IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION ARBITRATION PETITION NO. 208 OF 2023 M B Sugars & Pharmaceuticals Private Limited …Petitioner Versus Micro Small Enterprises Facilitation Council & Anr …Respondents Mr.Sagar Kasar a/w Vivekanand Krishnan, Chaitali Bhogle &

Rishabh Tiwari i/by Amol Wagh, for the Petitioner.

None for Respondents.

CORAM : SOMASEKHAR SUNDARESAN, J.

DATE : JUNE 18, 2025 Oral Judgement:

1. This is a Petition filed under Section 11 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act ”) in view of Respondent No.1, Micro Small Enterprises Facilitation Council, Nashik (“MSEFC, Nashik”), not having initiated conciliation proceedings as a precursor to arbitration in terms of Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (“MSME Act”). The Petitioner had executed a purchase order June 8, 2018 and supplied goods pursuant to a purchase order dated June 8, 2018 (page 57), which is a purchase order placed on the Petitioner by Respondent No.2. Various supplies Digitally signed by ASHWINI ASHWINI JANARDAN JANARDANVALLAKATI VALLAKATIDate:

2025.06.24 +0530 were made and invoices were raised, and it is the case of the Petitioner that the amounts payable under the invoices remain unpaid.

2. Consequently, a reference was made to the MSEFC, Nashik on April 24, 2023. It is the case of the Petitioner that the MSEFC, Nashik has not acted at all. This Application has been filed under Section 11 of the Arbitration Act on the premise that the arbitral institution which is meant to appoint the arbitrator has failed to do so. Under Section 18 of the MSME Act¹, an arbitration agreement as envisaged in Section 7 of the Arbitration Act is statutorily created between the enterprise covered by the MSME Act and its contractual counter-party. All provisions of the Arbitration Act would then apply to such arbitration agreement in terms of Section 18 of the MSME Act. Therefore, an arbitration agreement is statutorily in existence between the Petitioner and Respondent No.2. Therefore, the failure of Respondent No.1 i.e MSEFC, Nashik to act by taking up the processes required of it under the MSME Act enables the jurisdiction of this Court under Section 11(6) of the Arbitration Act being legitimately invoked.

1 The current version of Section 18(4) is in substance similar to Section 18(3) as it

existed prior to September 14, 2023, when Section 18 was amended

3. A plain reading of these three provisions, namely, Section 18 of the MSME Act, coupled with Section 7 and Section 11 of the Arbitration Act, would make it clear that this Court would have jurisdiction to appoint an arbitrator in the event of a failure by the MSEFC, Nashik. Section 7 of the Arbitration Act creates an arbitration agreement. Section 18 requires an institution (the MSEFC, Nashik) to appoint an arbitrator. Failure to do so, brings the matter within the jurisdiction of Section 11 of the Arbitration Act.

4. Consequently, no useful purpose would be served in keeping this Petition pending any further. This matter has remained pending for two years after it was filed in this Court. I am satisfied that the approach of this Court has been made only after the failure by the MSEFC, Nashik to appoint an arbitrator. It has not even initiated statutory mediation before arbitration.

5. In these circumstances, it was put to the Petitioner to ascertain whether any conciliation efforts were undertaken independently of the MSEFC, Nashik between the Petitioner and Respondent No.2. In response, Learned Counsel for the Petitioner submits that in fact there is no dispute about the payment obligation, inasmuch as cheques were issued on behalf of Respondent No.2 but have been dishonoured. Consequently, I am satisfied that a case has been made out to directly appoint an arbitrator, particularly, since the MSEFC, Nashik has not acted on its statutory mandate of initiating a process for the appointment of an arbitrator.

6. Toward this end, this vi