Case Note & Summary
The Petitioner, M/s. Magnum Opus IT consulting Private Limited, a company engaged in e-governance, challenged an order dated 03/02/2021 passed by the learned District Judge, Nashik, allowing an application under Section 29-A of the Arbitration and Conciliation Act, 1996 filed by the Respondent, M/s. Artcad Systems, a proprietorship concern registered under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). The Respondent had supplied spare parts and raw materials to the Petitioner for manufacturing Active Tracker Machines and claimed an amount of Rs.1,30,33,000/- was due. The Respondent referred the dispute to the Micro, Small and Medium Enterprises Facilitation Council under Section 18 of the MSMED Act. Conciliation failed, and the Council took up arbitration. The Petitioner failed to appear before the Council on three occasions, leading to closure of the matter on 29/07/2017. Subsequently, this Court in Arbitration Petition (LODG) No.20093 of 2017 revived the arbitration proceedings and directed the Respondent to file a statement of claim. However, no progress occurred for nearly three years. Since the one-year period under Section 29-A of the Arbitration Act expired, the Respondent applied to the District Court for extension of mandate and substitution of the arbitrator. The Petitioner opposed, claiming the Respondent was responsible for the delay. The District Judge allowed the application and appointed retired Judge Mr. Vivek R. Agrawal as sole arbitrator. The High Court upheld this order, holding that the Petitioner had ample opportunity to participate but chose not to, and the delay was not solely attributable to the Respondent. The Court found no error in the District Judge's exercise of discretion and dismissed the writ petition.
Headnote
A) Arbitration Law - Extension of Arbitral Mandate - Section 29-A Arbitration and Conciliation Act, 1996 - The District Judge allowed the application for extension of mandate and substitution of arbitrator after the one-year period expired due to the Petitioner's failure to appear before the Facilitation Council. The High Court upheld the order, noting that the Petitioner had ample opportunity to participate but chose not to, and the delay was not solely attributable to the Respondent. (Paras 1-10) B) Micro, Small and Medium Enterprises - Reference to Facilitation Council - Sections 17, 18 MSMED Act, 2006 - The Respondent, a supplier registered under the MSMED Act, referred the dispute to the Facilitation Council for recovery of dues. Conciliation failed, and the Council took up arbitration. The High Court held that the Council's proceedings were valid and the District Court's intervention under Section 29-A was proper. (Paras 3-5) C) Arbitration Law - Substitution of Arbitrator - Section 29-A(6) Arbitration and Conciliation Act, 1996 - The District Court appointed a retired judge as sole arbitrator after the mandate of the Council expired. The High Court found no error in this substitution, as the Council had failed to conclude the arbitration within the stipulated time. (Paras 6-10)
Issue of Consideration
Whether the District Judge was justified in allowing the application under Section 29-A of the Arbitration and Conciliation Act, 1996 for extension of the arbitral mandate and substitution of the arbitrator, given the delay in proceedings and the Petitioner's non-participation.
Final Decision
The High Court dismissed the writ petition, upholding the order of the District Judge, Nashik, dated 03/02/2021, which allowed the application under Section 29-A of the Arbitration and Conciliation Act, 1996 and appointed retired Judge Mr. Vivek R. Agrawal as the sole Arbitrator.
Law Points
- Section 29-A of the Arbitration and Conciliation Act
- 1996
- Extension of mandate
- Substitution of arbitrator
- Micro
- Small and Medium Enterprises Development Act
- 2006
- Section 18
- Section 17
- Arbitration proceedings
- Delay
- Non-participation
