The main legal point established is that unexplained delay in filing termination proceedings after participating in arbitration can lead to rejection of the petitions. Additionally, the MSME Act does not apply retrospectively to disputes arising before its enactment.

By consent of parties, these five petitions alongwith other ten matters were heard finally together and are being disposed of by a common Judgment.

2. By these petitions filed under Section 14 of the Arbitration and Conciliation Act, 1996 (for short herein after referred as ‘Arbitration Act 1996), the petitioners seek declaration that the mandate of the learned Arbitrator, respondent No.1 herein stood terminated under Section 14 of the Arbitration Act 1996, and the petitioner is entitled to approach the Micro and Small Scale Enterprises Facilitation Council constituted under the provisions of the Micro, Small Medium Enterprises Development Act, 2006 (for short hereinafter referred as MSME Act) and the said Council is entitled in law to adjudicate the disputes between the parties.

3. Relevant facts in ARBP No.1193 Of 2012:

(a) The petitioner is a small scale industry registered under the provisions of MSME Act with District Industries Centre, Faridabad, Haryana on 4th August 2009. The petitioner is a manufacturer of LPG cylinders of various capacity and supply those cylinders to respondent No.2 Corporation and other two oil companies.

(b) Since 1994, the second respondent had entered into yearly contract with the petitioner for supply of cylinders. Clause 17 of the agreement provides for resolution of dispute by arbitration which is extracted as under:

“17. ARBITRATION:

“(a) Any dispute and/or difference of any nature whatsoever any claim, cross-claim, counter claim or set off of the Corporation against the contractor or regarding any right, liability, act, omission on account of any of the parties hereto arising out of or in relation to this agreement shall be referred to the sole arbitration of the Director (Marketing) of the Corporation or of some Officer of the Corporation who may be nominated by the Director (Marketing). The Contractor will not be entitled to raise any objection to any such arbitration on the ground that the Arbitrator is an Officer of the Corporation or that he has dealt with the matters to which the contract relates or that in the course of his duties as an officer of the Corporation he had expressed views on all or any other matters in dispute or difference. In the event of the Arbitrator to whom the matter is originally referred being transferred or vacating this office or being unable to act for any reason the Director (Marketing) as aforesaid at the time of such transfer, vacation of office or inability to act any in the discretion of the Director (Marketing) designate another person to act as arbitrator in accordance with the terms of the agreement to the end and intent that the original Arbitrator shall be entitled to continue the arbitration proceedings notwithstanding his transfer or vacation of office as an officer of the Corporation if the Director (Marketing) does not designate another person to act as Arbitrator on such transfer, vacation of office or inability of original Arbitrator. Such persons shall be entitled to proceed with the reference from the point at which it was left by his predecessor. It is also a term of this contract that no person other than the Director (Marketing) or a person nominated by such Director (Marketing) of the Corporation as aforesaid shall act as arbitrator hereunder. The award of the arbitrator so appointed shall be final, conclusive and binding on all parties to the agreement subject to the provisions of the Arbitration Act, 1940 or any statutory modification or reenactment thereof and the rules made there under for the time being in force shall apply to the arbitration proceedings under this clause.”

(c) Vide letter dated 25th June 2003, petitioner invoked arbitration agreement and called upon the second respondent to appoint independent and impartial arbitrator. The said letter was received by respondent No.2 on 31st March 2003. Respondent No.2 vide letter dated 21st November 2003 appointed Mr A.C. Sen, General Manager (Health, Safety & Envir