IMPORTANT POINT
The MSMED Act, 2006 provides a statutory framework that allows the Facilitation Council to act as an arbitrator after conciliation, overriding the restrictions of the Arbitration Act, 1996.

JUDGMENT/ORDER

1. Heard learned counsel for the petitioner and learned counsel for the respondent No.2. None for the respondent No.1, though served.

2. RULE. Rule made returnable forthwith. Heard finally by consent for the respective parties.

3. In this petition a challenge is raised to the order dtd. 11/01/2022 passed by respondent No.1 Minor and Small Enterprises Facilitation Council, allowing the claim of balance payment under Sec. 15 of the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as the "MSMED Act") for Rs.21,53,217.00 for the service rendered by the respondent No.2 against the petitioner, with interest on delayed payment under Sec. 16 of the MSMED Act.

4. Brief facts of the present case are as under: The respondent No.2 preferred petition under Sec. 18 read with Ss. 15, 16 and 17 of the MSMED Act before the respondent No.1, thereby claiming to be a supplier under Sec. 2(n) of the Act of 2006, for recovery of balance and interest on delayed payment against the petitioner to the tune of Rs.21,53,217.00.

5. The petitioner filed its written statement denying all the allegations in toto. Consequently, after considering the material available on record, the impugned award was passed allowing the claim of the respondent No.2. Hence, this writ petition.

6. Ms Lakhani, learned counsel for the petitioner argues that the respondent No.1 has committed error in entertaining the petition as the Council failed to take into consideration that the Council who has conducted conciliation proceedings is prohibited from acting as an Arbitrator, as per the provisions of Sec. 80 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act of 1996").

7. It is submitted that, admittedly, in the present case the respondent No.1 conducted conciliation proceedings between the petitioner and the respondent No.2 and terminated the same as being unsuccessful. It is therefore, submitted that the Council ought not to have acted as an Arbitrator. In support of her submissions, she has placed reliance on the following judgments of the Hon'ble Supreme Court of India:

i) Union of India vs. U.P. State Bridge Corpn. Ltd., reported in (2015) 2 SCC 52;

ii) Voestalpine Schienen GMBH vs. Delhi Metro Rail Corpn. Ltd., reported in (2017) 4 SCC 665; iii) Ellora Paper Mills Ltd. vs. State of M.P., reported in (2022) 3 SCC 1.

8. On the other hand, the learned counsel for the respondent No.2 strongly opposed the present writ petition on the ground that the entire petition is based on incorrect statements. It is submitted that the notice under Sec. 18(2) of the Act of 2006 was issued to the petitioner on 18/08/2020 informing that two conciliators were appointed by the Council viz. General Manager, District Industries Centre, Nagpur and General Manager, District Industries Centre, Wardha. It is pointed out that another notice under Sec. 18(2) of the MSMED Act dtd. 23/12/2020 was issued by the Council informing the parties that the conciliation failed and the Council decided to take the matter for arbitration. Thereafter, both the parties i.e. petitioner and the respondent No.2 participated in the proceedings and accordingly the award was passed. It is submitted that in the award it has categorically observed that there was a separate panel of conciliators, than the panel acted as Arbitrator. He, therefore, submits that no error has been committed by the Council to act as Arbitrator.

9. It is pointed out that the petitioner never objected for acting the Council as Arbitrator. On the contrary, with the consent of the petitioner only the Council acted as an Arbitrator.

10. It is lastly argued that under Sec. 80 of the Act of 1996 there is no bar for Council from acting as Arbitrator if the parties agree for the same. In support of his submission, he has placed reliance on the judgment of the Hon'ble Supreme Court of India in the case of Gujrat State Civil Supplies Corporation ltd. vs. Mahakali Foods Pvt. Ltd. & Anr., repo