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IN THE HIGH COURT OF JUDICATURE AT MADRAS
N.ANAND VENKATESH
TGV SRAAC LTD. – Appellant
Versus
Unicon Engineers – Respondent
| Table of Content |
|---|
| 1. circumstances of contract formation and modifications. (Para 2 , 3 , 4 , 5 , 6 , 7) |
| 2. preliminary objections regarding jurisdiction of arbitral tribunal. (Para 11 , 12 , 13 , 14) |
| 3. appropriate legal interpretation of contract nature as works contract. (Para 15 , 16 , 17 , 18 , 19) |
| 4. msmed act applicability and jurisdictional limits. (Para 20 , 21 , 22) |
| 5. final judgment setting aside the arbitral award. (Para 24 , 25) |
ORDER :
The petitioner has assailed the Award passed by the sole Arbitrator dated 02.11.2021 in the present petition filed under Section 34 (2) of the Arbitration and Conciliation Act , 1996, (for brevity, hereinafter referred to “the Act”).
3. The further case of the respondent is that they supplied the ESP machinery at a price of Rs.3,75,00,000/- upon various payment terms. In the purchase order, it was stated that a separate work order will be issued later for erection and commissioning at a cost of Rs.20,00,0000/-. Subsequently, the purchase order was amended vide letter dated 22.05.2009, whereby the cost of supply was revised to Rs.3,55,00,000/- and the cost of erection and commissioning was revised to Rs.40,00,000/-.
5. There was a delay in making
The court ruled that a contract involving both supply and installation qualifies as a works contract, which is outside the jurisdiction of MSMED Act, leading to the Arbitrator's award being set aside....
The MSEFC lacks jurisdiction to adjudicate disputes arising from works contracts, which necessitate arbitration under traditional frameworks, not the MSMED Act.
The Facilitation Council lacks jurisdiction over disputes arising from works contracts under the MSME Act, and principles of natural justice must be adhered to in adjudicatory processes.
Works contracts cannot invoke the jurisdiction of MSEFC under the MSMED Act, necessitating arbitration under the Arbitration and Conciliation Act, thereby rendering MSEFC proceedings void.
The court upheld that statutory remedies under the MSMED Act take precedence over private arbitration agreements, affirming the Facilitation Council’s jurisdiction in disputes involving MSMEs.
The Council has jurisdiction to adjudicate disputes in cases of works contracts, even if there is an arbitration clause in the contract.
The MSMED Act operates as a special beneficial legislation, overriding the Arbitration Act in cases involving registered MSMEs, emphasizing exclusive jurisdiction of MSEFC for dispute resolution.
The applicability of the MSME Act to disputes arising from work contracts/agreements and the need for a sole arbitrator to adjudicate disputes arising from interlinked agreements related to the same ....
The jurisdiction for hearing arbitration matters must align with commercial dispute designations; an order from a court without proper jurisdiction is void.
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