KENDRIYA BHANDAR, CENTRAL GOVERNMENT EMPLOYEES CONSUMER COOPERATIVE SOCIETY LIMITED Vs. STATE OF GUJARAT

JUDGEMENT

(1.) The present Special Civil Application is filed praying for the following reliefs:-

(2.) The brief facts in the present case are that by G.O.RT. No.837 dtd. 24/12/2018, the Government of Telengana (Agriculture and Cooperation Department) nominated the petitioner Society as a nodal agency for supply of various items to government institutions in the State of Telengana. That the primary object of the petitioner was to supply the requisite edible/non-edible commodities exclusively to all the government departments under Central/State and its agencies/institutions all over the country through its registered manufacturers/ millers/traders/wholesalers with nominal margins. That the petitioner registers such vendors who propose to supply such commodities as are required by the petitioner. That the petitioner does not directly undertake supply or delivery of any such goods and primarily acts as a conduit/intermediary between the user department and the registered vendors with the petitioner. That the respondent No.3 herein is a registered vendor with the petitioner. That the respondent No.4 herein is a dealer in the present transaction who has supplied the products of the respondent No.3. It is the case of the petitioner that the respondent No.3 entered into a Memorandum of Understanding ["MOU' for short] with the petitioner for supply of agricultural implements for the Farmers Welfare Programme in the State of Telengana. That the petitioner placed supply orders to the respondent No.3 for certain agricultural implements which were delivered to the dealer for being sold to the beneficiaries i.e. the farmers in the State of Telengana. That the payment terms in respect of the supply orders was categorically stated in the MOU. That a total of 11,261 machines were supplied by the respondent No.3 to the dealer i.e. the respondent No.4 through the petitioner. As per the MOU, once the respondent No.4 made the payment to the petitioner (i.e. the non-subsidy portion), such payment were forwarded to the respondent No.3 in accordance with the MOU. That the petitioner was in no manner receiving or handling the goods by itself and was only mediator between the respondent No.3 and the respondent No.4.

(3.) That the respondent No.3 raised an arbitral claim from the said transaction of supply of goods to the dealer through the petitioner for a total amount of Rs.101,19,05,250.00 out of which, the non-subsidy amount of Rs.60,71,43,150.00 was already paid to the respondent No.3 as and when paid by the dealer i.e. the respondent No.4 to the petitioner. Therefore, the claim of the respondent No.3 before the respondent No.2 Facilitation Council was for an outstanding amount of Rs.41,86,98,166.00 i.e. the subsidy portion. That the conciliation proceedings took place between July and November 2023 under Sec. 18(2) of the Micro, Small and Medium Enterprises Development Act, 2006 ["MSMED Act' for short]. Since the conciliation proceedings did not fructify, the same came to be terminated and the claim was referred to arbitration under Sec. 18(3) of the MSMED Act by order dtd. 22/12/2023. That thereafter hearings came to be held and the impugned order dtd. 7/8/2024 came to be passed against the petitioner directing it to pay Rs.41,86,98,166.00 to the respondent No.3 claimant towards principal amount and Rs.29,70,66,757.00 towards interest till 31/5/2024. It was further directed that the petitioner shall pay additional interest to cover the period from 1/6/2024 upto the date of realisation at the same rate as per Ss. 15 and 16 of the MSMED Act. Aggrieved by the award, the petitioner has filed the present Special Civil Application under Articles 226 and 227 of the Constitution of India.