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TMI Blog2023 (6) TMI 1447X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 - where the jurisdiction of the Council has not been invoked by a party who seeks recovery of an amount due under section 17 of the Act. In NATIONAL PROJECTS CONSTRUCTION CORPORATION LIMITED ANR. VERSUS WEST BENGAL STATE MICRO SMALL ENTERPRISES FACILITATION COUNCIL ORS. [ 2017 (2) TMI 1557 - CALCUTTA HIGH COURT] , a Co-ordinate Bench of this Court was of the view that where one of the parties to an arbitration agreement is an entity within the meaning of the MSME Act, the Council under the said Act would have jurisdiction to arbitrate on the dispute between the parties. The facts in that case were hence substantially different as the parties had already made a reference to the Facilitation Council and the stage had already progressed through conciliation to arbitration under section 18(3) of the MSME Act. Absence of an arbitration agreement as contemplated by section 7(2) of the 1996 Act - HELD THAT:- This objection is belied from the material on record. The Service Order dated 9.12.2021 contains the arbitration clause that refers to a S.O No. C321364073. The S.O number finds specific mention/reference in the notice issued by the petitioner to the respondent on 8.4.2023 under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner alleging that the petitioner had failed to make full and complete payment of the invoices raised in connection with the Service Order. Learned counsel appearing for the parties, however, have raised certain preliminary questions on points of law which are required to be dealt with and answered. 3. The objection taken on behalf of the respondent is primarily on the ground that the respondent is an MSME or rather an entity defined under section 2 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 and that the respondent should accordingly get the protection of the 2006 Act. It is also the stand that the petitioner, as the buyer who placed the Service Order on the respondent for transport of 50,000 MT of coal for a consideration of Rs. 2.15 crores, was also under an obligation to make a reference to the Micro and Small Enterprises Facilitation Council under the provisions of the MSMED Act. Learned counsel appearing for the respondent/supplier relies on section 18(1) of the 2006 Act to urge that any party to a dispute may make a reference to the Council which means that the petitioner had an equal obligation to approach the Council for relief. 4. This co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Council before any Court to deposit 75% of the amount of the decree/award but makes an exception if the appellant is a supplier. 7. Therefore, resisting the application under section 11 on the ground that the petitioner/buyer should have approached the Facilitation Council under section 18(1) of the MSMED Act is misconceived and contrary to the purport of section 18(1) read with section 17 of the MSMED Act. 8. Section 24 of the Act which provides for sections 15-23 to have overriding effect will only apply where a reference has been made to the Council under section 18(1) of the Act. Section 24 does not contemplate automatic application of the provisions of sections 15-23, including section 18 - where the jurisdiction of the Council has not been invoked by a party who seeks recovery of an amount due under section 17 of the Act. 9. The case law cited on behalf of the parties do not strictly apply to the facts of the present case. The Bombay High Court decision in Porwal Sales vs. Flame Control Industries; MANU/MH/2299/2019 was on the issue whether the court under section 11 of the 1996 Act would be deprived of its jurisdiction where the respondent is an MSME. The Court held that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2022. The subject of the petitioner s mail also refers to the Service Order number. The respondent replied to the mail on 22.7.2022 referring to the contract and to the respondent s performance under the same. The respondent s reply states in the very first line that it is with reference to the petitioner s mail dated 18.7.2022. 14. Section 7(4) of the 1996 Act provides that an arbitration agreement is in writing if it is contained in an exchange of letters, telex, telegrams or other means of telecommunications including through electronic means providing for a record of the agreement (7(4)(b)). Further, the mails exchanged between the parties in July, 2022 shows that petitioner referred to the contract bearing the Service Order number and date and the respondent replied to the mail without denying the existence of the arbitration agreement. The respondent did not deny or dispute the existence of the arbitration agreement as reiterated by the petitioner in its section 21 notice of 8.4.2023. The existence of the arbitration agreement between the parties in writing as contained in the Service Order is hence established from the exchange of electronic communications between the partie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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