Micro Small and Medium Enterprises Development Act, 2006 – Arbitration and Conciliation Act, 1996 – s.34 – Respondent’s case that it supplied TMT bar to the appellant valuing Rs.2,44,92,846/out of which it received Rs.1,24,50,000/- – It was alleged that appellant had not made the payment of the remaining amount – Respondent approached the Chairman, Micro Small and Medium Enterprises Facilitation Council – Facilitation Council closed the proceedings by observing that Facilitation Council was constituted with a limited object, jurisdiction and it had no jurisdiction to make enquiry, take evidence and decide truth about the challenged document – Writ petition by the respondent – The High Court dismissed the writ petition by observing that order passed the Facilitating Council can be said to be an award u/s.18 of the MSMED Act and provision of Arbitration Act shall apply to the dispute and such an order would be amenable to appeal u/s.34 of the 1996 Act – On appeal, held: If there is any dispute between the parties governed by the MSMED Act, the said dispute has to be resolved through procedure prescribed u/s.18 of the MSMED Act – As per sub-section (2) of s.18, on receipt of a reference under subsection (1), the Council shall have to resolve the dispute through Conciliation either by the Council itself or seek the assistance of any institution or centre providing alternate dispute resolution (ADR) services by making reference to such an institution or centre, for conducting conciliation and the provisions of section 65 to 81 of the Arbitration and Conciliation Act shall apply to such dispute as if the conciliation was initiated under Part-III of the Arbitration Act – If Conciliation initiated is not successful, it will stand terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer it to any institution or centre providing ADR services for arbitration – In the instant case, the Facilitating Council has not followed the procedure as was required to be followed u/s.18 of the MSMED Act r/w. ss.65 to
81 of the Arbitration Act – Once the Conciliation fails, the arbitration proceedings commences and the Council as an arbitrator shall have all the powers of the arbitrator as are available under the provisions of the Arbitration Act – However, no such procedure was followed – Therefore, matter is remitted to the Facilitation Council to follow the procedure u/s.18 of the MSMED Act.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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