# Chhattisgarh Railway Corp. Ltd v. Micro & Small Enterprises Facilitation Council & Anr

- **Citation:** (2023) 8 ILRA 1530
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-12-13
- **Case number:** Writ-C No. 32955 of 2022
- **Bench:** Manoj Misra, Vikas Budhwar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/chhattisgarh-railway-corp-ltd-v-micro-small-enterprises-facilitation-council-anr-50559
- **Pages:** 6

## Headnote

Civil Law - Micro, Small and Medium
Enterprises
Development
Act,
2006
(MSMED
Act,
2006)
-Arbitration
and
Conciliation Act, 1996 - Constitution of
India,1950 -Where the Facilitation Council has
exercised jurisdiction upon a claim raised by a
supplier registered under MSMED Act, 2006, and
has ruled upon its own jurisdiction, such an
award is not ex facie without jurisdiction.
Challenge to such award must ordinarily be
made under Section 34 of the Arbitration and
Conciliation Act, 1996 read with Section 19 of
the MSMED Act. Existence of alternate remedy
with mandatory pre-deposit condition cannot be
a ground to invoke writ jurisdiction unless the
order is wholly without jurisdiction or violates
fundamental rights or natural justice.

The writ petition is not maintainable in
such circumstances.

Case Law Discussed:

## Text

1530 INDIAN LAW REPORTS ALLAHABAD SERIES

51. In so far as connected Writ-C
No.30052 of 2016 is concerned, the factual
and legal points involved in the same are
identical to the points involved and raised
in Writ-C No.30049 of 2016. For all the
reasons assigned in this judgment in
connection with the leading case, Writ-C
No.30052 of 2016 also fails and is
accordingly dismissed.

52. No order as to cost.

53. Before concluding this judgment,
this Court records all its appreciation for
both the learned counsel for arguing the
case in a most efficient manner.
----------
(2023) 8 ILRA 1530
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 13.12.2023

BEFORE

THE HON'BLE MANOJ MISRA, J.
THE HON'BLE VIKAS BUDHWAR, J.

Writ-C No. 32955 of 2022

Chhattisgarh Railway Corp. Ltd.
 ...Petitioner
Versus
Micro & Small Enterprises Facilitation
Council & Anr. ...Respondents

Counsel for the Petitioner:
Sri Kamal Krishna Roy, Sri Aagney Sail

Counsel for the Respondents:

Civil Law - Micro, Small and Medium
Enterprises
Development
Act,
2006
(MSMED
Act,
2006)
-Arbitration
and
Conciliation Act, 1996 - Constitution of
India,1950 -Where the Facilitation Council has
exercised jurisdiction upon a claim raised by a
supplier registered under MSMED Act, 2006, and
has ruled upon its own jurisdiction, such an
award is not ex facie without jurisdiction.
Challenge to such award must ordinarily be
made under Section 34 of the Arbitration and
Conciliation Act, 1996 read with Section 19 of
the MSMED Act. Existence of alternate remedy
with mandatory pre-deposit condition cannot be
a ground to invoke writ jurisdiction unless the
order is wholly without jurisdiction or violates
fundamental rights or natural justice.

The writ petition is not maintainable in
such circumstances.

Case Law Discussed:

1. Whirlpool Corporation Vs Registrar of
Trademarks, Mumbai, (1998) 8 SCC 1

2. U.P. Power Transmission Corp.Ltd. Vs CG
Power & Industrial Solutions Ltd., (2021) 6 SCC
15

3. Delhi Dayalbagh House Building Society Vs
Registrar, Cooperative Societies, (2019) 4 SCC
429

4. Rahul Singh Vs U.O.I., 2017 SCC Online ALL
3579

5. Goodyear India Ltd. Vs Norton Intech
Rubbers (P) Ltd., (2012) 6 SCC 345

6. Gujarat St. Disaster Management Authority Vs
Aska Equipments Ltd., (2022) 1 SCC 61

7.
Tirupati
Steels
Vs
Shubh
Industrial
Component, (2022) 7 SCC 429

8. Gujarat St. Civil Supplies Corporation Ltd. Vs
Mahakali Food Pvt. Ltd., 2022 SCC Online SC
1492

(Delivered by Hon'ble Manoj Misra, J.)

1. This writ petition seeks quashing of
the award dated 07.06.2022 passed by the
Micro and Small Enterprises Facilitation
Council, Kanpur (for short Facilitation
Council) in Claim Petition No. 270 of 2020
filed by the second respondent against the
petitioner and to declare the entire
8 All. Chattisgarh Railway Corp. Ltd. Vs. Micro & Small Enterprises Facilitation Council & Anr. 1531
proceeding in Claim Petition No. 270 of
2020 as void.

2. Briefly stated the facts giving rise
to the writ petition are as follows:-

3. The second respondent claiming
itself to be registered with the Directorate
of Industries as a Small Enterprise under
the provisions of the Micro, Small and
Medium Enterprises Development Act,
2006 (for short MSMED Act, 2006) with a
valid registration No. UP50E0002921 filed
a claim petition before the Facilitation
Council for recovery of Rs. 35,03,998.03/-
in respect of delayed payment of its dues
claiming, inter alia, (i) that the opposite
party (i.e. the writ petitioner herein) invited
tenders for the work of Geotechnical
Investigation in Reach 2 and Reach 3; (ii)
pursuant to which, the claimants offer was
accepted and both parties entered into a
contract subject to the standard general
terms and conditions; (iii) that the original
work was to carry out Geotechnical
Investigation on 25 bridges sites; (iv) that
the scope of Geotechnical Investigation
included drilling of soil and rock at bridge
sites, collecting the soil/rock samples,
testing them in the laboratory, followed by
preparation and submission of detailed
report to the buyer (the petitioner herein);
and (v) that the work was executed as per
directions and a completion certificate was
also issued in which the performance of the
claimants was found satisfactory. By
claiming that only part payment was made
and the remaining was withheld without
justification, and similar work carried out
by other company was fully paid off, the
claim petition was filed for recovery of the
balance amount with interest thereupon.

4. On the claim petition, the
Facilitation Council, on 03.12.2020, gave
20 days time to the parties for conciliation
and
required
them
to
submit
their
respective papers. The parties thereafter
exchanged
their
objections/counter
objections. A preliminary objection was
also taken with regard to maintainability of
the proceedings before the Facilitation
Council on the ground that the contract
between the parties provided for an
alternate dispute redressal mechanism, vide
clause 63 and 64 of the contract, including
resolution of dispute through an arbitration
therefore, there was no justification for the
claimants to invoke the provisions of
MSMED Act, 2006. It was also claimed
that the provisions of section 18 of the
MSMED Act, 2006 would get attracted
only for recovery of the amount due in
respect of any supply of goods or services
rendered by the supplier but not for
recovery of dues under a works contract of
which breach is alleged.

5. As no conciliation could be arrived
at, conciliation proceeding was terminated
and the matter was taken up for arbitral
proceeding.

6. In the arbitral proceeding, after
hearing both sides, the impugned award
was passed on 07.06.2022. Questioning the
award of the Facilitation Council, this writ
petition has been filed.

7. We have heard Sri Aagney Sail
along with Sri K.K. Roy for the petitioner.

8. At the outset, we required the
learned counsel for the petitioner to address
the Court as to why this petition be not
dismissed on the ground that there exists an
alternative
remedy,
inasmuch
as
the
petitioner could challenge the award of the
Facilitation Council by taking recourse to
the remedy under Section 34 of the
Arbitration and Conciliation Act, 1996 in
1532 INDIAN LAW REPORTS ALLAHABAD SERIES
light of the provisions of section 18(3) read
with Section 19 of MSMED Act, 2006.

9. Sri Aagney Sail, learned counsel
for the petitioner, submitted that existence
of an alternative statutory remedy is not an
absolute bar for the writ court to entertain a
challenge
against
the
award
of
the
Facilitation Council, particularly where the
Facilitation Council held no jurisdiction to
enter upon the reference and decide the
claim of the second respondent. According
to him, the Facilitation Council held no
jurisdiction to deal with the claim of the
second respondent for the following
reasons:-

(i) A claim under Chapter V of
MSMED Act, 2006 by a supplier against
the buyer is maintainable only for recovery
of the dues which are payable by the buyer
to the supplier for the supply of any goods
or services rendered to the buyer. In the
instant case, the contract between the
parties from its very nature was a works
contract and not a contract in respect of
supply of goods or for rendering service
therefore, the claim was not sustainable
under the provisions of the MSMED Act,
2006;

(ii) In the objection taken by the
petitioner it was specifically stated that the
supplier (i.e. the second respondent herein)
had employed huge machines which were
not permissible therefore, it committed
breach of the contract. For redressal of
grievances arising therefrom, there was an
alternate dispute resolution mechanism
available in the contract including an
arbitration
clause.
Consequently,
the
provisions of MSMED Act, 2006 could not
have been invoked more so because the
Facilitation Council is not empowered to
decide questions arising from a breach of
contract.
In
support
of
the
above
submission, the learned counsel for the
petitioner placed reliance on a Division
Bench decision of this Court in Rahul
Singh v. Union of India and others
reported in 2017 SCC Online ALL 3579.

10.

We
have
considered
the
submissions of the learned counsel for the
petitioner and have perused the record.

11. A perusal of the record would
reveal that the Facilitation Council in the
arbitral proceeding had examined the
question of jurisdiction of the Facilitation
Council while writing the award. The said
issue has been addressed as Issue no.1. The
Facilitation Council has also taken notice
of the decision of this Court in Rahul Singh
v. Union of India (supra) on which the
petitioner
has
placed
reliance.
The
Facilitation
Council
noticed
that
the
contract between the supplier and the buyer
was in the nature of a service contract; the
claimant/supplier is a registered MSMED
providing services of architecture and
engineering activities, testing and analysis
etc; that there was a delay in the payment,
therefore
it
held
jurisdiction.
The
Facilitation
Council
distinguished
the
decision of this Court in Rahul Singh's
case (supra) on the ground that there was
no concluded contract between the parties
and that the writ petitioner in that matter
was a person whose tender came to be
rejected on the ground of failure on his part
to deposit the tender cost as well as the
earnest money.

12. Before we proceed to address the
submissions made, we must make it clear
that we do not propose to examine the
merits of the award unless we come to the
conclusion that the petition is not liable to
be dismissed on the ground of alternative
8 All. Chattisgarh Railway Corp. Ltd. Vs. Micro & Small Enterprises Facilitation Council & Anr. 1533
remedy, which, admittedly, is available
under Section 34 of the Arbitration and
Conciliation Act, 1996 read with Section
19 of the MSMED Act, 2006. No doubt, it
is well settled that the existence of an
alternative remedy is not an absolute bar
for a writ court to exercise its extraordinary
jurisdiction under Article 226 of the
Constitution of India, rather is a selfimposed restriction, but, ordinarily, the
existence
of
alternative
remedy
in
commercial matters is not to be ignored
while entertaining a petition under Article
226 of the Constitution of India save in the
following three contingencies:

(i) Where the writ petition has
been filed for the enforcement of any of the
Fundamental rights;

(ii) Where there has been a
violation of the principle of natural justice;
or

(iii)
Where
the
order
or
proceedings are wholly without jurisdiction
or the vires of an Act is challenged.

(Vide Whirlpool Corporation v.
Registrar of Trademarks, Mumbai and
others, (1998) 8 SCC 1; U.P. Power
Transmission
Corporation
Ltd
and
another v. CG Power and Industrial
Solutions Ltd and another (2021) 6 SCC
15; and Delhi Dayalbagh House Building
Society v. Registrar, Cooperative Societies
and another, 2019 (4) SCC 429).

13. In the context of the submissions
made, the issue that arises for our
consideration is whether the award passed
by the Facilitation Council is ex facie
without jurisdiction as to enable the writ
petitioner to question it directly by
invoking the powers of this Court available
under Article 226 of the Constitution. In
Gujarat
State
Civil
Supplies
Corporation Ltd. v. Mahakali Food Pvt.
Ltd. (Unit 2) and another, 2022 SCC
Online 1492, the following questions of
law came up for consideration by the
Supreme Court, namely, :

(i) Whether the provisions of
Chapter-V of the MSMED Act, 2006
would have an effect overriding the
provisions of the Arbitration Act, 1996?

(ii) Whether any party to a
dispute with regard to any amount due
under Section 17 of the MSMED Act, 2006
would be precluded from making a
reference
to
the
Micro
and
Small
Enterprises Facilitation Council under subsection (1) of Section 18 of the said Act, if
an
independent
arbitration
agreement
existed between the parties as contemplated
in Section 7 of the Arbitration Act, 1996?

(iii) Whether the Micro and Small
Enterprises Facilitation Council, itself could
take up the dispute for arbitration and act as an
arbitrator, when the council itself had conducted
the conciliation proceedings under sub-section
(2) of the Section 18 of the MSMED Act, 2006
in view of the bar contained in Section 80 of the
Arbitration Act,1996?

14. The Supreme Court after
examining all the relevant provisions of the
MSMED Act, 2006 and the Arbitration and
Conciliation Act, 1996, in paragraph 34,
decided the said issues as under:-

(i) Chapter-V of the MSMED
Act, 2006 would override the provisions of
the Arbitration Act, 1996.

(ii) No party to a dispute with
regard to any amount due under Section 17
1534 INDIAN LAW REPORTS ALLAHABAD SERIES
of the MSMED Act, 2006 would be
precluded from making a reference to the
Micro and Small Enterprises Facilitation
Council, though an independent arbitration
agreement exists between the parties.

(iii) The Facilitation Council,
which
had
initiated
the
Conciliation
proceedings under Section 18(2) of the
MSMED Act, 2006 would be entitled to act
as an arbitrator despite the bar contained in
Section 80 of the Arbitration Act.

(iv) The proceedings before the
Facilitation Council/institute/centre acting
as an arbitrator/arbitration tribunal under
Section 18(3) of MSMED Act, 2006 would
be governed by the Arbitration Act, 1996.

(v)
The
Facilitation
Council/institute/centre acting as an
arbitral tribunal by virtue of Section
18(3) of the MSMED Act, 2006 would be
competent to rule on its own jurisdiction
as also the other issues in view of Section
16 of the Arbitration Act, 1996.

(vi) A party who was not the
''supplier' as per the definition contained in
Section 2(n) of the MSMED Act, 2006 on
the date of entering into contract cannot
seek any benefit as the ''supplier' under the
MSMED Act, 2006. If any registration is
obtained subsequently, the same would
have an effect prospectively and would
apply to the supply of goods and rendering
services subsequent to the registration.

15. From the decision of the Apex
Court noticed above, it is clear that, firstly,
notwithstanding existence of an arbitration
clause in the contract between the supplier
and the buyer, the supplier can invoke the
provisions of section 18 of the MSMED
Act, 2006 and, secondly, if any dispute is
raised with regard to the jurisdiction of the
Facilitation Council, it would be competent
to rule on its own jurisdiction as also the
other issues in view of section 16 of the
Arbitration Act, 1996.

16. In the instant case, there is no
dispute that the petitioner had a right to
challenge the award by taking recourse to
the provisions of section 34 of the
Arbitration and Conciliation Act, 1996,
rather, the argument on behalf of the
petitioner is that why should the petitioner
be relegated to the alternative remedy,
particularly when it carries an onerous
condition of pre-deposit of 75 percent of
the decretal amount as per the provisions of
section 19 of the MSMED Act, 2006 and
the award in question is ex facie without
jurisdiction.

17. In so far as the requirement of
deposit of 75 percent of the awarded
amount under Section 19 of the MSMED
Act, 2006 is concerned, that has been held
to be mandatory (vide Goodyear India Ltd.
v. Norton Intech Rubbers (P) Ltd., (2012)
6 SCC 345; Gujarat State Disaster
Management
Authority
vs.
Aska
Equipments Limited; (2022) 1 SCC 61;
and Tirupati Steels v. Shubh Industrial
Component, (2022) 7 SCC 429). As
regards jurisdiction of the Facilitation
Council, it is well settled that ordinarily the
jurisdiction of a Court or Tribunal to
proceed further is determined on the basis
of averments made in the plaint or claim
petition. In the instant case, the averments
made in the claim petition, prima facie,
make out a case for examination by the
Facilitation Council. Interestingly, in the
writ petition there is no specific challenge
to the claim of the second respondent (the
claimant/supplier) that it is registered with
the Directorate of Industries as Small
8 All. Azad Ahmad Khan Vs. Income Tax Appellate Tribunal
1535
Enterprises
under
the
provisions
of
MSMED Act, 2006 and is allotted
UP50E0002921 as its registration number
which was valid till the date of filing of
reference. The challenge in the petition is
with regard to the nature of the contract.
According to the writ petitioner, the
contract was not with regard to supply of
goods or rendering of services, rather it was
a works contract and thus, out of the
purview of sections 15, 16, 17 and 18 of the
MSMED Act, 2006. This aspect of the
matter no doubt raises a jurisdictional issue
but this jurisdictional issue has been
decided by the arbitrator against the writ
petitioner. The arbitrator under Section 16
of the Arbitration and Conciliation Act,
1996 is empowered to decide the issue
raised in respect of its own jurisdiction.
This aspect has been affirmed by the Apex
Court in the case of Gujarat State Civil
Supplies Corporation Ltd. v. Mahakali
Food Pvt. Ltd. (Unit 2) and another
(supra), as we have noticed above. In such
circumstances, it cannot be said that the
Facilitation Council, ex facie, held no
jurisdiction to entertain and decide the
claim of the second respondent.

18. For the reasons above, without
entering into the merits of the award, we
decline to entertain the writ petition of the
petitioner directly against the award of the
Facilitation Council, particularly, when the
petitioner could have availed the alternative
remedy available to him. The petition is
therefore,
dismissed
on
ground
of
alternative remedy.

19. It is made clear that we have not
expressed any opinion on the merits of the
award or the decision taken by the
Facilitation Council with regards to its own
jurisdiction.
----------
(2023) 8 ILRA 1535
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 31.07.2023

BEFORE

THE HON'BLE VIVEK CHAUDHARY, J.

Writ-C No. 1000800 of 2000

Azad Ahmad Khan ...Petitioner
Versus
Income Tax Appellate Tribunal
 ...Respondent

Counsel for the Petitioner:
Z. Zilani, Amar Mani Tiwari, Nazam Zafar,
Pradeep Agarwal, Rafat Siddiqui, Z. Jilani

Counsel for the Respondent:
S.C. Misra, Manish Mishra

Civil Law - Mussalman Waqf Validating
Act, 1913 - ESt. Duty Act, 1953 -
Explanation to Section 12(1) - Reservation
of interest in favour of settlor and relatives -
Indian Income Tax Act (contextual reference),
Treatment of waqf property in income tax
return,

Waqf-alal-aulad, Titamma (amendment of waqf
deed), Mutwalli, Dedication of property, ESt.
duty liability, Reservation of interest

Valid creation of waqf,Genuineness of waqf
intention, Personal use of waqf property,
Exemption under ESt. Duty Act, Waqf validity,
Beneficiaries of waqf

Held -
Creation of a valid waqf-alal-aulad under the
Mussalman Waqf Validating Act, 1913 mandates
actual dedication of property to Almighty and
divestment of ownership by the waqif. In the
present case, the waqif continued treating the
waqf property as personal property by including
it in income tax returns and selling part of it to
repay personal debts, thereby demonstrating no
genuine intention to create a waqf. Inclusion of
a non-family member as beneficiary further