THE CHIEF GENERAL MANAGER (CONTRACTS), NEYVELI LIGNITE CORPORATION LTD. Vs. DRIPLEX WATER ENGINEERING LTD. AND ORS.

JUDGEMENT

(1.) The appellant/petitioner has questioned the judgment dated 2.9.2019, passed by the learned Single Judge dismissing a writ petition filed by it, impugning an order dated 16.6.2016, passed by The Micro and Small Enterprises Facilitation Council (in short, 'MSEF Council') whereby the request of the respondent No.1/claimant for referring the parties to arbitration, was acceded to and as a result, the conciliation proceedings between the parties were terminated and their disputes were referred for arbitration to the Delhi International Arbitration Centre (in short, 'DIAC') under Section 18 (3) of The Micro, Small and Medium Enterprises Development Act, 2006 (in short, 'MSMED Act').

(2.) Before adverting to the arguments advanced by learned counsel for the parties, it is considered necessary to refer briefly to the facts leading to filing of this appeal. The appellant/petitioner, a Public Sector Enterprise that is engaged in production of power by using Lignite as a fuel, invited tenders in the year 2004, for the work relating to Water Treatment Plant and Effluent Treatment Plant for setting up of 2? -250 Mega Watt Thermal Power Stations. One of the eligibility conditions stipulated in the NIT was that the bidder must have a turnover of over Rs.11 crores. Respondent No.1 while submitting its bid, claimed that it had a turnover of Rs.20.09 crores in the year 2001-02, Rs.20.36 crores in the year 2002-03 and Rs.23.51 crores in the year 2003-04. On 25.9.2006, the parties entered into a contract for the captioned work whereunder, an amount of Rs.63 crores was payable to the respondent No.1. Claiming that the respondent No.1 was unable to complete the work within the time stipulated in the contract, the appellant/petitioner withheld the Performance Bank Guarantee offered by it for a sum of Rs.6.30 crores as against the total contractual value. Aggrieved by the said act, the respondent No.1 filed an application before the MSEF Council claiming an amount of Rs.34,08,36,747/- which includes interest to the tune of Rs.20,15,61,585/-.

(3.) On 28.12.2015, the appellant/petitioner filed a reply in opposition before the MSEF Council raising a preliminary objection that it lacked the jurisdiction to entertain the reference as the respondent No.1 was registered with the respondent No.2/Commissioner of Industries, Government of NCT of Delhi on 9.12.2011, which was much after the date the parties had entered into a contract i.e., 25.9.2006. It was also stated that the respondent No.1 could not project itself as a "Small Enterprise"?, as contemplated under the MSMED Act since the value of the contract was Rs.63 crores and to qualify as a "Small Enterprise"? under the Act, respondent No.1 was required to have made an investment in equipments of more than Rs.10 lakhs, but below Rs.2 crores. Thus, arguing that the respondent No.1 did not fulfill the eligibility criteria prescribed in Section 7 (1)(b)(ii) of the MSMED Act, the appellant/petitioner stated that the reference made by it under Section 18 of the Act, ought to be rejected.