Bombay High Court M/S. P.L. Adke A Sole Prop. Concern ... vs Wardha Municipal Corporation / Council ... on 1 March, 2021 Equivalent citations: AIRONLINE 2021 BOM 1016 CIVIL APPELLATE JURISDICTION ARBITRATION APPEAL (ST) NO.30508 OF 2019 IN ARBITRATION APPLICATION (COMMERCIAL) NO.7 OF 2019 M/s. P. L. Adke A sole Proprietorship concern through its proprietor P.L. Adke Having its office at 02AB, Adhaokar Plaza, Trimbak Road, Near ABB Circle, Mahatma Nagar, Nashik 422 007. .. Appellant/Applicant v/s. Wardha Municipal Corporation/Council Through Chief Officer Nagar Parishad Wardha, Wardha, Maharashtra. .. Respondent Mr. Prathamesh Kamat a/w Ms. Aditi Maheshwari, Mr. Shiv Iyer, Ms. Ankita Sen i/b. Ganesh & Co. for the appellant/applicant. Ms. Aparna Devkar for the respondent. CORAM : A. K. MENON, J. DATED : 1ST MARCH, 2021. P.C. : 1. By this appeal, the appellant seeks to challenge an order dated 4th November, 2019 passed by the District Court, Nasik, in 1/39 ARA(ST)3050819 (AS).doc wadhwa an Arbitration Application (Commercial) under Section 9 of the Arbitration and Conciliation Act. The appellant had filed the application seeking an injunction restraining the respondent corporation from proceeding with levy of penalty, fine from deducting additional security deposit and invoking the risk and cost clause and also to restrain the respondent from blacklisting the appellant. The District Court by the impugned order rejected the petition and hence the appeal. FACTS 2. The appellant claims to be registered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSME) and claims to have supplied goods and rendered services to the respondent under an agreement dated 27 th May, 2018 under work order dated 28th May, 2018 for the Wardha Sewerage Scheme. The contention of the appellant is that the respondent corporation failed to provide an obstruction free site and to secure the requisite permissions. Work under the contract was therefore delayed. It sought extension of time but the respondent failed to grant extension. In February 2019 the respondent levied penalty of Rs.2,65,000/ for irregularities in executing the work under the contract. The appellant had 2/39 ARA(ST)3050819 (AS).doc wadhwa meanwhile raised its 8th Running Account bill. The respondent in breach of contract paid the bill in part after deducting Rs.10 lakhs. The appellant contended that it was a supplier as defined under Section 2(n) of the MSEM Act and the respondent a "buyer" as defined under Section 2(d) of the Act. The appellant claims to have rendered services to the respondent a "buyer" of the services for consideration which was to be paid without any deductions towards penalty or any retention amount. That despite having received benefit of the services, the respondent failed to pay to the appellant the amounts due under the invoices/running account bills and thus a dispute resulted. It is contended that the dispute falls within the scope of Section 17 of the MSME Act and is therefore amenable to arbitration under the Act and has contemplated in Section 18(3). 3. The appellant contends that unless the respondent make payments of the bills in full for services rendered the appellant will be unable to carry out and complete the work under the contract. It claims that a prima facie case has been made out and balance of convenience was in its favour. However, the impugned order found that the application under Section 9 was not maintainable in the absence of a contractual provision to 3/39 ARA(ST)3050819 (AS).doc wadhwa refer disputes to arbitration. In order to appreciate the factual background it will be necessary to refer to certain provisions of the contract. The respondent corporation has contended that the sewerage scheme was undertaken by the Maharashtra Jeevan Pradikaran, a Government of Maharashtra Undertaking which plans, designs, constructs and operates water supply and sewerage scheme in the State, that is certain work of sewerage network, property connections, wet well with pump house, pumping, construction of SBR type sewage treatment plant and Nalla interception works were required to be carried out and completed by the respondent, for the sake of convenience is referred to as the "project". The appellant was a successful bidder for execution of the project for a price of Rs.95,39,62,674/. The works contract said to have been i