Karnataka High Court

Union Of India vs M/S Harcharan Dass Gupta on 22 April, 2024

Author: M. Nagaprasanna

Bench: M. Nagaprasanna

                            1



Reserved on : 20.03.2024
Pronounced on :22.04.2024
                                                     R
       IN THE HIGH COURT OF KARNATAKA AT BENGALURU

           DATED THIS THE 22ND DAY OF APRIL, 2024

                          BEFORE

         THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

         WRIT PETITION No.27269 OF 2023 (GM - RES)



BETWEEN:

UNION OF INDIA
MINISTRY OF SPACE,
REPRESENTED BY THE CHAIRMAN,
DEPARTMENT OF SPACE,
ISRO HEAD QUARTERS,
ANTARIKSH BHAVAN,
NEW BEL ROAD,
BENGALURU - 560 031.
                                              ... PETITIONER

(BY SRI K.ARVIND KAMATH, ADDITIONAL SOLICITOR
    GENERAL OF INDIA A/W
    SRI A.CHANDRACHUD, CGSC)

AND:

1.   M/S. HARCHARAN DASS GUPTA
     REPRESENTED BY ITS PARTNER,
     SRI LALIT MITTAL,
     S/O SRI D.R.MITTAL,
                           2




     AGED ABOUT 58 YEARS,
     NO.103, SAI BHAWAN,
     RANJIT NAGAR, COMMERCIAL COMPLEX,
     NEW DELHI - 110 008
     REGISTERED UNDER PARTNERSHIP ACT, 1958.

2.   SRI DEEPAK BHANWALA
     ARBITRATOR,
     SIGNUS ARBITRATION CHAMBERS,
     C-1/11, LGF, WEST ENCLAVE,
     PITAMPURA,
     NEW DELHI - 110 034.
                                           ... RESPONDENTS

(BY SMT.RENUKA ARORA, ADVOCATE FOR R-1)

     THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO a) QUASH THE
IMPUGNED COMMUNICATION NOTICE DATED 28/05/2022 BEARING
NO. DAC/MSME/A/D-101-197 BY THE DELHI ARBITRATION CENTRE
APPOINTING   THE   ARBITRATOR   TO   CONDUCT     ARBITRAL
PROCEEDINGS AS PER ANNEXURE-A; b) SETTING ASIDE THE
PROCEEDINGS BEING CONDUCTED BY THE ARBITRATOR IN THE
PROCEEDINGS BEARING NO. DL/03/S/SWC/00800 BY PASSING
THE ORDER DATED 26/09/2023 DIRECTING TO FILE STATEMENT
OF DEFENSE AS PER ANNEXURE-P.



     THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 20.03.2024, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-
                                    3



                                   ORDER

The petitioner/Indian Space Research Organization is before

this Court calling in question a communication dated 28-05-2022

issued by the Delhi Arbitration Centre in communication No.

DAC/MSME/A/D-101-197 appointing an Arbitrator to conduct

arbitral proceedings and consequently calls in question proceedings

conducted by the Arbitrator directing the petitioner to file a

statement of defence in terms of its order dated 26-09-2023.

2. Heard Sri K.Aravind Kamath, learned Additional Solicitor

General of India along with Sri A.Chandrachud, learned Central

Government Standing Counsel appearing for the petitioner and

Smt. Renuka Arora, learned counsel appearing for respondent No.1.

3. Shorn of unnecessary details, facts in brief germane, are as

follows:

The petitioner is an organization coming within the

Department of Space having its headquarters at Bengaluru. On

16-01-2017 the petitioner invites tender for construction of staff

quarters at Dwaraka, New Delhi in terms of an e-tender notice.

Pursuant to issuance of notice inviting tender, many tenderers

come forward to participate, by submitting their respective bids.

The 1st respondent/Company which had emerged as the successful

bidder becomes a signatory to the agreement between the

petitioner and the Company. The agreement is entered into on

11-09-2017. It appears that after completion of the project, which

according to the averment in the petition was 19 months after the

deadline, bills were raised by the Company on 10-11-2021. On

20-11-2021 the petitioner receives bills under a letter from the

Company. On 25-11-2021, in response to the said letter enclosing

the bills, the officer of the petitioner communicated that there was

a mismatch of measurement between the one found in the

agreement and the one that is found in the bills. The bills were thus

returned. Again the Company is said to have re-issued the same

bills removing the objections that were indicated on 25-11-2021.

The bills were not honoured by the petitioner.

4. The Company then approaches Micro, Small and Medium

Enterprises ('MSME' for short) Council for redressal of its grievance.

The MSME Council forwards the intimation of entertaining the

petition to the petitioner. On 09-05-2022 the Council refers the

grievance of the Company to a Conciliator and the Conciliator issues

a notice to the petitioner calling upon it to participate in the

conciliation proceedings. The petitioner replies to the said notice.

On receipt of the reply, the Council concludes the conciliation

holding it to be unsuccessful and initiated arbitration proceedings

by appointing an Arbitrator before the Delhi Arbitration Centre. The

Arbitrator then issues notice to the petitioner. The petitioner replies

to the said notice of the Arbitrator and during the pendency of the

said proceedings before the Arbitrator, the Company again

approaches the petitioner for settlement of claims.

5. After a joint survey of measurement on the work site, the

petitioner paid the final bill to the Company. This was accepted by

the Company under protest. By then the tenure of arbitration

proceedings had come to an end. The Arbitrator then passes an

order directing the Company to approach the competent Court of

law with jurisdiction to get the time extended for the Arbitrator to

proceed and conclude the arbitration proceedings. The Company

does not do so, but seeks to set aside the order dated 6-06-2023

before the Arbitrator himself by filing an application. The Arbitrator

in terms of his order dated 26-09-2023 set aside the order dated 6-

06-2023. It is these proceedings that have driven the petitioner to

this Court in the subject petition.

6. The learned Additional Solicitor General of India

Sri K. Arvind Kamath would contend that the dispute registered

before the Delhi Arbitration Centre itself was erroneous as the Delhi

Arbitration Centre did not have jurisdiction. It is his submission that

Clause 25 of the contract between the petitioner and the Company

is unequivocal that any dispute arising would be resolved in

Bengaluru. It is his further submission that Section 18 of the Micro,

Small and Medium Enterprises Development Act, 2006 ('the Act' for

short) can be invoked only when Section 15 is complied or satisfied.

The Company has failed to complying with Section 15, as it had not

removed the objections before approaching any facilitating Council.

He would, therefore, seek quashment of entire proceedings before

the Arbitrator.

7. The learned counsel appearing for the 1st

respondent/Company would, on the other hand, contend that Delhi

is conferred jurisdiction by the Council under sub-section (4) of

Section 18 of the Act. She would contend that the said provision is

very clear that a buyer can raise the dispute where the contract

was entered into anywhere in India. The learned counsel would

submit that the Act is a special enactment, whereas Arbitration and

Conciliation Act is a general law and, therefore, general law would

yield to special law.

8. I have given my anxious consideration to the submissions

made by the respective learned counsel and have perused the

material on record. In furtherance whereof, the issue that falls for

consideration is:

"Whether the Delhi Arbitration Centre did have

jurisdiction for constitution of an Arbitral Tribunal?"

9. To consider the above issue, it is necessary to notice the

genesis of the relationship between the petitioner and the

Company. It is the agreement that is entered into between the two

pursuant to the Company emerging as the successful bidder in a

tender notified by the petitioner that formed the relationship. The

agreement is entered into between the two based upon the general

conditions of contract when the contracting party is the Union of

India. The general conditions of contract also recognizes

settlement of disputes and arbitration. Since this is a format of the

contract, the place of arbitration is always left blank. It is printed

only after the consensus between the parties for having a seat of

arbitration in a particular place. The petitioner and the respondent

therefore enter into a contract, the clauses of which are admitted to

be identical to the format and contents of the general conditions of

contract. The place of arbitration agreed between the two is

Bangalore. Therefore, I deem it appropriate to notice clause 25 of

the general conditions of contract and the place of arbitration

agreed to by the parties. They all collectively read as follows:

"CLAUSE 25

SETTLEMENT OF DISPUTES AND ARBITRATION

a) If any dispute or differences of any kind whatsoever were to arise between the Engineer-in-charge, CMD and the Contractor regarding the following matters namely.

(i) The meaning of the specifications, designs, drawings and instructions herein before mentioned.

(ii) The quality of wormanship or materials used on the work and

(iii) Any other question, claim, right, matters, thing whatsoever in any way arising out of or relating to the contract, designs, drawings specifications, estimates, instructions or orders, or those conditions or failure to execute the same whether arising during the progress of the work after the completion, termination or abandonment thereof, the dispute shall, in the first place be referred to the Group Head, CMG/Head CMD who has Jurisdiction over the work specified in the contract with the details of claims, justification for the same with supporting documents such as analysis of rates, cash vouchers and other relevant particulars. The Group Head, CMG/ Head CMD shall within a period of sixty days from the date of furnishing of required particulars whichever is later shall give written notice of his decision to the contractor.

If the Group Head, CMG/Head CMD fails to give notice of his decision within a period of 60 days from the date of receipt of (i) the Contractor's request in writing for settlement of dispute or difference as aforesaid or (ii) relevant particulars from the Contractor in support of his claims whichever is later (OR)

If the decision of the Group Head, CMG/ Head CMD is not acceptable to the Contractor, he may approach the Director of the Centre/ Unit within a period of 15 days from the date of expiry of 60 days specified above. The Director of the Centre/ Unit shall within a period of further 90 days from the date of receipt of request from the

contractor or from the date of receipt of relevant particulars from the contractor in support of claims whichever is later give notice of his decision(s) to the Contractor.

(b) Subject to other forms of settlement hereinafter provided the Director of the Centre / Unit decision in respect of every dispute or difference so referred shall be final and binding upon the Contractor. The said decision shall forthwith be given effect to and Contractor shall proceed with the execution of the work with all due diligence.

1. When Director of the Centre/ Unit decision is not acceptable to Contractor OR

2. Director of the Centre/ Unit fails to give decision within 90 days.

In case the decision of the Director of the Centre/ Unit is not acceptable to the Contractor or Director of the Centre/ Unit fails to give decision within 90 days specified above, the Contractor may approach the Law court specified in Schedule 'F' for settlement of dispute after giving due written notice in this regard to the Director of the Centre/Unit.

(d) Whether the claim is referred to the Group Head, CMG/ Director of the Centre/Unit or to the Law Courts, as the case may be, the Contractor shall proceed to execute and complete the works with all due diligence pending settlement of the said dispute or differences.

Obligations of the Engineer-in-charge and Contractor shall remain unsettled during considerations of dispute.

(e) The reference of any dispute or dispute(s) or difference(s) to Group Head, CMG / Head CMD or the Director of the Centre/ Unit or the Law Court may proceed not withstanding that the work shall then be or be alleged to be complete provided always that the obligations of the

Engineer-in-charge and the Contractor shall not be altered by reason of the said dispute or difference being referred to Group Head, CMG/Head CMD/Director of the Centre/ Unit or the Law Court during the progress of the works.

CLAUSE 25A

SETILEMENT OF DISPUTES BETWEEN CMG AND CENTRAL GOVERNMENT ENTERPRISES

In the event of the contract being entered into between CMG/ Department of Space and a Central Government Public Enterprises, supersession of above clause 25 of condition of Contract the following clause shall apply 'In the event of any dispute or difference relating to the interpretation and application of the provisions of the contracts, such dispute or differences shall be referred by either party to the arbitration of one of arbitrators in the Department of Public Enterprises to be nominated by the Secretary to the Government of India, in charge of the Bureau of Public Enterprises. The arbitration Act, 1940 shall not be applicable to the arbitration under this clause. The award of the arbitration shall be binding upon the parties to the dispute provided, however any party aggrieved by such award may make further reference for setting aside or revision of the award to the Law Secretary, Additional Secretary, when so authorized by the Law secretary, Department of Legal Affairs, Ministry of Law and Justice, Government of India. Upon such reference the dispute shall be decided by the Law Secretary or the Secretary, whose decision shall bind the parties finally and conclusively. The parties to the dispute will share equally the cost of Arbitration as intimated by the Arbitrator.

Provisions of clause 25 shall not be applicable to contracts where this clause 25A is applicable and the contracts for which clause 25A is not applicable clause 25 will be applicable."

REF: CLAUSE 25 OF GCC: SETTLEMENT OF DISPUTES AND ARBITRATION.

         Law Court of Jurisdiction        :        Bangalore

                                                          (Emphasis added)

The afore-quoted are the clauses found in the general conditions of

contract, which are agreed to between the parties. In furtherance

of clause 25 supra, the parties have agreed that the law court of

jurisdiction for settlement of disputes and arbitration to be at

Bangalore. Whether the agreement between the parties would

become applicable to the case at hand or the action of the

1strespondent in approaching the MSME council seeking reference to

an Arbitrator, is required to be noticed. It need not detain this

Court for long or delve deep into the matter. The Apex Court, in the

case of INDUS MOBILE DISTRIBUTION (P) LIMITED v.

DATAWIND INNOVATIONS (P) LIMITED1 has held as follows:

".... .... ....

19. A conspectus of all the aforesaid provisions shows that the moment the seat is designated, it is akin to an exclusive jurisdiction clause. On the facts of the present case, it is clear that the seat of arbitration is Mumbai and Clause 19 further makes it clear that jurisdiction exclusively vests in the Mumbai courts. Under the Law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to "seat" is a concept by which a neutral venue can be chosen by the parties to an arbitration

(2017) 7 SCC 678

clause. The neutral venue may not in the classical sense have jurisdiction -- that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Sections 16 to 21 of CPC be attracted. In arbitration law however, as has been held above, the moment "seat" is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties."

(Emphasis supplied)

The Apex Court was considering the imperativeness of the reference

to a seat of arbitration in an arbitration agreement. The Apex Court

holds that the moment the seat is determined, the exclusive

jurisdiction for regulating arbitral proceedings would be at the seat

agreed to between the parties.

10. The High Court of Delhi, considering the mandate of the

MSMED Act and the arbitration agreement in the case of INDIAN

OIL CORPORATION LIMITED v. FEPL ENGINEERING (P)

LIMITED2 has held as follows:

".... .... ....

13. A reading of the above provision would show that the MSME Council, where the supplier is located, shall have jurisdiction in the matter. In exercise of this power, MSME Council at Thane exercised its jurisdiction in the present dispute. The Seat of arbitration, therefore, would

2019 SCC Online Del., 8007

be at Thane, Maharashtra and even applying the judgment of the Supreme Court in Indus Mobile (supra), it would only be the Courts at Thane which will have exclusive jurisdiction to entertain the present petition.

14. To hold otherwise, would infact run counter to the mandate of the MSMED Act. The MSMED Act being a special legislation dealing with the Micro, Small and Medium Enterprises, would certainly have precedence over the general law, that is the Arbitration and Conciliation Act, 1996."

(Emphasis supplied)

Later, a Division Bench of Delhi High Court, approving the afore-

quoted order in INDIAN OIL CORPORATION, in the case of

IRCON INTERNATIONAL LIMITED v. PIONEER FABRICATORS

(P) LIMITED3 has held as follows:

".... .... ....

15. We are unable to agree with the submissions advanced by the learned counsel for the respondent, for the reason that the issue in hand is covered by the judgment of the Division Bench of this Court in Indian Oil Corpn. Ltd. v. FEPL Engg. (P) Ltd. [Indian Oil Corpn. Ltd. v. FEPL Engg. (P) Ltd., 2019 SCC OnLine Del 8007] , wherein it is held, the jurisdiction of the MSME Council, which is decided on the basis of the location of the supplier, would only determine the "venue", and not the "seat" of arbitration. Therefore, the place of arbitration for the purpose to entertain a challenge to an arbitral award continues to be the place over which the court has been conferred with exclusive jurisdiction, as agreed between the parties. The court further held that the MSMED Act despite being the special legislation would not eclipse and nullify the jurisdiction clause agreed upon between the parties. It means, post-rendering of the

(2023) 2 HCC (DEL) 359

arbitral award by the Facilitation Council, the exclusive jurisdiction clause entered between the parties shall not be affected."

The High Court of Bombay in the case of GAMMON ENGINEERS &

CONTRACTORS (P) LIMITED v. SAHAY INDUSTRIES4 has held

as follows:

".... ..... .....

16. This Court is of the opinion that even though, in the case of Gujarat State Civil Supplies Corporation Ltd. v. Mahakali Foods Pvt. Ltd. (supra), the Hon'ble Supreme Court has observed that statutory Arbitration under Section 18 of the MSMED Act, would override the agreement between the parties, it necessarily applies to the agreed procedure of Arbitration between the parties. It is clear that if parties agreed for Arbitration by a sole Arbitrator or by an agreed procedure of constituting an Arbitral Tribunal, the same would stand obliterated by operation Section 18 of the MSMED Act. But once the Arbitration Award is pronounced, and there is an exclusionary clause of jurisdiction agreed between the parties, thereby agreeing upon jurisdiction of only one Court, in exclusion to others, the challenge initiated by the aggrieved party under the Arbitration Act, even against an award passed by the Facilitation Council under the MSMED Act, will lie only before the Court upon which the parties agreed to place exclusive jurisdiction. This Court is in agreement with the view taken by the Division Bench of the Delhi High Court in the case of Indian Oil Corporation Ltd. v. Fepl Engineering (P) Ltd. (supra), to the effect that Arbitration proceedings undertaken before the Facilitation Council under Section 18 of the MSMED Act are undertaken at the venue where the Facilitation Council is located. The place of the Arbitration continues to be the place over which the Court has exclusive jurisdiction, as agreed between the parties. By the operation of the provisions of the MSMED Act, only the procedure of constitution of the Arbitral Tribunal is

2023 SCC OnLine Bom 750

overshadowed in terms of the law laid down by the Hon'ble Supreme Court in case of Gujarat State Civil Supplies Corporation Ltd. v. Mahakali Foods Pvt. Ltd. (supra) and it does not eclipse the agreement between the parties of foisting exclusive jurisdiction on a particular Court. In law, it is that place which is covered under the exclusive jurisdiction of the Court agreed between the parties, which continues to be the place of Arbitration, thereby determining the Court that shall have territorial jurisdiction to entertain a petition under Section 34 of the Arbitration Act, to challenge the award passed by the Facilitation Council under the MSMED Act."

(Emphasis supplied)

11. On a coalesce of the judgments rendered by the Apex

Court and that of the High Courts of Delhi and Bombay what would

unmistakably emerge is, notwithstanding the fact that the Act is a

special legislation, it would not mean that the jurisdiction clause

agreed between the parties has to be given a go-bye. The

overriding effect of the Act cannot be construed to mean the terms

of the agreement between the parties would get nullified. The

jurisdiction of MSME Council would be decided on the basis of the

location of the supplier, as it would only determine the venue of the

Council and not the seat of the arbitration. The seat of arbitration

would undoubtedly be governed and bind the parties to the

arbitration agreement between them. If the facts obtaining in the

case at hand are considered on the bedrock of the principles laid

down in the aforesaid judgments what would unmistakably emerge

is, reference to Arbitrator and the Arbitrator taking up proceedings

pursuant to the said reference by the Council would suffer from

want of jurisdiction, as the seat of dispute resolution between the

petitioner and the Company is undoubtedly declared to be at

Bengaluru.

12. If the parties have agreed in terms of Clause 25 supra

that the seat of Arbitration to be Bengaluru, it cannot be contended

that Act being a special legislation would override the contract

between the parties. After all, the genesis for the dispute is in

terms of the contract. The contract declares the said resolution to

be by way of arbitration. The seat of arbitration is declared to be

Bengaluru. If that be so, all the proceedings before the Arbitral

Tribunal at Delhi would be without jurisdiction. Any order passed

by the Tribunal at Delhi is again without jurisdiction. The very

reference by the MSME Council appointing an arbitrator is contrary

to law.

13. In a Judgment, subsequent to the afore-quoted

judgments, the High Court of Calcutta in the case of ODISHA

POWER GENERATION CORPORATION LIMITED v. M/s.

TECHNICHE CONSULTING SERVICE5 has held as follows:

".... .... ....

34. The statutory position which emerges from the plethora of cases shown on behalf of the parties, is this. The cases are referred in chronological order from the earliest to the most recent. The first is Emkay Global Financial Services Limited vs. Girdhar Sondhi; (2018) 9 SCC 49 where the Supreme Court explained the concept of an exclusive jurisdiction clause. The Supreme Court referred to Indus Mobile Distribution (P) Ltd. vs. Datawind Innovations (P) Ltd.; (2017) 7 SCC 678 to hold that designation of a seat is akin to an exclusive jurisdiction clause. The second decision is that of a Division Bench of the Delhi High Court; Indian Oil Corporation Ltd. vs. FEPL Engineering (P) Ltd.; (2019) SCC OnLine Del 10265. The Delhi High Court held that the jurisdiction of the MSME Council which is decided on the basis of the location of the supplier would only determine the "venue" and not the "seat" of arbitration. In paragraph 44 of Gujarat State Civil Supplies Corporation Limited vs. Mahakali Foods Private Limited; (2023) 6 SCC 401, the Supreme Court held that a private agreement between the parties cannot obliterate the statutory provisions of the MSMED Act. The next is Gammon Engineers & Contractors Pvt. Ltd. vs. Sahay Industries, a Single Bench decision of the Bombay High Court reported in AIR 2023 Bom 65. The Bombay High Court restricted the interpretation of the Gujarat State Civil Supplies Corporation only to the effect that arbitration proceedings undertaken before the Facilitation Council under section 18 of the MSMED Act are at the "venue" where the Facilitation Council is located but the place of the arbitration continues to be the place over which the Court has exclusive jurisdiction as agreed between the parties. The Bombay High

A.P.Com.365 of 2024 decided on 19-03-2024

Court further clarified that in the facts of that case, the Courts at Mumbai would continue to have exclusive jurisdiction since the parties agreed to that while the "venue" of arbitration would be Madurai where the Facilitation Council passed the impugned award. A Division Bench of the Delhi High Court in Ircon International Limited vs. Pioneer Fabricators Private Limited; (2023) SCC OnLine Del 1811 followed the decision pronounced by the division Bench of the Delhi High Court in FEPL Engineering that the jurisdiction of the MSME Council would only determine the venue and not the seat of arbitration. Ircon disagreed with a Single Bench decision of the Delhi High Court in Ahluwalia Contracts (India) Limited vs. Ozone Research & Applications; 2023 SCC OnLine Del 581 which was of the view that the seat of arbitration would be the place where the Facilitation Council is situated. The last decision is of a Single Bench of this Court, Indian Oil Corporation Limited vs. Union of India; 2023 SCC OnLine Cal 4599 where the Court opined that section 18(3) of the MSMED Act does not preclude a party to an arbitration agreement from seeking interim relief under section 9 of the 1996 Act before the arbitration takes place before the Facilitation Council or enforcement of the award under section 36 of the 1996 Act. A Division Bench of the Allahabad High Court in Marsons Electrical Industries vs. Chairman, Madhya Pradesh Electricity Board; 2023 SCC OnLine All 2675 held that the MSMED Act, being a special statute, would have overriding effect over The Interest on Delayed Payments to Small Scale And Ancillary Industrial Undertakings Act, 1993 and that the MSMED Act would have precedence over any agreement between the parties.

35. The petitioner's / award-debtor's entire case rests on Gujarat State Civil Supplies and the thrust of the argument is that an independent arbitration agreement executed between a party and another would be subsumed into the proceedings before the Council thereon once a party files a reference before the Facilitation Council under the provisions of the MSMED Act. In other words, the argument is that a private agreement between the parties gives way to the statutory provisions of the MSMED Act once a party elects to subject itself to statutory arbitration. The doctrine of election is pressed into service and the petitioner relies on National Insurance Co. Ltd. vs. Mastan; (2006) 2 SCC 641 and Bank

of India vs. Lekhimoni Das; (2000) 3 SCC 640 in this context. Both the decisions are distinguishable on facts as two distinct remedies were available to the parties in these cases. In the instant case, no such rights with regard to remedies were exercised by the respondents.

Conclusion

36. The statutory construction of section 18 of the MSMED Act read with the case law definitively points to the parties being directed to their chosen venue, which in the absence of a designated seat, would anchor the arbitration to Bhubaneswar. The arbitration conducted by the Facilitation Council in the interregnum cannot confer jurisdiction on the Calcutta High Court in derogation of the venue/seat chosen by the parties. The office of the MSME Facilitation Council was the venue of the arbitration proceeding. The office of the Facilitation Council was not the seat. Jurisdiction cannot be conferred on this Court in the challenge to the Award passed by the Facilitation Council since that would be against the preferred venue/seat of the arbitration agreement.

37. This Court would therefore be denuded of jurisdiction to hear the present application for setting aside the award passed by the Facilitation Council."

(Emphasis supplied)

In the light of the preceding analysis qua the jurisdiction of the

Delhi Arbitration Centre, all other contentions are to be urged

before the Arbitrator at Bengaluru. Any further observation as to

whether the Company could have maintained the petition before

the MSME Council would prejudice the cases of both the petitioner

and the Company.

14. In the light of the law laid down by the Apex Court and

that of the other High Courts interpreting Section 18, the rights of

the parties to the agreement with regard to resolution of disputes,

the submission of the learned counsel for the respondents that the

buyer can raise a dispute where the contract was entered into,

which can be anywhere in the part of the country, does not merit

any acceptance. Even the submission that MSMED Act is a special

enactment and the arbitration is a general law which has to yield to

the special law is again unacceptable, in the light of the law laid

down by the High Court of Delhi and Bombay quoted supra.

Therefore, those submissions deserve to be rejected and are

accordingly rejected.

15. For the aforesaid reasons, the following:

ORDER

(i) Writ Petition is allowed in part.

(ii) The seat of arbitration assumed in terms of communication of Delhi Arbitration Centre in

No.DAC/MSME/A/D-101-197 dated 28-05-2022 is held to be a nullity.