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 Council would have exclusive jurisdiction.

JUDGMENT :

A.A. SAYED, J.

1. The petitioner-Himachal Pradesh State Electricity Board Ltd. has filed this Application under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) for appointment of an Arbitrator to adjudicate the disputes between the parties.

2. Pursuant to a tender for supply of 11 KV-400 Amp. G.O. switches, issued by the petitioner, the respondent-M/s Suri Electricals and Ceramics was declared as a successful bidder and alloted the work. An Agreement dated 07.11.2020, was entered into between the petitioner and respondent.

3. Clause 8.1 of the Agreement provides for reference of the disputes to the sole arbitration of the Managing Director of Respondent No. 1-Himachal Pradesh State Electricity Board Ltd. Shimla or his nominee.

4. It is the case of the petitioner that it has served Notice dated 3.5.2021 to the respondent nominating the Chief Engineer Project-cum-Arbitrator as an Arbitrator and requested the respondent to accord its consent. However, the respondent failed to accord its consent to the appointment of Arbitrator on the plea that it has already approached the Micro Small and Medium Enterprises Council, Agra (U.P.) (hereinafter referred to as “the Council”). It is pointed out that the petitioner has received notice/intimation dated 18.4.2021 from the Council that it (the Council) had received an Application bearing Application No. UDYAM-UP-18-0000950/S/00001 filed by the respondent against the petitioner making a reference of dispute to the Council under the provisions of Section 18 (1) of the Micro Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as the ‘MSMED Act, 2006’) in respect of its claim of an amount of Rs. 1,08,11,691/-. By this notice/intimation, the Council pointed out that it is empowered to conciliate and settle the disputes. The Council advised the petitioner to pay the due amount to the respondent within 15 days of the receipt of the notice/intimation, failing which, a case would be registered by the Council. The said notice/intimation of the Council was replied to by the petitioner vide letter dated 4.5.2021, inter-alia stating that the material delivered by the respondent was not as per the technical specifications under the Agreement and therefore, the payments against the purchase order could not be made to the respondent and delivery of the material could not be accepted till completion of the contract obligations. It was further stated by the petitioner in the reply that the Application is premature and not maintainable under the MSMED Act, 2006 as its transaction was not complete and that the claim raised by the respondent was required to be rejected. It was further pointed out that steps have been taken by the petitioner to appoint an Arbitrator and therefore, the proceeding before the Council be deferred.

5. In the above backdrop, the petitioner has filed the present Application for appointment of an independent and impartial Arbitrator under Section 11 (6) of the Act to adjudicate its claim of an of Rs. 76,73,589/-. The learned counsel for the petitioner has placed reliance on the judgment dated 14.8.1999 of the learned Single Judge of the Bombay High Court in Porwal Sales vs. Flame Control Industries in Arbitration Petition No. 77/17 in support of the case of the petitioner and contends that in the said case also, an Arbitrator was appointed by the learned Single Judge notwithstanding the contention of the respondent that the provisions of MSMED Act, 2006 were applicable.

6. The case of the respondent, on the other hand, is that it is an admitted position that the respondent is a MSME Enterprise as per the definition under the MSMED Act, 2006. It is contended that the jurisdiction of the Council has already been invoked ‘prior’ in time and therefore, the provisions of the MSMED Act, 2006 would prevail. It is further contended that the present Application seeking appointment of an Arbitrator is filed ‘subseque