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IN THE HIGH COURT OF DELHI AT NEW DELHI
JASMEET SINGH, J.
Dalmia Cement (Bharat) Limited – Appellant
Versus
M/s ESS ESS Technofabs Private Limited – Respondent
Arb. Pet. Nos. 1723, 1725 of 2024
Decided On : 07-02-2026
| Table of Content |
|---|
| 1. jurisdictional basis of arbitration disputes. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10) |
| 2. petitioner's arguments against facilitation council's jurisdiction. (Para 17 , 18 , 19 , 20 , 21 , 22) |
| 3. respondent's counterarguments regarding jurisdiction. (Para 23 , 24 , 25 , 26 , 27 , 28) |
| 4. court's preliminary observations on maintainability. (Para 29 , 30 , 31 , 32 , 33) |
| 5. supremacy of msmed act over arbitration act. (Para 34 , 35 , 36 , 37 , 38 , 39) |
| 6. court's determination on statutory remedies and jurisdiction. (Para 40 , 41 , 42) |
| 7. court's refusal to adjudicate pending issues before msme. (Para 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51) |
| 8. final conclusion and dismissal of petitions. (Para 52 , 53) |
JUDGMENT :
JASMEET SINGH, J.
1. These are petitions filed under Section 11 of the Arbitration and Conciliation Act, 1996, (“the Act”) arising out of the work order/purchase order dated 11.10.2020 and 04.11.2020, respectively, seeking appointment of a Sole Arbitrator to adjudicate disputes between the parties.
FACTUAL MATRIX AS PER THE PETITIONER
2. The petitioner, namely Dalmia Cements (Bharat) Limited is a public company engaged in the business of manufacturing and selling of cement and other allied products.
3. The respondent, namely M/S Ess Ess Technofabs Private Limited is engaged in the business of Manufacturing and installation of fabricated metal products.
4. In the year 2020, the petitioner engaged the respondent for providing material and services for mechanical fabrication and erection job of two projects, namely AFR feeding system and clinker silo at its DDSPL unit based in Rohtas, Bihar (“Project 1”) and the installation of cooler at Rajgangpur unit, Odisha (“Project 2”) respectively.
5. As regards with the project 1, the letter of indent was issued on 15.09.2020 and subsequently the petitioner issued a work order/purchase order dated 11.10.2020.
6. As regards with the project 2, the Letter of Indent was issued on 30.10.2020 and subsequently the petitioner issued a work order/purchase order dated 04.11.2020.
7. The aforesaid said work order/purchase order contained an arbitration clause being Clause No. 28 of the general terms and conditions of the work order/purchase order.
8. The nature of purported disputes in both these petitions are similar, hence are being dealt, together. It is the case of the petitioner that the respondent failed to execute the work within the time schedule and the petitioner had to engage the third party contractors for completion of the projects.
9. Subsequently, the respondent sent two demand notices dated 06.01.2023 and 10.01.2023, making demands of Rs. 61,65,000/- and Rs. 87,00,000/- along with interest, respectively.
10. In view of the disputes between the parties, on 04.08.2023 the respondent filed reference under Section 17 and 18 of the Micro, Small and Medium Enterprise Development Act, 2006 (“the MSMED Act”) relating to the both the claims before the District Micro & Small Enterprises Facilitation Council, Mohali, Punjab (“the Facilitation Council”) for an amount of Rs. 1,01,65,000/- along with interest with respect to the project 1 and Rs.87,00,000/- along with interest, with respect to the project 2.
11. The petitioner disputed the jurisdiction of the Facilitation Council by raising a preliminary objection and also filing an application under section 16 of the Act on 14.12.2023.
12. The petitioner then proceeded to file its Statement of Defence (“SOD”) on merits, it was filed without prejudice to the objections raised under Section 16 application.
13. In view of the disputes between the parties, the petitioner invoked the dispute resolution clause i.e. Clause No. 28 of the general terms and conditions of the work/purchase order by sending a notice invoking arbitration under Section 21 of the Act dated 12.01.2024.
14. On 30.04.2024, the petitioner also filed its evidence before the Facilitation Council. However, on 08.07.2024 the petitioner filed writ petitions being CWP
The court upheld that statutory remedies under the MSMED Act take precedence over private arbitration agreements, affirming the Facilitation Council’s jurisdiction in disputes involving MSMEs.
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 o....
Section 34 of the Arbitration Act arises as is evident from sub Section (6) of Section 16 of the Arbitration Act, which inter alia provides that the parties aggrieved by such an arbitral award may ma....
The arbitration agreement's designation of venue and exclusive jurisdiction prevails over statutory arbitration under the MSMED Act, and the statutory arbitration does not override the parties' agree....
The main legal point established in the judgment is that the Facilitation Council has the jurisdiction to act as an Arbitrator after the failure of conciliation proceedings under the MSME Act. The ri....
The Micro, Small and Medium Enterprises Development Act, 2006 has overriding effect over the Arbitration and Conciliation Act, 1996 when the jurisdiction of the Council has been invoked, and the Coun....
The Facilitation Council lacks jurisdiction over disputes arising from works contracts under the MSME Act, and principles of natural justice must be adhered to in adjudicatory processes.
The MSMED Act operates as a special beneficial legislation, overriding the Arbitration Act in cases involving registered MSMEs, emphasizing exclusive jurisdiction of MSEFC for dispute resolution.
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