KERALA WATER AUTHORITY V. INDUSTRIES COMMISSIONER

WP(C)/14038/2018

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The Kerala Water Authority (petitioner) filed a writ petition against the Industries Commissioner and the Council for Industrial Facilitation (respondents) and Modern Construction Company Pvt. Ltd. (3rd respondent), challenging the order that recognized the 3rd respondent as a small enterprise under the MSMED Act. The dispute originated from a project for laying water supply pipelines in Thiruvananthapuram, where the 3rd respondent was a successful bidder. The petitioner contended that the 3rd respondent violated contract conditions and improperly sought benefits under the MSMED Act. The High Court of Gujarat had previously remanded the matter for fresh consideration, leading to the 2nd respondent's order in favor of the 3rd respondent. The Kerala High Court dismissed the petition, citing lack of territorial jurisdiction as the cause of action and the initial contract were outside its geographical scope.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 726903 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 25-07-2018
• Assessment Year: misc
• Other Referred Cases: Alchemist Limited and another v. State Bank of Sikkim and another [AIR (SC) 1712], Usha Mehta and others v. State of Maharashtra and others [(2004) 6 SCC 264], Pitcheiyan v. Co-optex [1999(2) KLT 565], Syndicate Bank v. Mrs.K.Chandrakala Bhaktha and others [ILR 2002 KAR 3323], Union of India and others v. Adani Exports Ltd. And another [2002 KHC 1103], State of Rajasthan and others v. M/s.Swaika Properties and Another [1985 (3) SCC 217], Nakul Deo Singh v. Deputy Commandant [1999(3) KLT 629 (FB)], Dental Council of India (DCI) v. Dr. V . Viswanath and others [2018 (3) KHC 143 (FB)], Nawal Kishore Sharma v.Union of India and others [(2014) 9 SCC 329]
• Laws Referred To: Micro, Small and Medium Enterprises Development Act, 2006
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: LIJI J VADAKEDOM; D KISHORE; MINI GOPINATH; MEERA GOPINATH; R MURALEEKRISHNAN MALAKKARA
• Assessee Lawyers: P BENJAMIN PAUL
• Keywords: Arbitration; Jurisdiction; MSMED Act; Small Enterprise; Writ of Certiorari; Writ of Mandamus
• Section: 18

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN WEDNESDAY, THE 25TH DAY OF JULY 2018 / 3RD SRAVANA, 1940 WP(C).No. 14038 of 2018 PETITIONER : KERALA WATER AUTHORITY, VELLAYAMBALAM, THIRUVANANTHAPURAM-695 033. REPRESENTED BY ITS PROJECT COORDINATOR, JNNRUM, KERALA WATER AUTHORITY, THIRUVANANTHAPURAM, PIN:695 033. BY ADV.SRI.P.BENJAMIN PAUL, SC, KERALA WATER AUTHORITY RESPONDENTS : 1. INDUSTRIES COMMISSIONER, OFFICE OF THE INDUSTRIES COMMISSIONERATE, BLOCK 1-2L 4TH FLOOR, MSME-D BRANCH, UDYOG BHAVAN, GANDHI NAGAR, AHMEDABAD, GUJARAT - 380 009. 2. THE COUNCIL FOR INDUSTRIAL FACILITATION, OFFICE OF THE INDUSTRIES COMMISSIONERATE, BLOCK 1-2, 4TH FLOOR, MSME-D BRANCH, UDYOG BHAVAN, GANDHI NAGAR, AHMEDABAD, GUJARAT - 380 009. 3. M/S MODERN CONSTRUCTION COMPANY PVT. LTD., (A COMPANY INCORPORATED AS PER THE PROVISIONS OF THE COMPANIES ACT HAVING REGISTERED OFFICE AT) 54, H.K. HOUSE, ASHRAM ROAD, AHMEDABAD-480 009, GUJARAT, REP. BY ITS EXECUTIVE DIRECTOR, MR. SAUMIL PATEL. R1 BY SRI.LIJI.J.VADAKEDOM R3 BY ADVS. SRI.D.KISHORE SMT.MINI GOPINATH SMT.MEERA GOPINATH SRI.R.MURALEEKRISHNAN (MALAKKARA) THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 9.7.2018, THE COURT ON 25.7.2018 DELIVERED THE FOLLOWING: EL WP(C).No. 14038 of 2018 (D) APPENDIX PETITIONER(S)' EXHIBITS EXT.P1: TRUE COPY OF THE AGREEMENT DATED 08/04/2010 BETWEEN THE PETITIONER AND 3RD RESPONDENT. EXT.P2: TRUE COPY OF THE INTERIM ORDER DATED 10/06/2016 ISSUED BY THE HON'BLE COURT OF KERALA IN WPC. NO.3585/2014. EXT.P3: TRUE COPY OF THE APPLICATION DATED 15/01/2013 SUBMITTED BY THE 3RD RESPONDENT BEFORE THE 2ND RESPONDENT. EXT.P4: TRUE COPY OF THE ORDER DATED 06/12/2013 OF THE 2ND RESPONDENT. EXT.P4(A): TRUE COPY OF THE ENGLISH TRANSLATION OF EXHIBIT P4. EXT.P5: TRUE COPY OF THE JUDGMENT DATED 19/10/2016 IN SPECIAL CIVIL APPLICATION NO.4709/2014 OF GUJARAT HIGH COURT. EXT.P6: TRUE COPY OF THE ORDER DATED 18/09/2017 ON SPECIAL CIVIL APPLICATION NO.16758/2017 ISSUED BY THE HIGH COURT OF GUJARAT. EXT.P7: TRUE COPY OF THE JUDGMENT DATED 19/12/2017 IN LETTER PATENT APPEAL NO.1768/2017 OF GUJARAT HIGH COURT. EXT.P8: TRUE COPY OF THE PETITION ALONG WITH DOCUMENTS FILED BY THE 3RD RESPONDENT IN WPC.NO.3585/2014. EXT.P9: TRUE COPY OF THE ORDER OF THE 2ND RESPONDENT DATED 26/02/2018 EXT.P9(A): TRUE COPY OF THE TRANSLATION OF RELEVANT PORTION OF EXHIBIT P9. EXT.P10: TRUE COPY OF THE FINANCIAL CERTIFICATE SUBMITTED BY THE 3RD RESPONDENT. EXT.P11: TRUE COPY OF THE STATEMENT REGARDING THE EQUIPMENTS AND MACHINERY SUBMITTED BY THE 3RD RESPONDENT ALONG WITH THE TENDER EXT.P12: TRUE COPY OF THE EM-II CERTIFICATE DATED 05/12/2011 ISSUED BY THE 2ND RESPONDENT TO THE 3RD RESPONDENT. EXT.P13: TRUE COPY OF THE INTERIM ORDER DATED 10/10/2017 ISSUED BY THIS HON'BLE COURT IN WPC NO.32322/2017 WP(C).No. 14038 of 2018 (D) RESPONDENT(S)' EXHIBITS/ANNEXURES : EXT.R3(A): TRUE COPY OF THE CERTIFICATE DATED 3.12.2011 ISSUED BY THE DISTRICT INDUSTRIES CENTRE, AHEMEDABAD EXT.R3(B): TRUE COPY OF THE CERTIFICATE DATED 13.3.1980 ISSUED BY THE GENERAL MANAGER, DISTRICT INDUSTRY OFFICE, AHEMEDABAD EXT.R3(C): THE ENGLISH TRANSLATION OF EXHIBIT R3(B) EXT.R3(D): TRUE COPY OF THE CERTIFICATE DATED 12.11.2008 ISSUED BY THE GENERAL MANAGER, DISTRICT INDUSTRY OFFICE, AHEMEDABAD EXT.R3(E): TRUE COPY OF THE FIXED ASSETS STATEMENT SUBMITTED UNDER SCHEDULE 6 OF THE INCOME TAX ACT PERTAINING TO THE YEAR 2007-2008 TO 2014-2015 EXT.R3(F): TRUE COPY OF THE COMMUNICATION DATED 6.7.2017 SUBMITTED BY THE PETITIONER BEFORE THE 1ST RESPONDENT ALONG WITH THE DETAILS OF THE INVESTMENT IN PLANT AND MACHINERY ANX. I TRUE COPY OF THE JUDGMENT DATED 19.10.2016 IN SCA 4709/2014 OF THE HONOURABLE HIGH COURT OF KERALA ANX. II TRUE COPY OF THE PROCEEDINGS DATED 6.7.2017 OF THE 2ND RESPONDENT ANX. III TRUE COPY OF THE NOTICE DATED 31.7.2017 ISSUED BY THE SOLE ARBITRATOR ANX. IV TRUE COPY OF THE ORDER DATED 18.9.2017 OF THE 3RD RESPONDENT ANX. V TRUE COPY OF THE JUDGMENT DATED 19.12.2017 IN LPA.1768/2017 OF THE HONOURABLE HIGH COURT OF GUJARAT ANX. VI TRUE COPY OF THE ORDER DATED 26.2.2018 OF THE 3RD RESPONDENT TRUE COPY P.S. TO JUDGE EL 26.7.2018 ANU SIVARAMAN, J. = = = = = = = = = = = = = = = W.P.(C).No.14038 of 2018 = = = = = = = = = = = = = = = Dated this the 25th day of July, 2018 JUDGMENT 1.Petitioner, the Kerala Water Authority has approached this Court seeking the following prayers:- “a)call for the records relating to Exhibits P3 to P12 from the 2nd respondent. b)issue a writ of certiorari or any other appropriate writ, order or direction, quashing Exhibit P9 order of the 2nd respondent. c)issue a writ of mandamus or any other appropriate writ order or direction declaring that the 3rd respondent is not a small enterprise within the purview of MSMED Act, 2006;” 2.Heard the learned counsel for the petitioner and the learned counsel appearing for respondents 1 and 2 as well as the 3rd respondent. 3.It is contended that the petitioner had conceived the project for laying water supply pipelines for supply to W.P.(C).No.14038/18 2 Thiruvananthapuram Municipal Corporation and adjoining Panchayats in the JNNURM Scheme of the Central Government. The 3rd respondent, which claim to be an Micro, Small and Medium Enterprise covered by the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED for short) was the successful bidder. It is stated that conditions of the contract were violated by the 3rd respondent and apprehending the termination of work, the 3rd respondent submitted an application before the 2nd respondent under the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as 'the Act'). The 2nd respondent initially rejected the claim which was challenged by the 3rd respondent before the High Court of Gujarat and the matter was remanded for fresh consideration. Thereafter, it is contended that without issuing notice to the petitioner, the 2nd respondent decided to refer the matter for arbitration and a retired Judge was appointed as Arbitrator. The petitioner on coming to know of the orders, challenged the decision of the 2nd respondent before the High Court of Gujarat by filing Civil Application No.16758/2017. A learned single W.P.(C).No.14038/18 3 Judge of the Gujarat High Court admitted the civil application but refused the interim relief by Exhibit P6. The petitioner filed Letter Patent Appeal before the Division Bench of the High Court which was allowed by Exhibit P7 judgment and the 2nd respondent was directed to consider the matter afresh, including the question of jurisdiction. The 2nd respondent again passed an order that the 3rd respondent is entitled to the benefit of the Act and accordingly decided to start the conciliation proceedings as per Section 18 of the Act. The true English translation of the order which is produced as Exhibit P9(a) is under challenge in this writ petition. 4.The learned counsel appearing for the petitioner would contend that the cause of action with regard to the filing of the writ petition had occurred within the territorial jurisdiction of this Court and therefore this Court is fully competent in terms of Article 226(2) of the Constitution of India to consider the issue . The learned counsel placed reliance on the decisions of the Apex Court in Alchemist Limited and another v. Sate Bank of Sikkim and another [AIR (SC) 1712] and Usha W.P.(C).No.14038/18 4 Mehta and others v. State of Maharashtra and others [(2004) 6 SCC 264] and of a Division Bench of this Court in Pitcheiyan v. Co-optex [1999(2) KLT 565] as well as of the Karnataka High Court in Syndicate Bank v. Mrs.K.Chadrakala Bhaktha and others [ILR 2002 KAR 3323]. 5.The learned counsel appearing for the respondents would, on the other hand, contend that cause of action in respect of this writ petition would essentially be confined to the filing of the application under Section 18 of the Act by the 3rd respondent before the 2nd respondent and the details of the contract between the parties is not a part of the cause of action for the filing of this writ petition. It is stated that what is under challenge being the proceedings of the 2nd respondent and since the petitioner had earlier approached the Gujarat High Court challenging the orders earlier passed in the very same proceedings, it is clear that the cause of action had arisen completely outside the jurisdiction of this Court and therefore this Court exercising powers under Article 226 of the W.P.(C).No.14038/18 5 Constitution would have no territorial jurisdiction whatsoever to entertain this writ petition. The learned counsel relies on the decisions of the Apex Court in Union of India and others v. Adani Exports Ltd. And another [2002 KHC 1103], State of Rajasthan and others v. M/s.Swaika Properties and Another [1985 (3) SCC 217] and of this Court in Nakul Deo Singh v. Deputy Commandant [1999(3) KLT 629 (FB), Dental Council of India (DCI) v. Dr. V . Viswanath and others [2018 (3) KHC 143 (FB). 6.I have considered the contentions advanced. 7.What is under challenge in this writ petition is Exhibit P9 order passed by the 2nd respondent. It is not in dispute that under the provisions of the Act the 3rd respondent would have to approach the 2nd respondent for redressal of its grievances. In other words, the 3rd respondent could not have filed an application under Section 18 of the Act before any authority other than the 3rd respondent. The contention of the petitioner that the cause of action with regard to the filing of the W.P.(C).No.14038/18 6 application by the 3rd respondent arose in the territorial jurisdiction of this Court. What is under challenge before this Court is Exhibit P9 order issued by the 3rd respondent. 8.It is trite that a writ petition is maintainable in a High Court in the territorial limits of which cause of action arises wholly or in part. The Apex Court in Nawal Kishore Sharma v.Union of India and others [(2014) 9 SCC 329] held that in order to maintain a writ petition, the petitioner has to establish that his legal right has been infringed by the respondents within the territorial limits of the High court's jurisdiction. A Full Bench of this Court in Dental Council's case (supra) has per majority clearly held that the mere residence of the petitioners within the territorial jurisdiction of this Court or the fact that the jurisdiction of the elected body under the Dental Council Act would extend to the whole of the country would be insufficient to hold that any part of the cause of action arose within the territory of this Court. Essentially, the consideration would be as to what would amount to cause of action in respect of finding of the particular writ petition. W.P.(C).No.14038/18 7 9. The cause of action as has been understood by the courts of law in respect of the filing of this writ petition would therefore be confined to the preferring of the application by the 3rd respondent and would not encompass the earlier occurrences, including the entering into the contract between the parties and the carrying out of the work. Those are matters which may give rise to a cause of action for the petitioner to raise a dispute before this Court, but the cause of action with regard to the instant writ petition would totally lie outside the jurisdiction of this court. Though detailed arguments have been raised by the petitioner relying on precedents to contend that the cause of action had arisen within the jurisdiction of this Court, I am of the firm view that the earlier occurrences do not constitute the cause of action for this writ petition. The cause of action for the purpose of this writ petition would start only with the filing of the application by the 3rd respondent before the 2nd respondent. If that be so, the cause of action for the filing of this writ petition has arisen outside the territorial jurisdiction this Court and as such, this Court would have no W.P.(C).No.14038/18 8 jurisdiction to entertain this writ petition challenging Exhibit P9 order of the 2nd respondent. In the above view of the matter, writ petition has to fail. The same is accordingly dismissed. Sd/- Anu Sivaraman, Judge sj "