The Arbitration and Conciliation Act, 1996 is overridden by the MSMED Act, 2006, establishing the jurisdiction of the Facilitation Council for disputes, thereby necessitating adherence to its terms over general arbitration agreements.

JUDGMENT :

JASMEET SINGH, J.

1. This is a petition filed under Section 39 (2) of the Arbitration and Conciliation Act, 1996 (“1996 Act”) impugning the Order dated 18.01.2025 (“impugned Order”) passed by empaneled Expert to facilitate arbitration proceedings in Case Ref. No. 5710/2024, wherein the petitioner was directed to pay the entire fee of the learned Expert to the tune of Rs. 18,04,057/- to adjudicate the counter claim of the petitioner.

FACTUAL BACKGROUND

2. The petitioner i.e., Geniemode Global Private Limited, a company incorporated under the Companies Act, 2013, is a "Micro" industry duly registered under Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 (“MSMED Act”).

3. The respondent No. 1 is Priyanka Impex Private Limited and respondent No. 2 is Chairman, HMSEFC-cum-Director General of MSME, Haryana.

4. The petitioner and respondent No. 1 entered into a Service Agreement dated 09.02.2022 (“Service Agreement”), whereby the petitioner placed orders with respondent No.1 for supply of apparels as per the purchase orders issued by the buyers and also provided advance payments towards for raw materials in relation to such orders.

5. The said Service Agreement contains the arbitration clauses being Clause No. 7 read with Clause No. 11 of the Second Party Terms, which read as under:-

“7. DISPUTE RESOLUTION:

Any dispute arising from this agreement shall be first through settled arbitration to be held in accordance with the Arbitration and Conciliation Act, 1996 by a sole arbitrator mutually appointed by both FIRST PARTY and SECOND PARTY. Any arbitration award by the arbitrator shall be final and binding upon both FIRST PARTY and SECOND PARTY. If the parties fail to reach an agreement after negotiation, either party may bring a law suit in accordance with the laws of India as applicable in Delhi. The Courts at Delhi shall have exclusive jurisdiction.

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11. DISPUTE RESOLUTION AND GOVERNING LAWS

11.1 These terms and the Agreement shall be construed and governed according to the laws of India as applicable in Delhi and subject to Clause 11.2, the courts at Delhi shall have exclusive Jurisdiction.

11.2 Any dispute arising out of or in connection with these terms and/or the Agreement (“Dispute”), which remains to be resolved after the FIRST PARTY and SECOND PARTY have attempted to resolve the same amicably for 30 (thirty) days from the raising of the Dispute by any one of them, shall be referred to and settled by arbitration to be held in accordance with the Arbitration and Conciliation Act, 1996 by a sole arbitrator mutually appointed by both FIRST PARTY and SECOND PARTY. The language of the arbitration shall be English, and the seat and venue shall be Delhi. Any arbitration award by the arbitrator shall be final and binding upon both FIRST PARTY and SECOND PARTY.”

6. The petitioner and respondent No. 1 also agreed that the advance payment made to respondent No.1 will be adjusted against the payment for supply of goods to buyers. Further, the parties also mutually decided that the advances given to respondent No. 1 will be returned, upon delivery of goods by respondent No. 1 to petitioner or the buyers, as appropriate.

7. It is stated that from April 2022 till December 2023 the petitioner advanced approximately Rs. 2.37 crores to respondent No.1. Additionally, the petitioner also raised various invoices on respondent No. 1 with respect to raw material supplied to respondent No.1, which amount to Rs. 1.88 crores approximately.

8. Subsequently, on account of outstanding dues of respondent No. 1 towards the petitio