Case Note & Summary
The case involved an appeal against a Karnataka High Court order that ruled the Delhi Arbitration Centre lacked jurisdiction over arbitral proceedings due to a contractual agreement specifying Bengaluru as the seat of arbitration. The appellant, a registered supplier under the Micro, Small and Medium Enterprises (Development) Act, 2006 (MSMED Act), had entered into an agreement with the Indian Space and Research Organisation (ISRO) for construction work. Disputes arose, leading the appellant to invoke the jurisdiction of the Facilitation Council in Delhi under Section 18 of the MSMED Act. The Council attempted conciliation, but the respondent refused to participate, prompting the Council to refer the dispute to arbitration. The Delhi Arbitration Centre appointed an arbitrator, but the respondent challenged this in the High Court, which granted a stay on proceedings and ruled the Centre's jurisdiction invalid. The Supreme Court, however, found that the MSMED Act, being a special law, overrides the Arbitration Act, 1996, and thus the Delhi Arbitration Centre had jurisdiction. The Court emphasized that statutory provisions cannot be overridden by private agreements and directed the continuation of arbitral proceedings in Delhi. The appeal was allowed, and the High Court's order was set aside, with no costs awarded.
Headnote
A) Arbitration Law - Jurisdiction of Arbitration Centre - Jurisdiction of Delhi Arbitration Centre restored - Micro, Small and Medium Enterprises (Development) Act, 2006, Section 18 - The High Court's ruling that the Delhi Arbitration Centre lacked jurisdiction was overturned, affirming that the MSMED Act has an overriding effect over the Arbitration and Conciliation Act, 1996, allowing arbitration to proceed in Delhi despite the contractual seat being Bengaluru. Held that the statutory provisions of the MSMED Act prevail over private agreements (Paras 2-13).
Issue of Consideration
Whether the Delhi Arbitration Centre had jurisdiction to manage arbitral proceedings given the contractual agreement specifying Bengaluru as the seat of arbitration.
Final Decision
The Supreme Court allowed the appeal, set aside the Karnataka High Court's order dated 22.04.2024, and directed the continuation of arbitral proceedings under the Delhi Arbitration Centre.
Law Points
- jurisdiction
- arbitration
- MSMED Act
- overriding effect
- conciliation
- Facilitation Council
