Bombay High Court
M/S. Reliance Life Sciences ... vs Klenzaids Contamination ... on 24 November, 2017
Bench: K.R. Sriram
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
ARBITRATION PETITION NO. 60 OF 2016
M/s. Reliance Life Science Pvt. Ltd. ....Petitioner
Vs.
Klenzaids Contamination Controls
(P) Ltd. ....Respondent
----
Mr.Kalpesh Uttamrao Patil for petitioner.
Ms.Niyati Mankad a/w. Mr.Rahul Hakani i/b Kirit J. Hakani for Respondent.
----
CORAM : K.R.SHRIRAM, J.
DATE : 24th NOVEMBER, 2017
P.C.:
1 This is a petition under Section 11 of the Arbitration and Conciliation
Act 1996. Admittedly, Petitioner and Respondent had entered into an
Agreement as reflected in the Purchase Order issued by Petitioner being
LS2/6207598 dated 5th August 2010 with additional Work Order ref. No.
LS2/32002346 dated 27th August 2010. The Work Order provides for
arbitration and the arbitration clause reads as under :
"34. Arbitration :-
Should any disagreement, dispute or difference whatsoever arise
between OWNER and SELLER upon or in relating to or in
connection with the PURCHASE ORDER either party may
forthwith give to the other notice in writing on the existence of
such disagreement, dispute or difference whatsoever and the same
shall be referred to the adjudication of two arbitrators one to be
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nominated by the OWNER and the other to be nominated by the
SELLER and in the case of the said arbitrators not agreeing, then
to the adjudication of an Umpire to be appointed by the arbitrators
in writing before proceeding with the reference. The award of the
arbitrators, or in the event of their not agreeing that of the Umpire
appointed by them, shall be final and binding on the parties and
the provisions of the Arbitration and Conciliation Act, 1996 and
the Rules thereunder and any statutory modification thereof shall
be deemed to apply."
Admittedly, Respondent is registered with Gujarat State Micro and
Small Enterprises Facilitation Council at Gandhinagar under the provisions
of Micro, Small and Medium Enterprises Development Act, 2006 (The said
Act). A copy of the Registration Certificate is also annexed to the affidavit in
reply.
Brief facts :
(a) Petitioner placed Purchase Order dated 5th August,
2010 with Respondent at its Factory at GIDC Industrial Area,
Umbergaon, District Valsad, Gujarat for Rs.3,56,30,650.20 for
supply of Filling Line with Isolator on the terms and conditions
mentioned therein. Petitioner did not pay as per the Purchase
Order and it is alleged, expected supply and service free of
cost. Moreover, Petitioner placed another Order for a sum of
Rs.77,96,665/-. Respondent raised Bills for a sum of
Rs.4,34,27,315/- and as against this Petitioner paid an
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aggregate sum of Rs.3,32,33,315/-, leaving balance amount
payable of Rs.1,01,94,000/-.
(b) Petitioner issued a Notice dated 21 st December, 2013
to Respondent alleging defect in machine and delay in supply
and made claim for refund of Rs.2,61,29,000/-, re-
imbursement of Rs.20,00,000/- and for damages of
Rs.23,00,00,000/-. There is no invocation of Arbitration but
threat was given to file Civil and Criminal prosecution.
Respondent by its Demand Notice-cum-Reply, dated 14th
April 2014 denied the allegations and claims made by
Petitioner in the Notice dated 21st December, 2013 and called
upon Petitioner to pay a sum of Rs.1,01,94,000/- with
compounding interest as per the provisions of the said Act and
stated that the Arbitration under the said Act may be invoked in
alternative to the Arbitration as per the Purchase Order.
(c) Petitioner wrote a letter in Rejoinder dated 28 th
March, 2016 invoking Arbitration and appointed one Mr.
Rahul Chitnis as its Arbitrator. Respondent replied vide its
letter dated 26th April, 2016 and stated that Respondent is
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referring the matter to the Gujarat Micro and Small Enterprises
Facilitation Council (in short 'Council') at Gandhinagar. In the
alternative, Respondent appointed the Council as an Arbitrator.
(d) On 16th August 2016, Petitioner filed this Arbitration
Petition under Section 11 of the Arbitration and Conciliation
Act, 1996. The copy of the Petition was served on respondent
on 2nd September, 2016.
(e) On 12th September 2016, Petitioner made reference
to the Council at Gandhinagar. The case was registered on 16 th
September, 2017 under Case NO.GJ/25/ S/00116. On 5th
December, 2016, the Council at Gandhinagar issued a Notice
to Petitioner.
(f) On 26th December, 2016, Petitioner replied to the
said Notice of the Council and opposed the proceedings before
it on the ground that Petitioner has filed Arbitration Petition in
this Court and that the same is pending for admission.
Respondent herein vide its letter dated 11 th February, 2017 to
the Council, has refuted the allegations and contentions made
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by Petitioner in its letter to the Council and pointed out that the
Council has jurisdiction to decide the claim of Respondent.
Issue :
3 The issue raised is whether Petitioner should refer their disputes to the
Facilitation Council under Section 18 of the said Act and whether Section 24
has an overriding effect or the arbitration clause in the work order quoted
above will prevail.
4 Section 18 of the said Act reads as under :
18. Reference to micro and small enterprises facilitation
council.-
1. Notwithstanding anything contained in any other law for the
time being in force, any party to a dispute may, with regard to any
amount due under section 17, make a reference to the Micro and
Small Enterprises Facilitation Council.
2. On receipt of a reference under sub-section (1), the Council
shall either itself conduct conciliation in the matter or seek the
assistance of any institution or centre providing alternate dispute
resolution services by making a reference to such an institution or
centre, for conducting conciliation and the provisions of sections
65 to 81 of the Arbitration and Conciliation Act, 1996 shall apply
to such a dispute as if the conciliation was initiated under Part III
of that Act.
3 Where the conciliation initiated under sub-section (2) is
not successful and stands terminated without any settlement
between the parties, the Council shall either itself take up the
dispute for arbitration or refer to it any institution or centre
providing alternate dispute resolution services for such arbitration
and the provisions of the Arbitration and Conciliation Act, 1996
shall then apply to the dispute as if the arbitration was in
pursuance of an arbitration agreement referred to in sub-section
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(1) of section 7 of that Act.
4 Notwithstanding anything contained in any other law for
the time being in force, the Micro and Small Enterprises
Facilitation Council or the centre providing alternate dispute
resolution services shall have jurisdiction to act as an Arbitrator
or Conciliator under this section in a dispute between the supplier
located within its jurisdiction and a buyer located anywhere in
India.
5 Every reference made under this section shall be decided
within a period of ninety days from the date of making such a
reference.
Section 24 of the said Act reads as under :
24 Overriding effect.-
The provisions of Sections 15 to 23 shall have effect
notwithstanding anything inconsistent therewith contained in any
other law for the time being in force.
SUBMISSIONS :
5 Mr. Patil for Petitioner, submitted that where there is an independent
arbitration agreement in existence between the parties, the Council has no
jurisdiction under Section 18 of the said Act either to conduct conciliation or
to enter upon the reference for the purposes of arbitration. According to
Mr.Patil, Section 24 of the said Act, which provides for an overriding effect
of the provisions of the said Act including Section 18, which provides for
reference to a Council is of no effect in a case where there is an arbitration
agreement capable of being given full effect to under the provisions of the
said Act, since such an agreement serves the same purpose as that of
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arbitration, which might be entered upon under Section 18 of the said Act by
the Council. According to the counsel for Petitioner, a buyer like Petitioner,
has no remedy under the said Act and are not entitled to invoke the
provisions of Section 18 of the said Act at all either for conciliation or for
arbitration since an amount can be claimed under Section 18 of the said Act
only in respect of an amount due under Section 17, which in term can only
be an amount payable by the buyer for service provided or goods provided
by the supplier. Shri Patil relied on judgment of a Division Bench (Nagpur
Bench) of this Court in M/s. Steel Authority of India Ltd. & Anr. Vs. Micro,
Small Enterprises Facilitation Council, through Joint Director of
Industries, Nagpur Region, Nagpur1 and further submitted that Section
18(1) of the said Act clearly allows any party to a dispute, viz., a buyer and a
supplier to make reference to the Council but Section 24 of the said Act
which is enacted to give an overriding effect to the provisions of Section 15
to 23 including Section 18, which provides for forum for resolution of the
dispute under the Act-would not have the effect of negating an arbitration
agreement since that Section overrides only such things that are inconsistent
with Section 15 to Section 23 including Section 18 notwithstanding anything
contained in any other law for the time being in force. Mr. Patil relied on this
judgment also to submit that the Court has to come to a conclusion that an
1 AIR 2012 BOMBAY 178
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independent arbitration agreement will not cease to have effect because the
overriding clause only overrides things inconsistent therewith and there is no
inconsistency between an arbitration conducted by the Council under
Section 18 and arbitration conducted under an individual clause since both
are governed by the provision of the said Act.
6 Per contra, Ms. Mankad for Respondent submitted that though Section
17 of the said Act makes a provision for recovery of the amount due from
the buyer alone at the instance of the supplier, Section 18 clearly
contemplates that any party to the dispute may, with regard to any amount
due under Section 17, make reference to the Council in view of the express
provisions of Section 18(1). According to Ms. Mankad, the purport of the
said Act is to provide for a special procedure for micro, small and medium
enterprises to recover the amount and the said Act has, therefore, set up a
Facilitation Council, which is required to deal with the dispute, which has
arisen between a buyer and a micro and small enterprise, initially by
conciliation and later if conciliation fails, by arbitration. Ms.Mankad
submitted that a Division Bench of Allahabad High Court in M/s. Paper &
Board Convertors Thru' Partner Rajeev Agrawal Vs. U.P. State Micro &
Small Enterprises & 2 Others 2 came to a different conclusion from that of
2 MANU/UP/1087/2014
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the Division Bench of Bombay High Court and held that Section 18 provides
the Micro and Small Enterprises Facilitation Council or the centre providing
alternate dispute resolution services shall have jurisdiction to act as an
Arbitrator or Conciliator under this section in a dispute between the supplier
located within its jurisdiction and a buyer located anywhere in India.
7 Ms.Mankad also submitted that a Division Bench of Gujarat High
Court in Principal Chief Engineer Vs. Manibhai & Brothers (Sleeper) &
Ors.3 concurred with the views expressed by the Allahabad High Court and
came to the same conclusion that considering Section 18 of the said Act, the
Facilitation Council has jurisdiction to act as an Arbitrator or Conciliator in a
dispute between the parties and it overrides an individual arbitration clause.
Mrs.Mankad submitted that as Section 18 also provides that if the
conciliation talks fail, the Council will take steps under Section 18(3) to
commence arbitral proceedings and hence, Petitioner may approach the
Council.
8 Having considered the judgment in Paper Board Convertors (supra)
and Manibhai & Brothers (supra), it is true that these Courts have came to a
conclusion the Facilitation Council or the Centre providing alternate dispute
resolution services shall have jurisdiction in a dispute between a buyer and a
3 MANU/GJ/1164/2016
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seller who is registered under the said Act. Provisions of Section 18 of the
said Act will prevail over the individual arbitration clause. Paragraphs 9, 10,
11 and 12 of the judgment in Paper Board Convertors (supra) read as
under :-
"9 Certain salient aspects of Section 18 would merit
emphasis. Sub-section (1) of Section 18 provides for a reference to
the Micro and Small Enterprises Facilitation Council
notwithstanding anything contained in any other law for the time
being in force, by any party to a dispute, with regard to any
amount due under Section 17. Consequently, what Section 18(1)
does, is to stipulate a statutory reference to the Facilitation
Council for the resolution of disputes. Under sub-section (2), on
receipt of a reference, the Council shall either conduct a
conciliation in the matter itself or seek assistance of any institution
or centre providing alternate dispute resolution services. Sections
65 to 81 of the Arbitration and Conciliation Act, 1996 are to apply
to such a dispute. Sub-section (3) provides for the consequences if
the conciliation is not successful. Once the conciliation proceeding
is terminated without any settlement, the Council has one of two
courses of action open. The Council may either itself take up the
dispute for arbitration or refer the dispute to an institution or
centre providing alternate dispute resolution services for such
arbitration. Thereupon the provisions of the Arbitration and
Conciliation Act, 1996 apply as if the arbitration was in
accordance with the provisions of Section 7 (1) of the Act of 1996.
Sub-section (3) of Section 18, therefore, contains a statutory
reference to arbitration. This is not dependent on the existence of
an arbitration agreement in the contract between the parties.
10 Under sub-section (4) of Section 18, this position is made
abundantly clear because it stipulates that notwithstanding
anything contained in any other law for the time being in force, the
Facilitation Council or the Centre providing alternate dispute
resolution services shall have jurisdiction to act as an arbitrator
or Conciliator under this section in a dispute between a supplier
located within its jurisdiction and a buyer located anywhere in
India.
11 The Petitioner invoked the provisions of the 2006 Act by
filing a reference to the Facilitation Council on 3 October 2011.
There was undoubtedly a dispute between the Petitioner and the
Respondents in regard to the claim of the Petitioner arising out of
non payment of its bills. The respondents appointed a sole
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arbitrator on 5th October 2011 after the Petitioner had invoked the
intervention of the Facilitation Council on 3 October 2011 under
Section 18 of the 2006 Act. Once the jurisdiction of the
Facilitation Council has been validly invoked, the Council has
exclusive jurisdiction to enter upon conciliation in the first
instance and after conciliation has ended in failure, to refer the
parties to arbitration. The Facilitation Council could either have
conducted the arbitration itself or could have referred the parties
to a centre or institution providing alternate dispute resolution
services. The Facilitation Council was clearly in error in
entertaining the objection filed by the Respondents and referring
the Petitioner to the sole arbitrator so designated by the
Respondents.
12 The non-obstante provision contained in sub-section (1) of
Section 18 and again in sub-section (4) of Section 18 operates to
ensure that it is a Facilitation Council which has jurisdiction to
act as an arbitrator or Conciliator in a dispute between a supplier
located within its jurisdiction and a buyer located anywhere in
India. The Facilitation Council had only one of the two courses of
action open to it : either to conduct an arbitration itself or to refer
the parties to a centre or institution providing alternate dispute
resolution services stipulated in sub-section (3) of Section 18."
9 It will also be useful to reproduce paragraphs 7 to 10 of the judgment
of Gujarat High Court in Manibhai & Brothers (supra) and the same read as
under :
"7 Identical question came to be considered by the
Division Bench of the Allahabad High Court in the case of Paper
and Board Convertors (supra). While interpreting the very
provision of Section 18 of the Act, 2006, in para 12, the Division
Bench has observed and held as under:
12. The non-obstane provision contained in sub- (1) of
Section 18 and again in sub-section (4) of Section 18
operates to ensure that it is a Facilitation Council which
has jurisdiction to act as an arbitrator or Conciliator in
a dispute between a supplier located within its
jurisdiction and a buyer located anywhere in India. The
Facilitation Council had only one of the two courses of
action open to it : either to conduct an arbitration itself
or to refer the parties to a centre or institution
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providing alternate dispute resolution services
stipulated in sub-section (3) of Section 18.
After observing as above, the Division Bench of the
Allahabad High Court has set aside the order passed by the
Facilitation Council directing the parties to place it version before
the sole arbitrator in terms of the rate contract agreement
and restored the proceedings back to the Council and directed
the Council to act in accordance with the provisions of sub-section
(3) of Section 18 and either conduct the arbitration itself or refer
the arbitral proceedings to any institution or centre providing
alternate dispute resolution services.
8 Now, so far as reliance placed upon the decision of the
Division Bench of the Bombay High Court in the case of M/s. Steel
Authority of India Ltd and Anr. (supra) relied upon by Shri Patel,
learned advocate for appellant, for the reasons stated above
provision of Act 2006 referred herein above and the Act 2006
being Special Act under which the parties are governed, we are not
in agreement with the view taken by the Division Bench of
the Bombay High Court and we are in complete agreement with
the view taken by the Division Bench of the Allahabad High Court
in the case of Paper and Board Convertors (supra).
9 Now, so far as reliance placed upon the decision of the
Hon'ble Supreme Court in the case of Morgan Securities and
Credit Pvt Ltd (supra) and decision in the case of Vijay Kumar and
Others (supra) are concerned, on going through the said
decisions, we are of the opinion that said decisions shall not be
applicable to the facts of the case on hand. In the case before the
Hon'ble Supreme Court, the dispute was as to whether the
provision of Arbitration Act, 1996 would prevail over the provision
of Sick Industrial Companies (Special Provisions) Act or not (in
the case of Morgan Securities and Credit Pvt Ltd (supra). In the
case before the Hon'ble Supreme Court in the case of Vijay Kumar
and Others (supra) a dispute was whether the Tribunal
constituted under the Delhi School Education Act can be said to be
"Judicial Authority" or not. Under the circumstances, the said
decision shall not be applicable to the facts of the case on hand.
10 In view of the above and for the reasons stated above, no
error has been committed by the learned Council in not
entertaining the application under Section 8 of the Arbitration Act,
1996. We see no reason to interfere with the order passed by the
learned Council. As observed herein above and considering
the sub-section (1) of Section 18 of the Act, 2006 the
Facilitation Council has jurisdiction to act as Arbitrator and / or
conciliator any dispute between the parties and that Council had
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only one of two courses of action open to it, either to conduct an
arbitration itself or to refer the parties to a centre or institution
providing alternate dispute resolution services stipulated in
Section 18(3) of the Act, 2006. Therefore, while dismissing the
present appeal, it is observed that Council shall now act in
accordance with provision of sub-section (3) of Section 18 and
either to conduct an arbitration itself or to refer the parties to a
centre or institution providing alternate dispute resolution
services. With the above observations, present appeal is
dismissed. No costs. In view of dismissal of the First Appeal,
Civil Application stands dismissed accordingly."
10 Similar view has also been taken by the Punjab and Haryana High
Court in the case of Welspun Corp. Ltd. Vs. The Micro and Small, Medium
Enterprises Facilitation Council, Punjab and Others 4. The relevant
paragraphs of the said judgment are reproduced hereinbelow :
5 In this case, if there was a contract between the parties to
have an arbitration made under the Act, 1996 and the Conciliator
had proposed to terminate its conciliatory postures, it was
competent for it to treat itself as an Arbitrator and proceed the
arbitral process in the manner contemplated under Section 18(3). I
cannot read Section 18(3) in the manner canvassed by the learned
counsel that Section 18(3) will apply only if there is no contract
between the parties for a reference to arbitration under the Act,
1996. On the contrary, the latter part of Section 18(3) that the
provisions of the Act, 1996 would apply to a dispute as if the
arbitration was in pursuance of an arbitration agreement shall be
read in such a way that it is applicable only to a situation where
the Council deems fit to CWP No.23016 of 2011 (O&M) and
connected cases [10] refer to any institution for an alternate
dispute resolution services for such an arbitration. Section 18(3)
provides for two procedures: (i) on termination of conciliation, it
can either take up the arbitration itself or (ii) refer the matter to
arbitration as though there is an arbitral agreement between the
parties. It is possible for a Council to make a reference to
arbitration even in the absence of an arbitration agreement. If
there is an arbitration agreement between the parties, it only
means that the power is still available when the Council, without
invoking its own powers. It can simply observe that in terms of the
4 Civil Writ Petition No.23016 to 23019 & 23023 of 2011 decided on 13th December 2011
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agreement between the parties, the parties shall be at liberty to
have an arbitration done under the Act, 1996. It does not exclude a
construction that whenever there is an arbitration clause, the
Council does not have a power to act as an Arbitrator. Such an
interpretation would render nugatory the first portion of Section
18(3) that allows it to proceed to arbitrate. I would, therefore,
uphold the specific reasoning, which the impugned order makes in
stating that:
"If Section 18 of the Act, 2006 provides for a mode of
resolution of a dispute wherein this Council is to
adjudicate acting as an arbitrator in terms of the Act,
1996, it would not be open for any party to oust the said
jurisdiction of this Council which has been vested in
terms of Section 18(3) of the Act, 2006 merely by
creating a mutual agreement. The Agreement cannot
over CWP No.23016 of 2011 (O&M) and connected
cases [11] ride the provisions of the Act, 2006 in view of
the aforesaid fact."
6 The learned counsel states, to a specific query as to why
the Petitioner has a problem for obtaining an adjudication through
the Council as an Arbitrator, would contend that the contract
between the parties contemplates appointment of an Arbitrator by
each party and a provision for appointment of an Umpire, but that
remedy will be lost if the Council itself has to act as an Arbitrator
where his own individual volition comes to nought. The counsel
would further contend that there are other stringent provisions of
the Act, 2006, such as requirement of having to deposit 75% of the
amount determined by the Arbitrator through an award for an
application under Section 19, which an application under Section
34 of the Act, 1996 does not enjoin. This points out to the
inconsistency in provisions between the Act, 2006 and the Act,
1996 but the Act, 2006 still obtains primacy of its application
through the overriding effect, which we had stated above. If an
arbitration made under Section 18 proceeds to an award directing
the payment between the parties, the manner of setting aside the
award cannot happen under Section 34 of the Act, 1996 but it has
to be still only in the manner contained under Section 19 of the
Act, 2006. Inevitably, it has to be so and if an express provision in
a statute would contain a non-obstante clause and overriding
effect of the Act, a full play to the same Act must be given and it
CWP No.23016 of 2011 (O&M) and connected cases [12] shall
become possible to apply the Act, 1996 only to such matters of
procedures as the Act, 2006 itself does not provide for. For
instance, the Act, 2006 contains no procedure for conducting
arbitral process; the Act, 2006 does not contain provisions for
challenging the Arbitrator's impartiality; the Act, 2006 does not
still contain any provision for enforcement of process where an
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award was obtained in a foreign jurisdiction. The above are
merely illustrative and not exhaustive. But in respect of provisions
relating to appointment of Arbitrator or commencement of arbitral
process, the binding nature of arbitral award and the manner of
redressal of a person not satisfied with the award would perforce
have to conform to the provisions of section contained in Sections
18 and 19 of the Act, 2006. I would, therefore, find that if the
Council found that the Act, 2006 empowers it to act as an
Arbitrator, I would not find any error in the said order.
7 The learned counsel would also point out to me that in the
order passed by this Court earlier in CWP No.13111 of 2011, it
had been found that if there is a refusal to refer the matter to the
arbitration, the Petitioner was entitled to have the remedy under
the Act, 1996 in terms of Section 11 but the manner in which the
Council has provided to treat itself as an Arbitrator amounted to
violation of the directions contained in the order. The Council has
also dealt with this objection in the CWP No.23016 of 2011
(O&M) and connected cases [13] order itself and in my view
correctly. This clause could have obtained relevance where the
arbitral dispute had not been referred to arbitration. As per the
procedure under Section 18(3), the reference could have been
either by the Council acting itself as an Arbitrator or it could have
made a reference to an Arbitrator constituted under the Act, 1996.
If he had omitted to do either one of them, it should have been
possible for the Petitioner to apply under Section 11 of the Act,
1996. Admittedly, till date a resort to Section 11 had not been
made. This has also been referred to in the impugned order. In a
case, where the Council has constituted itself as an Arbitrator
then, it has done an act allowing for appointment of an Arbitrator
and setting the arbitral process in motion. Consequently, a need
for appointment of an Arbitrator under Section 11 of the Act, 1996
does not arise.
8 There are at least 25 central enactments, which contain
provisions for statutory arbitrations. The provisions that are
frequently invoked are statutory arbitration provided under the
Telegraph Act and amongst the State enactments, the State Co-
operative Societies Act.. The reference to statutory arbitration and
the primacy that it obtains over contractual reference to
independent modes of resolution of disputes had come before
Hon'ble the Supreme Court in several cases. In "Registrar, Co-
operative Society Vs. Krishan Kumar Singhania, 1995(6) CWP
No.23016 of 2011 (O&M) and connected cases [14] SCC 482" the
Supreme Court dealt with a conflict between the statutory
arbitration contained under the West Bengal Cooperative Societies
Act and the Arbitration and Conciliation Act, 1996 and provided
for a primacy of application of the State Act. In "Punjab State
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Electricity Board V. Guru Nanak Cold Storage 1996(5) SCC 411",
the Supreme Court was considering the effect of some of the
provisions of the Electricity Act and a provision for an arbitration
outside the scope of the Act, 1996. These are merely to state that
the issue is not res integra. The conflicts have existed and the
Courts have never found it essential at all times to give the Act,
1996 a primacy. In this case, the Act, 2006 which is an Act of the
Parliament and will hold itself field for determining the rights of
parties for the disputes that they have arisen between a supplier
and a buyer. The arbitral proceedings before the Council have not
made much head way except that through the impugned order, it is
clear that the Council has decided to accept the termination of
conciliation proceedings and it has stated that the case was being
adjourned and the parties will be informed the future date of
hearing. The Petitioner shall have his recourse only under the Act,
2006 and with reference to the procedures for which the Act, 2006
does not make provision for conducting the arbitral process, he
shall be entitled to resort to the Act, 1996 to the extent to which it
is applicable.
10. In the light of the above reasoning, the writ petitions
challenging the impugned order ought to fail and accordingly
dismissed.
11 The judgment of Gujarat High Court in Manibhai & Brothers (supra)
was impugned before the Hon'ble Supreme Court of India 5. The Apex
Court, by an order dated 5th July 2017 has upheld the view expressed by the
Division Bench of Gujarat High Court. The short order of the Supreme
Court reads as under :
" We have given our thoughtful consideration to the
submissions advanced before us yesterday and today.
We are satisfied, that the interpretation placed by the High
Court on Section 18 of the Micro, Small and Medium Enterprises
Development Act, 2006 in the impugned order, with reference to
arbitration proceeding is fully justified and in consonance with the
provisions thereof.
Having affirmed the above, we are of the view, that all
other matters dealt with in the impugned order are not relevant for
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the adjudication of the present controversy, and need not be
examined.
The special leave petition is dismissed in the above terms.
Pending applications stand disposed of."
12 In the circumstances, I am afraid, I cannot accept the submissions of
Shir Patil because the Gujarat High Court had, in paragraph 8 of the
judgment as quoted above, expressly disagreed with the views of the
Division Bench of the Bombay High Court and the Supreme Court has
upheld the interpretation placed by the Gujarat High Court. This Court is
bound by that. I must hasten to add that it was pointed out by Respondent
that judgment in M/s.Steel Authority of India Ltd. (supra) is also challenged
before the Hon'ble Apex Court and Special Leave is granted and the Civil
Appeal is pending for final hearing. For the moment, however, the
interpretation placed by Gujarat High Court in Manibhai & Brothers (supra)
holds fort.
13 In view of the above, the non- obstante provision contained in sub-
section (1) of Section 18 and again in sub-section 18(4) operates to ensure
that it is the Facilitation Council which has jurisdiction to act as an arbitrator
or Conciliator in a dispute between a supplier located within its jurisdiction
(Respondent) and a buyer located anywhere in India. It will prevail over the
individual arbitration clause.
Ms. S.K. Talekar, PS
18/18 37.arp.60.2016.doc
14 Therefore, as the jurisdiction of the Gujarat Micro and Small
Enterprises Facilitation Council has been invoked and the said Council
having taken cognizance thereof, the said Council shall continue with the
proceedings.
15 Petition stands dismissed. No order as to costs.
16 By way of abundant caution, it is made clear that this Court has
expressed no opinion on the merits or the tenability of the claim of Petitioner
in respect whereof all rights and contentions of Respondent is kept open, to
be urged before the Conciliator or arbitral forum.
(K.R. SHRIRAM, J.)
Ms. S.K. Talekar, PS
