Case Note & Summary
The arbitration petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 was filed by the petitioner, a proprietary concern acting as exclusive stockist of the respondent manufacturer of kitchen appliances, seeking appointment of an arbitrator to resolve disputes arising from the termination of the distributorship and non‑supply of spare parts. The parties’ relationship was governed by an appointment letter dated 24 February 2012 containing an arbitration clause. After undergoing business transactions over several years, the petitioner invoked arbitration by notice dated 6 May 2017, proposing three names, but the respondent did not respond. The petitioner then approached the High Court under Section 11(6). The respondent filed a reply raising two preliminary objections: first, that the appointment letter was forged because the email ID printed on its letterhead was created only in 2013, and second, that being a small scale enterprise under the Micro, Small and Medium Enterprises Development Act, 2006, the MSMED Act ousted the court’s jurisdiction under Section 11 by virtue of Section 18(4) of that Act, even though no reference had been made to the Facilitation Council under Section 18(1). The court framed the core legal question as whether Section 11 jurisdiction is taken away merely by the respondent’s MSME status when no reference under Section 18(1) has been invoked. The court noted the substantial correspondence between the parties, including purchase orders, complaints, and an apology email from the respondent, which prima facie indicated the existence of a business relationship. The respondent’s forgery plea rested on the assertion that the email ID appearing on the 2012 letter was created only in 2013. The court was called upon to examine these objections within the limited scope of Section 11(6A) of the Arbitration Act. As per the text provided, no final order was recorded, and the matter remained under consideration.
Headnote
A) Arbitration - Appointment of Arbitrator - Section 11(6) read with Section 11(6A) of Arbitration and Conciliation Act, 1996 - Jurisdiction - Preliminary objection raised that respondent being a small scale enterprise under MSMED Act, 2006, Section 18(4) ousts court’s jurisdiction despite no reference made under Section 18(1) - Court yet to determine whether Section 18(4) is applicable where no party has invoked Section 18(1) before the Facilitation Council (Paras 2, 10). B) Arbitration - Existence of Arbitration Agreement - Forgery Allegation - Section 7 read with Section 11(6A) of Arbitration Act - Respondent contends appointment letter dated 24 February 2012 is fabricated as email ID on letterhead did not exist until 2013 - Court to make prima facie assessment of existence of agreement based on documentary evidence and business correspondence placed on record (Paras 9-10).
Issue of Consideration
Whether the jurisdiction of the High Court under section 11 of the Arbitration and Conciliation Act, 1996 is ousted merely because the respondent is a small scale enterprise under the Micro, Small and Medium Enterprises Development Act, 2006, when no application/reference has been made by the respondent invoking the provisions of Section 18(1) of the MSMED Act.
Final Decision
Decision not clearly stated
Law Points
- Legal points not extracted
- Section 11(6) of Arbitration and Conciliation Act
- 1996 invoked for appointment of arbitrator when respondent fails to appoint
- Section 18(4) of MSMED Act
- 2006 may override other laws only when reference is made under Section 18(1)
- Prima facie examination of arbitration agreement under Section 11(6A) includes consideration of forgery allegations
- Jurisdiction of court under Section 11 is not automatically ousted solely by respondent’s MSME status without a reference to Facilitation Council.
