Orris Infrastructure Pvt Ltd v. Saanvi Interiors India Pvt Ltd

1. The Petitioner has approached this Court under Article 226 of the Constitution of India challenging the arbitral award dated 15.03.2023, passed by MSME-Arbitral Tribunal.

2. The facts, in brief, leading to the present Writ Petition are that the Petitioner and the Respondent herein entered into an agreement dated 27.02.2013 for carrying out interior, landscape finishing and plumbing work in its project known as "Orris Gallery Project" (hereinafter referred to as the Project I), situated at Sector 89, Gurgaon, Haryana for a sum of Rs. 77,96,789.65/-. It is stated that as per the terms of the Agreement, the work was to be completed within a period of two months, w.e.f. 01.03.2013. It is stated that the Petitioner awarded one more contract of Rs. 10,56,070/- to the Respondent herein for the supply and installation of wooden veneer and mirror glass cladding and, melamine polishing work for its project namely "Floreal Tower Project" (hereinafter referred to as the Project II) situated at Sector 83, Gurgaon, Haryana. It is stated that disputes arose between the parties regarding completion of the projects as the projects were not completed within the stipulated time. It is stated that the Respondent sent a legal notice to the Petitioner for payment of Rs.55,69,201/- with accrued interest @ 18% per annum and also to return the bank guarantee dated 19.03.2013 for a sum of Rs.3,89,840/-. Material on record also indicates that the Respondent filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 before the District Judge, Gurgaon seeking deposit of Rs.55,69,201/- from the Petitioner pending arbitration. It is stated that the said petition has been dismissed by the District Judge, Gurgaon, on the ground that the Respondent had not appointed an Arbitrator even after one year after filing the Section 9 application. It is stated that after dismissal of the said application, the Respondent approached the Micro and Small Enterprise Facilitation Council (hereinafter referred to as the 'MSE Facilitation Council') under Section 18 of the Micro, Small and Medium Enterprise Development (MSMED) Act, 2006. It is stated that the MSEFC referred the matter to a sole arbitrator under the aegis of Delhi International Arbitration Centre (DIAC). It is stated that the Petitioner filed an application under Section 16 of the Arbitration Act before the sole arbitrator stating that the claims raised by the Respondent are barred by limitation and the mandate of arbitration has expired since the proceedings have not been completed within the time stipulated under the MSMED Act. The said application was dismissed by the sole arbitrator and award dated 15.03.2023 has been passed in favour of the Respondent. It is this Order which has been challenged by the Petitioner in the present Writ Petition under Article 226 of the Constitution of India.

3. It is pertinent to mention here that the Petitioner has also filed an application under Section 34 of the Arbitration Act before the Commercial Courts, Gurgaon, seeking a direction to set aside the award dated 15.03.2023.

4. Before this Court, it is the contention of the Petitioner that the reference to Arbitration under the DIAC is not in accordance with the MSMED Act as the Respondent was not registered as an MSME at the time of entering into an agreement with the Petitioner and, therefore, the Respondent could not have taken the benefit of the MSMED Act. Various other grounds have also been taken by the Petitioner finding fault with the conduct of the arbitration including the fact that the award was not completed within the time stipulated under the MSMED Act and also that the statement of claim is barred by limitation.

5. At this juncture, it is pertinent to mention that the Order referring the matter to the Arbitrator under the MSMED Act by the MSE Facilitation Council has not been challenged. The Petitioner has challenged the award by filing a petition under Section 34 of the Arbitration Act before the competent Court and has also filed the present petition under Article 226 of the Constitution of India.

6. It is settled law that when an award is challenged under Section 34 of the Arbitration Act then a Writ Petition under Article 226 of the Constitution of India is not maintainable (Refer: Bhaven Construction v. Sardar Sarovar Narmada Nigam Ltd., (2022) 1 SCC 75; Deep Industries Ltd. v. ONGC,

7. This Court in Executive Engineer and Others v. Bholasingh Jaiprakash Constrcution Ltd. and Another, 2024 SCC OnLine Del 1080, has held as under:

alternate dispute resolution services by making a reference to such an institution or centre, for conducting conciliation. In the present matter, prior to sending the matter to the Arbitral Tribunal, an effort for conciliation was also made and the matter was referred to the Arbitral Tribunal only after conciliation proceedings have failed. Once the matter is referred to Arbitration and an award is passed, the award can be challenged either by filing an application under Section 34 of the Arbitration Act or by filing an application under Section 19 of the MSMED Act.

9. In the present case, the Petitioner comes within the definition of State under Article 12 of the Constitution of India. The Petitioner knew about the dispute. The Petitioner knew that the matter has been referred to the Arbitral Tribunal. There has been complete inaction on the part of the State to challenge the reference proceedings. In fact, the State chose not to participate in the proceedings. After the award was passed, the State chose not to challenge the same under Section 34 of the Arbitration Act on the same grounds which have been raised in the present Writ Petition. After failing to invoke the procedures under the Arbitration Act, it is now not open for the State to approach this Court by filing a Writ Petition under Article 226 of the Constitution of India. State is not a helpless litigant who is not aware of the law and, therefore, this Court does not find it expedient to interfere with the award under Article 226 of the Constitution of India on the issue of jurisdiction. Article 226 cannot be invoked by a litigant who has failed to avail of the remedies available under law. The State is not a helpless litigant in whose favour, the Court should invoke the extraordinary remedy under Article 226 of the Constitution of India."

8. The said Order has been affirmed by the Division Bench of this Court in Executive Engineer and Others v. Bholasingh Jaiprakash Constrcution Ltd. and Another, 2024 SCC OnLine Del 3070, wherein the Division Bench, while dismissing the appeal, has held as under:

Parliament."

9. In view of the above, the writ petition is dismissed, along with pending application(s), if any.

10. It is made clear that this Court has not made any observations on the merits of the case or the award as the proceedings against the same are pending before the Court of competent jurisdiction.