The Micro, Small and Medium Enterprises Development Act has precedence over the Arbitration and Conciliation Act, allowing parties to reference disputes to the MSEFC despite existing arbitration agreements.

ORDER :

1. The matters comes up on applications under Section 5 of the Limitation Act seeking condonation of delay in filing the instant appeals bearing D.B. Civil Misc. Appeal Nos.1636/2023, 1124/2023, 2803/2023, 3875/2023, 120/2024, 851/2024 & 4379/2024.

1.1 For the reasons mentioned in the applications, the same are allowed. The delay in filing the aforementioned appeals is condoned.

2. With the consent of learned counsel for the parties, the matters are heard finally.

3. The broader controversy in the present cases is that certain NITs were invited by the appellants for supply of ISI marked Sluice valves and after going through the process, the contract / agreement was executed between the parties and the work commenced. The respondents made a reference under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (for short ‘the Act of 2006’) claiming certain amount as principal along with interest, whereupon an award dated 17.05.2021 (in D.B. Civil Misc. Appeal No.1625/2022) was passed by the District Level Micro and Small Enterprises Facilitation Council, Jalandhar (for short, ‘MSEFC’) in favour of the contractor. The said instant D.B. Civil Misc. Appeal No.1625/2022, for the sake of brevity and convenience, is taken as a lead case in the present adjudication.

4. The appellants in the present case being aggrieved by the aforementioned award dated 17.05.2021 of the MSEFC preferred an appeal under Section 34 of the Arbitration and Conciliation Act, 1996 (for short ‘Act of 1996’) before the learned Commercial Court No.1, Jaipur Metropolitan-II, which came to be dismissed for lack of territorial jurisdiction, vide the impugned order dated 27.04.2022. The operative part of the impugned order reads as follows:-

5. Learned Additional Advocate General appearing on behalf of the appellants submits that as per Clause 21 of the Rate Contract, it was agreed upon that all legal proceedings, if necessary arises to the institute, may be by any of the parties (Government or contractor) shall have to be lodged in the Courts of jurisdiction in Rajasthan and not elsewhere.

5.1. Learned Additional Advocate General further submits that in light of such agreement, learned Commercial Court was not right in refusing to hear the controversy, on count of lack of territorial jurisdiction. In support of such submissions, she relies upon the judgment rendered by the Hon’ble Supreme Court in the case of Swastik Gases Private Limited Vs. Indian Oil Corporation Limited , (2013) 9 SCC 32 , the relevant paragraphs whereof read as under:-

“31. In the instant case, the appellant does not dispute that part of cause of action has arisen in Kolkata. What appellant says is that part of cause of action has also arisen in Jaipur and, therefore, the Chief Justice of the Rajasthan High Court or the designate Judge has jurisdiction to consider the application made by the appellant for the appointment of an arbitrator under Section 11. Having regard to Section 11(12)(b) and Section 2(e) of the 1996 Act read with Section 20(c) of the Code, there remains no doubt that the Chief Justice or the designate Judge of the Rajasthan High Court has jurisdiction in the matter. The question is, whether parties by virtue of Clause 18 of the agreement have agreed to exclude the jurisdiction of the courts at Jaipur or, in other words, whether in view of Clause 18 of the agreement, the jurisdiction of the Chief Justice of the Rajasthan High Court has been excluded?

32. For answer to the above question, we have to see the effect of the jurisdiction clause in the agreement which provides that the agreement shall be subject to jurisdicti