Case Note & Summary
The matter arose from two writ petitions filed by M/s. Chamundeshwari Electricity Supply Corporation Limited, a Government company engaged in electricity distribution, challenging a common order dated 23-01-2020 passed by the Micro and Small Enterprise Facilitation Council, Bengaluru. The Council had rejected the Corporation's objection that the claims of the first respondent, M/s. Rajshekar and Associates, were barred by limitation and referred the dispute to arbitration under the Micro, Small and Medium Enterprises Development Act, 2006. The dispute originated from two work contracts awarded in 2011 for strengthening the electricity distribution network in Chamarajanagar and Kollegal Taluks. Due to alleged delays and breach by the first respondent, the project was short closed in 2016. The Corporation filed a suit for recovery of alleged dues, while the first respondent filed claims before the Council in 2019 seeking payments totaling over Rs. 9 crore. The Corporation contended that the claims were stale and debarred by limitation, relying on Shanti Conductors Limited v. Assam State Electricity Board, and argued that the Council ought not to have referred the matter to arbitration. The first respondent submitted that the Council lacked power to adjudicate limitation and had to refer the dispute to arbitration once conciliation failed. The Court framed two issues: (i) whether the Limitation Act applies to proceedings under the MSME Act and the Council can consider limitation without referring to arbitration, and (ii) whether the writ petition against the reference order is maintainable under Article 226. While discussing the first issue, the Court observed that limitation is a mixed question of law and fact requiring evidence, and referred to a Bombay High Court decision holding that limitation is for the Arbitral Tribunal alone. However, the available excerpt ends without recording a final adjudication or direction, and no decision on the writ petitions is provided in the text.
Headnote
A) Limitation - Applicability to MSME Act Proceedings - Limitation Act, 1963; Micro, Small and Medium Enterprises Development Act, 2006, Sections 2(b), 18 - The court examined whether the Limitation Act applies to claims before the MSEF Council and whether the Council can adjudicate limitation. The court noted that limitation is a mixed question of law and fact requiring evidence, and referred to the Bombay High Court decision in Shah & Parikh v. Urmi Trenchless Technology Private Limited which held that limitation is within the exclusive jurisdiction of the Arbitral Tribunal. No final decision is recorded in the available text. (Paras 8-10) B) Constitutional Law - Writ Jurisdiction under Article 226 - Maintainability of Writ Petition against Reference to Arbitration under MSME Act - Constitution of India, 1950, Article 226 - The court framed the issue whether a writ petition against an order of the MSEF Council referring a dispute to arbitration is entertainable under Article 226, but did not discuss or decide this issue in the provided text (Para 7).
Issue of Consideration
(i) Whether the Limitation Act is applicable to the facilitation under the Micro, Small and Medium Enterprises Development Act, 2006 and the Council has power to consider limitation without referring the same to the Arbitral Tribunal; (ii) Whether a writ petition against orders referring the matter to the Arbitral Tribunal would be entertainable under Article 226 of the Constitution of India.
Law Points
- Limitation Act is applicable to proceedings under the MSME Act
- limitation is a mixed question of law and fact to be decided by evidence
- the issue of limitation is within the exclusive jurisdiction of the Arbitral Tribunal
- law of limitation is based on public policy
