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TMI Blog2023 (3) TMI 1540X X X X Extracts X X X X X X X X Extracts X X X X ..... ies, the Facilitation Council is empowered to either itself take up the dispute for arbitration or refer it to any institution or Centre providing alternate dispute resolution services for such arbitration. The provision further states that upon taking up of arbitration by the Facilitation Council itself or upon such reference to any institution or centre, the provisions of the Arbitration Act shall apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in sub-Section 1 of Section 7 of the Arbitration Act. The use of the word then clearly indicates the intent of the legislature that it is only when the arbitration proceedings are initiated in form of the Facilitation Council itself taking it up o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the present petition is not maintainable. The present petition is, accordingly, dismissed. - HON'BLE MR. JUSTICE NAVIN CHAWLA For the Appellant : Mr. Achal Gupta, Ms. Alizaah Rais, Advs. For the Respondent : Mr. Prateek Gupta, Mr. S.P. Singh Chawla, Mr. Nikhil Saini, Advs. ORDER: NAVIN CHAWLA, J. (ORAL) 1. This petition has been taken up today for hearing as 09.03.2023 was declared as a Court holiday. 2. This petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Arbitration Act‟) seeking appointment of an Arbitrator for adjudicating the disputes that have arisen between the parties in relation to the Purchase Orders that were placed upon the petitioner by the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the petitioner submits that, therefore, the refusal of the Facilitation Council to act as an arbitrator or to refer the dispute to an institution for the appointment of an arbitrator was incorrect and based on fallacious grounds. 7. On the other hand, the learned counsel for the respondent, though admitting that there moratorium has not been declared for the respondent company as the petitions under the Code have yet not been admitted against the respondent company by the learned National Company Law Tribunal, submits that the present petition is not maintainable under Section 11 of the Arbitration Act as there is no Arbitration Agreement between the parties as required in Section 7 of the Arbitration Act. He submits that Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f an arbitration agreement referred to in sub-section (1) of section 7 of that Act. (Emphasis supplied) 11. A reading of the above provision would show that where the conciliation proceedings initiated under sub-Section 2 of Section 18 of the MSMED Act are not successful and stand terminated without settlement between the parties, the Facilitation Council is empowered to either itself take up the dispute for arbitration or refer it to any institution or Centre providing alternate dispute resolution services for such arbitration. The provision further states that upon taking up of arbitration by the Facilitation Council itself or upon such reference to any institution or centre, the provisions of the Arbitration Act shall apply to the disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the Conciliation process initiated under sub- section (2) of Section 18 of the MSMED Act, 2006 fails and when the Facilitation Council itself takes up the disputes for arbitration or refers it to any institution or centre for such arbitration. It is also significant to note that a deeming legal fiction is created in the Section 18(3) by using the expression as if ‟ for the purpose of treating such arbitration as if it was in pursuance of an arbitration agreement referred to in sub-section (1) of Section 7 of the Arbitration Act, 1996. As held in K. Prabhakaran v. P. Jayarajan, (2005) 1 SCC 754 a legal fiction presupposes the existence of the State of facts which may not exist and then works out the consequences which flow from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied) 13. A reading of the above would show that the Supreme Court also observed that the provisions of the Arbitration Act would apply only after the process of Conciliation initiated by the Facilitation Council under Section 18(2) of the MSMED Act fails and the Council either itself takes up the dispute for arbitration or refers it to any institution or Centre for such arbitration as contemplated under Section 18(3) of the MSMED Act. The provisions of the Arbitration Act have no application prior thereto. 14. Section 11(6) of the Arbitration Act reads as under:- 11. Appointment of arbitrators. xxxx (6) Where, under an appointment procedure agreed upon by the parties, (a) a party fails to act as required under that procedure; or (b) th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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