Case Note & Summary
The petitioner, M/s. Microvision Technologies Pvt. Ltd., a company registered under the Indian Companies Act, 1956, had entered into a contract with the respondent no.2, Union of India through the General Manager, Central Railway. The contract contained an arbitration agreement in clauses 63 and 64 of the General Conditions of the Contract. Being a micro/small enterprise, the petitioner invoked Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) and approached the Micro & Small Enterprises Facilitation Council (respondent no.1) for conciliation. The conciliation proceedings failed and were terminated. Thereafter, the petitioner issued a notice on 25th May 2016 to the Council and the General Manager, Central Railway, but the Council did not refer the dispute to arbitration as contemplated under Section 18(3) of the MSMED Act. Consequently, the petitioner filed three arbitration petitions under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of a retired Judge of the Bombay High Court as sole arbitrator. The Court noted that there was no dispute regarding the existence of the arbitration agreement and that conciliation had failed. The Court held that the Council's failure to refer the matter to arbitration does not bar the High Court from exercising its power under Section 11(6) to appoint an arbitrator. Accordingly, the Court allowed the petitions and appointed a retired Judge as sole arbitrator to adjudicate the disputes between the parties.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11(6) Arbitration and Conciliation Act, 1996 - Section 18 Micro, Small and Medium Enterprises Development Act, 2006 - The petitioner invoked Section 18 of MSMED Act before the Facilitation Council for conciliation, which failed. The Council did not refer the dispute to arbitration as required under Section 18(3). The petitioner then filed a petition under Section 11(6) of the Arbitration and Conciliation Act for appointment of an arbitrator. The Court held that the Council's failure to refer the matter to arbitration does not preclude the High Court from exercising its power under Section 11(6) to appoint an arbitrator, as the arbitration agreement exists and conciliation has failed. (Paras 1-4)
Issue of Consideration
Whether the High Court can appoint an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 when the Micro & Small Enterprises Facilitation Council failed to refer the dispute to arbitration after conciliation failed under Section 18 of the MSMED Act, 2006.
Final Decision
The Court allowed the arbitration petitions and appointed a retired Judge of the Bombay High Court as sole arbitrator to adjudicate the disputes between the petitioner and respondent no.2.
Law Points
- Section 11(6) of Arbitration and Conciliation Act
- 1996
- Section 18 of Micro
- Small and Medium Enterprises Development Act
- 2006
- Arbitration agreement
- Conciliation failure
- Appointment of arbitrator
Case Details
2016 LawText (BOM) (12) 39
Arbitration Petition No.43 of 2016 along with Arbitration Petition No.44 of 2016 and Arbitration Petition No.45 of 2016
Mr. A.P. Bhandari i/by Ms. Chaitrali Deshmukh for the petitioner, Mr. A.A. Parkar for the respondent no.1, Mr. T.J. Pandian for the respondent no.2
M/s. Microvision Technologies Pvt. Ltd.
1. Micro & Small Enterprises Facilitation Council, 2. Union of India
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Nature of Litigation
Petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator.
Remedy Sought
Appointment of a retired Judge of the Bombay High Court as sole arbitrator to decide the dispute between the petitioner and respondent no.2.
Filing Reason
The conciliation proceedings under Section 18 of the MSMED Act failed, and the Facilitation Council did not refer the dispute to arbitration.
Previous Decisions
Conciliation proceedings between the parties failed and were terminated.
Issues
Whether the High Court can appoint an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 when the Micro & Small Enterprises Facilitation Council failed to refer the dispute to arbitration after conciliation failed under Section 18 of the MSMED Act, 2006.
Submissions/Arguments
The petitioner submitted that the arbitration agreement exists in clauses 63 and 64 of the General Conditions of the Contract.
The petitioner submitted that conciliation under Section 18 of the MSMED Act failed and the Council did not refer the matter to arbitration.
The respondents did not dispute the existence of the arbitration agreement or the failure of conciliation.
Ratio Decidendi
The failure of the Micro & Small Enterprises Facilitation Council to refer the dispute to arbitration under Section 18(3) of the MSMED Act after conciliation fails does not preclude the High Court from exercising its power under Section 11(6) of the Arbitration and Conciliation Act, 1996 to appoint an arbitrator, as the arbitration agreement exists and conciliation has failed.
Judgment Excerpts
By these three arbitration petitions filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, the petitioner has applied for appointment of any retired Judge of this Court as a sole arbitrator to decide the dispute between the petitioner and the respondent no.2.
There is no dispute that the arbitration agreement is recorded between the parties in clauses 63 and 64 of the General Conditions of the Contract.
There is no dispute that the conciliation proceedings between the parties failed and the conciliation proceedings came to be terminated.
Procedural History
The petitioner invoked Section 18 of the MSMED Act before the Micro & Small Enterprises Facilitation Council for conciliation. Conciliation failed and was terminated. The petitioner issued a notice on 25th May 2016 to the Council and the General Manager, Central Railway. The Council did not refer the dispute to arbitration. The petitioner then filed three arbitration petitions under Section 11(6) of the Arbitration and Conciliation Act, 1996 before the Bombay High Court.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 11(6)
- Micro, Small and Medium Enterprises Development Act, 2006: Section 18, Section 18(1), Section 18(3)
