MSME Council Award Can Be Challenged Only U/S 34 Of Arbitration Act, Not Under Articles 226 Or 227: Orissa High Court

The Odisha High Court bench of Chief Justice Chakradhari Sharan Singh and Justice Murahari Sri Raman has upheld that an arbitral award passed by the Micro and Small Enterprises Facilitation Council (MSEFC) could only be challenged in accordance with Section 34 of the Arbitration and Conciliation Act, 1996, as mandated by Section 19 of the MSMED Act. The court held that the Single Judge had rightly declined to entertain the challenge to the award under Article 226/227 of the Constitution,...

Arbitrator Nominated U/S 18(3) MSMED Act Erred In Deciding Merits After Finding Respondent Was Not MSME: Madras HC Upholds Setting Aside Of Award

The Madras High Coury bench of Justices R. Suresh Kumar and C. Saravanan has held that an Arbitrator ought not to decide the case on merits after coming to a conclusion that the respondent was not a Micro, Small, and Medium Enterprise (MSME) and therefore not entitled to invoke the machinery under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. The court upheld the setting aside of the award passed by the Arbitrator.Brief Facts M/s. Sunwin Papers (Respondent)...

Application U/S 34 Of Arbitration Act To Challenge Award Passed U/S 18(4) Of MSMED Act Is Governed By Agreement Between Parties: Bombay HC

The Bombay High Court Bench of Justice Jitendra S. Jain And M.S. Sonak, held that the jurisdiction of the Court to hear the application under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) to challenge the award passed under Section 18(4) of the MSMED Act would be governed by the agreement between the parties which has conferred exclusive jurisdiction to a particular Court. In this case, a case was referred to the High Court to resolve the conflict between two...

"Any Objection Regarding Non-Applicability Of MSMED Act Can Be Decided By Arbitral Tribunal U/S 16 Of A&C Act": Delhi High Court

The Delhi High Court division bench of Chief Justice Manmohan and Justice Tushar Rao Gadela, while hearing an appeal, has upheld the order passed by a single-judge bench wherein it was held that the question of whether an entity was an MSME at the relevant time was to determined by the tribunal under section 16 of A&C Act and not the writ court. Facts Overview: GAIL issued a tender for the service of HDD works at Kochi, Koottanad, Banglore, Manglore, Phase II Section ...

Application Of MSMED Act And Arbitral Tribunal's Jurisdiction Over Contractual Disputes Must Be Determined By Arbitral Tribunal,Not By Court In Writ Jurisdiction: Delhi High Court

The Delhi High Court has clarified the legal position of the intersection between the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) and the Arbitration and Conciliation Act, 1996. The bench of Justice Sanjeev Narula, while hearing a petition filed under Article 226 of the Constitution, seeking to quash a notice requesting the parties to file their Statement of Claims (SoC) and subsequent communications, has clarified the legal position concerning the period of...

90-Day Timeline In Section 18(5) Of MSME Act Is Directory : Calcutta High Court

The Calcutta High Court bench comprising Justice Sabyasachi Bhattacharyya has held that the 90-day timeline for completion of the arbitral proceeding under Section 18(5) of the Micro, Small and Medium Enterprises Development Act, 2006 (MSME Act) is directory, not mandatory, and does not terminate or affect the validity of mandate of the MSME Facilitation Council as Arbitrator. It further held that the Court does not have jurisdiction to substitute the Council or its nominee by another...

MSME Act Doesn't Bar Independent Arbitration Under Arbitration And Conciliation Act Based On Agreement Clause: Calcutta High Court

The Calcutta High Court bench of Justice Sabyasachi Bhattacharyya has held that Section 18 of the MSME Act does not create any substantive rights or liabilities but simply offers an alternative method for resolving disputes outside of court proceedings. The bench held that if a party involved in a dispute chooses to pursue arbitration independently under the Arbitration and Conciliation Act, 1996, based on an arbitration clause in the agreement between the parties, the MSME Act does...

MSMED Act Prevail Over Arbitration Act, Seller Can Approach Facilitation Council Even In Presence Of Arbitration Act: Telangana High Court

The Telangana High Court bench of Justice B. Vijaysen Reddy held that the provisions of the MSMED Act, 2006 will prevail over the Arbitration and Conciliation Act, 1996. The bench held that even if parties have an arbitration agreement, if the seller falls under the purview of the MSMED, it has the right to seek resolution through the designated authority for its claims. Brief Facts: The Applicant, engaged in electricity production in Gurha, Bikaner, Rajasthan, sought to purchase...

Court Must Assign Reasons When Releasing Amount Under Section 19 of MSME Act: Telangana High Court

The Telangana High Court bench of Chief Justice Alok Aradhe and Justice Anil Kumar Jukanti has held that the court while dealing with a prayer under Section 19 Micro, Small and Medium Enterprises Development Act, 2006 to release the amount has to assign reasons for releasing such percentage of the amount. Section 19 of the MSME Act provides that the court may permit the release of a portion of the deposited amount to the supplier pending the decision on the application to set aside...

Madras High Court: MSME Corporate Debtor Can't Misuse Clean Slate Theory To Withhold Information When Its Management Had A Duty To Disclose

The Madras High Court bench of Justice N. Seshasayee held that an MSME Corporate Debtor cannot exploit the Clean Slate Theory by withholding information, especially when its management, which remained in control, had a duty to disclose such information. Background Facts: National Sewing Thread Co. Ltd. (Petitioner), a public limited company registered under the MSME Act, 2006, had obtained financial assistance from the Indian Overseas Bank ('IOB'). Due to substantial business...

Allahabad High Court Dismisses Writ Petition Against Facilitation Council Award For Lack Of Mandatory Pre-Deposit U/S 19 MSME Act

The Allahabad High Court has dismissed a writ petition challenging the award passed by the Zonal Micro and Small Enterprises, Facilitation Council (MSEFC), Meerut Zone, Meerut under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 as the petitioners, Tamil Nadu Generation And Distribution Corporation Limited and others, had refused to make the mandatory pre-deposit under Section 19 of the MSME Act.The Court held that even though principles of natural justice have been...

Proper Recourse Against Arbitral Proceeding Under MSMED Act Is Application u/s 18(3) Of MSMED Act Or u/s 16 Of Arbitration Act: Delhi High Court

The Delhi High Court division bench of Acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora held that the proper recourse against proceedings under the MSMED Act is to file an application under Section 18(3) of the MSMED Act or Section 16 of the Arbitration Act. Further, the bench held that in case an award has been passed, then the proper recourse is to file objections under Section 34 of the Arbitration Act. Section 18(3) of MSMED Act: “(3) Where the...