The main legal point established is that the MSMED Act applies only to ascertainable amounts due to the supplier and does not provide for entertaining counterclaims, influencing the decision to appoint an arbitrator under the Arbitration & Conciliation Act.

JUDGMENT :

(Prayer: Original Petition is filed under Section 11(6)(b) of the Arbitration and Conciliation Act, 1996, to appoint an Arbitrator in terms of Clause 22 of the Development Agreement dated 10.02.2014 to adjudicate upon the differences and disputes between the parties under the Development Agreement dated 10.02.2014.)

This application has been filed for appointment of arbitrator in terms of Clause 22 of the Development Agreement dated 10.02.2014 to adjudicate upon the differences and disputes between the parties under the Development Agreement dated 10.02.2014.

2. By agreement dated 10.02.2014, the petitioner herein entered an agreement with the respondent for setting up a wind farm project, wherein, the respondent agreed to purchase the land parcels, provide some services and ultimately handover the wind manufacturing project to the petitioner herein.

3. The Clause 20 of the agreement reads as follows :

“20. Governing Law and Jurisdiction and Service of Process :

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(c) All disputes, difference and claims or any non-payment concerning the project work hereby created and/or touching this presents, arising out of or in relation to anything contained herein shall be referred to arbitration to be held at Chennai, under the provisions of Arbitration and Conciliation Act, 1996 (in force time to time). The arbitration panel shall consist of three arbitrators, one arbitrator shall be appointed by each party and the arbitrators so appointed shall appoint the presiding arbitrator. The parties hereto shall duly observe and person any interim award/s or direction/s of the arbitration tribunal and the award in pursuance to arbitration shall be final and binding on the parties hereto. The arbitration proceedings shall be conducted in English language.”

4. It is the contention of the petitioner that they released a sum of Rs.6.475 Crores on an account basis as envisaged by the agreement. However, no proper services were forthcoming from the respondent as per the terms of the agreement. Requisite land parcels were also not provided within the time as agreed in the agreement. When the matter stood thus, the respondent issued a legal notice on 21.04.2018 making an untenable and baseless demand for the damages to the tune of Rs.3,26,08,545/-, which was denied by the petitioner by issuing a reply dated 21.01.2019. As there was a issue raised, the petitioner invoking the arbitration clause. As the respondent has not shown any interest, the present petition is filed.

5. It is the contention of the respondent that the respondent is registered under the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as MSMED Act). Therefore, it is the contention that any dispute in respect of amount due to the supplier has to be referred to the arbitrator as provided under the MSMED Act. His further contention is that they already raised dispute under Section 18 of the MSMED Act. Therefore, the present application is not maintainable. They also denied various other facts and allegations made by the petitioner.

6. Mr.Vishnu Mohan, learned counsel appearing for the petitioner submitted that the agreement was executed on 10.02.2014. The respondent having agreed to purchase the land parcels has not purchased the properties as agreed in the agreement and the service which was undertaken has not been provided in time. In such view of the matter, the parties agreed to refer the dispute to the arbitrator. It is his further contention that the petitioner has also raised counter claim against the respondent. MSMED Act does not provide for entertaining the counter claim. Hence, it is the contention that the matter has to be referred only to the arbitrator as per the agreement between the parties. His further contention is that the respondent has registered under the MSMED act only in 2017, whereas, the dispute is much prior to that and no service has been given as agreed in the agreement. Therefore, merely because the respondent is regist