ARBAP/27/2022
2023 Latest Caselaw 1178 UK

        IN THE HIGH COURT OF UTTARAKHAND
                   AT NAINITAL

                       SRI JUSTICE VIPIN SANGHI, C.J.

                             28TH APRIL, 2023
       ARBITRATION PETITION NO. 27 OF 2022
Between:
M/s Mondrian High                     ...................Applicant
and
M/s Pranav Doors and Windows Private Limited
                                          ....Respondents
Counsel for the applicant         :   Mr. Akshay Pradhan.

Counsel for the respondent        :   Mr. Pankaj Miglani.



Upon hearing the learned Counsel, the Court made the
following

JUDGMENT :

This is an Application preferred by the applicant

under Section 11(6) of the Arbitration and Conciliation Act,

1996 to seek the appointment of an arbitrator to adjudicate

their disputes arising out of their agreement dated

03.03.2021, whereunder the respondent agreed to supply

and install goods, i.e. windows / doors and skylight at the

site of the applicant. The arbitration agreement is contained

in the Terms & Conditions which formed part of the offer

made by the respondent dated 03.03.2021, which was

accepted by the applicant.

2. When the arbitration application was taken up for

consideration on 22.07.2022, this Court passed the following

order:-

"Mr. Akshay Pradhan, the learned counsel for the applicant.

The applicant has preferred the present application, under Section 11(6) of the Arbitration and Conciliation Act, 1996, to seek appointment of a sole arbitrator to adjudicate the disputes, which have arisen between the parties, under their agreement. The said agreement contains an arbitration agreement in Clause 8.

The applicant has placed on record the correspondences undertaken between the parties. From the same, it appears that the respondent claims to be a Small Scale Enterprise, and the respondent has stated that it is in the process of invoking Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006. Section 18 of the said Act begins with a non-

obstante clause, and it states that 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.

Prima facie, it appears that in the light of the aforesaid, it is open to the applicant as well to invoke the remedy available under Section 18 of the said Act, despite there being an arbitration agreement contained in the agreement between the parties.

Counsel for the applicant wishes to examine the position, and address this Court.

At his request, list on 29.07.2022."

3. Thereafter, notice was issued to the respondent

on 29.07.2022. The respondent filed its reply, contesting

this Application, disclosing that on the respondent invoking

Section 18(1) of the Micro, Small and Medium Enterprises

Development Act, 2006, the office of the Member Secretary-

cum-General Manager, District Level, Micro, Small and

Medium Enterprises Facilitation Council, S.A.S. Nagar,

issued notice to the applicant on 06.09.2022, returnable on

06.10.2022.

4. On 13.01.2023, this Court passed an order, which

reads as follows:-

"Mr. B.D. Pandey, learned counsel for the applicant.

Mr. Pankaj Miglani, learned counsel for the respondent.

Today, Mr. Pankaj Miglani, learned counsel for the respondent, tendered in the Court another Communication dated 09.01.2023 issued by the office of the Member Secretary-cum-General Manager, District Level Micro and Small Enterprises Facilitation Council S.A.S. Nagar. This communication reads as follows:-

"Subject: Information Regarding Arbitration Proceedings in Case of "Pranav Doors and Windows Vs. Mondrian High School" [Case No. PB/20/S/SA/00177] pending before the council.

In reference to your application dated 09.01.2023 on the above noted subject.

The Government of Punjab has empanelled 20 Arbitrators, vide its Order Endst. No. Commerce / Arbitrator / 2022/4885-A dated 12.10.2022. (COPY ENCLOSED) However, till date no particular Arbitrator has been appointed particularly for this district i.e. S.A.S. Nagar (Punjab) and the proceedings under above captioned case are presently being heard in the Council only. The next date for hearing in this case is 30.03.2023 before the Council. In this regard, as and when, any arbitrator is appointed by the Council, the same shall be communicated duly to the concerned parties."

Reading of the aforesaid communication shows that on the one hand, the Government of Punjab has empanelled 20 Arbitrators, list of whom has been enclosed, on the other hand, the letter records that till date no particular Arbitrator has been appointed particularly for "this district i.e. S.A.S. Nagar (Punjab)". It further says that "the proceedings under above captioned case are presently being heard in the Council only". It is not clearly stated as to what is the meaning

of the word "proceedings". Whether these proceedings are conciliation proceedings, or the arbitration proceedings, is not clear. This doubt gets reaffirmed by the fact that the communication also states that "as and when, any arbitrator is appointed by the Council, the same shall be communicated duly to the concerned parties". This implies that no Arbitrator has been appointed by the Council till date.

In this light, I consider it necessary to issue notice to the District Level Micro and Small Enterprises Facilitation Council S.A.S. Nagar through its Member Secretary-cum-General Manager, returnable by 24.02.2023, by all permitted modes, including electronically.

The process fee be filed by the applicant within three days providing complete address of the said Body. The copy of the application shall accompany the notice to be issued to the said Body.

List on 24.02.2023."

5. The respondent has filed a Supplementary

Affidavit along with Order-Sheet of the Micro and Small

Enterprises Facilitation Council, S.A.S. Nagar constituted

under the Micro, Small and Medium Enterprises

Development Act, 2006 (hereinafter referred to as the

'MSMED Act').

6. From the documents filed along with the

Supplementary Affidavit, it appears that the claim of the

respondent was registered as Case No. PB/20/S/SAS/00177

titled "Pranav Doors vs. Mondrian High School". The

conciliation proceedings were taken up by the said

Facilitation Council on 06.10.2022 in respect of the claim

instituted by the respondent under Section 18 of the MSMED

Act on 10.12.2020. On that day, the Facilitation Council

recorded that despite best efforts, the amicable settlement

could not be reached between the parties. In fact, the

applicant herein (respondent before the Council) stated that

conciliation is not possible, and it requested the Council to

decide the case through arbitration. This plea of the

applicant herein was accepted by the Council. In the order

passed by it on 06.10.2022, the Council, inter alia, recorded

"Council itself takes-up the reference for arbitration." The

claim reference submitted by the claimant was further

considered for arbitration. The respondent was given time

to file its reply in the case, and the case was adjourned to

01.12.2022 for reply. It appears that the matter could not

be taken-up on 01.12.2022 and intimated the parties that

new date would be announced in due time. Thereafter, the

proceedings were fixed on 15.12.2022 in respect whereof an

email was issued to the parties. The claim of the

respondent was enlisted at Serial No. 20 of the Cause-List

issued by the Council. The applicant herein sought an

adjournment from the Council by stating that its counsel

was not available due to him being out of station. The

Order-Sheet of 15.12.2022 recorded by the Facilitation

Council shows that the Council has decided to give another

opportunity to the applicant herein to plead its case, and the

case was adjourned to 30.03.2023 for consideration. The

email dated 24.03.2023 issued by Facilitation Council shows

that the proceedings were thereafter fixed on 06.04.2023.

Mr. Pankaj Miglani, learned counsel for the respondent,

states that the next date fixed by the Council was

11.04.2023, on which date the applicant herein sought time

to file its statement of defense. Thus, it is argued by Mr.

Miglani, learned counsel for the respondent that the

arbitration stands commenced before the Council which

itself is acting as an Arbitral Tribunal.

7. The submission of learned counsel for the applicant is

that the Council has yet not nominated any Arbitrator, even

though it has a panel of Arbitrators. Thus, according to him,

the arbitration has still not commenced before the Council.

8. A perusal of the Supplementary Affidavit and the

orders passed by the Facilitation Council has now cleared

the doubts which were raised by me in the order dated

13.01.2023. Section 18(3) of the MSMED Act shows that if

the conciliation initiated under Section 18(2) of the MSMED

Act 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 it to any

institution or centre providing alternate dispute resolution

services for such arbitration, to which the provisions of the

Arbitration and Conciliation Act, 1996 shall apply as if the

arbitration was in pursuance of an arbitration agreement

referred to in Section 7(1) of the Arbitration and Conciliation

Act. Thus, the Council is not obliged to refer the dispute or

claim to any other Arbitrator, or alternate dispute resolution

service provider/institution or centre. It can itself act as the

Arbitral Tribunal.

9. In the present case, the Council has itself chosen

to act as an Arbitral Tribunal, which it was empowered to do

under Section 18(2) of the MSMED Act. Clearly, the said

Council entered upon a reference and commenced

arbitration on 06.10.2022. Thus, the submission of learned

counsel for the applicant, that till date the Facilitation

Council has not constituted an Arbitral Tribunal cannot be

accepted.

10. Learned counsel for the applicant has placed

reliance on a judgment of the High Court of Calcutta in A.P.

No. 73 of 2023 Essar Oil and Gas Exploration and

Production Limited vs. Gargi Travels Private Limited,

decided on 20.04.2023, to submit that mere pendency of a

reference under Section 18 of the MSMED Act before the

MSME Facilitation Council would not rob the Court of its

jurisdiction to appoint an Arbitrator under Section 11 of the

Arbitration and Conciliation Act, 1996.

11. I have considered the said judgment. It appears

that the said judgment was rendered at the stage when the

Council had not, either initiated the arbitration on its own,

or referred the matter to any institution or centre for

initiation of arbitration. However, the material difference in

the present case is that the Council has itself initiated

arbitral proceedings on 06.10.2022, i.e. before the

constitution of an Arbitral Tribunal by this Court under

Section 11 of the Act.

12. For all the aforesaid reasons, since the disputes

between the parties are already pending in arbitration

before the Facilitation Council, I am not inclined to appoint

an Arbitral Tribunal. The Application is, accordingly,

rejected.

________________ VIPIN SANGHI, C.J.

Dt: 28th April, 2023 Rathour