Case Note & Summary
The dispute arose between the parties regarding the non-payment for TMT bars supplied by the respondent to the appellant, amounting to Rs. 2,44,92,846, of which Rs. 1,24,50,000 was paid. The respondent approached the Facilitation Council under the MSMED Act for resolution, but the Council dismissed the application on jurisdictional grounds, stating it could not conduct a thorough inquiry. The respondent then filed a writ petition in the High Court, which was dismissed on the basis that the Council's order constituted an award under the Arbitration and Conciliation Act, making it appealable under Section 34. The appellant contended that the Council's order was not an award and thus not subject to appeal. The respondent argued that the order was indeed an award and could be challenged in court. The Supreme Court noted that the MSMED Act mandates a specific procedure for dispute resolution, which includes conciliation followed by arbitration if conciliation fails. The Court found that the Facilitation Council did not adhere to this procedure, as it failed to initiate arbitration after conciliation was unsuccessful. Consequently, the Court quashed the High Court's order and the Council's decision, remitting the matter back to the Facilitation Council for fresh proceedings in accordance with the law, directing completion within six months. No costs were awarded.
Headnote
A) Arbitration Law - Definition of Award - The order of the Facilitation Council cannot be deemed an award as it did not conclusively settle the dispute. - Arbitration and Conciliation Act, 1996, Section 34 - The Facilitation Council's order was based on jurisdictional grounds and did not follow the required procedure for arbitration, thus not amenable to appeal under Section 34. Held that the order was not an award (Paras 6-10). B) MSMED Act - Procedure for Dispute Resolution - The procedure under Section 18 of the MSMED Act must be followed for resolving disputes between suppliers and buyers. - MSMED Act, 2006, Section 18 - The court emphasized that the Facilitation Council must act as both conciliator and arbitrator, and failure to initiate arbitration after unsuccessful conciliation necessitated remittance of the case for fresh proceedings. Held that the Facilitation Council must follow the prescribed procedure (Paras 9-12).
Issue of Consideration
Whether the order of the Facilitation Council can be considered an award under the Arbitration and Conciliation Act, 1996, and whether the High Court erred in dismissing the writ petition based on the availability of an alternate remedy.
Final Decision
The Supreme Court quashed the order of the Facilitation Council and the High Court's judgment, remitting the matter back to the Facilitation Council to follow the required procedure under Section 18 of the MSMED Act, directing completion within six months.
Law Points
- Arbitration and Conciliation Act
- 1996
- MSMED Act
- 2006
- Conciliation
- Arbitration
- Jurisdiction
- Alternate Dispute Resolution
