Court Dismisses Petition for Arbitrator Appointment Amidst Pending Conciliation under MSMED Act
The Delhi High Court, in a significant ruling, has dismissed a petition filed by M/S Jubilant Marketing Pvt. Ltd. seeking the appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. The petition was filed in the context of an ongoing dispute with M/S Robbins Tunneling and Trenchless Technology India Pvt. Ltd. over non-payment of dues.
The petitioner, a registered small enterprise under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), had initially approached the Micro and Small Enterprises Facilitation Council (MSEF Council) for conciliation and recovery of its dues. However, due to delays in proceeding to arbitration, Jubilant Marketing sought judicial intervention for the appointment of an arbitrator under the Arbitration Act.
Presiding Judge, Ms. Mini Pushkarna, emphasized the precedence of the MSMED Act over the Arbitration Act, citing the statutory mechanism established under Section 18 of the MSMED Act. The Court clarified that the provisions of the Arbitration Act are applicable only after the conciliation proceedings under the MSMED Act fail and the matter is formally referred to arbitration by the MSEF Council.
The judgment underscores that once a party elects to initiate proceedings under the MSMED Act, they are bound to adhere to its processes to conclusion. The Court noted that the petitioner had prematurely sought arbitration without the formal termination of conciliation proceedings or a referral to arbitration by the MSEF Council.
In its decision, the Court directed the MSEF Council to expedite the pending conciliation proceedings, urging a resolution within two months. This ruling highlights the legislative intent behind the MSMED Act to provide a comprehensive and expedited dispute resolution framework for micro, small, and medium enterprises, reinforcing its overriding effect on general arbitration provisions.
Bottom Line:
Arbitration - Section 11(6) of the Arbitration and Conciliation Act, 1996 cannot be invoked for appointment of an arbitrator during pendency of conciliation proceedings under Section 18(2) of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). Provisions of the Arbitration Act apply only after conciliation fails and the matter is referred to arbitration under Section 18(3) of the MSMED Act.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Section 11(6), MSMED Act, 2006 Sections 18(1), 18(2), 18(3)
