The main legal point established in the judgment is that the District Court had jurisdiction to substitute the Arbitrator under Section 29-A of the Arbitration and Conciliation Act, 1996 in the absence of provisions under the MSMED Act for such actions.

JUDGMENT :

1. Rule. With consent, rule is made returnable forthwith.

2. This writ petition raises challenge to the order dated 03/02/2021 whereby learned District Judge, Nashik, allowed the application filed by the Respondent under Section 29-A of the Arbitration and Conciliation Act, 1996 and appointed retired Judge Mr. Vivek R. Agrawal as the sole Arbitrator.

3. The Petitioner is a registered Company engaged in the business of e-governance. The Respondent-proprietorship concern, which is registered under Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as ‘MSMED Act’), supplied to the Petitioner spare parts and raw material required for manufacture of Active Tracker Machines. The Respondent claimed that an amount of Rs.1,30,33,000/- was due and payable by the Petitioner Company towards the price of the goods supplied. The Respondent made reference to Micro, Small and Medium Enterprises Facilitation Council (hereinafter referred to as ‘the Council’) under Section 18 of the MSMED Act in respect of the amount due under Section 17. The conciliation between the parties was not successful and stood terminated without any settlement. Hence, the Council took up the dispute for arbitration. It appears that the Petitioner failed to appear before the Council on three occasions and on 29/07/2017 the Council decided to close the matter. By order dated 17/11/2017 in Arbitration Petition (LODG) No.20093 of 2017, filed by the Respondent -herein, this Court revived the arbitration proceedings, which was going on before the Council and directed the Respondent to file the statement of claim with compilation of documents within a period of two weeks. The Council was directed to decide further course of action within four weeks from the date of the order.

4. There was no progress in the arbitration proceedings for almost a period of three years. Since the period of one year stipulated in Section 29-A of the Arbitration and Conciliation Act, had expired, the Respondent filed an application before the District Court at Nashik praying for extension of mandate and substitution of Arbitrator in terms of Sub Section 6 of Section 29-A of the Arbitration and Conciliation Act, 1996.

5. The Petitioner claimed that the Respondent was responsible for delaying the matter. It was contended that when the matter was on the verge of disposal the Respondent had approached the High Court to appoint an Arbitrator from the panel of the High Court and when the matter came up for hearing agreed for revival of the arbitration proceedings before the Council and to proceed before the same Arbitrator. The Petitioner claimed that the Respondent was only interested in delaying the matter by approaching various authorities. The Petitioner also opposed the said application on the ground that the provisions of MSME Act are not applicable to the Respondent, for the reasons stated in the reply. It was further held that in the absence of agreement between the parties, the court has no jurisdiction to entertain the application.

6. Learned District Judge after hearing the respective parties held that the arbitration proceedings were not concluded within a period of 12 months and as per Section 29-A of the Arbitration and Conciliation Act, the mandate of the Arbitrator stands terminated. Relying upon the decision of this Court in Chief Engineer and Anr. vs. Mrs. Devdatt P. Shirodkar, 2018 SCC Online Bom 688 learned District Judge held that since the mandate of the Arbitrator has lapsed, in terms of Section 29-A of the Arbitration and Conciliation Act, the District Court has jurisdiction to substitute the Arbitrator. The learned Judge allowed the application and appointed retired Judge Vivek R. Agrawal as a sole Arbitrator. Directions have been given to the Arbitrator to call for the records and proceedings pending before the Council and to complete the adjudication process within the statutory period. This order has been challenged in this petition.

7. Mr.