Case Note & Summary
The appellant, M/s. Delton Electricals, a partnership firm and small scale industrial unit, filed Original Application No. 1 of 2005 before the Micro and Small Enterprises Facilitation Council, Mumbai, claiming interest on delayed payments for supplies made to the respondent Maharashtra State Electricity Distribution Company Limited (MSEDCL) under various agreements executed between 1994 and 2000. The appellant alleged that payments were delayed beyond the contractual period, entitling it to interest under the Interest on Delayed Payments to Small Scale and Ancillary Undertakings Act, 1993 (Act 32 of 1993) and later the Micro, Small and Medium Enterprise Development Act, 2006 (MSMED Act). The Council initially attempted conciliation, which failed, and then proceeded with arbitration under Section 18(3) of the MSMED Act. The Council made an Award dated 31st January 2015, directing MSEDCL to pay Rs. 83,54,695/- as interest up to 31st March 2005 and further interest of Rs. 6,95,18,435/- up to 31st October 2013, with ongoing interest. MSEDCL challenged the Award by filing Arbitration Petition (L) No. 2464 of 2015 under Section 34 of the Arbitration & Conciliation Act, 1996, raising objections including limitation, mis-joinder of causes of action, and lack of territorial jurisdiction of the Council. MSEDCL deposited 75% of the Award amount as required under Section 19 of the MSMED Act. The learned single Judge of the Bombay High Court allowed the petition by order dated 15th November 2016, setting aside the Award. The appellant then filed Commercial Appeal No. 38 of 2017 before the Division Bench. The appeal was admitted and finally heard on 31st August 2017. The oral judgment was delivered by the bench of Justices S.C. Dharmadhikari and Vibha Kankanwadi, though the text provided does not include the final decision and reasoning.
Headnote
A) Arbitration - Challenge to Award - Grounds of Limitation - Micro, Small and Medium Enterprise Development Act, 2006, Sections 18, 19; Arbitration & Conciliation Act, 1996, Section 34 - The appellant, a small scale industry, filed a claim for interest on delayed payments for supplies made between 1994 and 2000; the respondent MSEDCL raised objection that the claim was barred by limitation as the application was filed in 2004 - Court's decision not mentioned. (Paras 11-12)
B) Arbitration - Challenge to Award - Mis-joinder of Causes of Action - Act 32 of 1993, MSMED Act, 2006 - The appellant clubbed multiple claims arising from different agreements and bills; MSEDCL contended that each claim was separate and distinct and could not be joined together - Court's decision not mentioned. (Paras 12)
C) Arbitration - Jurisdiction of Facilitation Council - Territorial Jurisdiction - Act 32 of 1993, MSMED Act, 2006 - MSEDCL argued that the agreements were executed at Mumbai, payments made at Mumbai, and exclusive jurisdiction clause vested courts at Mumbai; Council at Vasai lacked territorial jurisdiction - Court's decision not mentioned. (Paras 12)
Issue of Consideration
Whether the single Judge correctly allowed the Section 34 petition setting aside the Award of the Micro and Small Enterprises Facilitation Council on grounds of limitation, mis-joinder of causes of action, and territorial jurisdiction.
Law Points
- Interest on delayed payment under MSMED Act
- section 34 challenge to arbitral award
- limitation
- mis-joinder of causes of action
- territorial jurisdiction of Facilitation Council
Case Details
2017 LawText (BOM) (08) 75
Commercial Appeal No. 38 of 2017 in Arbitration Petition (L) No. 2464 of 2015
S.C. Dharmadhikari, Vibha Kankanwadi
Mr. Rajeev Madkholkar, Mr. Suresh Dhole, Ms. Pushpa Shinde for Appellant; Mr. Gaurav Joshi, Ms. Neeta Jain, Mr. Nirav Shah, Mr. Anuj Jaiswal for Respondents
1. Maharashtra State Electricity Distribution Company Limited, 2. Chairman, Maharashtra State Electricity Board, 3. Chairman, MSEB Holding Company Limited
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Nature of Litigation
Commercial appeal against order of single Judge allowing Section 34 petition to set aside an arbitral award for interest on delayed payments under MSMED Act.
Remedy Sought
The appellant seeks to set aside the single Judge's order and restore the Award of the Micro and Small Enterprises Facilitation Council granting interest on delayed payments.
Filing Reason
The appellant claimed interest for delayed payments by MSEDCL; the Council passed an Award in its favor; MSEDCL challenged the Award under Section 34, and the single Judge allowed the challenge, setting aside the Award.
Previous Decisions
The Micro and Small Enterprises Facilitation Council passed an Award dated 31st January 2015 in favor of the appellant. The single Judge of the Bombay High Court by order dated 15th November 2016 allowed the Arbitration Petition (L) No. 2464 of 2015 and set aside the Award.
Issues
Whether the claims for interest were barred by limitation?
Whether the application before the Council suffered from mis-joinder of causes of action?
Whether the Council had territorial jurisdiction to entertain the application?
Submissions/Arguments
The appellant contended that it was entitled to interest on delayed payments under the Act, that payments were delayed beyond the contractual period, and that the Council had jurisdiction.
The respondent MSEDCL argued that the claims were time-barred having arisen from agreements between 1994 and 2000, that multiple causes of action could not be clubbed, and that the Council at Vasai lacked territorial jurisdiction as the agreements were executed and payments made at Mumbai with exclusive jurisdiction clause.
Judgment Excerpts
The appellant filed Original Application / Reference Petition No.1 of 2005 before the Micro and Small Enterprises Facilitation Council, Mumbai, claiming the relief under the Micro, Small and Medium Enterprise Development Act, 2006.
The Council stipulated the time of one month to the MSEDCL to pay this sum.
It is such an Award which was challenged by MSEDCL before the learned single Judge.
It is common ground that MSEDCL invoked section 34 of the Arbitration & Conciliation Act, 1996, in challenging the Award.
The MSEDCL filed a reply and contended that the agreement was to purchase transformers of various capacities from the applicant and the agreements, details of which are set out in paragraph 4 of the reply, have been executed by and between the parties. The claim was denied by urging that no interest is payable...
Procedural History
The appellant filed Original Application No. 1 of 2005 before the Micro and Small Enterprises Facilitation Council under the Interest on Delayed Payments Act, 1993. The Council attempted conciliation, which failed. Arbitration proceedings were then held under Section 18(3) of the MSMED Act, 2006. The Council passed an Award on 31st January 2015, directing MSEDCL to pay Rs. 83,54,695/- as interest up to 31st March 2005 and further interest. MSEDCL challenged the Award by filing Arbitration Petition (L) No. 2464 of 2015 under Section 34 of the Arbitration & Conciliation Act, 1996. MSEDCL deposited 75% of the awarded amount as per Section 19 of the MSMED Act. The learned single Judge of the Bombay High Court allowed the petition on 15th November 2016, setting aside the Award. The appellant filed Commercial Appeal No. 38 of 2017 against that order. The appeal was admitted and finally heard on 31st August 2017.
Acts & Sections
- Micro, Small and Medium Enterprise Development Act, 2006: Sections 18(3), 19, 10
- Interest on Delayed Payments to Small Scale and Ancillary Undertaking Act, 1993: Sections 4, 5
- Arbitration and Conciliation Act, 1996: Sections 7(1), 34
- Industries (Development and Regulation) Act, 1951: Section 3
- Electricity (Supply) Act, 1948:
- Companies Act, 1956:
