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2025 Supreme(Online)(Del) 3131
IN THE HIGH COURT OF DELHI AT NEW DELHI
Sachin Datta, J
MAHANAGAR TELEPHONE NIGAM LTD – Appellant
Versus
MICRO AND SMALL ENTERPRISE FACILITATION COUNCIL AND OTHERS – Respondent
W.P.(C) 115/2025
For the Appellants/Petitioners: Mr. Chandan Kumar, Mr. Vikram Sharma
For the Respondents: Dr. Anurag Kr. Agarwal
The court affirmed that jurisdictional issues regarding arbitration under the MSMED Act should be challenged under the Arbitration Act, not through Article 226.
Headnote:(A) Micro, Small and Medium Enterprises Development Act, 2006 - Section 18 - Arbitration - Jurisdiction of the arbitrator - The petition contests the arbitral award, claiming it exceeds the scope of the reference to arbitration - Respondent argues the claim was broader than a single invoice, and the arbitrator had jurisdiction over the work order. (Paras 3-9),
(B) Jurisdiction - The court holds objections regarding jurisdiction were appropriately dealt with by the arbitrator and the petition under Article 226 is not maintainable when alternative remedies exist under the A&C Act. (Paras 10-14)
Facts of the case:
The petitioner challenges an arbitral award for jurisdictional overreach by the arbitrator beyond the original reference concerning a payment for a specific invoice.
Findings of Court:
The court concludes that jurisdiction issues raised were properly addressed by the arbitrator, ruling the petition under Article 226 inappropriate.
Issues: Main issues include the expansion of claim scope beyond the initial invoice and the jurisdiction of the arbitrator.
Ratio Decidendi: The arbitrator's scope includes all claims arising from the work order, not limited to a specific invoice, and the judicial review under Article 226 is unwarranted due to available statutory remedies.
Result: The petition is dismissed with liberty to seek remedies under the A&C Act.
| Table of Content |
|---|
| 1. petitioner contests arbitral jurisdiction. (Para 3 , 4) |
| 2. arbitrator expanded claim beyond invoice. (Para 6 , 7) |
| 3. court rules against writ petition maintainability. (Para 10 , 12 , 13) |
CORAM:
HON'BLE MR. JUSTICE SACHIN DATTA SACHIN DATTA, J. (Oral CM APPL.437/2025 (Exemption)
1. Allowed, subject to all just exceptions.
2. Application stands disposed of.
3. The present petition assails an arbitral award dated 15.10.2024 passed pursuant to reference to arbitration under Section 18 of the MSMED Act 2006. An arbitral tribunal comprising of a sole arbitrator, was constituted pursuant to a communication dated 04.11.2022 addressed to the Coordinator, Delhi International Arbitration Centre (DIAC) which, inter alia, reads as under:
“In accordance with the provisions of the said Act, MSEFC, District North West took up the case for conciliation proceedings in its meeting held 011 18.10.2022 and has arrived at the conclusion that both the parties do not seem to be interested for conciliation towards the disputed amount. It is felt that conciliation is not possible in this case. Therefore, the Council decided to terminate the conciliation proceedings and refer this case u/s 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 to the Delhi International Arbitration Center (DIAC) for initiating proceedings as per the Arbitration and Conciliation Act, 1996.”
4. The learned sole arbitrator appointed by the DIAC duly conducted the arbitral proceedings and rendered an arbitral award dated 15.10.2024.
5. The present petition has been filed on the premise that the learned arbitrator has exercised jurisdiction beyond the scope of reference. It is submitted that the scope of reference to arbitration was confined only to one running bill of the respondent no.3, whereas the scope of the arbitral proceedings was expanded much beyond the scope of reference by virtue of the prayer/s made in the statement of claim filed before the arbitral tribunal.
6. Learned counsel for the petitioner submits that an appropriate objection in this regard was taken before the learned sole arbitrator and also duly recorded in paragraph 109 of the award which reads as under:
“109. It is submitted by the Respondent that reference dated 14.3.2022 made by the Claimant under section 18 MSME Act listed only one invoice bearing No. K.N20 15-16, dated 08.08.2018 for Rs. 55,80,311/-, the said case having been registered by MSEFC as case No. DLl061M1NWC/00724 and referred to DIAC by letter dated 04.11.2022. It is stated that the Claimant has not filed in these proceedings any other reference to the MSEFC to include any other invoice. The contention is that this being a statutory arbitration, inclusion of any other claim/invoice in these proceedings, which was not the subject matter of 14.03.2022 reference by the Claimant, is/are barred. It is also submitted that even the 14.03.2022 reference for invoice No. K.N20 15-16, dated 8.8.2018 for Rs. 55 80 311/- was barred because on the date of the said Invoice the Claimant was not registered under the MSME Act, such event happening later on 14.11.2018.”
7. It is contended that the arbitral award is liable to be set aside in these proceedings as the arbitrator was completely devoid of the jurisdiction under the MSMED Act, 2006 to adjudicate the disputes that were raised in the arbitral proceedings.
8. The aforesaid objection/s of the petitioner have been squarely dealt with in the arbitral award in Paragraph 121, which reads as under:
“121. But, the argument of the Respondent that the Claimant had taken to MSEFC, by its petition dated 14.03.2022 (Ex. C-99), the dispute concerning only the 1st RA bill, dated 08.08.2018 of Rs. 55,80,31 1/- (Annexure - A - 107) or that it is only the said matter which formed the subject matter of the case registered by MSEFC in which notice was issued to the parties on 02.05.2022 (Ex. C-100) for conciliation under section 18(2) of MSME Act is fallacious. It is noted that the appli
