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TMI Blog2023 (4) TMI 1374X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners seek setting aside of all proceedings initiated or being conducted by the Facilitation Council under Arbitration Case no. 04 of 2018. The petitioner no. 1 is the buyer and the respondent no. 2 is the supplier in transactions entered into between the parties in 2013. The writ petition does not give any particulars of the transactions. 2. The expressions "buyer" and "supplier" are being used as defined under section 2(d) and (n) respectively of The Micro, Small and Medium Enterprises Development Act, 2006. The petitioner no. 1 is the respondent in an ongoing arbitration proceeding pending before the Council. The proceedings were initiated by the respondent no. 2 as the supplier / claimant. The respondent no. 2 admittedly supplied goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an arbitrator. Counsel further submits that the claim of the respondent no. 2 as a supplier is not maintainable since its registration under the MSMED Act is subsequent to the date of the transaction. 5. The preliminary objection raised on behalf of the respondent no. 2 on the maintainability of the writ petition is required to be dealt with first. The petitioners have sought for issuance of a writ in the nature of mandamus for quashing of the arbitration proceeding pending before the Facilitation Council. The provisions of The Arbitration and Conciliation Act, 1996, however provide for several routes of statutory redress to an aggrieved party. This would include section 34 which gives recourse to a party against an arbitral award; sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st-conciliation scenario on the failure of the conciliation proceedings where a Council is under a mandate to then take up the dispute for arbitration either by itself or refer it to a center providing ADR services. Section 18(3) further provides that the dispute shall be decided under the provisions of the 1996 Act as if the arbitration is pursuant to an arbitration agreement as defined under section 7(1) of the 1996 Act. 7. The above provisions of the MSMED Act hence makes it clear that the Facilitation Council has been conferred with exclusive powers to decide a dispute under the provisions of the 1996 Act after the failure of the conciliation proceedings. The fact that the conciliation failed would appear from the Council's letter date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown by the Court is more of a self-imposed restraint. The Court in such cases generally directs the parties to explore and exhaust the alternative remedy available to them and seek recourse before the alternative forum. In the present case, the 1996 Act was enacted for the purpose of consolidating laws relating to domestic and international commercial arbitration. The MSMED Act of 2006 is a special statute as it was specifically enacted for facilitating the promotion and development of micro, small and medium Enterprises and enhancing their competitiveness. 10. The alternative statutory remedy in the present case is not only sufficient and effective but also multi-layered. The petitioners can seek recourse through any of the remedies ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Supplier under section 2(n) of the MSMED Act. The decision of a Division Bench of the Bombay High Court in JSW Steel Ltd. vs. Kamlakar V. Salvi; Writ Petition No. 12897 of 2016 considered the constitutional validity of section 16 of the MSMED Act. The Court relied upon Silpi Industries and held that the supplier should have a permanent registration certificate under section 8 of the MSMED Act. A Single Bench decision of the Gujarat High Court in Anupam Industries Ltd. vs. The State Level Industry Facilitation Council; R/Special Civil Application No. 2825 of 2020 follows the Bombay High Court decision in JSW Steel. The Court was of the view that the Facilitation Council can have jurisdiction only where the supplier is registered unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The District Industries Center, Directorate of Cottage and Small Scale Industries was the notified authority in the State at the relevant point of time. Even otherwise, according to learned counsel for the parties, the admitted fact is that the petitioners have already made part payment to the respondent no. 2 of about Rs. 36 lakhs and approximately Rs. 50 lakhs stands outstanding as on date - as submitted by counsel. 14. In Marine Craft Engineers Private Limited vs. Garden Reach Shipbuilders and Engineers Limited decided by this Court in A.P. No. 831 of 2018 it was held that the date of execution of a contract between a buyer and a supplier under the MSMED Act loses relevance for the application of the said Act provided the supplier cla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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