In a recent judgment by the Delhi High Court, the appeal in the case of Executive Engineer v. Bholasingh Jaiprakash Construction Ltd. was dismissed. The court’s decision sheds light on the complexities of MSME rights and arbitration proceedings, emphasizing the need for a thorough understanding of legal avenues available to all parties involved.
Facts
- The Petitioner entered into an agreement with the Respondent for interior, landscape finishing, and plumbing work in the Orris Gallery Project.
- The agreement specified a completion period of two months starting from 03.2013.
- The Petitioner has challenged the arbitral award dated 15.03.2023, passed by MSME-Arbitral Tribunal.
- The total sum agreed upon for the project was Rs. 77,96,789.65.
Analysis
- Failure to pay for goods and services leading to MSMEs going out of business as they can’t fight with large enterprises
- State did not participate in the proceedings
- Reference of dispute to MSME Facilitation Council under Section 18 of MSMED Act
- Pursued challenge under Arbitration Act Section 34 after award, not appropriate to file writ petition under Article 226
- MSMED Act aims to address concerns of Micro, Small, and Medium industries
- State challenged award under Arbitration Act but also filed writ petition under Article 226
- Article 226 is an extraordinary remedy, other remedies should be pursued first
- Chapter V of MSMED Act deals with delayed payments to MSMEs
- State did not challenge reference proceedings, should not approach Court with writ petition now
- Conciliation attempted before arbitration, followed by arbitration award
- Proper recourse against MSMED Act proceedings is through MSMED Act or Arbitration Act
- Recent cases have shown reluctance to entertain writ petitions related to MSMED Act
- Court refused to interfere with judgment citing statutory remedy available under MSMED Act
- Writ petition dismissed, no observations made on award merits
- MSMEs are significant economy contributors, primarily labor-intensive
- State is not a helpless litigant and should be aware of legal options before invoking Article 226
- MSME Facilitation Council can conduct conciliation or seek assistance from alternative dispute resolution services.
- The Council can refer the matter to an institution or center providing ADR services for conducting conciliation.
- Any reference received under Sub-Section 18(1) of the MSMED Act triggers the Council’s involvement in conciliation.
- The State is not a helpless litigant in whose favour the Court should invoke Article 226 of the Constitution of India.
- The Division Bench dismissed the appeal in the case of Executive Engineer and Others v. Bholasingh Jaiprakash Construction Ltd. and Another (2024 SCC OnLine Del 3070).
- The arbitral award in this case was passed ex-parte.
Case Title: ORRIS INFRASTRUCTURE PVT LTD Vs. SAANVI INTERIORS INDIA PVT LTD (2024:DHC:4350)
Case Number: W.P.(C)-4760/2024
