MANIBHAI & BROTHERS (SLEEPER) & 1 Respondent(s) Mr.Mukesh Patel for MR RAVI KARNAVAT for Petitioner MR PARESH M DAVE for Respondent No.1 Mr.Niraj Soni,learned ASST.GOVERNMENT PLEADER for Respondent No.2 CORAM : HON'BLE SMT. JUSTICE ABHILASHA KUMARI Date : 11/10/2011 CAV JUDGMENT 1. Rule. Mr. Paresh M.Dave, learned advocate, waives service of notice of Rule, for respondent No.1. Mr.Niraj Soni, learned Assistant Government Pleader, waives service of notice of Rule, for respondent No.2. 2. The challenge in this petition, preferred under Articles 226 and 227 of the Constitution of India, is to the impugned Award (referred to as an 'Order' by the petitioner) dated 21082010, passed by the State Level Industry Facilitation Council, constituted under Section 21 of the Micro, Small and Medium Enterprises Development Act, 2006 ("MSMED Act" for short). 3. The brief factual background of the case, as garnered from the Memorandum of the petition and material on record, is as follows: 3.1 The petitioner is the Principal Chief Engineer, Western Railway. Respondent No.1 is a Registered Smallscale Manufacturer, who has established a Factory for manufacture of goods, such as Prestressed Monoblock Concrete Sleepers, that are being supplied to the Western Railways. The State Level Industries Facilitation Council has been joined as respondent No.2, by order of the Court, dated 15032011. The present dispute centers around Contract CS 160, entered into between the parties, on 20102008. Previous to this contract, respondent No.1 had entered into Contract CS 156 with the Western Railways. The case of the petitioner is that, insofar as CS 156 is concerned, respondent No.1 failed to supply the requisite quantity of Sleepers against the total ordered quantity. A clause in the said contract provides for recovery of Liquidated Damages at 5% of the cost of the stores. The petitioner, therefore, calculated the cost of the unsupplied quantity of sleepers i.e. 1,65,997 at Rs.23,81,57,164.81 and Liquidated Damages at 5%, amounting to Rs.1,19,07,858.00, which has been recovered from the bill of respondent No.1, to be paid under the second Contract, CS 160. According to the petitioner, respondent No.1 has failed to perform his contractual obligations under CS 156, therefore, an amount of Rs. 1,19,07,858.00 has been retained from the sum payable to the said respondent under the said contract, CS 160. Respondent No.1 addressed letter dated 04052009 to the petitioner, stating that the Railways had no legal right to appropriate any amount from the payment of respondent No.1 meant for CS 160, towards the claim for damages pertaining to another contract, when such damages were neither accepted, nor acceptable by the said respondent. As no reply was received from the Railways in this regard, respondent No.1, being a Registered Smallscale Entrepreneur, submitted an application, as per the provisions of Section 18 of the MSMED Act, before the Council on 06/11062009, claiming the outstanding amount of Rs.1,19,07,858/, with interest. The Council initially resorted to conciliation proceedings. However, when the said proceedings were apparently unsuccessful, it took the dispute for Arbitration to itself, and rendered the impugned Award, dated 2182010. 4. Before the petition could be heard on merits, Mr.Paresh M.Dave, learned counsel of respondent No.1 raised a preliminary objection regarding the maintainability o