Case Note & Summary
The judgment involves three writ petitions filed by Morarjee Textiles Ltd., its Head of Finance, and its Executive Director and Chairperson, challenging a reference made by D.C. Weaving Mills Pvt. Ltd. to the Micro and Small Enterprises Facilitation Council, Nagpur, under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). The petitioners also challenged an award passed by the Council. The background is a dispute over unpaid dues for goods supplied by D.C. Weaving Mills to Morarjee Textiles. The Facilitation Council entertained the reference and passed an award. The petitioners argued that the Council lacked jurisdiction because there was no prior arbitration agreement between the parties. They also contended that the award was barred by limitation and that the writ petition was maintainable. The respondents, including the Union of India and the Facilitation Council, argued that Section 18 of the MSMED Act does not require a prior arbitration agreement and that the remedy to challenge the award is under Section 34 of the Arbitration and Conciliation Act, 1996, not by way of a writ petition. The court analyzed the provisions of the MSMED Act, particularly Section 18, which provides for conciliation and arbitration by the Facilitation Council. The court held that the Council has jurisdiction even without a prior arbitration agreement, as the statute itself creates a mechanism for dispute resolution. The court further held that the limitation period under Section 34 of the Arbitration Act applies to awards under the MSMED Act, and a writ petition is not maintainable. The court dismissed all three writ petitions, upholding the jurisdiction of the Facilitation Council and the applicability of the Arbitration Act's limitation provisions.
Headnote
A) Arbitration - Reference to Facilitation Council - Section 18 of Micro, Small and Medium Enterprises Development Act, 2006 - Jurisdiction - The court held that Section 18 of the MSMED Act, 2006 does not require a prior arbitration agreement between the parties for a reference to the Facilitation Council. The Council has jurisdiction to entertain a reference even in the absence of an arbitration agreement, as the statutory scheme provides for conciliation and arbitration. (Paras 10-15) B) Limitation - Setting Aside of Award - Section 34 of Arbitration and Conciliation Act, 1996 - Applicability - The court held that the limitation period under Section 34 of the Arbitration and Conciliation Act, 1996 applies to an award passed under the MSMED Act, 2006. The remedy to challenge the award is under Section 34, and a writ petition is not maintainable. (Paras 16-20) C) Writ Jurisdiction - Maintainability - Arbitration Award - The court held that a writ petition under Article 226 of the Constitution is not maintainable to challenge an arbitration award passed under the MSMED Act, 2006, as the remedy lies under Section 34 of the Arbitration and Conciliation Act, 1996. (Paras 21-25)
Issue of Consideration
Whether the Micro and Small Enterprises Facilitation Council has jurisdiction to entertain a reference under Section 18 of the MSMED Act, 2006 without a prior arbitration agreement, and whether the limitation period under Section 34 of the Arbitration and Conciliation Act, 1996 applies to an award passed under the MSMED Act.
Final Decision
All three writ petitions are dismissed. The court upheld the jurisdiction of the Micro and Small Enterprises Facilitation Council and held that the remedy to challenge the award is under Section 34 of the Arbitration and Conciliation Act, 1996.
Law Points
- Section 18 of MSMED Act
- 2006 does not require a prior arbitration agreement for reference to Facilitation Council
- Limitation for setting aside award under Section 34 of Arbitration and Conciliation Act
- 1996 applies
- Writ petition not maintainable against arbitration award under Section 34 remedy
