Under the Arbitration and Conciliation Act, 1996 and the Micro, Small and Medium Enterprises Development Act…

Arbitration and Conciliation Act, 1996 — Micro, Small and Medium Enterprises Development Act, 2006 — MSME arbitration recourse — Question left open —

Arbitration and Conciliation Act, 1996 — MSMED Act, 2006 — MSME's independent recourse to arbitration — Question left open —

Held: Whether a buyer can independently invoke arbitration under the Arbitration and Conciliation Act, 1996 against an MSME seller, apart from the MSMED Act, 2006 route, was raised but left open for an appropriate future case; the appeal was disposed of by consent, referring the parties to arbitration through the Delhi International Arbitration Centre. (¶2, 6)

Under the Arbitration and Conciliation Act, 1996 and the Micro, Small and Medium Enterprises Development Act, 2006, has the Supreme Court settled whether a buyer can independently invoke arbitration against an MSME seller under the 1996 Act?

No — the question was raised in this appeal but expressly left open, since the parties agreed instead to resolve their dispute by arbitration through the Delhi International Arbitration Centre; it remains available for consideration in an appropriate future case. [¶2, ¶6]

What did the Supreme Court finally decide in this appeal?

The appeal was disposed of by consent: the respondent MSME agreed to arbitration through the Delhi International Arbitration Centre, with the venue fixed at New Delhi and the appellant directed to approach the Centre within two weeks, while the underlying question of law was left open. [¶5, ¶6]

“An interesting question of law was sought to be raised by way of this appeal, that is, whether a buyer of goods or services from a micro or small enterprise (MSME), governed by the Micro, Small and Medium Enterprises Development Act, 2006, can seek to initiate arbitration proceedings in respect of its claim against such MSME by independently taking recourse to the Arbitration and Conciliation Act, 1996.”

“While so, on instructions, Mr. Sanjay Bhaseen, learned senior counsel, appearing for the respondent MSME, stated that the respondent MSME is agreeable to the appointment of an arbitrator through the aegis of the Delhi International Arbitration Centre to resolve the inter se disputes between the parties through the process of arbitration governed by the provisions of the Arbitration and Conciliation Act, 1996. He would, however, submit that as the appellant has its registered office at Ahmedabad, Gujarat, and the respondent MSME, being a proprietorship, has its office at Basti in Uttar Pradesh, the venue of the arbitration may be fixed as New Delhi for the convenience of both parties.”

“Accepting the fair offer made by the learned senior counsel so as to give a quietus to the matter without further ado, the appeal is disposed of requesting the Delhi International Arbitration Centre to appoint a suitable arbitrator to undertake the resolution of the disputes between the appellant, M/s Patel Infrastructure Limited, and the respondent, M/s Aditya Construction under the provisions of the Arbitration and Conciliation Act, 1996. The venue of the arbitration shall be at New Delhi. The appellant shall approach the Delhi International Arbitration Centre within two weeks from the date of receipt of a certified copy of this order.”

“The question of law raised in this appeal is, however, left open to be considered in an appropriate case in future. The appeal is disposed of in the aforestated terms. Parties shall bear their own costs.”