Karnataka High Court Union Of India vs Industrial Engineering Instruments on 6 August, 2019 1 DATED THIS THE 6TH DAY OF AUGUST 2019 BEFORE THE HON'BLE MR. JUSTICE ALOK ARADHE WRIT PETITION NOS.30700701 OF 2018 (GMRES) BETWEEN: 1. UNION OF INDIA MINISTRY OF DEFENCE (ARMY), SOUTH BLOCK, NEW DELHI 110 001, REP BY ITS SECRETARY 2. THE DIRECTORATE GENERAL OF ORDINANCE SERVICE MASTER GENERAL OF ORDNANCE BRANCH, INTEGRATED HEAD QUARTERS OF MINISTRY OF DEFENCE (ARMY), ROOM NO. 95, B HUTMET, DALHOUSIE ROAD, DHQ POST, NEW DELHI 110 001, REP BY LT. COL SK PUNIA, OIC AALIC, ARMY AVIATION LIAISON CELL (AIRCRAFT DIVISION) ... PETITIONERS (BY SRI.UNNIKRISHNAN M, ADVOCATE) AND: 1. INDUSTRIAL ENGINEERING INSTRUMENTS A PARTNERSHIP FIRM AT PLOT 203, 12TH MAIN ROAD, 3RD PHASE, PEENYA INDUSTRIAL AREA, PEENYA, BENGALURU 560 058, 2 REP BY ITS PARTNER, MR. CHETHAN PARAMESHWARAIAH 2. THE KARNATAKA MICRO & SMALL ENTERPRISES FACILITATION COUNCIL, KHANIJA BHAVAN, RACE COURSE ROAD, BENGALURU 560 001, ... RESPONDENTS (BY SMT. SAHANA B.V., ADVOCATE FOR R1; R2 SERVED AND UNREPRESENTED) THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH ANNEXUREA I.E., THE ORDER PASSED BY THE KARNATAKA MICRO & SMALL ENTERPRISES FACILITATION COUNCIL, BANGALORE IN CASE NO.39/2016, DATED 06.02.2018. THESE WRIT PETITIONS COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER Sri. Unnikrishnan M., learned counsel for the petitioners. Smt. Sahana B.V., learned counsel for respondent No.1. 3 These petitions are admitted for hearing. With the consent of learned counsel for the parties, the same are heard finally. 2. In these petitions under Articles 226 and 227 of the Constitution of India, the petitioners inter alia seek a writ of certiorari for quashment of the order passed by the Karnataka Micro & Small Enterprises Facilitation Council, Bengaluru. 3. The facts giving rise to filing of these writ petitions, which lie under narrow compass are stated hereafter: Respondent No.1 claims to be a Supplier as defined under Section 2(n) of the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as 'the 2006 Act' for short) and is engaged in manufacture of electronic test and measuring instruments, PC/microprocessors based automated test equipment and systems, tansducers and sensors, and 4 technical/engineering laboratory equipment. As per the supply order dated 10.01.2012, respondent No.1 was required to supply 1793 sets of Leak Tester Sets to petitioner No.2. Petitioner No.2 has not disputed the status of respondent No.1 as a supplier. The dispute arose between the parties on account of delay in supply of Leak Tester Sets by respondent No.1 to respondent No.2. Thereafter, the same was referred by respondent No.1 to respondent No.2 i.e., the Karnataka Micro & Small Enterprises Facilitation Council, Bengaluru vide application dated 24.01.2017 under Section 17 of the 2006 Act for recovery of the amount of Rs.13.45 Crores. Respondent No.2, thereupon initiated conciliation proceedings. Petitioner No.2 appeared before respondent No.2 and participated in the proceedings and did not question the jurisdiction of respondent No.2. Thereupon, respondent No.2 by an order dated 06.02.2018 held that the conciliation had failed and that the question of justifiability of the liquidated damages ought to be decided by way of arbitration and referred the parties to 5 arbitration before a Sole Arbitrator under the auspices of the Bangalore Arbitration Centre. The petitioners appeared before the Arbitrator in a arbitration proceedings on 16.07.2018. The petitioners after entering appearance in the proceedings before the Arbitrator, have approached this Court seeking the relief as stated supra. 4. Learned counsel for the petitioners submitted that the concluded contract between the parties contains an Arbitration Clause. It is further submitted that the 2006 Act in no way prohibits appointment of an Arbitrator and refer the dispute to the Arbitrator. While inviting the attention of this Court to Section 3