 the Buyer to join the proceedings while referring to the record of the Arbitration proceedings. 6. It was accordingly argued that the first claim was of Rs.14.50 crores while referring to the order dated 28.06.2016 (Annexure P-19) passed inter se the parties in the High Court at Patna wherein the said dues had been claimed and directions had been issued to pass a speaking order on the representation made way back on 17.12.2015. It was submitted that the second claim was enhanced to (Rs.29,83,909.00/-), inclusive of interest when the reference was filed before the respondent No.1-Council on 05.10.2017, on the basis of which Council had issued notice dated 27.11.2017. While referring to the Statement of claim made before the earlier Arbitrator on 23.06.2018 (Annexure P-31), it is pointed out from the file that at that point of time recovery of Rs.33,77,25,952/- as principal amount plus interest to the last date had been claimed. The claim had been enhanced to Rs.66,50,74,190.00/- for the fourth time as on 17.03.2021, while referring to the record of the present Arbitrator/respondent No.2. The last and final enhancement, as noticed earlier, was made on 01.04.2021, during the pendency of the proceedings before respondent 7 No.2 within 15 days to the tune of Rs.95,71,00,208.00/- along with future interest from 01.04.2021, till the date of realization as per the provisions of the MSMED Act, 2006, while referring to the affidavit which was given before the Arbitrator by way of evidence of the Liaison Officer Shri Chaman Lal Dhiman of the Supplier. 7. It was accordingly argued that the earlier directions had been issued by the learned Single Judge in CWP No.1865 of 2018 inter se the parties wherein on 26.08.2019, the writ petition had been allowed and the earlier orders wherein the matter had been referred to Arbitration on 18.03.2018 had been set aside with the directions that the matter be proceeded in terms of the provisions of sub-Rule 7 of Rule 4 of the Himachal Pradesh Micro and Small Enterprises Facilitation Council Rules, 2007, (hereinafter referred to as ‘the 2007 Rules’) after getting response from the Buyer. It was thus argued that there was misconduct apparent on the part of the Arbitrator and there was no requirement of deposit of 75% of the amount for entertaining the said proceedings against the Award which was subject matter of consideration while placing reliance upon the judgment of a Single Judge of 8 Punjab and Haryana High Court in M/s Pratibha Industries Ltd. vs M/s Reva Industries Ltd. (2016) 2 PLR 839. 8. The issue of jurisdiction was also raised while referring to the agreement dated 04.10.2013 inter se the parties wherein in view of Clause 26, the dispute was to be subject to the jurisdiction of the High Court of Bihar at Patna on account of the Buyer as such having the office there at Bihar. It was pointed out that there was a large number of petitions which had been preferred in the High Court itself at Patna between the period 2014 to 2017 before changing of the course to seek the reference proceedings before respondent No-1-Council under the MSMED Act, 2006. Resultantly, it was further argued that the objection being taken to the maintainability of the writ petition, in view of the law laid down by the Apex Court in India Glycols Ltd. and another vs. Micro and Small Enterprises Facilitation Council, Medchal-Malkajgiri and others, 2023 SC Online SC 1852, would be without any basis since the matter had been referred to a larger Bench by the Apex Court in 2025 SCC OnLine SC 127, M/s. Tamil Nadu Cements Corporation Ltd. Vs. Micro and Small 9 Enterprises Facilitation Council and Anr., on 22.01.2025. Arguments on behalf of Respondent/Supplier. 9. In response, the Counsel for the Supplier has argued that the 2006 Act is a special statute and would have overriding effect and once the Supplier has supplied the goods, the Buyer has to make the payment and after the period is exceeded by 45 days, under Section 15, the interest is to be paid by way of compound interest with monthly rests from the appointed date at the date agreed upon at three times of the bank rate as notified by the Reserve Bank. In these circumstances, on account of the payments having not been made since 2014, the amounts had gone up by way of geometric progression and therefore, justified the enhanced claim which had been made from Rs.14.50 crores to Rs.95.71 crores. It was accordingly argued that Section 18 (4) provides that the Council shall take up the disputes to arbitration while referring to an institution providing alternate dispute resolution service and the Council as such would have jurisdiction to act as an Arbitrator in any dispute even if the Supplier is located within its jurisdiction or even the Buyer is 10 located any where in India. Reliance was placed upon the judgment passed by the Apex Court in Harcharan Dass Gupta vs. Union of India 2025 SCC OnLIne SC 1111 wherein the order passed by the Karnataka High Court holding that the Delhi Arbitration Center lacks jurisdiction and the seat for Arbitration was to be at Bangalore, was set aside to contend that the Council as such would have jurisdiction and resultantly reliance was placed upon the earlier judgment of the Apex Court passed in Gujarat Civil Supplies Corporation Ltd vs. Mahakali Foods Pvt. Ltd. (Unit-2) and another (2023) 6 SCC 401, to plead that the 2006 Act, as such would have prevalence over the issue of jurisdiction and the same would be covered under Section 18 (4) of the Act. Resultantly, reliance upon the Division Bench judgment of the Delhi High Court in State Trading Corporation of India ltd. vs. Micro and Small Enterprises Facilitation Council, 2024 SCC Online Delhi 979 was placed that the writ petition was not maintainable. 10. Accordingly the passing of the said Award within 25 days was justified on the ground that under Section 18 (5), the reference had to be decided within the period of 90 11 days from the date of making such reference and therefore, the action of Arbitrator was well supported. 11. A strong objection has been taken to the Arbitration Appeal having been filed on account of its lack of maintainability on account of the fact that 75% of the amount had not been deposited if the said Award has to be challenged and the appeal was not liable to be entertained by any Court. The arbitration matter was to be heard before the learned Single Judge was pressed upon since there was right of appeal as such under Section 37 of the 1996 Act and that right would be be taken away if both the matters are heard together. 12. A suggestion was given that the delay, if any, regarding raising the issue as such from the year 2014, till preferring the proceedings on 24.10.2017, before the respondent No.1-Council was sought to be justified on the ground that initially the Council had returned the matter on 28.10.2017, since the goods were supplied in the year 2013 and liberty had been given to re-submit the reference. The delay had been explained in communication dated 13.11.2017 (Annexure P-13 colly) regarding the earlier litigation in Patna and that on account of the order dated 12 06.09.2017 (Annexure P-20) in the contempt matter whereby liberty had been given to the petitioner to question the same in appropriate proceedings. The delay was sought to be explained which, according to the counsel for the respondents, was accordingly accepted when the fresh summons were issued on 27.11.2017 (Annexure P-23) to the Buyer wherein the respondent No.1-Council had asked the response from the Buyer. Accordingly, it is being contended that the matter had been brought before the Council, the Buyer as such had only taken time to make the payment and it has been pressed upon them several times as such to settle the matter and they had taken time on 05.11.2020 for the said purpose. It is thus submitted that time and again the Supplier has not offered to pay for the goods supplied which were without any defects and it is accordingly argued that for the 41 items only one of the items was having defect which had led to the black-listing of the Supplier. Background and History of the case at Patna: 13. The background of the case has to be taken into account before we proceed to decide the issue regarding the maintainability of the writ petition and also the manner 13 in which the arbitration proceedings had been conducted by the Arbitrator and whether it would fall within Clause 34(2) (iii) and (iv) of the 1996 Act and there is misconduct as such on the part of the Arbitrator, the manner in which the arbitration proceedings had been conducted. 14. It is to be noticed that agreement inter se the parties is dated 04.10.2013 (Annexure P-3) whereby the Supplier having its registered office in Delhi and factory premises at Bhud Baddi, District Solan, H.P. had entered into the agreement with the Petitioner/Buyer at Patna, which is a corporation having its office at Patna. The drugs and medicines which have been purchased as such as per the specification mentioned in the schedule at the prices with a primary deposit of Rs.43,56,000/-, as security deposit. As per Clause 25 of the said Agreement, the dispute inter se the parties was to be decided by the Managing Director and had to be final and binding and the jurisdiction as such was of the High Court of Bihar under Clause 26. The relevant Clauses read as under: “This Deed of Agreement is made on this 4th day of October 2013 by M/s. MEOIPOL PHARMACEUTICAL INDIA LTD. represented by its Proprietor/Managing partner/Managing Director having its Registered Office at 14 128/5, Swiss House, Vishwas Nagar, Delhi-110032 and its Factory Premises at 1199/3 BHUD BADDI, Distt. Solan (H.P.) (hereinafter/referred to as "Supplier" which term shall include its successors, representatives heirs, executors and administrators unless excluded by the Contract) on one part and Govt. of Bihar, represented by its Managing Director of Bihar Medical Services and Infrastructure Corporation Ltd. (BMSICL) having his Office at Patna (hereinafter referred to as "The Purchaser" which term shall include its successors, representatives, executors assigns and administrators unless excluded by the Contract on the both part. Whereas the Supplier has agreed to supply to the Purchaser, the Drugs and Medicines with specifications mentioned in the Schedule attached here to at the prices noted there in and in the manner and under the terms and conditions herein after mentioned and where as the Supplier has deposited with the Purchaser a sum of Rs 43,56000 (Rupees Fourty three Lacs fifty six thousand only) as Security Deposit for the due and faithful performance of this Agreement, to be forfeited in the event of the Supplier failing duly and faithfully to perform It. Now these presents witness that for carrying out the said Agreement in this behalf into execution. 1 to 24 xxx xxx 25.And it is hereby agreed and declared between the parties hereto that in case any question of dispute arises touching the construction or wording of any clause wherein contained on the rights, duties, liabilities of the parties hereto or any other way, touching or arising out of the presents, the decision of the Managing Director in the matter shall be final and binding. 26.In the event of any disputes between the parties, the disputes would be subject to the jurisdiction of the Court 15 of Bihar or Honourable High Court of Bihar. In witness whereof the Supplier and the General Manager acting for an on behalf of the ordering authority and Govt. of Bihar, the Purchaser, have set their hands the day, month and year first above written.” 15. On 25.04.2017, the Supplier was put to notice vide (Annexure P-4), by the Managing Director that the drugs supplied by it ‘Cefixime Oral Suspension IP’ had not conformed to the quality testing and therefore, why penal clause should not be invoked against the company. In pursuance of the said show-cause notice, petitioner along with two other companies was black listed for two years on 13.09.2014 (Annexure P-6). The writ petition bearing No. 16767 of 2014 was filed before the High Court at Patna in which orders were passed on 22.10.2014 (Annexure P-7), remanding the matter to the competent authority by issuing fresh show-cause notice and giving the right as such to apply for a contract by disclosing this fact in any tender and subject to final decision to be taken by the Corporation. 16. Fresh show-cause notice was issued on 25.01.2015 which was responded to on 15.01.2015 (Annexure P-10) by the Supplier and an order dated 26.04.2015 came to be passed 16 black-listing the company for a period of five years. The Supplier filed Civil Writ Petition No. 7523 of 2015 which was allowed on 03.12.2015 (Annexure P-12) by the Patna High Court and the said order was set aside on the ground that opportunity of being heard had been denied. 17. The third writ petition was filed at Patna by the Supplier that its bills to the tune of Rs.14.50 crores remain pending and therefore, representation dated 07.12.2015 before the Managing Director be decided. The writ petition was disposed of with the directions on 28.06.2016 to consider the claim of the petitioner and make payment of admissible dues within three months and in case the dues are found inadmissible the same may be disposed of by a speaking order. The rejection was done on 17.07.2017 (Annexure P-20) by the Managing Director of the Buyer and the representation dated 07.12.2015 was rejected. 18. Vide order dated 05.10.2016, the Managing Director again black-listed the Supplier for five years keeping in view the reconsideration which had to be done vide order dated 03.12.2015 in CWP No. 7523 of 2015 (Annexure P-12). The 17 Contempt Petition filed in CWP No. 454 of 2016 was filed before the learned Single Judge at Patna which was disposed of on 06.09.2017 (Annexure P-21) apparently on account of the fact that the directions to consider the payment of the bills of 14.50 crores still remains pending. It was accordingly brought to the notice of the said Court that an order had been passed on 17.07.2017 by the Managing Director of the Buyer Corporation and resultantly, it was held that no case for contempt is made out and the application was disposed of leaving it open to the petitioner to question the same in an appropriate proceedings by filing an appropriate application. 19. It is thereafter on 24.10.2017, Reference was filed before respondent No.1-Council which, as noticed above, was returned on 24.10.2017 on the ground that the interests calculation schedule was not prepared as per the format devised and the same has not been signed by the competent persons and that there is delay in filing the reference. 20. Apparently, on 13.11.2017, justification was given that since an order had been passed on 06.09.2017, (Annexure P-21) in compliance of the Contempt Petition by the High Court and liberty had been given to challenge the same and the 18 matter was within limitation and therefore, the delay was sought to be justified leading to the notice dated 27.11.2017 (Annexure P-23) being issued to the Buyer to the effect by respondent No.1-Council that the claim of Rs.29,83,80,909.00/- plus interest had been preferred and to file its reply. The litigation at Patna continued and on 08.03.2018, the writ petition No. 17483/2016 was allowed and liberty was given to fresh issue show-cause notice and the permission was given to participate in the tender in the mean time subject to any fresh order of black-listing. Fresh show-cause notice was issued on 15.06.2018 and vide order dated 30.07.2018 (Annexure P-16) black-listing of five years as such was made effective from the date of first order dated 13.09.2014 (Annexure P-6). 21. The Letters Patent Appeal No. 513 of 2018 was filed before the Patna High Court against the order dated 08.03.2018 which was disposed of on 04.01.2019 on account of the fact that fresh orders had been passed and therefore, the appeal had been rendered infructuous. 19 Litigation and contest in Himachal Pradesh between the Parties: 22. Apparently, the Buyer had filed reply on 03.01.2018 to the notice dated 27.11.2017 issued by the respondent No-1 Council raising various objections, including the issue of jurisdiction and that the matter is still pending before the High Court at Patna, apart from the merits as such of the case regarding the issue of black-listing. The fact that claim of payment for the outstanding dues had been rejected by the order dated 17.07.2017 (Annexure P-20) was also highlighted while questioning the jurisdiction as such in view of the orders passed by the Patna High Court. The matter was taken up before the Council on 06.04.2018 and it was noticed that dispute is regarding one of its 41 items and payment could be made regarding other 40 items and thereafter the matter was listed on 08.05.2018 along with a large number of cases. The Chairman of the Council as such had handed over the Reference to Shri L.R. Sharma, District and Sessions Judge (Retd.), on 28.05.2018 (Annexure P-30) who was on the panel notified by the State Government, while noting that the 20 conciliation proceedings had failed as the Buyer was not interested to solve the matter. 23. Notice was issued by the said Arbitrator on 23.06.2018 (Annexure P-3) to the Buyer to put in appearance and as noticed, as per the Statement of Claim was for Rs.33,77,62,592/- was claimed of principle amount plus interest up to 31.05.2018. On putting appearance, time was taken initially for filing the reply by the Buyer and eventually, Civil Writ Petition No.1865 of 2018 came to be filed which was allowed on 26.08.2019 (Annexure P-34) and the order passed by the Chairman referring the matter to Arbitrator was quashed by the learned Single Judge of this Court on the ground that the Chairperson of the respondent-Council had placed the matter in routine before the Council and had not dealt with it in accordance with the Rules. Relevant part of the order reads as under: “15.Accordingly, this petition is partly allowed by setting aside the order passed by the Council in its 37th meeting held on 08.05.2018, vide which the Reference filed before it by respondent No.3 under Section 18 of the Micro, Small & Medium Enterprise Development Act, 2006 stood referred for arbitration. The matter is remanded back tot he Chairperson of respondent No. 1-Council, with the direction that he shall proceed with the matter in terms of 21 the provisions of Sub-rule (7)of Rule 4 of the 2007 Rules, as envisaged after receipt of the response of the buyer. It is directed that the said procedure has to be strictly followed by the Chairperson, because the Rules are statutory Rules and have the force of law and also because any decision of the Chairperson whether or not to place the matter before the Council and whether a case of a delayed payment is made out, shall have civil consequences as far as either of the parties is concerned. The decision in this regard shall be a reasoned and speaking one. However, it is made clear that as far as the merit of the Reference made before the Council by respondent No. 3 is concerned, this Court is not making any observation upon the same and the same shall be dealt with by the Chairperson independently, uninfluenced by any observation of this Court in this judgment. In view of the above discussion, the second contention raised by learned Senior Counsel with regard to the maintainability of the Reference is not being adjudicated upon in terms of Clause-26 of the agreement entered into between the parties (Annexure P-2). This Court hopes and expects that the Chairperson of the Council shall deal with the issue as expeditiously as possible. The petition stands disposed of in above terms,so also pending miscellaneous application, if any.” 24. Thereafter on 18.01.2021 (Annexure P-1) the Council as such, vide order dated 02.02.2021 (Annexure P-2) referred the matter again to the Arbitration by concluding that the Rules had been repealed and 22 revised and there was no further scope of re- conciliation. The relevant portion of the said order reads as under: “5.Finally the matter was listed before the Facilitation Council in its 56th meeting held on 18.01.2021. During the meeting, the claimant pleaded before the Council to refer this case to arbitrator as there is no further possibility of amicable settlement. 6. The Member Secretary again informed that Rules of HPMSEFC were repealed/revised, on 16.04.2018. No such provision is existing in these revised Rules as was there earlier in Sub-rule (7) of Rule 4 of the 2007 Rules of HPMSEFC. After deliberation and listening to the arguments from both the sides, the Members of the Council were of the unanimous opinion that there is no further scope of reconciliation in this long pending case. Hence, it was decided by the Council that this reference be referred to the arbitrator.” 25. Resultantly, while issuing communication dated 08.02.2021, (Annexure P-1) respondent No. 3 Shri J.S. Mahantan District and Sessions Judge (Retd.) was appointed as an Arbitrator before whom the matter had come up on 16.02.2021, during Covid period for the first time and counsel for the Buyer had put in appearance on their own account without having any notice. Notice had been issued to the 23 Supplier for 19.03.2021. On 19.03.2021, ex parte proceedings were ordered and the Statement of Claim was filed and the case was kept for claimant's ex parte evidence. 26. A perusal of the file would go on to show that in the Statement of Claim initially filed on 17.03.2021, a sum of Rs.66,50,74,119/- was claimed before the Arbitrator. The affidavit of the Liaison Officer Chaman Lal had been taken on record. On 06.04.2021 Award was passed, as noticed above, while taking the evidence by way of affidavit dated 01.04.2021 wherein enhanced amount of Rs.95,71,00,208/- as such had been claimed on the basis of interest calculation done up to 31.03.2021 as per the certificates of the Chartered Accountant which were appended as Exts. A-7, A-8 and A-9. The scope as such of the amount was substantially enhanced more than three times than what had been claimed at the first instance before the Council. It is in such circumstances, the matter has reached before this Court leading to the interim order being passed staying the operation of the Award in the Writ petition at the first instance. 24 Legal provisions governing the field. 27. Sections 15 to 19 and 24 of the 2006 Act are apposite and read as under: “15. Liability of buyer to make payment- Where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day: Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed forty-five days from the day of acceptance or the day of deemed acceptance. This clause seeks to specify the liability of buyer of goods and services from a supplier to make payment therefor on or before the date agreed upon between the two parties in writing or, where there is no agreement in this behalf, before the appointed day. The proviso to this clause seeks to limit the period agreed upon between the supplier and the buyer in writing to forty-five days from the day of acceptance or the day of deemed acceptance. 16. Date from which and rate at which interest is payable- Where any buyer fails to make payment of the amount to the supplier, as required under section 15, the buyer 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. This clause seeks to specify the date from which and the rate at which interests will be payable by the buyer to the supplier in case of the former failing to make payments of the amount to the supplier, as required under section 15. 25 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. This clause seeks to make the buyer liable to pay the amount with interest thereon as provided under section 16 for goods supplied or services rendered by the supplier. 18. Reference to Micro and Small Enterprises Facilitation Council.- (1) Notwithstanding anything 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. (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 stand terminated without any settlement between the parties, the Coucil 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 disputes 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 for the time being in force, the Micro and Small Enterprises Facilitation Council or the centre providing alternate dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator under this section in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India. 26 (5) Every reference made under this section shall be decided within a period of ninety days from the date of making such a reference. This clause seeks to provide for the jurisdiction of the Micro and Small Enterprises Facilitation Council for acting as an arbitrator or conciliator in respect of the matters referred to in clause 17. 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 providing alternate dispute resolution services to which a reference is made by the Council, shall be entertained by any 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, as the case may be, the other order in the manner directed by such Court: Provided that pending disposal of the application to set aside 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, subject to such conditions as it deems necessary to impose. This clause seeks to debar any Court or other authority from entertaining an appeal against any decree, ward or any other order 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 other order. 20. to 23. xxx xxxxx 24. Overriding effect. - The provisions of sections 15 to 23 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. This clause seeks to give the provisions of clauses 15 to 23 an overriding effect over anything inconsistent therewith in any other law for the time being in force.” 28. Relevant provisions of Arbitration Act, 1996 read as under: 27 “18. Equal treatment of parties.- The parties shall be treated with equality and each party shall be given a full opportunity to present his case. 19 to 22. xxxx xxxx xxxxx 23. Statement of claim and defence.-(1) Within the period of time agreed upon by the parties or determined by the arbitral tribunal, the claimant shall state the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defence in respect of these particulars, unless the parties have otherwise agreed as to the required elements of those statements. (2) The parties may submit with their statements all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit. [(2A) The respondent, in support of his case, may also submit a counter-claim or plead a set-off, which shall be adjudicated upon by the arbitral tribunal, if such counter-claim or set-off falls within the scope of the arbitration agreement.] (3) Unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow the amendment or supplement having regard to the delay in making it. 1[(4) The statement of claim and defence under this section shall be completed within a period of six months from the date the arbitrator or all the arbitrators, as the case may be, received notice, in writing of their appointment.] 24. Hearing and written proceedings.- (1) Unless otherwise agreed by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials: 28 Provided that the arbitral tribunal shall hold oral hearings, at an stage of the proceedings, appropriate on a request by a party, unless the parties have agreed that no oral hearing shall be held: 2[Provided further that the arbitral tribunal shall, as far as possible, hold oral hearings for the presentation of evidence or for oral argument on day-to-day basis, and not grant any adjournments unless sufficient cause is made out, and may impose costs including exemplary costs on the party seeking adjournment without any sufficient cause.] (2) The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of documents, goods or other property. (3) All statements, documents or other information supplied to, or applications made to the arbitral tribunal by one party shall be communicated to the other party, and any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties. 25. Default of a party. Unless otherwise agreed by the parties, where, without showing sufficient cause,- (a) the claimant fails to communicate his statement of claim in accordance with sub-section (1) of section 23, the arbitral tribunal shall terminate the proceedings; (b) the respondent fails to communicate his statement of defence in accordance with sub-section (1) of section 23, the arbitral tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant [and shall have the discretion to treat the right of the respondent to file such statement of defence as having been forfeited]; (c) a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the arbitral award on the evidence before it. 26. to 29. xxxx xxxx xxxx 29 29A. Time limit for Arbitral award:- (1) The in matters other than international commercial arbitration shall be made by the Arbitral tribunal within a period of twelve months from the date of completion of pleadings under sub-Section (4) of Section 23. 34.Application for setting aside arbitral award.- (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub- section (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only if- (a) the party making the application 1 [establishes on the basis of the record of the arbitral tribunal that]- (i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court finds that- (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. 30 ¹[Explanation 1- For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,- (i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice.] [Explanation 2.-For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.] 2[(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re- appreciation of evidence.]” 29. Section 37 of the 1996 Act is also apposite and reads as under:- “37. Appealable orders.—(1) ¹[Notwithstanding anything contained in any other law for the time being in force, an appeal] shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:- 2[(a) refusing to refer the parties to arbitration under section 8; (b) granting or refusing to grant any measure under section 9; (c) setting aside or refusing to set aside an arbitral award under section 34.] (2) An appeal shall also lie to a Court from an order of the arbitral tribunal.- 31 (a) accepting the plea referred in sub-section (2) or sub-section (3) of section 16; or (b) granting or refusing to grant an interim measure under section 17. (3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.” Law on the issue: 30. The issue of power of the Writ Court to entertain the Award under Articles 226 and 227 of the Constitution was subject matter of consideration by a three Judge Bench of the apex Court in India Glycols Ltd. case (supra) and it was accordingly held that Section 19 of the Act has been introduced as a measure of security for enterprises for whom a special provisions have been made in the Act and the Buyer as such has a remedy to challenge the Award under Section 34 of the 1996 Act and thus, would be required to deposit 75% of the decreetal amount. Therefore, the recourse to Articles 226 and 227 of the Constitution was impermissible. It was accordingly held that in order to obviate compliance to the requirement of pre-deposit, the writ petition would be preferred therefore, the same was not maintainable. The said view has been doubted in M/s 32 Tamil Nadu Cements Corporation Ltd. vs. Micro and Small Enterprises Facilitation Council and another, on 22.01.2025 by a another Three Judge Bench and the matter has been referred for constitution of a larger Bench primarily by holding that under the MSMED Act, the interest rate at three times of the Reserve Bank rate of interest of 9.5% is undoubtedly higher rate of interest with further compounding monthly rests and therefore, compliance of the stringent conditions and an absolute and complete bar to invoke the writ jurisdiction under Article 226 of the Constitution even in exceptional and rare cases where fairness, equity and justice may warrant, would be taking away the access to the High Courts. It was further held that Rule of exclusion of writ jurisdiction is a rule of discretion and not a compulsion. Accordingly, the observations were made by the onerous and burdensome conditions imposed under the Statute, the alternative remedy as such may not be equally efficacious and adequate and the statutory right as such was illusory. Relevant part of the said judgment reads as under:- “13. 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 33 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 under Article 226 of the Constitution is plenary in nature and the same is not limited by any provision of the Constitution and cannot be restricted or circumscribed by a statute. 16 It has been well settled through a legion of judicial pronouncements of this Court that the writ courts, despite the availability of alternative remedies, may 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, 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 proceedings. Following the judgments in Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and Others and Harbanslal Sahnia (supra), this Court in Radha Krishan Industries v. State of Himachal Pradesh and Others laid down the following principles: "27. The principles of law which emerge are that: 34 27.1. The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well. 27.2. The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person. 27.3. Exceptions to the rule of alternate remedy arise where: (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged. 27.4. An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law. 27.5. When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion. 27.6. In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with." 15.Thus, it would be true to say that the existence of the statutory remedy does not affect the jurisdiction of the High Court to issue a writ. Nevertheless, the writ jurisdiction being discretionary by policy, the writ courts generally insist that the parties adhere to alternative statutory remedies, as this reinforces the rule of law. However, in 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 35 Constitution Bench of five Judges way back in 1954 in Himmatlal Harilal Mehta v. State of Madhya Pradesh and Others 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, 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 the alternative, the right is almost illusory.” 31. Thus, from the above, it would be clear that the matter is not beyond debate regarding the power of the Writ Court. Though Mr. Umesh Prasad Singh, Senior Advocate, appearing for he petitioner has submitted that hearing of the petition should be deferred till the order is passed by the Reference Court, but we are of the considered opinion that in view of the law laid down in Ashok Sadarangani and another vs. Union of India and others (2012) 11 SCC 321, where it was held that a Court is under a bounden duty to decide the issue rather to keep the matter in limbo. 36 32. The Apex Court in Civil Appeal Nos. 4526- 4527 of 2024 M/s A.P. Electrical Equipment Corporation vs. The Tahsildar and others etc., has held that if there are two views inconsistent with each other of the Apex Court, the High Court should not follow the one and over look the other and should try to reconcile and respect both of them. It is in such circumstances, we are of the view that the absolute bar as projected by the Counsel for the Supplier would not stand in the way of this Court to do complete justice between the parties as further delay as such would only enhance the amount claimed and also cripple both the Supplier and the Buyer. 33. A Five Judge Bench of the Apex Court in Himmatlal Harilal Mehta vs. State of Madhya Pradesh and others AIR 1954 SC 403 has held that when the remedy is of onerous and burdensome character under the statutory remedy of depositing the whole amount of tax, the provisions can hardly be described as adequate alternative remedy. The relevant part of the said judgment reads as under:- “9……………..There it was held that the principle that a Court will not issue a prerogative writ when an adequate alternative remedy was available could not apply where a 37 party came to the court with an allegation that his fundamental right had been infringed and sought relief under Art. 226. Moreover, the remedy provided by the Act is of an onerous and burdensome character. Before the appellant can avail of it he has to deposit the whole amount of the tax. Such a provision can hardly be described as an adequate alternative remedy.” 34. Another Five Judge Bench in A.V. Venkateswaran Collector of Customs, Bombay, vs. Ramchand Sobhraj Wadhwani and another, AIR 1961 SC 1506, has held that the order passed in violation of principle of natural justice should be treated as void or non est and that the Rule of adequate alternative remedy is not an exhaustive Rule and even beyond that the discretion vests in the High Court to entertain the petition and to grant the relief. Resultantly, there was no interference which was sought to be at the hands of the Collector of the Customs. Relevant portion of the said judgment reads as under:- “10.The passages in the judgments of this Court we have extracted would indicate (1) that the two exceptions which the learned Solicitor-General formulated to the normal rule as to the effect of the existence of an adequate alternative remedy were by no means exhaustive, and (2) that that even beyond them a discretion vested in the High Court to have entertained the petition and granted the petitioner relief notwithstanding the existence of an alternative remedy. We need only add that the broad lines of the general principles on which the Court should act having been 38 clearly laid down, their application to the facts of each particular case must necessarily be dependent on a variety of individual facts which must govern the proper exercise of the discretion of the Court, and that in a matter which is thus preeminently one of discretion, it is not possible or even if it were, it would not be desirable to lay down inflexible rules which should be applied with rigidity in every case which comes up before the Court.” 35. In Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai and others, (1998) 8 SCC 1, the said view was followed by holding that the High Court imposes upon itself certain restrictions and where there is violation of principles of natural justice then circle of forensic whirlpool has to be cut down and there has to some exercise of discretion to refuse to interfere and there is no absolute bar and the writ petition would be entertained in exceptional circumstances. Reliance was placed upon in another Constitution Bench decision in Calcutta Discount Co. Ltd. v. ITO Companies Distt. AIR 1961 SC 372. Resultantly, it was held that the High Court was not justified in dismissing the writ petition at the initial stage without examining the contention that the show-cause notice issued was wholly without jurisdiction. 36. In M/s Radha Krishan Industries vs. State of Himachal Pradesh and others AIR 2021 SC 2114, the 39 maintainability of the writ petition before the High Court was one of the moot questions since the petition was dismissed on the ground of alternative remedy wherein challenge had been raised to the attaching of the appellant receivable's from the customers under Section 83 of the Himachal Pradesh Goods and Services Act, 2017 and the relevant rules. Resultantly, following principles of law were laid down while noticing the earlier judgments in Seth Chand Ratan vs Pandit Durga Prasad (D) By Lrs. & Ors (2003) 5 SCC 399, Babubhai Muljibhai Patel vs. Nandlal Khodidas Barot & Ors.,(1974) 2 SCC 706 and Rajasthan SEB vs. Union of India & Ors. (2008) 5 SCC 632, the judgment of the High Court was set aside and also the orders of provisional attachment were quashed. Relevant observations of the said judgment read as under:- “27. The principles of law which emerge are that: (i) The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well; (ii) The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person; 40 (iii) Exceptions to the rule of alternate remedy arise where (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged; (iv) An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law; (v) When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion; and (vi) In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with.” 37. Keeping in mind the said principles of onerous conditions, we proceed to decide the issue for the reasons given below. Reasoning for interference by this Court: 38. Counsel for the respondent-Buyer has vehemently submitted that in view of the settled position of law, this Court should not exercise its jurisdiction, both on the Writ as well as appellate sides, since the Writ would not be maintainable and 41 the appeal cannot be entertained until there is a pre-deposit of 75% of the amount awarded. 39. A perusal of Section 18 (3) of the 2006 Act would go on to show that the said provisions would come into play when the Council has taken up the issue for arbitration or referred it to any institution or Centre providing alternate disputes resolution services. It is in such circumstances, the provisions of 1996 Act which have been reproduced above would also come into play as what is to be seen is that whether the respondent-Supplier can be given a walk over and the Buyer cannot even be given an opportunity to put forth its case once apparently, they were unable to present their case. The Arbitral Award has also dealt with the dispute which was not falling within the terms of the submission to the Arbitration containing the decision on the matters beyond the scope or submission to the Arbitration on the pecuniary aspect of the claim itself. 40. It has to be noticed and argued by the Counsel for the petitioner that the amount has been excessively enhanced over a period of time and the Reference at the last point of time, after the remand, as such by the Council is regarding a sum of 42 Rs.29,83,80,909.00/- principle amount plus interest as on 08.02.2021, which would be clear from (Annexure P-1). 41. The audacity as such of the Buyer to have claimed enhanced amount of Rs.33,77,25,952/- (Annexure P-31) as the principle amount and interest was already there before the first Arbitrator which proceedings had been nixed by this Court on a different issue that the Chairman had referred the matter to the Council without keeping in mind the Rules in question. The claim had thereafter been enhanced to Rs.66,50,74,160.00/- even though the Reference was for a less amount of Rs.29,83,80,909.00/-. The Arbitrator further permitted the enhancement to Rs.95,71,00,208.00/-. Therefore, in the opinion of this Court, it has opened up the scope of Reference to contain a decision beyond the scope of decision to Arbitration under Section 34 (2) sub Clause 2 (2A) and thus has apparently misconducted himself on the face of the record. 42. The fact also remains, as noticed, in the manner in which the Arbitrator has proceeded, which would be clear from the proceedings conducted, which would go on to show that the Buyer as such was unable to present his case during time when the Country was in the grip of Covid-19 43 pandemic. The Buyers as such were from Patna/Bihar who had been, prior in point of time, successfully putting in appearance and contesting the matter. The old adage that “justice hurried is justice buried” comes to mind in the manner in which the proceedings had been conducted by the Arbitrator. The proceedings conducted would go on to show that on 16.02.2021, the Supplier had themselves appeared on their own before the Arbitrator though they were not even aware that the matter was liable to be taken up on 16.02.2021. Thereafter proceedings were conducted ex pate on 19.03.2021, and at that point of time, the claim had been filed which was over and above the amount which had been referred to, as noticed above. The principle amount was thus successively enhanced. The Buyer was never aware of this development and by its own affidavit given on 05.04.2021, the amount was further enhanced by the affidavit of the Liaison Officer of the Supplier whereby the principle amount itself was further enhanced and the Award came to be passed on the very next day. Thus, on two occasions, the enhancement was done even without putting the Buyer to notice of the said fact. The claimants 44 had thus gone from Rs.29,83,80,909.00/-, to claim Rs.95,71,00,208.00/-. 43. The provisions of Arbitration Act, as referred to above, would go on to show that apart from the equal treatment which was to be given to each party and full opportunity to present their case. Under Section 18 of the 2006 Act, the Supplier will put forward the Statement of Claims stating the facts supporting his claim and points at issue. The relief or remedy is provided under Section 23 (1) sub-Clause (3) of the 1996 Act, unless otherwise agreed by the parties and either party may amend or supplement his claim or during the course of Arbitral proceedings, unless the Arbitral Tribunal considers it inapropriate to allow amendment or supplement it. The said procedure was to be completed within a period of six months from the date, the Arbitrator received notice in writing of their appointment. This has to be read in conjunction as such with Section 18 of the 2006 Act which provides that any party to the dispute with regard to the money due under Section 17 to make a Reference to the respondent-Council. Though there is notwithstanding clause as such and on the reference being received, the Conciliation has to take place and only if the 45 Conciliation is not successful, the matter has to be referred as such in pursuance of the 1996 Act. Thus, apparently, the reference as such at that particular point of time has to be qua the amount which was pending before the respondent- Council and if the amount had to be enhanced, it was the bounden duty of the Arbitrator to have issued notice to the Buyer. Section 24 further provides that sufficient advance notice of any hearing has to be given of the meeting of the Arbitral Tribunal and there is also power to impose exemplary costs and there is a power as such to continue with the proceedings if the parties fails to appear at an oral hearing. The time limit as such provided is 12 months from the date of completion of pleadings under Section 23(4) of the Act which is further extendable. Thus, keeping in view the cumulative facts as such, more so, that the physical proceedings were being conducted by the Arbitrator and the benefit of Covid-19 period is also liable to be granted is an aspect which weighs with us very heavily, as no such effort as such was made by the Arbitrator even to put the Buyer to notice regarding the enhanced claim, during Covid-19 period. 46 44. In such circumstances, we are of the considered opinion that the principle of natural justice have been violated and therefore, this Court would have jurisdiction under the Writ jurisdiction also to quash the order and therefore, the requirement of pre-deposit as such would have to be given a go by in the peculiar facts and circumstances while exercising our discretion under Article 226 of the Constitution by treating it as an exceptional circumstance. 45. The orders passed by the Arbitrator in the proceedings would show the manner in which the proceedings were conducted. The said orders read as under:- “16.02.2021. Present: None for the parties. This Reference No.49/2017 received from the HP Micro & small enterprises facilitation Council Shimla. Heard. Issue notice to the parties through registered speed post for 19.03.2021. At this stage Shri Chaman Dhiman, Authorised, Representative with Shri Atul Jhingan Ld. Counsel appeared of their own and accepted the service on behalf of the claimant, hence no notice to the claimant is required to be issued. ARBITRATOR 47 19.03.2021. Present: Shri Atul Jhingan Ld counsel for claimant with Shri Chaman Dhiman, Authorised, Representative in person. Respondent served through registered speed post but not present till 4:00 PM. I have scrutinized the Indian mail track consignment record placed on file which shows that the respondent was properly and legally served on 23.02.2021 at 15:25.03 by registered speed post as is evident from Mail Track Consignment placed on record but not present. I am satisfied that proper and legal service has been affected on-respondent for 19.03.2021 but not present, hence proceeded against ex parte. Statement of Claim filed. Now to come up for claimant's ex parte evidence on 05.04.2021. ARBITRATOR. 05.04.2021 Shri Atul Jhingan Ld counsel for claimant with Shri Chaman Dhiman Authorised, representative in person. Respondent already ex parte. Shri Chaman Dhiman Authorised, representative has sworn an affidavit in support of claimant's claim alongwith documents relied upon and closed exparte evidence of claimer claim Arguments heard. To come up for award on 06.04.2021. ARBITRATOR 06.04.2021 Present: Shri Atul Jhingan Ld counsel for claimant with Shri chaman Dhiman Authorised, representative in person. Respondent already ex parte. The entire claim of the claimant /suppler alongwith uptodate penal interest till its final realisation and other incidental charges is admitted and allowed vide my 48 separate award announced today. Let the copies of award be given to the parties fourthwith. File after completion be sent to the Chairman HP Micro & small enterprises facilitation Council, Udyog Bhawan Shimla for Information, Record and further necessary action. Announced 06.04.2021 Jagmohan Singh Mahantan, District & Sessions Judge (Retd.) Sole Arbitrator Shimla” 46. One has to go through the Award as such passed by the Arbitrator. It is therein also recorded that a large number of invoices remained unpaid of Rs.14,87,60,705/- till filing of the case with the MSME Council. The Arbitral Tribunal also noticed in the proceedings before the Council that the claimant had filed a revised Reference on 20.12.2019, seeking a claim of Rs.66,50,74,190/- on 30.11.2019 and therefore, came to the conclusion that the enhancement as such before him was justified. He has relied upon the report of the Chartered Accountant, justifying the up to date claim to award the same while noting that the initial amount was only Rs.29,83,80,909/- when the initial challenge had been made before the learned Single Judge of this Court. Neither any Reference has been made to the Court proceedings which carried on at 49 Patna from the year 2014 till the year 2017 nor any Reference has been made to the reply dated 03.01.2018 submitted by the Buyer to the initial notice also dated 27.11.2017. A specific objection was taken regarding the jurisdiction inter se the parties as per Clause 26 and the pendency of the Letters Patent Appeal before the Patna High Court and the earlier litigation that in case, the drugs failed in quality testing, no payment will be made against the supplies and the fact that the company had been black- listed with immediate effect for five years, on account of the failure as such of the ‘Cefixime Oral Suspension IP 50 mg’ having failed in the quality check test. It was also highlighted that similar order of black-listing had been passed by the Kerala Medical Services and Infrastructure Corporation since the company had failed to fulfill the eligibility criteria and therefore, the Reference as such for arbitration had been opposed and issue of maintainability had been raised. 47. The Award as such on merit is silent about the background of the case while taking in to consideration only the contention put forwarded on account of the supplier, thus, violating the provisions of the Arbitration Act, whereas 50 Section 18 of the 1996 Act specifically provided that the parties have to be treated with equality and each party have to be given full opportunity to present his case. 48. Viewed thus, this Court is of the considered opinion that the Award is vitiated by a patent illegality appearing on the face of it while dealing with the issue both on the Appellate side as well as on the Writ side. This Court would not as such be a silent spectator to the injustice which is being met out at the hands of over eager Supplier. 49. It is to be noticed that under Section 19 of the 2006 Act, the pre-deposit of 75% of the amount in terms of the Award is to be in the manner directed by such Court though it starts with the wording “no application would be filed setting aside any decree Award or other Order made by the Council neither it shall be entertained by any Court unless the Supplier/appellant has deposited 75% of the amount.” 50. Though the Apex Court has also in Goodyear India Ltd. v. Norton Intech Rubbers (P) Ltd. (2012) 6 SCC 345, held that in view of the provision of Section 19 of the 2006 Act, the power as such or discretion is only to 51 allow the Court to allow pre-deposit to be made if felt necessary by way of installments. 51. Such onerous condition to deposit 75% amount of Rs.95 crores, in our considered opinion, would not be liable to be met in the peculiar facts and circumstances of the case. Therefore, the argument as such raised that the amount should be firstly deposited, before the appeal can be heard, is liable to be rejected as it would bring the Corporation to its knees if the amount of Rs.72 crores is to be deposited before the matter can be heard on merits when there is patent illegality, irregularity and mis-conduct on the part of the Arbitrator in the manner in which the proceedings had been conducted, by violating the principle of natural justice. Benefit of Covid-19 Period. 52. Benefit of Covid-19 Period. 52. It is also to be noticed that the Apex Court in Suo Motu Writ Petition (Civil) No.3 of 2020 In Re: Cognizance for Extension of Limitation had noticed that the Courts and Tribunals as such are functioning either physically or by virtual mode and therefore, while extending the period of limitation from 15.03.2020 till 28.02.2022, excluded the same and benefit was granted to the public 52 and even Reference was made to the provisions of Section 23 (4) and 29A of the 1996 Act while disposing of the matter on 10.01.2022. The dates before the Arbitrator are covered under the said period which was taken up on 16.02.2021 and culminated on 06.04.2021 and therefore, keeping view the directions issued by the Apex Court also, we are of the considered opinion that the benefit has to be granted as such to the writ petitioner-appellant for non-appearance on 19.03.2021. The final order passed on 10.01.2022 reads as under: “I. The order dated 23.03.2020 is restored and in continuation of the subsequent orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. II. Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022. III. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply. IV. It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts 53 Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings. V. As prayed for by learned Senior Counsel, M.A. No. 29 of 2022 is dismissed as withdrawn.” 53. It has been specifically pleaded in the appeal by the occupation Manager (Finance) of the appellant- Corporation that the Covid wave created alarming situation and traveling long distances was not advisable and therefore, the presence on 19.03.2021 could not be put in and the proceedings were conducted in utter haste and without providing adequate opportunity. No intimation was also given of the next date for hearing after the proceedings ex parte had been initiated, and therefore, the claim of misconduct on the part of respondent No.2 which as noticed, we have accepted. Aspects of limitation and Jurisdiction. 54. Another aspect which rankles us is that it is not an open and shut case as contended by the Counsel for the Supplier. As noticed, the petitions were pending at Patna from the year 2014 whereby the black-listing was subject matter of challenge on several occasions and non-payment 54 of the outstanding dues in which the directions had been issued and the representation had been rejected on 17.7.2017. Merely because the Contempt Court had accepted the prayer that the Supplier was at liberty to pursue his remedy, did not, in our considered opinion, prima facie give the Supplier a right to change the Forum of jurisdiction. 55. The cause of action is sought to be invoked by the Supplier on the basis of the order dated 06.09.2017 (Annexure P-21) which reads as under: “06.09.2017. Heard Mr. Sanjeev Kumar, learned counsel appearing for the petitioner and Mr. Lalit Kishore, learned Advocate General for the State. In view of the order preset at Annexure ‘A’ to the show cause filed on behalf of opposite party nos. 2 to 5 no case for contempt is made out and the contempt application is disposed of leaving it open for the petitioner to question the same in an appropriate proceeding by filing and appropriate application.” 56. The Order dated 06.09.2017 as reproduced above may give a cause of action as such, but the issue of limitation would still apply which was an aspect which the Arbitrator would have to consider as apparently, a period of over 3 years had expired before the Application was filed 55 before respondent No.1-Council outside the jurisdiction of the Bihar Court. These are vexed questions which were to be decided by the Arbitrator and therefore, we are of the considered opinion that the issue of limitation and jurisdiction have not been allowed to be raised by the Arbitrator in the manner in which he has conducted the proceedings and concluded it by allowing enhanced claim at the back of the Buyer which has constrained us to come to a finding that mis-conduct is apparent on the face of the record. 57. In Silpi Industries and others vs. Kerala State Road Transport Corporation and another, (2021) 18 SCC 719, it was held that the limitation Act is applicable to the arbitration covered under Section 18 (3) of the 2006 Act and even counter-claim can be filed as such while referring to Section 23 (2A) of the 1996 Act. Two specific issues as such were framed and while referring to Section 43 of 1996 Act, it was held that the limitation would be applicable to the arbitration proceedings and the provisions of Limitation Act, 1963 would apply to the arbitration covered under Section 18 56 (3) of the 2006 Act and resultantly the Apex Court chose not to interfere with the order of remand of the Kerala High Court. Similarly, it was held that counter-claim as such was also liable to be filed before the Arbitrator and therefore, keeping in view the rights of the Buyer as such also, and the plea that on account of the sample as such being mis-branded, the right to claim damages has been taken away. The seminal issue would arise that both the parties had to be given a right as such and to be treated equally by the Arbitral Tribunal under Section 18 rather than giving pre-dominence only to the Supplier which has been done by respondent No. 2- Arbitrator. The relevant portions of the said judgment read as under: “26. Applicability of the Limitation Act, 1963 to the arbitrations is covered by Section 43 of the 1996 Act. The High Court, while referring to abovesaid provisions and the judgment of this Court in A.P. Power Coordination Committee v. Lanco Kondapalli Power Ltd. has held that the Limitation Act, 1963 is applicable to the arbitrations covered by Section 18(3) of the 2006 Act. A reading of Section 43 itself makes it clear that the Limitation Act, 1963 shall apply to the arbitrations, as it applies to proceedings in court. When the parties is not under Section 18 of the 2006 Act, necessarily, the Micro and Small Enterprises Facilitation Council shall take up the dispute for arbitration under Section 18(3) of the 2006 Act or it may refer to institution or centre to provide alternate dispute resolution services and provisions of the Arbitration and 57 Conciliation Act, 1996 are made applicable as if there was an agreement between the parties under sub-section (1) of Section 7 of the 1996 Act. 27. In view of the express provision applying the provisions of the Limitation Act, 1963 to arbitrations as per Section 43 of the Arbitration and Conciliation Act, 1996, we are of the view that the High Court has rightly relied on the judgment in A.P. Power Coordination Committee and held that the Limitation Act, 1963 is applicable to the arbitration proceedings under Section 18(3) of the 2006 Act. Thus, we are of the view that no further elaboration is necessary on this issue and we hold that the provisions of the Limitation Act, 1963 will apply to the arbitrations covered by Section 18(3) of the 2006 Act. We make it clear that as the judgment of the High Court is an order of remand, we need not enter into the controversy whether the claims/ counterclaims are within time or not. We keep it open to the primary authority to go into such issues and record its own findings on merits. 28. to 39. xxx xxx xxx 40. For the aforesaid reasons and on a harmonious construction of Section 18(3) of the 2006 Act and Section 7(1) and Section 23(2-A) of the 1996 Act, we are of the view that counterclaim is maintainable before the statutory authorities under the MSMED Act” 58. If one goes through the judgment in McLeod and company Ltd. vs. State of Orissa and others (1984) 1 SCC 434, the issue of jurisdiction as such would also arise which would have to be kept in mind by the Arbitrator, keeping in view the fact that the agreement as such was entered into at Patna and there was an 58 exclusion Clause as such and only the Courts at Bihar would have jurisdiction. Objection regarding matter being taken up by the Division Bench. 59. The right to file appeal under Section 37 of the 1996, Act would be covered in view of the fact that under the Notification issued on 17.10.2022, in exercise of powers vested under Section 29 read with Sections 10 and 11 of the Himachal Pradesh Courts Act, 1976 which was in super-session of the Notification dated 03.10.2013, the jurisdiction of the District Judge/Additional District Judge has been restricted to below rupees one crore. The relevant portion of the said Notification reads as under: “NOTIFICATION The High Court of the Himachal Pradesh, in exercise of the powers vested under Sections 10 and 11 of the Himachal Pradesh Courts Act, 1976 as well as in super- session of the Notification dated 03.10.2013, has been pleased to pass the following orders:- 1. District Judge/Additional District Judge. The Court of District Judge/Additional District Judge shall have the pecuniary jurisdiction in all Original Civil Suits, the value of which exceeds Rs.60,00,000/- (Rupees Sixty Lakhs) but does not exceed Rs.1,00,00,000/- (Rupees One Crore).” 59 60. It is in such circumstances, the matter was filed before this Court and on normal circumstances, the application under Section 34 of the 1996 Act, could be filed before the District Judge being the principal Civil Court of Original jurisdiction under Section 2 (e) (i) of the 1996 Act. Since the matter was intrinsically linked with the writ petition, the learned Single Judge had directed that the matter be heard along with the writ petition and while admitting the matter for regular hearing on 16.06.2022, Rule DB was directed and said order was never assailed, due to which, this Court is seized of the matter. Therefore, the objection which has been taken that the matter should be heard by the learned Single judge, would also be of no avail in the facts and circumstances of the case. 61. In such circumstances, we are constrained to set aside the impugned Award passed by respondent No.2 and resultantly, we direct the respondent-Council as such to nominate a fresh and different Arbitrator from its panel for settlement of dispute inter se the parties. 60 62. Needless to say that the observations made by us both for the purposes of jurisdiction and limitation are only for the purpose of coming to the prima facie, conclusion that the Ex parte Award passed by respondent No. 2 as such is not legally sustainable. It will be open to the Arbitrator as such to decide the said issues fresh by taking into consideration the evidence which comes on record and in view of the legal provisions. 63. Accordingly, both Writ petition and Arbitration case are disposed of, as indicated hereinabove, along with pending application(s) if any. (G.S. Sandhawalia) Chief Justice (Ranjan Sharma) Judge July 11, 2025. (cm Thakur)