# Tamilnadu Generation & Distribution Corp. Ltd. & Ors v. State of U.P. & Ors. 2524 INDIAN LAW REPORTS ALLAHABAD SERIES

- **Citation:** (2024) 5 ILRA 2523
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-05-27
- **Case number:** Writ C No. 10525 of 2024
- **Bench:** Manoj Kumar Gupta, Kshitij Shailendra
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/tamilnadu-generation-distribution-corp-ltd-ors-v-state-of-u-p-ors-2524-indian-52089
- **Pages:** 6

## Headnote

A. Arbitration Law - Maintainability -
Alternative remedy - Micro, Small and
Medium Enterprises Development Act,
2006 - Sections 18 & 19 - Arbitration and
Conciliation Act, 1996 - Section 34 - A
person cannot be permitted to bypass the
statutory requirement of depositing 75%
of the decretal amount by invoking the
jurisdiction of the High Court u/Articles
226/227 of the Constitution of India. (Para
9)

A bare perusal of Section 18(3) of the MSME Act,
2006 would reveal that the provisions of the
Arbitration and Conciliation Act, 1996 have been
made applicable to the dispute as if the arbitration
was in pursuance of an arbitration agreement
referred to S.7(1) of the Act of 1996. Thus, remedy
of filing objection u/s 34 of the Act of 1996 is
available to the petitioner to get the award set
aside. (Para 7)

Section 19 of the MSME Act, 2006, in unequivocal
terms, provides that no application for setting aside
the award made by the Council shall be
entertained by any court unless the appellant has
deposited 75% of the amount in terms of the
award or, as the case may be, in the manner
directed by such court. Thus, in case the
petitioners avail the remedy u/s 34 of the Act of
1996, they would be required to deposit 75% of
the amount in terms of the award before the
challenge is entertained. (Para 8)

In view of the provisions of Section 18(4), where
the Facilitation Council proceeds to arbitrate upon
a dispute, the provisions of the Act of 1996 are to
apply to the dispute as if it is in pursuance of an
arbitration agreement u/s 7(1) of that Act. Hence,
the remedy which is provided u/s 34 of the Act of
1996 would govern an award of the Facilitation
Council. However, there is a super added condition
which is imposed by S. 19 of MSMED Act, 2006 to
the effect that an application for setting aside an
award can be entertained only upon the appellant
depositing with the Council 75% of the amount in
terms of the award. S. 19 has been introduced as
a measure of security for enterprises for whom a
special provision is made in the MSMED Act by
Parliament. (Para 9)

Thus, the instant petition, without making predeposit as per statutory provision, would not be
maintainable. In case of breach of principles of
natural justice, alternative remedy is not an
absolute bar. The writ petition would have been
entertained without relegating the petitioners to
the alternative remedy u/s 34 of the Act of 1996,
had the petitioners agreed to deposit 75% of the
amount in terms of impugned award in this Court.
(Para 10)

Petition dismissed. (E-4)

Precedent followed:

M/s India Clycols Limited & anr. Vs Micro and Small
Enterprises
Facilitation
Council,
Medchal
-
Malkajgiri & ors. in Civil Appeal No.7491 of 2023,
arising out of SLP (C) No.9899 of 2023, decided on
06.11.2023 (Para 4)

Present petition challenges the order dated
01.01.2024,
whereby
respondent
no.2
(Zonal MSEFC, Meerut Zone, Meerut) (for
short 'the Facilitation Council') has declared
an award of a total sum of Rs.1,49,48,762/-
in favour of respondent no.3, in exercise of
powers u/s 18 of the MSME Act, 2006.

## Text

5 All. Tamilnadu Generation & Distribution Corp. Ltd. & Ors. Vs. State of U.P. & Ors.
2523
NDPS Act on 12.01.2022 and was again
granted bail.

18. Thus, from the above, it is apparent
that the material forming basis of the opinion of
the competent authority i.e. proposal of the
Sponsoring Authority and recommendation of
the Screening Authority, to pass impugned
orders were never supplied to the petitioners in
terms of the decisions in Smt. Icchu Devi
Choraria's Case (Supra), Mohinuddin's
Case (Supra), Smt. Shalini Soni's Case
(Supra) and S. Gurdip Singh's Case (Supra)
and he has not been afforded proper opportunity
of hearing and the impugned order of rejection
is totally non speaking order with regard to the
pleas raised by the petitioner.

19. Accordingly, this petition is
allowed. The impugned orders are set aside.
The petitioner be released forthwith if he is not
required in any other case on furnishing surety
bond and personal bond.

20. However, it is made clear if petitioner
is found involved in any subsequent F.I.R., it
will be open for the authorities to initiate fresh
proceedings against the petitioner.
----------

Hon'ble Arvind Singh Sangwan,J.
Hon'ble Ram Manohar Narayan Mishra,J.

(Order on Correction Application No.3 of
2024. )

1. Heard learned counsel for the
petitioner and learned A.G.A. for the State and
perused the material available on record.

2. Learned counsel for the petitioner
prays for correction in the order dated
14.05.2024 passed by this Court.
3. Learned counsel for the petitioner
submitted that due to typographical mistake in
the order dated 14.05.2024 in the tenth line of
paragraph No.11 of the order the date of
surrender is mentioned as 12.01.2024, where as
it is 10.01.2024. Similar mistake has occurred in
fourth line of paragraph No.17 B date of
surrender is wrongly mentioned 12.01.2024,
whereas the correct date of surrender is
10.01.2024.

4. Counsel further submitted that in
paragraph No.19 inadvertently it is mentioned
that "the petitioner be released forthwith if he is
not required in any other case, on furnishing
surety bond and personal bond."

5. It is submitted that since the
petitioner was detained under the preventive
detention, therefore, there is no provision for
furnishing surety bond and personal bond.

6. Accordingly, paragraph No.19 is
recast as follows- Accordingly, this petition is
allowed. The impugned orders are set-aside.
The petitioner be set at liberty forthwith if he is
not required in any other case.

7. With the aforesaid modification/
correction in the order dated 14.05.2024,
the application for correction stands
disposed of.
----------
(2024) 5 ILRA 2523
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 27.05.2024

BEFORE

THE HON'BLE MANOJ KUMAR GUPTA, J.
THE HON'BLE KSHITIJ SHAILENDRA, J.

Writ C No. 10525 of 2024

Tamilnadu
Generation
&
Distribution
Corp. Ltd. & Ors. ...Petitioners
Versus
State of U.P. & Ors. ...Respondents
2524 INDIAN LAW REPORTS ALLAHABAD SERIES
Counsel for the Petitioners:
Sri P.K. Upadhyay

Counsel for the Respondents:
C.S.C., Sri Kartikeya Saran, Sri Prabhav
Srivastava

A. Arbitration Law - Maintainability -
Alternative remedy - Micro, Small and
Medium Enterprises Development Act,
2006 - Sections 18 & 19 - Arbitration and
Conciliation Act, 1996 - Section 34 - A
person cannot be permitted to bypass the
statutory requirement of depositing 75%
of the decretal amount by invoking the
jurisdiction of the High Court u/Articles
226/227 of the Constitution of India. (Para
9)

A bare perusal of Section 18(3) of the MSME Act,
2006 would reveal that the provisions of the
Arbitration and Conciliation Act, 1996 have been
made applicable to the dispute as if the arbitration
was in pursuance of an arbitration agreement
referred to S.7(1) of the Act of 1996. Thus, remedy
of filing objection u/s 34 of the Act of 1996 is
available to the petitioner to get the award set
aside. (Para 7)

Section 19 of the MSME Act, 2006, in unequivocal
terms, provides that no application for setting aside
the award made by the Council shall be
entertained by any court unless the appellant has
deposited 75% of the amount in terms of the
award or, as the case may be, in the manner
directed by such court. Thus, in case the
petitioners avail the remedy u/s 34 of the Act of
1996, they would be required to deposit 75% of
the amount in terms of the award before the
challenge is entertained. (Para 8)

In view of the provisions of Section 18(4), where
the Facilitation Council proceeds to arbitrate upon
a dispute, the provisions of the Act of 1996 are to
apply to the dispute as if it is in pursuance of an
arbitration agreement u/s 7(1) of that Act. Hence,
the remedy which is provided u/s 34 of the Act of
1996 would govern an award of the Facilitation
Council. However, there is a super added condition
which is imposed by S. 19 of MSMED Act, 2006 to
the effect that an application for setting aside an
award can be entertained only upon the appellant
depositing with the Council 75% of the amount in
terms of the award. S. 19 has been introduced as
a measure of security for enterprises for whom a
special provision is made in the MSMED Act by
Parliament. (Para 9)

Thus, the instant petition, without making predeposit as per statutory provision, would not be
maintainable. In case of breach of principles of
natural justice, alternative remedy is not an
absolute bar. The writ petition would have been
entertained without relegating the petitioners to
the alternative remedy u/s 34 of the Act of 1996,
had the petitioners agreed to deposit 75% of the
amount in terms of impugned award in this Court.
(Para 10)

Petition dismissed. (E-4)

Precedent followed:

M/s India Clycols Limited & anr. Vs Micro and Small
Enterprises
Facilitation
Council,
Medchal
-
Malkajgiri & ors. in Civil Appeal No.7491 of 2023,
arising out of SLP (C) No.9899 of 2023, decided on
06.11.2023 (Para 4)

Present petition challenges the order dated
01.01.2024,
whereby
respondent
no.2
(Zonal MSEFC, Meerut Zone, Meerut) (for
short 'the Facilitation Council') has declared
an award of a total sum of Rs.1,49,48,762/-
in favour of respondent no.3, in exercise of
powers u/s 18 of the MSME Act, 2006.

(Delivered by Hon'ble Manoj Kumar
Gupta, J.
&
Hon'ble Kshitij Shailendra, J.)

1. Heard Sri S.T. Raja, learned
counsel assisted by Sri P.K. Upadhyay, for
the petitioners, Sri Rajiv Gupta, learned
Additional Chief Standing Counsel for
respondents no.1 and 2 and Sri Kartikeya
Saran, learned counsel for respondent no.3.

2. The instant writ petition under
Article 226 of the Constitution of India has
been filed challenging the order dated
5 All. Tamilnadu Generation & Distribution Corp. Ltd. & Ors. Vs. State of U.P. & Ors.
2525
01.01.2024
whereby
respondent
no.2
(Zonal Micro and Small Enterprises,
Facilitation Council (MSEFC), Meerut
Zone, Meerut) (for short 'the Facilitation
Council') has declared an award of a total
sum of Rs.1,49,48,762/- in favour of
respondent no.3, in exercise of powers
under Section 18 of the Micro, Small and
Medium Enterprises Development Act,
2006 (for short 'the MSME Act, 2006).

3. The case of the petitioners is that
respondent no.3, being a registered firm,
approached the petitioners pursuant to an etender dated 04.01.2021 for supply of 11
KV Vertical Gang Operated Air breaks
switch with composite polymer insulator,
single square pole transformer structure
material with clamp and 11 KV Solid Core
type GH fuse sets for HVDS and a contract
deed/
purchase
order
No.146
dated
19.01.2021 came to be executed. The
petitioners issued purchase order dated
26.02.2021 asking respondent no.3 to
supply the goods and it is alleged that
respondent no.3 failed to supply the goods
as per the terms and conditions of the
supply order. The petitioners, accordingly,
issued a letter dated 15.03.2022 to
respondent no.3 with regard to non supply
of goods, however, respondent no.3
approached the Facilitation Council by
making a reference on 05.04.2022 under
Section 18 of the MSME Act, 2006. While
the reference was pending, respondent no.3
approached this Court by filing Writ-C
No.11981 of 2022 claiming various reliefs.
The writ petition was disposed of by a
Coordinate Bench of this Court by order
dated 19.07.2022 with an observation that
the Authority under Section 18 of the
MSME Act, 2006 shall decide the reference
application in accordance with law within a
period of four weeks from the date of
receipt of the order. It is in pursuance of the
order dated 19.07.2022 passed by this
Court that the impugned award has been
declared by the Facilitation Council.

4. Respondent no. 3 raised
preliminary objection with regard to
maintainability of the writ petition on the
ground of availability of alternative remedy
of filing objections against the impugned
award under Section 34 of the Arbitration
and Conciliation Act, 1996, read with
Section 18(3) of the MSME Act, 2006.
Additionally, it is also contended that
unless 75% of the amount in terms of
impugned award is deposited by the
petitioners, the challenge would not be
maintainable in view of Section 19 of the
MSME Act, 2006. In support of his
submission, he places reliance on the
judgment of Supreme Court in the case of
M/s India Clycols Limited and another
Vs.
Micro
and
Small
Enterprises
Facilitation
Council,
Medchal
-
Malkajgiri and others in Civil Appeal
No.7491 of 2023, arising out of SLP (C)
No.9899 of 2023, decided on 06.11.2023.

5. Per contra, learned counsel for
the petitioners submitted that the impugned
award is ex parte as on the last date of
hearing, the video link was not sent to the
counsel for the petitioners. According to
him, the video link was sent at the head
office of the petitioner-company and to its
officers, ignoring the request of the counsel
to send video link to him, as arguments
were to be advanced by him only. It is urged
that since the impugned award has been
rendered in violation of principles of
natural justice, therefore, availability of
alternative remedy of filing objection under
Section 34 of the Act of 1996 would not
debar the petitioners from invoking the writ
jurisdiction. In respect of condition relating
to pre-deposit of 75% of the amount, he
2526 INDIAN LAW REPORTS ALLAHABAD SERIES
submits that since the petitioner is a
Government company, therefore, the said
condition be dispensed with. He even did
not accept the suggestion of the Court to
deposit the amount as contemplated under
Section 19 before advancing arguments on
merits and submitted that the case be
decided.

6. In order to deal with the
submissions advanced, the Court may refer
to the provisions of Sections 18 and 19 of
the MSME Act, 2006. The same are quoted
below:-

 "18. Reference to Micro and
Small
Enterprises
Facilitation
Council.-(1) Notwithstanding anything
contained in any other law for the time
being in force, any party to a dispute may,
with regard to any amount due under
section 17, make a reference to the Micro
and Small Enterprises Facilitation Council.

 (2) On receipt of a reference
under sub-section (1), the Council shall
either itself conduct conciliation in the
matter or seek the assistance of any
institution or centre providing alternate
dispute resolution services by making a
reference to such an institution or centre,
for
conducting
conciliation
and
the
provisions of sections 65 to 81 of the
Arbitration and Conciliation Act, 1996 (26
of 1996) shall apply to such a dispute as if
the conciliation was initiated under Part III
of that Act.

 (3)
Where
the
conciliation
initiated under sub-section (2) is not
successful and stands terminated without
any settlement between the parties, the
Council shall either itself take up the
dispute for arbitration or refer to it any
institution or centre providing alternate
dispute resolution services for such
arbitration and the provisions of the
Arbitration and Conciliation Act, 1996
(26 of 1996) shall then apply to the
dispute as if the arbitration was in
pursuance of an arbitration agreement
referred to in sub-section (1) of section 7
of that Act.

 (4) Notwithstanding anything
contained in any other law for the time
being in force, the Micro and Small
Enterprises Facilitation Council or the
centre
providing
alternate
dispute
resolution services shall have jurisdiction
to act as an Arbitrator or Conciliator
under this section in a dispute between
the supplier located within its jurisdiction
and a buyer located anywhere in India.

 (5) Every reference made under
this section shall be decided within a
period of ninety days from the date of
making such a reference.

 19. Application for setting
aside decree, award or order.- No
application for setting aside any decree,
award or other order made either by the
Council itself or by any institution or
centre
providing
alternate
dispute
resolution services to which a reference is
made by the Council, shall be entertained
by any court unless the appellant (not
being a supplier) has deposited with it
seventy-five per cent of the amount in
terms of the decree, award or, as the case
may be, the other order in the manner
directed by such court:

 Provided that pending disposal of
the application to set aside the decree,
award or order, the court shall order that
such percentage of the amount deposited
shall be paid to the supplier, as it considers
5 All. Tamilnadu Generation & Distribution Corp. Ltd. & Ors. Vs. State of U.P. & Ors.
2527
reasonable under the circumstances of the
case subject to such conditions as it deems
necessary to impose."

 (emphasis supplied)

7. A bare perusal of Section 18(3)
of the MSME Act, 2006 would reveal that
the provisions of the Arbitration and
Conciliation Act, 1996 have been made
applicable to the dispute as if the
arbitration was in pursuance of an
arbitration agreement referred to subsection (1) of Section 7 of that Act, i.e. the
Act of 1996. Thus, remedy of filing
objection under Section 34 of the Act of
1996 is available to the petitioner to get the
award set aside.

8. Section 19 of the MSME Act,
2006, in unequivocal terms, provides that
no application for setting aside the award
made by the Council shall be entertained
by any court unless the appellant has
deposited 75% of the amount in terms of
the award or, as the case may be, in the
manner directed by such court. Thus, in
case the petitioners avail the remedy
under Section 34 of the Act of 1996, they
would be required to deposit 75% of the
amount in terms of the award before the
challenge is entertained.

9. In M/s India Clycols Limited
(supra), the Supreme Court held that a
person cannot be permitted to bypass the
statutory requirement of depositing 75% of
the decretal amount by invoking the
jurisdiction of the High Court under
Articles 226/227 of the Constitution of
India. The writ petition was held to be not
maintainable for the said reason. The
relevant observations made in this regard in
paragraphs 10, 12 and 13 of the judgment
are reproduced below:-
 "10. In terms of Section 19, an
application for setting aside an award of the
Facilitation Council cannot be entertained
by any court unless the appellant has
deposited seventy-five per cent of the
amount in terms of the award. In view of
the provisions of Section 18(4), where the
Facilitation Council proceeds to arbitrate
upon a dispute, the provisions of the Act of
1996 are to apply to the dispute as if it is in
pursuance of an arbitration agreement
under sub-section (1) of Section 7 of that
Act. Hence, the remedy which is provided
under Section 34 of the Act of 1996 would
govern an award of the Facilitation
Council. However, there is a super added
condition which is imposed by Section 19
of MSMED Act, 2006 to the effect that an
application for setting aside an award can
be entertained only upon the appellant
depositing with the Council seventy-five
per cent of the amount in terms of the
award. Section 19 has been introduced as a
measure of security for enterprises for
whom a special provision is made in the
MSMED Act by Parliament. In view of the
provisions of Section 18(4), the appellant
had a remedy under Section 34 of the Act
of 1996 to challenge the award which it
failed to pursue.

 12. The appellant failed to avail
of the remedy under Section 34. If it were
to do so, it would have been required to
deposit seventy-five per cent of the decretal
amount. This obligation under the statute
was sought to be obviated by taking
recourse to the jurisdiction under Articles
226/227 of the Constitution. This was
clearly impermissible.

 13. For the above reasons, we are
in agreement with the view of the Division
Bench of the High Court that the writ
2528 INDIAN LAW REPORTS ALLAHABAD SERIES
petition which was instituted by the
appellant was not maintainable."

 (emphasis supplied)

10. Thus, in view of law laid down
by Supreme Court in M/s India Clycols
Limited (supra), we are of considered
opinion that the instant petition, without
making
pre-deposit
as
per
statutory
provision, would not be maintainable. We
hold so being fully aware of the legal
position that in case of breach of principles
of natural justice, alternative remedy is not
an absolute bar. We would have entertained
the writ petition without relegating the
petitioners to the alternative remedy under
Section 34 of the Act of 1996, had the
petitioners agreed to deposit 75% of the
amount in terms of impugned award in this
Court. As counsel for the petitioners is not
agreeable to comply with the said
condition, therefore, we decline to examine
the challenge and uphold the preliminary
objection of learned counsel for respondent
no. 3.

11.

The
writ
petition
is,
accordingly,
dismissed
as
not
maintainable, however, without prejudice
to the rights of the petitioners to avail such
other remedy as may be available to them
under the law.
---------
(2024) 5 ILRA 2528
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 17.05.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.

Civil Misc. Arbitration Application No. 4 of 2024
With
Civil Misc. Arbiration Application No. 5 of 2024

M/S Geo Miller & Co. Pvt. Ltd. ...Appellant
Versus
U.P. Jal Nigam & Ors. ...Respondents

Counsel for the Appellant:
Sri S.D. Singh with Sri Shadab Alam,
Advocates Sri Sujeet Kumar with Ms.
Chhaya Gupta, Advocates

Counsel for the Respondents:
Sri Vimlesh Kumar Rai, Advocate for U.P. Jal
Nigam, Sri Anand Prakash Paul, Advocate
for Kanpur Development Authority

A. Arbitration Law - Extension of mandate
of the arbitrator - When a bench of
coequal strength is faced with conflicting
judgments of other coequal benches, the
judgment delivered earlier will continue to
govern the field of law, till such time, the
same is overturned or in case the
question(s) of law, if referred to the larger
bench is answered. This will also hold true
when a lower court is faced with
conflicting judgments of a higher court, or
a
coordinate
bench
is
faced
with
conflicting judgments of a division bench.
(Para 24)

Precedents are not mere legal doctrines; they
are the embodiment of centuries of legal wisdom
and collective judicial experience. When courts
deviate from established precedents without
due consideration, they risk undermining the
credibility and legitimacy of the legal system.
Therefore, it is imperative for courts to uphold
the sanctity of legal precedents and adhere to
established principles of judicial discipline, even
in the face of conflicting opinions or pressures to
depart from precedent. (Para 22)

B. The judgments in Lucknow Agencies
(infra) and Indian Farmers Fertilizers
(infra) having been delivered under
different factual scenarios will continue to
govern the field of law as far as Section
29A of the Act is concerned before this
Court. All applications filed u/s 29A of the Act
till such time as the Larger Bench, reference to
which was made vide this Court's order dated
February 26, 2024, returns its decision on the