Matter: Jharkhand Urja Vikas Nigam Limited v. The State of Rajasthan
Order dated: 15 December 2021
Summary:
Jharkhand Urja Vikas Nigam Limited (JUVNL) had entered into a contract with Anamika Conductors Ltd. which approached the Rajasthan Micro and Small Enterprises Facilitation Council (Facilitation Council) for recovery of pending payments from JUVNL. As JUVNL failed to appear before the Facilitation Council despite receipt of summons, an order was passed directing JUVNL to make complete payments within a period of 30 (thirty) days from the date of the order. This order was challenged before Rajasthan High Court, which dismissed the appeal. Eventually, an appeal was preferred by JUVNL before the SC.
The SC noted that as per the provisions of the MSMED Act read with the Arbitration Act, the Facilitation Council, on the failure of the conciliation proceedings between the party, was only empowered to refer the parties to arbitration. SC opined that arbitration and conciliation cannot be clubbed together to pass an award, and any such order would be patently illegal. Accordingly, the appeal was allowed, and the Facilitation Council’s order was quashed as it was a nullity and ran contrary not only to the provisions of MSMED Act but also to the mandatory provisions of Arbitration Act. The SC kept it open to either party to refer the dispute to arbitration on their own.
