An arbitral award must address all claims and counter-claims presented; failure to do so renders the award unintelligible and subject to annulment under Section 34.

ORDER :

(ABDUL QUDDHOSE, J.)

This petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (in short “the Act”) challenging the impugned award dated 30.01.2023 passed by the Micro and Small Enterprises Facilitation Council (MSEFC) (in short “Council”) under the Micro, Small and Medium Enterprises Development Act, 2006 (in short “MSMED Act”).

2. The respondent claims to have supplied materials based on purchase orders placed by the petitioner. According to the respondent, certain sums of money are due and payable to them by the petitioner for the supplies made by them. The respondent claimed that they are registered under the MSMED Act and therefore, they are entitled to make a reference to the Council for the recovery of the amount due and payable by the petitioner to the respondent. Accordingly, they made a reference to the Council as per the provisions of the MSMED Act. As per the provisions of the MSMED Act, conciliation proceedings were initiated by the Council, but, the conciliation failed. Thereafter, the arbitration commenced and both the parties to the dispute participated in the arbitration. Under the impugned award dated 30.01.2023 passed by the Council, the petitioner has been directed to pay a sum of Rs.12,51,064/- to the respondent along with compound interest as per Section 16 of the MSMED Act till realisation of the amount by the respondent. Before the Council, the petitioner had made a counter-claim against the respondent, as, according to them, the goods supplied to them were defective and therefore, they have made a counter-claim of Rs.17,99,533/- against the respondent in this petition.

3. The petitioner has challenged the impugned award on the following grounds:-

(a) Eventhough a counter-claim was made by the petitioner, the Council under the impugned award has failed to consider the same and the impugned award is a non-speaking award with regard to the counter- claim made by the petitioner against the respondent.

(b) The contract placed on the respondent by the petitioner is a works contract, which includes supply, erection and commissioning, and therefore, the Council does not have jurisdiction to entertain the reference as per the provisions of MSMED Act.

(c) As on the date of the supplies effected by the respondent, the respondent was not registered under the MSMED Act, as they had obtained registration subsequently. Therefore, the Council ought not to have entertained the reference made by the respondent in respect of their claim.

4. The learned counsel for the petitioner drew the attention of this Court to the impugned award and would submit that the Council has not taken into consideration the counter-claim made by the petitioner against the respondent as there is absolutely no discussion made in the award by the Council with regard to the same. He also drew the attention of this Court to the various purchase orders placed by the petitioner on the respondent and would submit that as seen from the same, the purchase orders stipulate that the respondent will have to supply, erect and commission the petitioner's project, which amounts to works contract. According to the petitioner, being a works contract, MSMED Act will not apply. He also submits that various documents were produced by the petitioner before the Council to support the petitioner's counter-claim, which have not been considered by the Council in the impugned award. He also submits that the award passed by the Council is an unintelligible award and therefore, the award has to be set aside under Section 34 of the Act.

5. On the other hand, the learned counsel for the respondent would reiterate the contents of the impug