Case Note & Summary
The dispute arose from an order issued by the Rajasthan Micro and Small Enterprises Facilitation Council directing the appellant to pay a sum to the third respondent, a small-scale industry, for delayed payments under a contract. The appellant, Jharkhand Urja Vikas Nigam Limited, contested the order, arguing that it was passed without proper opportunity for conciliation and in violation of the Arbitration and Conciliation Act, 1996. The appellant had entered into a contract with the third respondent for the supply of conductors, but disputes regarding the supplies led to the Council issuing summons for conciliation proceedings. The Council passed an order on 06.08.2012, directing payment based solely on the appellant's absence from the proceedings. The appellant later paid a portion of the claimed amount but challenged the validity of the Council's order through a writ petition, which was dismissed by the High Court. The Supreme Court, upon reviewing the case, found that the Council had failed to follow the necessary arbitration procedures outlined in the MSMED Act and the Arbitration and Conciliation Act. The Court held that the order was a nullity and quashed it, allowing the Council to initiate proper arbitration proceedings. The decision emphasized the importance of adhering to procedural requirements in arbitration and conciliation processes.
Headnote
A) Arbitration Law - Validity of Award - Nullity of Award - Micro, Small and Medium Enterprises Development Act, 2006, Section 18 - The order passed by the Council was found to be a nullity as it was issued without following the mandatory provisions of the Arbitration and Conciliation Act, 1996, and thus could not be considered a valid arbitral award. Held that the Council must initiate arbitration proceedings in accordance with the law (Paras 12-14).
Issue of Consideration
Whether the order passed by the Rajasthan Micro and Small Enterprises Facilitation Council was valid under the provisions of the MSMED Act and the Arbitration and Conciliation Act.
Final Decision
The Supreme Court allowed the civil appeal, set aside the impugned judgment and order, and quashed the order/award dated 06.08.2012 passed by the Council. The Court directed the Council to initiate arbitration proceedings in accordance with the law.
Law Points
- Arbitration
- Conciliation
- Jurisdiction
- MSMED Act
- Nullity of Award
