The Facilitation Council has jurisdiction to arbitrate disputes under the MSMED Act, regardless of the supplier's registration status, and the District Court cannot re-evaluate the merits of an arbitral award under Section 34.

JUDGMENT :

Easwaran S., J.

The appeal is preferred by the appellant aggrieved by the order of the District Court, Thiruvananthapuram in OP(Arbitration) No.34/2012 dated 17.7.2015.

2. The brief facts necessary for the disposal of the appeal are as follows:

The appellant is a small-scale industrial unit registered under the Industries Department of Government of Kerala. The respondent Devaswom Board (hereinafter referred to as Board) is registered under the provisions of the Travancore Cochin Hindu Religious Institutions Act, 1950. An agreement dated 13.4.1999 was executed between the appellant and the respondent for filling and distribution of “Aravana Prasadam” in Sabarimala, which was to be operated from 1999 till 2007. The agreement was for the supply of 50 lakhs of cans, and the appellant claims to have delivered more than 430 lakhs of cans, generating an amount of Rs.178 Crores to the respondent Board. Various disputes stemmed out of the operation of the agreement with the appellant alleging that the respondent Board did not fulfil its obligation under the contract. Aggrieved by the action of the Board, the appellant raised a dispute relating to the delay in payment before the Micro and Small Enterprises Facilitation Council, invoking Section 18(1) of the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter called as “MSMED Act, 2006”). The respondent Board raised a preliminary objection regarding the maintainability of the claim before the Facilitation Council. The preliminary objection was overruled by the Council in its order dated 18.6.2009. The said order was challenged by the respondent in WP(C) No.22286/2009, which was dismissed by this Court without prejudice to the right of the Board to challenge the said decision under any statutory scheme. The Facilitation Council could not resolve the dispute between the parties through conciliation and therefore referred the matter for arbitration under sub- Section (3) of Section 18 of the MSMED Act, 2006. The appellant claimed a sum of Rs.8,08,35,636.97. On the other hand, the respondent-Board claimed a sum of Rs.1,53,01,367/- due to them from the appellant. The respondent also raised a plea that there were deductions done by the Board under various orders of the civil courts and the Debt Recovery Tribunal and on another basis. In the arbitration proceedings, though the Council directed the Board to produce documents to justify the deduction relating to the disputed payments, it is contended that the Board failed to produce such evidence and, therefore, the Council finally passed an award stating that a sum of Rs.6,66,42,549/- is due to the appellant.

3. Challenging the award of the Facilitation Council (Arbitral Tribunal), the Board approached the Additional District Court, Thiruvananthapuram in OP(Arbitration) No.34/2012. It was basically contended in the petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “Arbitration Act”, for short) before the District Court that the award was liable to be set aside under Section 34(2)(b)(ii) thereof. The finding of the Facilitation Council on the merits of the case was also questioned before the District Court. During the pendency of the petition under Section 34 of the Arbitration Act, the Board filed IA No.142/2014 seeking to produce additional documents, which was accepted by the District Court on 15.7.2015 and on 17.7.2015 the District Court set aside the award passed by the Facilitation Council finding that there was no basis for the Council to have arrived at the amount due to the appellant herein and accordingly set aside the award leaving open the parties to initiate fresh proceedings, if so desired under the Act. Hence, the appellant is before us in the present appeal.

4. Heard Sri.Jaju Babu, the learned Senior Counsel assisted by Smt.M.U.Vijayalakshmi, appearing on behalf of the appellant and Sri.K.Jayakumar, the learned Senior Counsel assisted by Sri.Ajith, appearin