9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (6) TMI 1444 - HC - Indian LawsReference of matter for arbitration in exercise of powers under Section 8 of the Act 1996 - Section 8 of the Arbitration and Conciliation Act 1996 - HELD THAT - It is not in dispute that the parties are not governed by the provisions of Micro Small and Medium Enterprises Development Act 2006. In that view of the matter if there is any dispute between the parties the dispute is required to be resolved by following procedure as required under Section 18 of the Act 2006. Earlier when the respondent approached Council without following any procedure as required under Section 18(2) of the Act 2006 the Council declared the award and at that time also the application submitted by the appellant submitted under Section 8 of the Arbitration Act 1996 was pending. Application for setting aside decree award or order No application for setting aside any decree award or other order made either by the Council itself or by any institution or centre providing alternate dispute resolution services to which a reference is made by the Council shall be entertained by any court unless the appellant (not being a supplier) has deposited with it seventy five per cent of the amount in terms of the decree award or as the case may be the other order in the manner directed by such court Provided that pending disposal of the application to set aside the decree award or order the court shall order that such percentage of the amount deposited shall be paid to the supplier as it considers reasonable under the circumstances of the case subject to such conditions as it deems necessary to impose - Establishment of Micro and Small Enterprises Facilitation Council The State Government shall by notification establish one or more Micro and Small Enterprises Facilitation Councils at such places exercising such jurisdiction and for such areas as may be specified in he notification. It cannot be disputed that the Act 2006 is a Special Act and as per Section 24 of the Act 2006 the provisions of sections 15 to 23 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Therefore Section 18 of the Act 2006 would have overriding effect or any other law for the time being in force including Arbitration Act 1996 and therefore if there is any dispute between the parties governed by the Act 2006 the said dispute is required to be resolved only through the procedure as provided under Section 18 of the Act 2006. Thus considering Section 18 of the Act 2006 after conciliation has failed as per Section 18(2) of the Act 2006 thereafter as per subsection (3) of Section 18 where the conciliation initiated under subsection (2) is not successful and stands terminated without any settlement between the parties the Council shall either itself take up the dispute for arbitration or refer to it any institution or centre providing alternate dispute resolution services for such arbitration and the provisions of the Arbitration and Conciliation Act 1996 (26 of 1996) shall then apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in subsection (1) of section 7 of that Act - In the present case therefore after unsuccessful conciliation which was conducted as per subsection (2) of Section 18 the Council shall have jurisdiction to take up dispute for arbitration. Therefore once the Council itself is acting as an Arbitrator in that case thereafter the Council who acts as an Arbitrator has no authority and / or jurisdiction to entertain the application under Section 8 of the Arbitration Act 1996. The Division Bench of the Allahabad High Court in the case of Paper and Board Convertors 2014 (4) TMI 1286 - ALLAHABAD HIGH COURT has set aside the order passed by the Facilitation Council directing the parties to place it version before the sole arbitrator in terms of the rate contract agreement and restored the proceedings back to the Council and directed the Council to act in accordance with the provisions of subsection (3) of Section 18 and either conduct the arbitration itself or refer the arbitral proceedings to any institution or centre providing alternate dispute resolution services. No error has been committed by the learned Council in not entertaining the application under Section 8 of the Arbitration Act 1996. There are no reason to interfere with the order passed by the learned Council. Considering the subsection (1) of Section 18 of the Act 2006 the Facilitation Council has jurisdiction to act as Arbitrator and / or conciliator any dispute between the parties and that Council had only one of two courses of action open to it either to conduct an arbitration itself or to refer the parties to a centre or institution providing alternate dispute resolution services stipulated in Section 18(3) of the Act 2006. The present appeal is dismissed.
Issues Involved:
1. Jurisdiction of the Council under Section 8 of the Arbitration and Conciliation Act, 1996. 2. Applicability of the Micro, Small and Medium Enterprises Development Act, 2006. 3. Whether the Council can be considered a "Judicial Authority" under the Arbitration Act, 1996. 4. The validity of the conciliation and arbitration proceedings conducted by the Council. 5. The impact of previous judicial directions on the Council's decision-making. Detailed Analysis: 1. Jurisdiction of the Council under Section 8 of the Arbitration and Conciliation Act, 1996: The appellant argued that the Council erred in not referring the dispute for arbitration under Section 8 of the Arbitration Act, 1996. The Council, however, held that it lacked jurisdiction to entertain the application under Section 8, as it did not consider itself a "Judicial Authority." The Court upheld the Council's decision, stating that once the Council acts as an Arbitrator under Section 18(3) of the MSMED Act, 2006, it cannot entertain an application under Section 8 of the Arbitration Act, 1996. 2. Applicability of the Micro, Small and Medium Enterprises Development Act, 2006: The Court emphasized that the MSMED Act, 2006, being a special act, overrides other laws, including the Arbitration Act, 1996. Section 18 of the MSMED Act mandates that disputes involving parties governed by this Act must be resolved through the procedures specified therein, which include conciliation and arbitration conducted by the Council. 3. Whether the Council can be considered a "Judicial Authority" under the Arbitration Act, 1996: The appellant relied on Supreme Court decisions to argue that the Council should be considered a "Judicial Authority." However, the Court found that the Council, while acting under Section 18 of the MSMED Act, does not perform judicial or quasi-judicial functions and thus cannot be considered a "Judicial Authority" under Section 2(e) of the Arbitration Act, 1996. 4. The validity of the conciliation and arbitration proceedings conducted by the Council: The Court noted that the Council initially conducted conciliation proceedings, which failed, leading to arbitration. The Division Bench had previously remanded the matter to the Council, directing it to proceed with arbitration in accordance with Section 18 of the MSMED Act. The Council's subsequent decision to reject the application under Section 8 of the Arbitration Act was found to be consistent with the statutory framework and previous judicial directions. 5. The impact of previous judicial directions on the Council's decision-making: The appellant contended that the Division Bench's order in Letters Patent Appeal No. 1997 of 2011 required the Council to entertain the application under Section 8 of the Arbitration Act. However, the Court clarified that the Division Bench had only directed the Council to decide the application, not necessarily to entertain it. The Council's decision to reject the application was thus not contrary to the Division Bench's directions. Conclusion: The Court dismissed the appeal, upholding the Council's decision to reject the application under Section 8 of the Arbitration Act, 1996. It reiterated that the MSMED Act, 2006, provides a specific procedure for resolving disputes involving micro and small enterprises, which includes the Council acting as an Arbitrator. The Council must now proceed with arbitration or refer the parties to an alternate dispute resolution institution as per Section 18(3) of the MSMED Act, 2006.
|
