Reference Made To Larger Bench Doesn't Unsettle Declared Law Until Reference Court Rules Otherwise: Jammu & Kashmir & Ladakh High Court

The Jammu & Kashmir and Ladakh High Court has held that any reference made larger bench doesn't unsettle declared law, until the Reference Court rules otherwise.

The Court was considering a Writ Petition against an order passed by Chairman, Micro and Small Enterprises Facilitation Council in terms of which Respondent No. 1 was held entitled to the payment of ₹2,75,65, 355.00/- as principal amount along with interest as delayed amount up to May 31, 2023.

The bench of Justice Moksha Khajuria Kazmi held, "It is clearly stated in the judgment supra that till the reference made by Supreme Court in case titled M/s Tamil Nadu Cements Corporation Limited vs Micro and Small Enterprises Facilitation Council and Another is considered and decided by the larger bench, Judgment passed in M/s India Glycols Limited shall be binding on this court and would hold law."

The Petitioner was represented by Senior Additional Advocate General Abdul Rashid Malik, while the Respondent was represented by Senior Advocate Jahangir Iqbal Ganai.

Facts of the Case

The Jal Shakti Department invited tenders for bidding for supply of ISI marked GMS tubes from GeM approved manufacturers. Out of six bidders, the firm M/S JTL Infra Limited was declared lowest for all the items of the advertised diameters in both light and medium class categories as such three supply orders were issued in favour of the claimant firm. The material from the firm, i.e., Respondent No.1, was received as and when supplied as per the supply orders and payments were made to the firm from time to time as per the payment clauses of the terms and conditions of the E-NIT.

It was stated that the delay of finalization/closure of the contract for supply of GMS Tubes from Respondent No. 1 to the Department of Jal Shakti had occurred, owing to the delay in supplies from the Firm itself, which consequently impeded the settlement of delay. It was stated that once the settlement of delay was confirmed, firm and final rates were established and after imposition of penalty clause, the net amount payable to the firm and the payment was made as per the terms and conditions laid in E-NIT. Respondent No. 1 filed a claim petition/reference under Section 18 of the Micro Small and Medium Enterprises Development Act, 2006 for recovery of Rs. 19,38,92,339/-, which includes Rs. 16,89,79,714.26/- as principal amount and Rs. 2,49,12,624.74/- as interest upto December 31, 2019, before the Punjab Micro and Small Enterprises Facilitation Council.

Petitioner challenged the impugned award on the ground that the same has been passed in a very mechanical way, and in a slip shod manner without providing any opportunity of being heard to the Petitioner. It was contended that the MSE Facilitation Council exceeded jurisdiction by taking cognizance of the reference made by respondent company on account of interest on delayed payment of goods by the petitioner as the said agreement executed between the parties does not have any clause pertaining to the payment of interest on delayed payment and above all there is no delay on part of the petitioner department.

The Respondent, on the other submitted that the Petitioner instead of taking recourse to the remedy provided in law as per mandate of Act of 2006, directly approached the court through the medium of the Writ Petition, that too, without there being any application for depositing 75% of the awarded amount, as provided under Section 19 of MSME Act, 2006. It was submitted that it is a settled proposition of law that this Court cannot entertain a petition under Article 226/227 of the Constitution of India, if an alternate remedy is provided and the statute under which the action complained of has been taken, itself contains a mechanism for redressal of grievances. It was also submitted that the Court lacks territorial jurisdiction over the subject matter on account of the fact that the proceedings have been conducted at the supplier's location.

Reasoning By Court

The Court referred to the decision of the Supreme Court in case titled “M/s India Glycols Limited vs. Micro and Small Enterprises Facilitation Council, Medchal Malkajgiri and Others" whereby a three judge bench had held that Petition under Article 226/227 of the Constitution instituted by the Applicant is not maintainable under MSMED Act.

It noted that the Counsel for the Petitioner has relied upon the judgment passed by Supreme Court in M/s Tamil Nadu Cements Corporation Limited vs Micro and Small Enterprises Facilitation Council and Another and stated that as to whether petition under Article 226/227 can be entertained by this court or not has already been referred to the larger bench of five judges as such till the decision is taken by the larger bench in terms of judgment supra, instant petition deserves to be entertained and decided by this court.

"Since the decision has not been taken by the larger bench, in terms of the judgment passed by Supreme Court in case titled M/s Tamil Nadu Cements Corporation Limited vs Micro and Small Enterprises Facilitation Council and Another till date, therefore judgment passed in case of M/s India Glycols Limited supra, wherein it has been held that the petition under Article 226/227 of the Constitution of India is not maintainable in assailing an award under MSMED Act 2006, by a larger bench of three judges will be binding as against the judgment of two judges bench in case of Jharkhand Urja Vikas Nigam Limited v. State of Rajasthan and others," the Court observed.

The Petition was accordingly dismissed as non-maintainable.

Cause Title: Union Territory of J&K vs. M/S JTL Infra Limited

Appearances:

Petitioner- Senior Additional Advocate General Abdul Rashid Mali, Assisting Counsel Mohammad Younis

Respondent- Senior Advocate Jahangir Iqbal Ganai, Advocate Mehnaz Rather

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