Case Note & Summary
The petitioner, Nexus Infratech, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award passed by the Micro and Small Enterprise Facilitation Council (Respondent No. 1) in favor of Sikco Engineering Services (Respondent No. 2). The dispute arose from a contract for supply of goods and services. The petitioner contended that the Facilitation Council lacked jurisdiction because the respondent was not a 'supplier' under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). The petitioner also argued that the award was passed without proper opportunity of hearing. The respondent argued that the petitioner had admitted liability in several emails and letters and had participated in the proceedings without raising any objection to jurisdiction. The court examined the record and found that the petitioner had indeed admitted the debt and had not objected to the jurisdiction of the Facilitation Council at any stage. The court held that the petitioner had waived the right to challenge jurisdiction. The court further held that the award was based on admission and was not patently illegal or in conflict with public policy. The court dismissed the petition, upholding the award.
Headnote
A) Arbitration Law - Challenge to Arbitral Award - Section 34 of Arbitration and Conciliation Act, 1996 - Jurisdiction of Facilitation Council - The petitioner challenged the award on the ground that the Facilitation Council lacked jurisdiction as the respondent was not a 'supplier' under the MSMED Act. The court held that the petitioner had admitted liability in correspondence and participated in proceedings without objection, thereby waiving the right to challenge jurisdiction. (Paras 1-10) B) MSME Law - Admission of Liability - Section 18 of Micro, Small and Medium Enterprises Development Act, 2006 - The court noted that the petitioner had admitted the debt in emails and letters, and the award was based on such admission. The court found no patent illegality or perversity in the award. (Paras 5-8) C) Arbitration Law - Scope of Section 34 - Section 34 of Arbitration and Conciliation Act, 1996 - The court reiterated that the scope of interference under Section 34 is narrow and does not permit reappreciation of evidence. The award was not found to be in conflict with public policy or patently illegal. (Paras 9-10)
Issue of Consideration
Whether the arbitral award passed under the Micro, Small and Medium Enterprises Development Act, 2006 is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on grounds of lack of jurisdiction and violation of principles of natural justice.
Final Decision
The petition is dismissed. The arbitral award is upheld.
Law Points
- Section 34 of Arbitration and Conciliation Act
- 1996
- Micro
- Small and Medium Enterprises Development Act
- 2006
- Section 18 of MSMED Act
- Jurisdiction of Facilitation Council
- Admission of liability
- Waiver of right to object
