# Uttar Haryana Bijli Vitran Nigam Ltd., Panchkula, Haryana v. M/s P.M. Electronics Ltd., Greater Noida

- **Citation:** FAFO No. 1519 of 2017
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2020-02-26
- **Case number:** FAFO No. 1519 of 2017
- **Bench:** Sudhir Agarwal, Rajeev Misra
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/uttar-haryana-bijli-vitran-nigam-ltd-panchkula-haryana-v-m-s-p-m-electronics-46344
- **Pages:** 43

## Headnote

Law-Arbitration
and
Conciliation Act, 1996 - Section 34 -
Amendment Act, 2016 - Arbitral Award
- Parameter to set aside - Term 'Public
Policy' explained - The application for
setting aside an arbitral award restricted on
the ground of public policy and to apply
only when award was persuaded or affected
by fraud or corruption, or was against the
fundamental policy of Indian law or in
contravention with the most basic notions
of morality. (Para 54, 55 and 56)
B.
Civil
law-Arbitration
and
Conciliation Act, 1996 - Section 34 -
Jurisdiction
of
Civil
Court
to
decide
Objection - Where High Court and District
Court have jurisdiction to decide objections
under Section 34 of Act, then in that
eventuality challenge to award shall lie only
before High Court otherwise it shall lie
before District Court being Principal Civil
Court of original jurisdiction. (Para 34 and
61)
C. Court Proceeding - Decision on merit -
D.
Micro
and
Small
and
Medium
Enterprises Development Act, 2006 -
Section 2(n) and 8 - Term 'Supplier' -
Meaning
- Requirement of filing of
Memorandum within 180 days - Court
below
relied
upon
the
notification
bearing No. 2/311123007-MSNE POL
(PL) to arrive at conclusion that it is not
mandatory for an Industrial undertaking
to
file
its
Industrial
Entrepreneur's
Memorandum - Since this was the only
ground relied upon by Uttar Pradesh
State
Micro
and
Small
Industrial
Facilitation Council, Kanpur, the finding
so recorded by Council was rightly set
aside by Court below - In the absence of
any such materials to establish that
filing
of
Industrial
Entrepreneur's
Memorandum is mandatory, the finding
recorded by the Court below upheld.
(Para 83)
Appeal dismissed (E-1)
Cases relied on :-

## Text

_Characters 0–39,946 of 147,006. This is a partial read: ask again with offset=39946 for what follows._

1448 INDIAN LAW REPORTS ALLAHABAD SERIES
Court in the case of National Insurance
Company Ltd. vs. Pranay Sethi reported
in 2017(4) T.A.C. 673.

18. The Hon'ble Apex Court has
provided the multiplier of 17 for the age
group of 26 to 30 years and as such the
appropriate multiplier in the present case
would be 17.

19. The Claims Tribunal had also
erred in deducting 1/3rd towards personal
expenses, which is applicable only in the
case of death, as held by Hon'ble Apex
Court in the case of Raj Kumar(supra).
The paragraph 20 is reproduced herein
below:-

"20. In the case of an injured
claimant
with
a
disability,
what
is
calculated is the future loss of earning of
the claimant, payable to claimant, (as
contrasted
from
loss
of
dependency
calculated in a fatal accident, where the
dependent family members of the deceased
are the claimants). Therefore there is no
need to deduct one-third or any other
percentage from out of the income, towards
the personal and living expenses."

20. The claims Tribunal had not awarded
any amount towards future prospects, whereas
the claimant is also entitled 40% future
prospects in view of law laid down by the
Constitutional Bench of Hon'ble Apex Court in
the case of National Insurance Company
Ltd. vs. Pranay Sethi reported in 2017(4)
T.A.C. 673.

21. In view of aforesaid discussion, the
quantum of compensation has been reassessed
as follows:-

1) Monthly income Rs.3000/-

2) Annual income Rs.3000/- X 12 =
Rs. 36,000/-

3)
Future
prospects
40%
=
Rs.14,400/-

4) Total annual income = Rs.36000/-
+ Rs.14,400 =Rs.50,400/-

5) Loss of earning capacity 40% =
Rs.20,160/-

6)
Multiplier
applicable
-17
=Rs.20,160 x 17 = 3,42,720/-

7) Medical expenses Rs.60,000/-

8)
Non-pecuniary
damages
Rs.25,000/-

Total Rs. 3,42,720/- + Rs.60,000/- +
Rs.25,000/- =Rs.4,27,720/-

22. Since the claimant himself was found
negligent to the extent of 30%; as such the
amount of compensation is reduced to 30%(Rs.
4,27,720/- minus Rs.1,28,316/- =2,99,404/-). It
is taken in round figure as Rs.3,00,000/-. The
rate of interest as 12% is also on higher side.
The Hon'ble Apex Court in a latest decision
Civil Appeal No.242/243 of 2020 National
Insurance Company Ltd. vs. Birender and
others has awarded 9% interest.

23. In view of aforesaid discussion, both
the appeals are hereby disposed off and award
of the Tribunal is modified and compensation
awarded by the Tribunal is enhanced from
Rs.2,02,000/- to Rs.3,00,000/- with interest at
the rate of 9% from the date of filing of claim
petition. The corporation is directed to pay
enhanced amount within two months.

24. No order as to costs.
----------

(2020)03-05ILR A1448
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 26.02.2020

BEFORE
3-5 All. Uttar Haryana Bijli Vitran Nigam Ltd., Panchkula, Haryana Vs. M/s P.M. Electronics Ltd., Greater Noida.
1449
THE HON'BLE SUDHIR AGARWAL, J.
THE HON'BLE RAJEEV MISRA, J.

FAFO No. 1519 of 2017

Uttar Haryana Bijli Vitran Nigam Ltd.,
Panchkula, Haryana ...Appellant
Versus
M/s P.M. Electronics Ltd., Greater Noida
 ...Respondent

Counsel for the Appellant:
Sri Vivek Ratan Agrawal, Sri Anil Kumr
Srivastava, Sri Baleshwar Chaturvedi, Sri
Ashutosh Srivastava, Sri H.N. Singh, Sri
M.C. Chaturvedi

Counsel for the Respondent:
Sri Alok Kumar Yadav

A.
Civil
Law-Arbitration
and
Conciliation Act, 1996 - Section 34 -
Amendment Act, 2016 - Arbitral Award
- Parameter to set aside - Term 'Public
Policy' explained - The application for
setting aside an arbitral award restricted on
the ground of public policy and to apply
only when award was persuaded or affected
by fraud or corruption, or was against the
fundamental policy of Indian law or in
contravention with the most basic notions
of morality. (Para 54, 55 and 56)
B.
Civil
law-Arbitration
and
Conciliation Act, 1996 - Section 34 -
Jurisdiction
of
Civil
Court
to
decide
Objection - Where High Court and District
Court have jurisdiction to decide objections
under Section 34 of Act, then in that
eventuality challenge to award shall lie only
before High Court otherwise it shall lie
before District Court being Principal Civil
Court of original jurisdiction. (Para 34 and
61)
C. Court Proceeding - Decision on merit -
D.
Micro
and
Small
and
Medium
Enterprises Development Act, 2006 -
Section 2(n) and 8 - Term 'Supplier' -
Meaning
- Requirement of filing of
Memorandum within 180 days - Court
below
relied
upon
the
notification
bearing No. 2/311123007-MSNE POL
(PL) to arrive at conclusion that it is not
mandatory for an Industrial undertaking
to
file
its
Industrial
Entrepreneur's
Memorandum - Since this was the only
ground relied upon by Uttar Pradesh
State
Micro
and
Small
Industrial
Facilitation Council, Kanpur, the finding
so recorded by Council was rightly set
aside by Court below - In the absence of
any such materials to establish that
filing
of
Industrial
Entrepreneur's
Memorandum is mandatory, the finding
recorded by the Court below upheld.
(Para 83)
Appeal dismissed (E-1)
Cases relied on :-
1. Executive Engineer, Road Development
Division No.III, Panvel & anr. V. Atlanta
Ltd., 2014 (11) SCC 619
2. Bharat Aluminum Company Vs. Kaisar
Aluminum Technical Services & ors., 2012
(9) SCC 552
3. M/s Shakti Tubes Ltd. through Director
Vs. St. of Bihar & ors., 2009 (1) SCC 786
4. Assam State Electricity Boards and
Others Vs. Trusses and Towers Pvt. Ltd.;
AIR 2002 Assam 49
5. M/s. Shakti Tubes Ltd. Through Director
v. St. of Bihar & ors., 2009 (1) SCC 786
6. Purvanchal Cabels and Conductors Pvt.
Ltd. Vs. Assam State Electricity Board &
ors., 2012 (7) SCC 462
7. Mcdermott International Inc. Vs. Burn
Standard Co. Ltd. & ors., 2006 (11) SCC
181
8. Bharat Cooking Coal Ltd. Vs. L.K. Ahuja
Company Ltd.; 2001 (4) SCC 86
9. Maharashtra State Electricity Board Vs.
Sterilite Industries (India) & anr., 2001 (8)
SCC 482
10. Renusagar Power Co. Ltd. Vs. General
Electric Company, 1994 SCC Supl. (1) 644
1450 INDIAN LAW REPORTS ALLAHABAD SERIES
11. Oil and Natural Gas Corporation Ltd. Vs.
Saw Pipes Ltd., 2003 (5) SCC 705
12. Mcdermott International Incorporation Vs.
Burn Standard Co. Ltd. & ors., 2006 (11) SCC
181
13. Associate Builders Vs. D.D.A.; 2015 (3) SCC
49
14. Ssangyong Engineering & Construction Co.
Ltd. v. National Highways Authority of India
(NHAI); 2019 SCC Online SCC 677
(Delivered by Hon'ble Rajeev Misra, J.)

1. This First Appeal From Order
under Section 37 of Arbitration and
Conciliation Act, 1996 (hereinafter referred
to as Act, 1996) has been filed by
Respondent-Appellant
challenging
judgement and order dated 08.09.2015
passed by District Judge, Kanpur Nagar in
Misc. Case No. 100/74 of 2010 (M/s P.M.
Electronics Limited Vs. Uttar Haryana Bijli
Vitran Nigam Ltd. (UHBVNL) under
Section 34 of Act, 1996, whereby Court
below has set aside award dated 22.02.2010
delivered by U.P. State Micro and Small
Industrial Facilitation Council Kanpur and
remanded the matter before aforesaid
Council Kanpur for decision a fresh on
merits after giving notice and opportunity
of hearing to the parties.

2. We have heard Mr. H. N. Singh,
learned Senior Counsel assisted by Mr.
Ashutosh Srivastava, Advocate alongwith
Mr. M.C. Chaturvedi, learned Senior
Counsel
assisted
by
Mr.
Baleshwar
Chaturvedi.
Learned
counsel
for
Respondent-Appellant
and
Mr.
Alok
Kumar Yadav, learned counsel representing
Claimant-Opposite Party.

3.

Respondent-appellant
Uttar
Haryana
Bijli
Vitran
Nigam
Ltd.
(hereinafter referred to as UHBVNL) is a
Government
of
Haryana
undertaking
having its registered office at Shakti
Bhavan
Sector-6
Panchkula,
Haryana
(hereinafter referred to as 'Appellant').
Appellant is engaged in distribution of
electricity.

4. Claimant-Opposite Party M/S P.
M. Electronics Ltd. is a Company duly
incorporated under the Companies Act,
1956 (hereinafter referred to as ClaimantOpposite Party). Claimant-Opposite Party
is engaged in manufacturing and marketing
of power and distribution transformers of
various KVA ratings.

5.

Appellant
awarded
various
purchase orders to Claimant-Opposite Party
during the period 1991 to 2000. Things
were going on smoothly and bills of
Claimant-Opposite Party were being paid
regularly. However, in the year 1997, it
appears that there was some delay in
payment of principal amount. Accordingly,
Claimant-Opposite Party filed CMWP No.
7916 of 1997 before Punjab and Haryana
High Court claiming payment of interest on
principal amount for the period of delayed
payment. During pendency of above
mentioned writ petition, Claimant-Opposite
Party filed a Civil Misc. Application in the
aforesaid writ petition praying therein that
directions be issued to Government of
Haryana to establish Industrial Facilitation
Council (hereinafter referred to as 'IFC') as
contemplated under Sections 7A and 7B of
Interest on Delayed Payment to Small
Scale Ancillary Industrial Undertaking Act,
1993 (hereinafter referred to as Act, 1993)
within a period of three months.

6. It transpires from record that by
and large contract awarded to ClaimantOpposite Party was performed smoothly by
him. However, in the year 2000, Claimant-
3-5 All. Uttar Haryana Bijli Vitran Nigam Ltd., Panchkula, Haryana Vs. M/s P.M. Electronics Ltd., Greater Noida.
1451
Opposite Party is alleged to have failed in
completing purchase orders resulting in
immense loss to UHBVNL. Consequently,
in view of above and in accordance with
conditions of contract, UHBVNL encashed
bank guarantee submitted by ClaimantOpposite Party.

7. It is further gathered from record
that Claimant-Opposite Party filed an
Original Suit in Civil Court at Panchkula,
Haryana, but neither plaint of aforesaid suit
nor any other document has been brought
on record to show the relief claimed in
aforesaid suit or what has ultimately
happened in that suit.

8. Subsequently, Chief Engineer
UHBVNL, Panchkula Haryana passed an
order
dated
3.10.2006,
blacklisting
Claimant-Opposite party, but there is
nothing on record to show that aforesaid
order dated 3.10.2006 was challenged by
Claimant-Opposite party.

9. Punjab and Haryana High Court
did not examine the merits of claim raised
by petitioner i.e. Claimant-Opposite Party
herein in CMWP No. 7916 of 1997 but
disposed of the said writ petition finally
vide order dated 13.02.2002.

10. Perusal of order dated 13.02.2002
goes to show that aforesaid writ petition
was disposed of finally on the undertaking
given by counsel for State of Haryana. For
ready reference order dated 13.02.2002
referred to above is reproduced hereinbelow:

" In pursuant to order dated
December 20, 2001, Mrs. Meenaxi Anand
Chaudhary,
Principal
Secretary,
to
government of Haryana, Department of
Power is present in Court. She has stated
that the Government shall constitute the
requisite council as provided under Section
7A of the Interest on Delayed Payment to
Small Scale and Ancillary Industrial
Undertakes (Amendment) Act, 1958. She
has further stated that in fact is the Small
Scale Industries Department, which is
directly
concerned
with
this
matter.
However, she has stated for and on behalf
of the Government of Haryana that Council
shall be constituted within a period of three
months from today.

In this view of the matter, the
application has been rendered instructions
and the same is disposed of accordingly.

Dasti on payment."

11. Pursuant to aforesaid order dated
07.05.2002 passed by Punjab and Haryana
High Court, Government of Haryana
established
IFC
at
Chandigarh.
Accordingly, Claimant-Opposite Party filed
his claim before IFC (Haryana) under Act
1993,
vide
claim
dated
31.07.2002
claiming a sum of Rs.12,70,89,049/-
alongwith pendente-lite and future interest
as well as cost of claim petition.

12. Perusal of Claim Petition dated
31.07.2002 filed by claimant-opposite party
goes to show that Claimant-Opposite Party
in
support
of
of
it's
claim
of
Rs.12,70,89,049/- pleaded that claimantopposite party is a small scale industrial
unit
having
permanent
registration
certificate.
Claimant-Opposite
party
supplied various goods under different
purchase orders to appellant. However,
appellant failed to make timely payment
i.e. within the time period prescribed by
Act 1993. It was then pleaded that
claimant-opposite party falls within the
category of 'Supplier' as defined under
section 2 (f) of Act 1993. Respondentappellant is a 'Buyer' and therefore, liable
1452 INDIAN LAW REPORTS ALLAHABAD SERIES
under the statute i.e. Act 1993 to make
payment on or before period prescribed
under Act 1993. As appellants have failed
to make payment on or before due date, as
envisaged under section 3 of Act 1993,
they are liable to pay interest for the period
of delayed payment as per the rates
prescribed is Sections 4 and 5 of Act 1993.
Aforesaid provisions cast a statutory duty
upon Purchaser to pay interest for the
period of delayed payment.

13. During pendency of aforesaid
Claim Petition dated 31.07.2002 filed by
claimant-opposite
party
before
IFC,
Haryana
Micro
Small
and
Medium
Enterprises
Development
Act,
2006
(hereinafter referred to as Act, 2006) came
into force on 02.10.2006. By reason of
Section 32 of Act 2006, old Act of 1993
stood repealed.

14. Consequently, after coming into
force of Act, 2006, IFC (Haryana) losts its
existence. As a result of aforesaid, dispute
of parties pending before IFC Haryana
came to be stayed and thereafter adjourned
as IFC (Haryana) now had no jurisdiction
to decide claim of Claimant-Opposite
Party. Under the new Act 2006, jurisdiction
to decide claim of Claimant-Opposite Party
now
vested
with
Micro
and
Small
Industrial Facilitation Council Haryana or
Micro and Small Industrial Facilitation
Council,
Uttar
Pradesh
which
were
established at Chandigarh and Kanpur
respectively as per Section 20 read with
Section 21 of Act, 2006.

15. Claimant-Opposite Party filed an
application
dated
21.03.2007
before
Director
of
Industries
Haryana-CumChairman Industries Facilitation Council
Haryana praying therein that original file
pertaining to claim submitted by claimantopposite party be sent to U.P. State Micro
& Small Industrial Facilitation Council,
Directorate of Industries (U.P.) Kanpur.
Thereafter, Claimant-Opposite Party filed
reminders dated 27.11.2006, 08.12.2006,
22.12.2006, 07.02.2007 and 07.04.2007 in
continuation of transfer application dated
21.3.2007 earlier filed by him.

16. However, as no consequential
action
was
taken
on
aforesaid
applications/representations submitted by
claimant-opposite party, they submitted a
new claim dated 19.06.2007 before U.P.
State
Micro
and
Small
Industrial
Facilitation Council which was constituted
under Act, 2006. Claimant-Opposite Party
now revised its claim to Rs.42,19,02,100/-.
The break up of same is as follows:

"Interest due as per Section 16
and 17 of Act i.e. Rs. 40,74,54,079/-

Cost of goods supplied Rs.
43,50,817/-

Cost of recoveries made illegally
through encahsment of Bank Guarantee
and
the
cost
of
material
supplied
Rs.1,00,97,204/-"

17. Subsequently, Haryana State
Micro and Small Industrial Facilitation
Council passed an order dated 02.04.2008
directing
Claimant-Opposite
Party
to
approach Uttar Pradesh Micro and Small
Industrial Facilitation Council, Kanpur as
Claimant-Opposite Party is registered in
Uttar Pradesh. For ready reference order
dated 02.04.2008 is reproduced hereinbelow:-

" Regd. No. TS/IFC/22/2006-07

From

The Director of Industries &
Commerce,
Haryana-cum-ChairmanHaryana Micro and Small Enterprises
3-5 All. Uttar Haryana Bijli Vitran Nigam Ltd., Panchkula, Haryana Vs. M/s P.M. Electronics Ltd., Greater Noida.
1453
Facilitation Council 30 Bays Building, Ist
Floor, Section 17, Chandigarh.

To

M/s P.M. Electronics Ltd.,

B-10 & 11, Surajpur Site-C,
Greater Noida,

Distt. Gautam Budh Nagar,

Dated Chandigarh, the

Subject: Ist Meeting of Haryana
Micro and Small Enterprises Facilitation
Council fixed for 22.01.2008 at 11-00 AM
under
the
Chairmanship
of
Shri
D.R.Dhingra, IAS, Director of Industries &
Commerce,
Haryana-Cum-Chairman
,
HMSEFC.

Sir,

Reference this office letter
No. TS/HMSEFC/Ist meeting/392-A dated
8.1.2008 on the subject cited above.

2. The Ist meeting of Ist Meeting
of Haryana Micro and Small Enterprises
Facilitation Council fixed for 22.01.2008 at
11-00 AM under the Chairmanship of the
undersigned. The decision of the Council is
reproduced below:

"M/s P.M. Electronics Pvt. Ltd.
Noida has submitted an applicati0on for
transfer of their case to Micro & Small
Enterprises Facilitation Council set up by
the U.P. State, since HMSEFC under the
Micro, Small & Medium Development Act,
2006 does not have jurisdiction to proceed
further in their case. To this effect the
claimant
has
submitted
various
representations
dated
21.3.07,7.4.07,
29.10.07 and 22.1.2008 respectively.

On the request of the Claimant,
the Council decided to dispose of the case
since the unit of the claimant is registered
in U.P. Sate with the direction to claimant
to approach MSEFC set up by the U.P.
Govt. if they so desire"

This is for your kind information.
(D.R. Dhingra)
 Director of Industries &
Commerce,
Haryana- Cum-Chairman, HMSEFC"

18. It is pursuant to aforesaid order
that claim of Claimant-Opposite Party
submitted on 19.6.2007, came to be
considered by Uttar Pradesh Micro and
Small
Industrial
Facilitation
Council,
Kanpur.

19. Notices were issued to opposite
party, i.e. Appellant herein by Uttar
Pradesh
Micro
and
Small
Industrial
Facilitation Council, Kanpur. Accordingly,
Appellant filed objections dated 22.12.2008
before Uttar Pradesh Micro and Small
Industrial Facilitation Council, Kanpur.
According to Appellant, claim raised by
Claimant-Opposite Party is not tenable as
Claimant-Opposite Party had originally
filed a claim of Rs.12,70,89,049.00, which
was pending before Haryana Industrial
Facilitation Council and later on before
Haryana Micro and Small Enterprises
Facilitation Council, Chandigarh. Aforesaid
claim was transferred to U.P. Micro and
Small Enterprises Facilitation Council
(UPMSME), vide order dated 22.01.2008.
Therefore, filing of a fresh claim without
disclosing pendency of previous pending
claim amounts to concealment of fact and
therefore, claim is liable to be dismissed on
aforesaid ground. Apart from above, fresh
claim as filed by claimant opposite party is
barred by limitation and therefore liable to
be dismissed.

20. It may be noted that proceedings
before Uttar Pradesh Micro and Small
Industrial Facilitation Council, Kanpur
were to be conducted as per provisions of
Arbitration and Conciliation Act, 1996
(hereinafter referred to as 'Act, 1996').
1454 INDIAN LAW REPORTS ALLAHABAD SERIES

21. Ultimately, Uttar Pradesh Micro
and Small Industries Facilitation Council,
Kanpur
gave
arbitral
award
dated
22.02.2010, whereby claim of ClaimantOpposite Party M/S P.M. Electronics Ltd.
was rejected.

22.

Perusal
of
award
dated
22.02.2010 passed by Uttar Pradesh
Micro and Small Industrial Facilitation
Council, Kanpur goes to show that
Council has rejected claim of ClaimantOpposite Party by formulating two points
of consideration;

A. Whether Claimant can file
petition for interest being treated to be a
supplier as defined in Section 2(n) of the
Act.

B. Whether Claimant can claim
interest on due interest when principal
amount has already been received by him.

23. While considering the first point
of consideration as to whether claimant is
to be treated as 'Supplier' as defined in
Section 2(n) of Act, 2006, Council
considered
meaning
of
the
term
'Supplier', as defined in Section 2(n) read
with Section 8 of Micro and Small and
Medium Enterprises Development Act,
2006, to ascertain whether claimant i.e.
opposite party herein, is covered within
the meaning of term "Supplier' as defined
in Section 2(n) of Act, 2006. For ready
reference Section 2 (n) and Section 8 of
Micro and Small and Medium Enterprises
Development Act, 2006 relied upon by
Uttar Pradesh Micro and Small Industrial
Facilitation
Council,
Kanpur,
are
reproduced herein-below:-

"Section 2(n). "Supplier" means
a micro or small enterprise, which has filed
a memorandum with the authority referred
to in sub-section (1) of section 8, and
includes,-

(i) The National Small Industries
Corporation, being a company, registered
under the Companies Act, 1956 (1 of 1956)

(ii)
The
Small
Industries
Development Corporation of a State or a
Union territory, by whatever name called,
being a company registered under the
Companies Act, 1956 (1 of 1956)

(iii) any company, co-operative
society, trust or a body, by whatever name
called, registered or constituted under any
law for the time being in force and engaged
in selling goods produced by micro or
small enterprises and rendering services
which are provided by such enterprises;

Section
8.
Memorandum
of
micro, small and medium enterprises-(1)
Any person who intends to establish-

(a) A micro or small enterprise,
may, at his discretion, or

(b) A medium enterprise engaged
in providing or rendering of services may,
at his discretion; or

(c) A medium enterprise engaged
in the manufacture or production of goods
pertaining to any industry specified in the
First
Schedule
to
the
Industries
(Development and Regulation) Act, 1951
(65 of 1951) shall file the memorandum of
micro, small, or as the case may be, of
medium enterprise with such authority as
may be specified by the State Government
under sub-section (4) or the Central
Government under sub-section (3):

Provided that any person who,
before the commencement of this Act,
established-

(a) a small scale industry and
obtained a registration certificate, may, at
his discretion; and

(b) an industry engaged in the
manufacture or production of goods
pertaining to any industry specified in the
3-5 All. Uttar Haryana Bijli Vitran Nigam Ltd., Panchkula, Haryana Vs. M/s P.M. Electronics Ltd., Greater Noida.
1455
First
Schedule
to
the
Industries
(Development and Regulation) Act, 1951
(65 of 1951), having investment in plant
and machinery of more than one crore
rupees but not exceeding ten crore rupees
and, in pursuance of the notification of the
Government of India in the erstwhile
Ministry
of
Industry
(Department
of
Industrial
Development)
number
S.O.477(E) dated the 25th July, 1991 filed
an Industrial Entrepreneur's Memorandum,
shall within one hundred and eighty days
from the commencement of this Act, file the
memorandum, in accordance with the
provisions of this Act.

(2) The form of the memorandum,
the procedure of its filing and other matters
incidental thereto shall be such as may be
notified by the Central Government after
obtaining the recommendations of the
Advisory Committee in this behalf.

(3) The authority with which the
memorandum shall be filed by a medium
enterprise shall be such as may be specified
by notification, by the Central Government.

(4) The State Government shall,
by notification, specify the authority with
which a micro or small enterprise may file
the memorandum.

(5) The authorities specified
under sub-sections (3) and (4) shall follow,
for the purposes of this section, the
procedure
notified
by
the
Central
Government under sub-section (2)."

24. Upon consideration of Section 2
(n) read-with Section 8 of Act, 2006, Uttar
Pradesh
Micro
and
Small
Industrial
Facilitation Council, Kanpur concluded that
though it is not obligatory for every Micro
Small and Medium Enterprise to file a
memorandum but only those Enterprises
who have filed memorandum can be treated
to be 'Supplier' as per Section 2(n) of Act,
2006. It was further observed that as per
Section 8 of Act, 2006 such memorandum
is required to be filed within 180 days from
the date of enforcement of Act, 2006. Since
there is nothing on record to show that
Claimant-Opposite
Party
ever
filed
memorandum before competent authority,
as required under Section 8 of Act 2006, he
cannot be treated as 'Supplier' as defined
under Section 2 (n) of Act, 2006.
Consequently, Council concluded that as
Claimant-Opposite Party does not fall
within the meaning of the term 'Supplier' as
defined in Section 2(n) of Act, 2006, its
claim cannot be considered. With regard to
second point of consideration regarding
claim of interest on due interest when
Claimant Opposite Party has already
received
principal
amount,
Council
concluded that claim was barred by
limitation.

25. Feeling aggrieved by award dated
22.02.2010, Claimant-Opposite Party filed
objections against the same before District
Judge, Kanpur in terms of Section 34 of
Act, 1996. Same came to be registered as
Misc. Case No. 100/74 of 2010 (M/s P.M.
Electronics Limited Vs. Uttar Haryana Bijli
Vitran Nigam Ltd. (UHBVNL).

26. Perusal of objection under Section
34 of Act, 1996 filed by Claimant-opposite
party no.2 goes to show that award dated
22.02.2010 rendered by Uttar Pradesh
Micro and Small Industrial Facilitation
Council,
Kanpur
was
challenged
by
Claimant-Opposite Party on the grounds
that finding recorded by Council to the
effect that Claimant-Opposite Party does
not fall within the meaning of term supplier
as defined under Section 2 (n) of Act, 2006
is incorrect. It was further alleged that at
the time of presentation of claim in October
2002, Act 2006 relied upon by Uttar
Pradesh
Micro
and
Small
Industrial
1456 INDIAN LAW REPORTS ALLAHABAD SERIES
Facilitation Council, Kanpur was not in
existence and therefore, claim of ClaimantOpposite Party could not be rejected on the
aforesaid ground. Under the Provisions of
Act 1993, Claimant-Opposite Party was
covered within the definition of term
"Supplier" as defined in Section 2 (F) of
Act, 1993. Company is not under legal
obligation to submit its memorandum as
per Section 8(1) (A) of Act, 2006. Thus,
Section 8 of Act, 2006 has wrongly been
relied upon in case of Claimant-Opposite
Party. It was next urged that Section 8 of
Act, 2006 grants freedom to Small Scale
Industries to present or not to present their
memorandum. Therefore, Section 2(n) of
Act, 2006 is not to be read alongwith
Section 8 of Act, 2006 but independent of
the same. It was then contended that
finding has been recorded by Council that
some dues are pending payment in the
hands of purchaser but in spite of the same
claim of payment of interest for the period
of delayed payment was denied. In
elaboration of aforesaid, it was urged that
Gauhati High Court in its decision reported
in 2002 (1) GLT 947 has held that Act,
1993 creates a statutory liability under the
aforesaid Act upon purchaser and he cannot
be relieved of his liability to pay interest on
delayed payment. Claimant-Opposite Party
has raised its claim regarding delayed
payment and for that purpose has submitted
separate bills which are liable to be paid by
Appellant. It was also alleged that Section
3 of Act, 1993 defines statutory obligation
of purchaser. The purchaser is bound to
make payment of goods received on or
before agreed date and in case the
purchaser fails to make payment as
aforesaid, he shall be liable to pay interest.
According to Claimant-Opposite Party, his
claim was rejected by Council on the
ground that it was barred by limitation as
'Supplies' were made 7 to 10 years before.
View taken by the Council is contrary to
mandate of Section 14 of Limitation Act,
1963 inasmuch as the period spent in
pursuing a wrong legal remedy is liable to
be
excluded.
Admittedly,
ClaimantOpposite Party filed CMWP No. 7916 of
1997 in Punjab and Haryana High Court,
which was disposed of finally vide order
dated 07.05.2002. Upon exclusion of
aforesaid period, it cannot be said that
claim of Claimant-Opposite Party is barred
by limitation. Award rendered by Council
is against Public Policy of India and
therefore, liable to be set aside under
Section 34 (2) (B) (II) of Act, 1996. It was
also pleaded that Council did not give equal
opportunity to parties which is contrary to
mandate of Section 18 of Act, 1996. Award
has been passed against Claimant-Opposite
Party
on
non-existent
grounds.
No
objection was ever raised before Council
that Claimant-Opposite Party is not a
'Supplier' within the meaning of aforesaid
term as defined under Section 2 (n) of Act,
2006. Thus Council has erroneously
interpreted Section 8 (1) of Act, 1996. The
award has been rendered after a period of
90 days which is in gross violation of
Section 8 (1) of Act, 1996. On aforesaid
factual
and
legal
premise,
claimantopposite party prayed that award itself is
liable to be set aside.

27. Appellant contested the objections
filed by Claimant-Opposite Party by filing
reply. A preliminary objection was raised
on behalf of Appellant that objections
under Section 34 of Act, 1996 filed by
Claimant-Opposite
Party
are
not
maintainable being barred by provisions of
Code of Civil Procedure as well as relevant
provisions of Act, 1996 in respect of
territorial jurisdiction of Court. On merits
of the claim, it was pleaded that grounds
raised by Claimant-Opposite Party for
3-5 All. Uttar Haryana Bijli Vitran Nigam Ltd., Panchkula, Haryana Vs. M/s P.M. Electronics Ltd., Greater Noida.
1457
setting aside award do not fall within ambit
and scope of Section 34 of Act, 1996.
Claim Petition filed by Claimant-Opposite
Party in the year 2008 is hopelessly barred
by limitation. It was also contended that
Claimant-Opposite Party is not a 'Supplier'
within the meaning of term "Supplier" as
defined in Section 2 (n) of Act, 2006.
Section 2 (n) of Act, 2006 deals with such
'Supplier', who has filed memorandum
before authority mentioned in Section 8 of
Act, 2006, which is nominated by State
Government. Claimant-Opposite Party has
failed to establish itself as a 'Supplier'
within the meaning of Act, 2006. The
pendency of Claim Petition before Haryana
MSMEFC was not disclosed in fresh
Claim Petition filed by Claimant-Opposite
Party.

28. District Judge, Kanpur upon
consideration of pleadings of parties, the
provisions of Act, 1993, Act, 1996 as also
Act, 2006 passed judgement and order
dated 08.09.2015 whereby award dated
22.02.2010 passed byUttar Pradesh Micro
and Small Industries Facilitation Council,
Kanpur was set aside and matter remanded
to aforesaid Council to decide same on
mertis a fresh after giving notice and
opportunity of hearing to parties.

29. Court below concluded that
Principal
Civil
Court,
Kanpur
has
jurisdiction to hear objections under section
34 of Act 1996 filed by claimant-opposite
party. In support of aforesaid conclusion
reliance was placed upon judgment of
Supreme Court in Executive Engineer,
Road
Development
Division
No.III,
Panvel and another V. Atlanta Limited,
2014 (11) SCC 619, wherein it has been
held that where High Court and District
Court have jurisdiction to decide objections
under Section 34 of Act, 1996 then in that
eventuality challenge to award shall lie
only before High Court otherwise it shall
lie before District Court being Principal
Civil
Court
of
original
jurisdiction.
Reliance was also placed upon Constitution
Bench judgement in Bharat Aluminum
Company
Vs.
Kaisar
Aluminum
Technical Services and Others, 2012 (9)
SCC 552, wherein it has been held that the
Court having jurisdiction over place where
arbitration took place will have jurisdiction
to hear objections under sections 34 of Act
1996. Since award dated 22.02.2010 was
rendered by Uttar Pradesh Micro and Small
Industrial Facilitation Council at Kanpur
and arbitral proceedings were conducted by
Council at Kanpur as per provisions of Act
1996, therefore, Principal Civil Court
Kanpur shall have jurisdiction to decide
objections under section 34 filed by
claimant-opposite party.

30. On the issue of parallel remedies
being availed by claimant-opposite party,
inasmuch as, an original suit has been filed
before civil Court at Panchkula, Haryana
and during pendency of aforesaid civil suit,
claim regarding payment of interest for the
period of delayed payment has been raised,
Court below concluded that from record it
appears that original suit was in respect of
purchase order nos. 23 and 24. However, it
is not clear whether the claim raised in
original suit is the subject matter of present
proceeding. In the absence of material
regarding above being brought on record,
Court below opined that the cause of action
pleaded in original suit as well as present
proceedings are different.

31. In respect of finding recorded by
Uttar Pradesh Micro and Small Industrial
Facilitation
Council,
Kanpur
in
the
impugned award dated 22.2.2010 that claim
raised by claimant respondent is barred by
1458 INDIAN LAW REPORTS ALLAHABAD SERIES
limitation, Court below set aside the same.
Reference was made to section 32 of Act
2006 which provides that any proceedings
initiated under the Repeal Act shall be
deemed to have been filed and pending
under the new Act of 2006. For ready
reference, Section 32 of Act 2006 relied
upon by Court below is reproduced herein
under:

"32. Repeal of Act.-- (1) The
interest on Delayed Payments to Small
Scale
and
Ancillary
Industrial
Undertakings Act, 1993 (32 of 1993) is
hereby repealed.

(2) Notwithstanding such repeal,
anything done or any action taken under
the Act so repealed under sub-section (1)
shall be deemed to have been done or taken
under the corresponding provisions of this
Act."

32. Furthermore, after coming into
force of Act 2006, IFC (Haryana) had no
jurisdiction to hear claim of claimantopposite party. Consequently, vide order
dated 2.4.2008 IFC (Haryana) refused to
hear the claim of claimant-respondent and
transferred record to Medium and Small
Enterprises, Faciliation Council, U.P. As
such, by virtue of section 18 (4) of Act
2006, Uttar Pradesh Micro and Small
Industrial Facilitation Council, Kanpur
acquired jurisdiction to decide the claim.

33. Lastly, Court below concluded
that new claim was filed to avoid delay as
IFC (Haryana) had no jurisdiction to decide
the claim. This fact has been noted in the
order dated 22.1.2008, passed by the
Director of Industy/Chairman, Haryana
Micro and Small Enterprises Facilitation
Council. As the new claim presented by
claimant-opposite party is in continuation
of their old claim, it cannot be said to be
barred by time. To butress aforesaid
conclusion, Court below relied upon
judgement of Apex Court in M/s Shakti
Tubes Ltd. through Director Vs. State of
Bihar and Others, 2009 (1) SCC 786,
wherein it has been held that period spend
in bonafide pursuing a wrong legal remedy
should be excluded. In the light of
aforesaid
judgement,
claim
presented
before IFC (Haryana) will have to be
excluded and consequently, the claim of
claimant-opposite party cannot be said to
be barred by limitation.

34. Court below also considered the
question, "whether claimant-opposite party
falls within the meaning of term 'Supplier'
as defined under section 2 (n) of Act 2006."
For this purpose, Court below referred to
section 2 (n) and section 8 (1) of Act 1996.
Thereafter, Court below referred to a
notification bearing No. 2/311123007MSNE POL (PL) Government of India,
whereby filing of Industrial Entrepreneur's
Memorandum was made discretionary.
Court below further held that above
mentioned notification was not placed by
Claimant-Opposite
party
before
Uttar
Pradesh
Micro
and
Small
Industrial
Facilitation Council, Kanpur, which is a
bonafide mistake. Claimants have also filed
copy of certificate showing that claimant is
registered as a Small Scale Industry. It thus
concluded that claimant-opposite party falls
within the meaning of the term "Supplier"
as defined in section 2 (n) of Act 2006.

35. Another issue that was considered
by Court below was that Uttar Pradesh
Micro and Small Industrial Facilitation
Council, Kanpur by placing reliance upon
judgement of Assam High Court in
Assam State Electricity Boards and
Others Vs. Trusses and Towers Pvt.
Ltd., AIR 2002 Assam 49, rejected claim
3-5 All. Uttar Haryana Bijli Vitran Nigam Ltd., Panchkula, Haryana Vs. M/s P.M. Electronics Ltd., Greater Noida.
1459
petition filed by claimant opposite party on
the ground that claim for payment of
interest
alone
was
not
maintainable.
Aforesaid finding was reversed by Court
below, by referring to the case of M/s.
Shakti Tubes Ltd. Through. Director v.
State of Bihar & Ors, reported in 2009
(1) SCC 786, wherein it has been held that
period spent in pursuing a writ petition
before High Court should be excluded in
reckoning limitation period. Reference was
also made to Purvanchal Cabels and
Conductors Pvt. Ltd. Vs. Assam State
Electricity Board and Others, 2012 (7)
SCC 462, wherein it has been held that
under scheme of Act, 2006, payment of
interest on delayed payment is a statutory
liability
which
must
be
discharged.
Applying ratio of aforesaid judgment,
Court below concluded that a claim petition
can be filed only for claiming interest also.
As such, conclusion drawn by Uttar
Pradesh
Micro
and
Small
Industrial
Facilitation Council, Kanpur is illegal.
Court below strengthened its aforesaid
conclusion by observing that supplies were
made during the period 1990 to 1996. The
payment in respect of aforesaid supplies
were made with delay and therefore,
claimant is entitled to seek payment of
interest for period of delayed payment.
Admittedly, claimant-opposite party had
filed its claim under section 6 of Act 1993.
IFC (Haryana) i.e. the body required to be
constituted as per sections 7 (a) and 7 (b) of
Act 1993 but was constituted only in the
year 2001. Thereafter, claimant filed its
claim before aforesaid council in the year
2002. During pendency of claim, Act 2006
came into force and thereafter, Uttar
Pradesh
Micro
and
Small
Industrial
Facilitation
Council,
Kanpur
was
established on 11.6.2007 and claim was
presented by claimant opposite party before
aforesaid council on 19.6.2007. Thereafter,
IFC (Haryana) vide order dated 2.4.2008
disposed of case of claimant-opposite party
with direction to approach Uttar Pradesh
Micro and Small Industrial Facilitation
Council, Kanpur. In view of aforesaid,
Court below concluded that claim filed by
claimant-opposite party is not barred by
limitation and therefore maintainable.

36. As objections were filed under
section 34 of Act 1996, it was obligatory
upon Court below to examine, whether
objections filed by claimant-opposite party
fulfill any of the parameters provided for in
section
34 of
Act
1996
itself
for
challenging an award. Court below referred
to judgements of Apex Court wherein the
provisions of sections 34 of Act 1996 have
been interpreted. Reference was made to
the
judgement
in
Mcdermott
International Inc. Vs. Burn Standard
Co. Ltd. and Others, 2006 (11) SCC 181,
wherein following has been observed:

" The arbitral award can be set
aside if if is contrary to (a) fundamental
policy of Indian law; (b) the interests of
India; (c) justice of morality; or (d) if it is
patently illegal or arbitrary. Such patent
illegality however, must go to the root of
the matter. The public policy violation,
indisputably should be so unfair and
unreasonable as to shock the conscience of
the court. Lastly, where the arbitrator,
however, has gone contrary to or beyond
the expressed law of the contract or
granted relief in the matter not in dispute,
would come within the purview of section
34 of Act"

37. Reference was also made to the
case of Bharat Cooking Coal Ltd. Vs.
L.K. Ahuja Company Ltd. 2001 (4) SCC
86, wherein Court has observed that where
there is an error apparent on the face of
1460 INDIAN LAW REPORTS ALLAHABAD SERIES
award, same is liable to be set aside. Then
reliance was placed upon Maharashtra
State Electricity Board Vs. Sterilite
Industries (India) and Another, 2001 (8)
SCC 482, wherein it has been held that
where an error of law is apparent on the
face of award, the same is liable to be set
aside.