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2025 (5) TMI 927 - HC - Indian LawsWithholding of payment of contractual dues under the agreements executed for rural electrification works - MSME - determination of the quantum of admitted dues payable - HELD THAT - Since the petitioner is an MSME on the previous date learned counsel for the State was specifically asked to apprise the Court as to whether a Micro and Small Enterprises Facilitation Council has been constituted in the State of Tripura or not. Learned Advocate General informs that vide notification dated 13.07.2021 the Tripura Micro and Small Enterprises Facilitation Council has been constituted by the Department of Industries Commerce Government of Tripura. It is submitted on behalf of the State and TSECL that petitioner may raise his disputed claim before the Facilitation Council. In view of the aforesaid categorical stand of the TSECL learned senior counsel for the petitioner submits that the respondents-TSECL may be directed to make the payment of the admissible dues to the tune of Rs.7.88 crores (approximately) within the period of 45 days. He further submits that petitioner may be allowed liberty to raise rest of his claims which are disputed before the Facilitation Council. Thus the stand taken on behalf of respondents-TSECL on instruction by learned Advocate General the respondents-TSECL should make the payment of the admissible dues totaling Rs.7.88 crores to the petitioner against the works executed under the above four agreements within a period of 45(forty five) days from today. Petitioner is at liberty to raise rest of his claims before the Facilitation Council. The instant writ petition is disposed of in the aforesaid terms. Let it be made clear that this Court has not made any comments on the claim of the petitioner on merits.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court include:
2. ISSUE-WISE DETAILED ANALYSIS Entitlement to Payment of Contractual Dues and Validity of Impugned Letters The petitioner executed multiple agreements dated between 24.09.2019 and 29.10.2019 for rural electrification works under the DDUGJY Phase-II scheme across eight districts. The petitioner contended that all works were satisfactorily completed, supported by issuance of completion certificates dated 16.08.2021, 06.08.2022, and 26.08.2022. Despite this, the respondents withheld substantial payments, as reflected in the impugned letters dated 19.11.2021 and 16.03.2024. The petitioner sought writ remedies including certiorari to quash the impugned letters and mandamus to compel payment of admitted and withheld amounts. The respondents contested the claims, filing counter affidavits and asserting reconciliation processes were ongoing. The Court noted the petitioner's claim for payment of Rs. 13,06,55,211/- admitted by respondents, alongside other withheld amounts on account of liquidated damages, GST adjustments, and alleged erroneous calculations. The respondents initially admitted a lesser amount of Rs. 8,56,96,761/- as payable after reconciliation, with Rs. 3,95,58,450/- already paid during proceedings. Reconciliation and Quantum of Admitted Dues A key piece of evidence was the minutes of the meeting held on 18.07.2024 (Annexure-8 to the counter affidavit), attended by senior financial officers of TSECL and representatives of the petitioner. The minutes recorded a net payable amount of Rs. 14,69,87,553/-, subject to technical clearance of Rs. 2,86,78,504/-. This document was pivotal in establishing the admitted quantum of dues. Respondents' counsel, on instructions, confirmed the admitted amount as Rs. 14.69 crores, with Rs. 2.86 crores subject to technical clearance, leaving an undisputed amount of approximately Rs. 11.83 crores. Considering prior payments of Rs. 3.95 crores, the balance undisputed amount was Rs. 7.88 crores. Application of the Micro, Small and Medium Enterprises Development Act, 2006 The petitioner was a Micro and Small Enterprise at contract execution and is now a medium enterprise. The Act of 2006, particularly Chapter V, provides a statutory mechanism for resolution of disputes relating to delayed payments to MSMEs through the Micro and Small Enterprises Facilitation Council (MSEFC). Section 17 of the Act mandates that such dues be paid within stipulated timeframes, failing which the MSME can approach the Facilitation Council for redressal. The Court directed the respondents to clarify whether the State of Tripura had constituted an MSEFC. Learned Advocate General confirmed by producing a notification dated 13.07.2021 constituting the Tripura MSEFC. The respondents submitted that disputed claims should be raised before the Facilitation Council, consistent with the statutory scheme. Disputed Claims and Other Withheld Amounts The petitioner's other claims, including amounts withheld on account of liquidated damages, GST adjustments, and erroneous calculations, were acknowledged as disputed. The Court refrained from adjudicating these claims on merits, instead directing that these be pursued before the MSEFC as per the Act of 2006 and the Arbitration and Conciliation Act, 1996, if conciliation fails. Additionally, a claim of Rs. 54 lakhs related to a worker's alleged death during execution was noted but not accepted as a basis for withholding payment, since the claim was neither adjudicated nor established. The Court clarified that if adjudication results in liability, the petitioner would be responsible for payment accordingly. Directions Regarding Payment and Proceedings In light of the admitted undisputed amount of Rs. 7.88 crores, the Court directed the respondents-TSECL to make payment within 45 days. The petitioner was granted liberty to pursue the remaining disputed claims before the Facilitation Council. The Court expressly refrained from commenting on the merits of the disputed claims and limited its order to payment of the undisputed amount. 3. SIGNIFICANT HOLDINGS The Court's legal reasoning and principles can be distilled as follows: "The petitioner is entitled to receive the undisputed contractual dues against the executed works, as admitted by the respondents and recorded in the minutes of the reconciliation meeting dated 18.07.2024." "The Micro, Small and Medium Enterprises Development Act, 2006 being a beneficial legislation, provides a dedicated mechanism for resolution of payment disputes of MSMEs, and the petitioner is entitled to avail the remedy under the said Act through the Micro and Small Enterprises Facilitation Council constituted by the State." "The disputed claims including liquidated damages, GST-related adjustments, and other withheld amounts are not adjudicated by this Court and are to be pursued before the Facilitation Council or through arbitration as per the statutory framework." "The respondents-TSECL shall make payment of Rs. 7.88 crores, being the undisputed balance amount, within 45 days from the date of the order." "The Court does not comment on the merits of the petitioner's claims except to direct payment of undisputed dues." The final determination thus preserves the petitioner's right to receive undisputed dues promptly while channeling disputed claims through the appropriate statutory and contractual dispute resolution mechanisms. The Court's order balances enforcement of contractual rights with procedural propriety and statutory mandates for MSME dispute resolution.
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