9911796707
TMI Blog2010 (8) TMI 1100X X X X Extracts X X X X X X X X Extracts X X X X ..... is a petition by M/s. Steel Authority of India, questioning the jurisdiction of respondent no.1-the Micro, Small Enterprises Facilitation Council (hereinafter referred to as the Council ) in entertaining a reference under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as the Act ), in disputes, which have arisen between the petitioners as a buyer of goods from respondent no.2-M/s. Vidarbha Ceramics Pvt. Ltd, as seller. 3. Respondent no.2-M/s. Vidarbha Ceramics Pvt. Ltd. (hereinafter referred to as the Supplier ) has supplied certain goods to the petitioners (hereinafter referred to as the Buyers ) under a contract for supply of Fire Clay Refractory Coke-Oven. According to the petitioners, the materials supplied by the supplier were defective and the supplier was, therefore, asked to replace the material. The supplier, apparently, admitted the defects in the material vide communications dated 01.01.2007, 25.01.2007 and 10.02.2007. The supplier, thereafter, issued a notice to the petitioners and invoked clause 22 of the agreement between them and proposed to appoint Justice C. P. Sen (Retired) as Arbitrator to settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present one where there is no inconsistency between the arbitration agreement between the parties and the arbitration is liable to be held in pursuance thereof on one hand and the Arbitration, which may be conducted by the Council under the provisions of Section 18 of the Act, since the arbitration to be conducted by the Council is also required to be conducted under the provisions of the Arbitration and Conciliation Act, 1996. In short, the contention on behalf of the petitioners is that no inconsistency can arise if the arbitration is conducted under the arbitration agreement and the arbitration is conducted by the Council under Section 18 of the Act since both must be conducted under the Arbitration and Conciliation Act, 1996. It is further submitted that the scheme under the Act namely Sections 16, 17 and 18 provide only for recovery of a sum allegedly due to the seller, therefore, a party such as a buyer i.e the petitioners are not entitled to invoke that remedy. Hence, according to the learned counsel for the petitioners, the arbitration agreement between the parties, which allows for an adjudication of the claims and counter claims of both the parties, if any, under the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as provided under Section 16. 18. Reference to Micro and Small Enterprises Facilitation Council-(1) Notwithstanding anything contained in any other law for the time being in force, any party to a dispute may, with regard to any amount due under Section 17, make a reference to the Micro and Small Enterprises Facilitation Council. (2) On receipt of a reference under sub-section (1), the Council shall either itself conduct conciliation in the matter or seek the assistance of any institution or centre providing alternate dispute resolution services by making a reference to such an institution or centre, for conducting conciliation and the provisions of Sections 65 to 81 of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to such a dispute as if the condition was initiated under Part III of that Act. (3) Where the conciliation initiated under sub-section (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll effect to under the provisions of the Arbitration and Conciliation Act, 1996. Since such an agreement serves the same purpose as that of arbitration, which might be entered upon under Section 18 of the Act by the Council. According to the learned counsel for the petitioners, a buyer like the petitioners, have no remedy under the Act and are not entitled to invoke the provisions of Section 18 of the Act at all either for conciliation or for arbitration since an amount can be claimed under Section 18 of the Act only in respect of an amount due under Section 17, which in term can only be an amount payable by the buyer for service provided or goods provided by the supplier. 9. As against this, Mrs. Dangre, the learned Additional Government Pleader for respondent no.1, submitted that though Section 17 of the Act makes a provision for recovery of the amount due from the buyer alone at the instance of the supplier, Section 18 clearly contemplates that any party to the dispute may; with regard to any amount due under Section 17; make reference to the Council in view of the expressed provisions of Section 18 (1) supra. According to the learned Addl. Government Pleader, the purport of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and that the provisions of the Arbitration and Conciliation Act, 1996 shall thus apply to the disputes as an arbitration in pursuance of arbitration agreement referred to in Section 7 (1) of the Arbitration and Conciliation Act, 1996. This procedure for arbitration and conciliation is precisely the procedure under which all arbitration agreements are dealt with. We, thus find that it cannot be said that because Section 18 provides for a forum of arbitration an independent arbitration agreement entered into between the parties will cease to have effect. There is no question of an independent arbitration agreement ceasing to have any effect because the overriding clause only overrides things inconsistent therewith and there is no inconsistency between an arbitration conducted by the Council under Section 18 and arbitration conducted under an individual clause since both are governed by the provision of the Arbitration Act, 1996. 12. At this stage, it is necessary to deal with another contention raised on behalf of the Council by Mrs. Dangre, the learned Addl. Government Pleader. According to the learned Addl. Government Pleader, the procedure of conciliation contemplated b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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