Case Note & Summary
The petitioner, Gammon Engineers & Contractors Pvt. Ltd., challenged an arbitral award dated 24 September 2020 passed by the Facilitation Council under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). The respondent, Sahay Industries, had supplied fabricated metal to the petitioner under a sub-contract between 2010 and 2014. The respondent claimed amounts were due and approached the Facilitation Council under Section 18 of the MSMED Act for arbitration. The petitioner raised a preliminary objection on limitation before the Council, which was not addressed in the award. The petitioner then filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 before the Bombay High Court. The respondent raised a preliminary objection on territorial jurisdiction, arguing that the court at Mumbai lacked jurisdiction. The court considered two issues: territorial jurisdiction and limitation. On jurisdiction, the court held that under Section 42 of the Arbitration Act, where an arbitration is held, the court having jurisdiction over that place has exclusive jurisdiction over subsequent applications. Since the arbitration was held in Mumbai, this Court had jurisdiction. On limitation, the court held that the period of limitation for initiating arbitration under Section 18 of the MSMED Act is governed by Article 137 of the Limitation Act, 1963, which provides three years from when the right to apply accrues. The court found that the last supply was in 2014 and the arbitration was initiated in 2017, within three years, and thus the claim was not barred by limitation. The court dismissed the petition.
Headnote
A) Arbitration - Limitation - Article 137 of Limitation Act, 1963 - Section 18 of MSMED Act, 2006 - The court held that the period of limitation for initiating arbitration under Section 18 of the MSMED Act is governed by Article 137 of the Limitation Act, 1963, which provides a period of three years from when the right to apply accrues. The court found that the respondent's claim was not barred by limitation as the last supply was in 2014 and the arbitration was initiated in 2017, within three years. (Paras 1-21) B) Arbitration - Territorial Jurisdiction - Section 42 of Arbitration Act, 1996 - Section 18 of MSMED Act, 2006 - The court held that under Section 42 of the Arbitration Act, 1996, where an arbitration is held, the court having jurisdiction over that place has exclusive jurisdiction over subsequent applications. Since the arbitration was held in Mumbai, this Court had territorial jurisdiction. (Paras 1-21)
Issue of Consideration
Whether this Court has territorial jurisdiction to entertain the petition under Section 34 of the Arbitration Act, 1996, and whether the impugned award passed by the Facilitation Council under the MSMED Act is barred by limitation.
Final Decision
The court dismissed the petition, holding that it had territorial jurisdiction under Section 42 of the Arbitration Act and that the claim was not barred by limitation as the arbitration was initiated within three years from the last supply in 2014.
Law Points
- Limitation for arbitration under MSMED Act governed by Article 137 of Limitation Act
- 1963
- Territorial jurisdiction under Section 42 of Arbitration Act
- 1996
- Section 18 of MSMED Act
- 2006
