IN THE HIGH COURT OF KERALA AT ERNAKULAM WP(C) No. 3954 of 2008(U)
1. ASIATIC RUBRO COMPLEX, REPRESENTED
1. THE KERALA MICRO & SMALL ENTERPRISES
2. THE KERALA STATE ROAD TRANSPORT
For Petitioner :SRI.KURIAN GEORGE KANNAMTHANAM (SR.) For Respondent : No Appearance
The Hon'ble MR. Justice ANTONY DOMINIC
O R D E R
ANTONY DOMINIC, J.
W.P.(C) 3954 & 3956 of 2008
Dated: MARCH 31, 2008
In these cases, the petitioners are small scale industrial units engaged in the manufacture and supply of tread rubber and allied products to the KSRTC. For the materials supplied, amounts are due from the KSRTC to the petitioners. Invoking the power of the 1st respondent under the Micro, Small and Medium Enterprises Development Act, 2006, petitioners made applications to the 1st respondent, the Kerala Micro and Small Enterprises Facilitation Council, established under sec.20 of the said Act. The claims so made by the petitioners were registered as O.A.Nos.7/2006 and 8/2006.
2. Ext.P2 in these writ petitions are the final orders passed in the above OAs. In the order in O.A.7/06, it has been held that the claim of the applicant therein is maintainable. But, however, WP(C) 3954 & 3956 of 2008
considering that the applicant had failed to make their claim at the appropriate legal forum, favourable orders have been declined. Similarly, in the order in O.A.8/06 challenged in W.P.(C) 3956/08, though two items of claims have been negatived, for the reason that the petitioner did not pursue the legal course that is available, orders have been declined in respect of the remaining claims.
3. It is challenging the aforesaid orders produced as Ext.P2 in these writ petitions, the petitioners have approached this court seeking to quash the aforesaid order and to direct that the matter be considered.
4. The 1st respondent, the Kerala Micro and Small Enterprises Facilitation Council, has been established under sec.20 of the Micro, Small and Medium Enterprises Development Act, 2006. Sec.18 of the Act provides for reference to the 1st respondent, and the section reads as follows:-
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. WP(C) 3954 & 3956 of 2008
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 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 it to any institution or centre providing alternate dispute resolution services for such arbitration and the provisions of the Arbitration and Conciliation Act, 1996, (96 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 WP(C) 3954 & 3956 of 2008
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."
5. A reading of sec.18 shows that on receipt of a reference made by the petitioners in these cases, the 1st respondent is bound to initiate conciliation in the matter either by itself or by seeking assistance of any other institution providing alternate dispute resolution services. Sub-section (3) provides that where the conciliation is unsuccessful and stands terminated without settlement between the parties, the Council shall either by itself take up the dispute for arbitration or refer it to any institution or centre providing alternate dispute resolution services for such arbitration in terms of the provisions contained in the Arbitration and Conciliation Act.
WP(C) 3954 & 3956 of 2008
6. A reading of Ext.P2 orders passed in these cases shows that as against its duty to initiate conciliation and on its failure, arbitration in terms of the Arbitration and Conciliation Act, 1996, the 1st respondent has declined to consider the matter on merits and directed the petitioners to pursue legal course. This means that the petitioners are now relegated to pursue their claims before a civil court. In my view, it is to avoid taking recourse to civil court and for settlement of disputes through the mechanism of alternate dispute resolution that the Act itself has been legislated. The order now passed by the 1st respondent defeats the very purpose and object of the Act and in fact it reflects abdication of duties by the 1st respondent.
7. For these reasons Ext.P2 orders in these cases will stand quashed and the 1st respondent is directed to take OA Nos.7/06 and 8/06 back on file, and dispose of the same in the manner as provided under sec.18 of the aforesaid Act.
8. It is clarified hat the petitioner in WP(C) 3956/08 does not dispute the finding of the 1st respondent in paragraph 10 about the WP(C) 3954 & 3956 of 2008
two claims which have been negatived and the adjudication shall be confined to the other claims alone.
The writ petitions are disposed of as above. ANTONY DOMINIC, JUDGE