The judgment established the overriding effect of the MSMED Act over the Arbitration Act, emphasizing the entitlement of the respondent to approach the HMSEFC for redressal of its grievance, and the permissibility of counter claim by the buyer.

JUDGMENT

Lisa Gill, J. (Oral) - This petition has been filed under Section 14 of the Arbitration and Conciliation Act (for short 'Arbitration Act') read with Section 151 CPC seeking termination of the mandate of the Sole Arbitrator.

2. It is submitted that the petitioner is a proprietorship firm engaged in manufacturing of corrugated boxes, packaging material and other material which is used in logistic industry for safe transportation of goods. Respondent is stated to be a supplier of plywood and other wooden material used in the manufacturing of corrugated boxes and other packaging material by the petitioner. Respondent claimed an outstanding amount qua the petitioner in respect of goods supplied by it to the petitioner in the year 2016. Claim was filed by the respondent before the Haryana Micro and Small Enterprises Facilitation Council (for short 'HMSEFC') claiming an amount of Rs. 14,01,505/-.

3. It is contended that the matter was referred for arbitration without any valid order being passed on conciliation proceedings under the Micro, Small and Medium Enterprises Development Act, 2006 (for short 'MSMED Act') Petitioner is stated to have received notice dated 08.06.2020 from the office of Sh. Satish Ahlawat, the Sole Arbitrator, asking the parties to appear before the Arbitrator on 20.06.2020 as he had been appointed Arbitrator by the HMSEFC. It is stated that the petitioner filed an application under Section 12 of the Arbitration Act seeking valid disclosure from the learned Arbitrator, copy of which is attached as Annexure P-2 and a specific objection was raised in the said application that there exists no clause for arbitration, therefore HMSEFC could not have referred the matter to the Arbitrator. Moreover, declaration in terms of Section 12 of the Arbitration Act, should be made by the Arbitrator. Said application was dismissed by the learned Arbitrator on 20.06.2020, Annexure P-3.

4. Present petition has thus been filed on the grounds that conduct of the Arbitrator is arbitrary and disclosure regarding independence and impartiality of the Arbitrator is imperative as per Section 12 of the Arbitration Act. It is further submitted that claim filed by the respondent-claimant is time barred as invoices are of the year 2016. Learned counsel for the petitioner also argued that Sectionl8 (3) MSMED Act, provides for referral of the dispute to any institution or centre or arbitration, therefore referral to the Sole Arbitrator is illegal. Furthermore, it is contended that learned Arbitrator was moving with the arbitration proceedings at a very fast pace, thus mandate of the Arbitrator should stand terminated.

5. This petition has been vehemently opposed by the respondent while submitting that petitioner is guilty of concealment of material facts. It is contended that respondent-claimant being duly registered under the MSMED Act had approached the HMSEFC for redressal of its grievances. Intimation of the same was duly conveyed vide order dated 25.09.2019 wherein petitioner was advised to pay the amount in question and to settle the dispute. It is thereafter that the HMSEFC on 26.02.2020 decided to refer the matter to the empanelled Arbitrator i.e., Sh. Satish Ahlawat, retired District and Sessions Judge. The said order, at no point of time has been challenged by the petitioner.

6. Learned counsel for the respondent further submits that after dismissal of petitioner's application under Section 12 and 13 of the Arbitration Act on 20.06.2020, present petition was filed on 13.07.2020. Petitioner's defence was struck off by the learned Arbitrator on 18.07.2020. Petitioner filed ARB No. 113 of 2020 under Section 37 of the Arbitration Act before the learned Additional District Judge, Gurugram, challenging order dated 18.07.2020 striking off petitioner's defence. Notice was issued in ARB No. 113 of 2020 for 31.07.2020, but no interim order was passed in petitioner's favour.

7. Petitioner, it is stated filed ARB No. 114 of 2020 i.e., another