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2016 (6) TMI 1444 - HC - Indian LawsReference of matter for arbitration in exercise of powers under Section 8 of the Act, 1996 - Section 8 of the Arbitration and Conciliation Act, 1996 - HELD THAT:- It is not in dispute that the parties are not governed by the provisions of Micro, Small and Medium Enterprises Development Act, 2006. In that view of the matter, if there is any dispute between the parties, the dispute is required to be resolved by following procedure as required under Section 18 of the Act, 2006. Earlier when the respondent approached Council, without following any procedure as required under Section 18(2) of the Act, 2006, the Council declared the award and at that time also the application submitted by the appellant, submitted under Section 8 of the Arbitration Act, 1996 was pending. Application for setting aside decree, award or order: No application for setting aside any decree, award or other order made either by the Council itself or by any institution or centre providing alternate dispute resolution services to which a reference is made by the Council, shall be entertained by any court unless the appellant (not being a supplier) has deposited with it seventy five per cent of the amount in terms of the decree, award or, as the case may be, the other order in the manner directed by such court: Provided that pending disposal of the application to set aside the decree, award or order, the court shall order that such percentage of the amount deposited shall be paid to the supplier, as it considers reasonable under the circumstances of the case subject to such conditions as it deems necessary to impose - Establishment of Micro and Small Enterprises Facilitation Council:The State Government shall, by notification, establish one or more Micro and Small Enterprises Facilitation Councils, at such places, exercising such jurisdiction and for such areas, as may be specified in he notification. It cannot be disputed that the Act 2006 is a Special Act and as per Section 24 of the Act, 2006, 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. Therefore, Section 18 of the Act, 2006 would have overriding effect or any other law for the time being in force including Arbitration Act, 1996 and therefore, if there is any dispute between the parties governed by the Act, 2006, the said dispute is required to be resolved only through the procedure as provided under Section 18 of the Act, 2006. Thus, considering Section 18 of the Act, 2006, after conciliation has failed as per Section 18(2) of the Act, 2006, thereafter as per subsection (3) of Section 18, where the conciliation initiated under subsection (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 (26 of 1996) shall then apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in subsection (1) of section 7 of that Act - In the present case, therefore, after unsuccessful conciliation which was conducted as per subsection (2) of Section 18 the Council shall have jurisdiction to take up dispute for arbitration. Therefore, once the Council itself is acting as an Arbitrator in that case, thereafter the Council who acts as an Arbitrator has no authority and / or jurisdiction to entertain the application under Section 8 of the Arbitration Act, 1996. The Division Bench of the Allahabad High Court in the case of Paper and Board Convertors [2014 (4) TMI 1286 - 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 subsection (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. No error has been committed by the learned Council in not entertaining the application under Section 8 of the Arbitration Act, 1996. There are no reason to interfere with the order passed by the learned Council. Considering the subsection (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 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. The present appeal is dismissed.
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