Micro and small enterprises may opt for arbitration even if the MSMED Act applies, but medium enterprises are not governed by its provisions.

CAV ORDER

1. The Petitioner is before the Court seeking for the following relief:

“To appoint an Arbitrator as per clause 11.10 of the Agreement from the Panel of Arbitrators from the Bengaluru Arbitration Centre to resolve the dispute arising out of the Agreement dated 21.02.2023 at Annexure-B between the parties, in the interest of justice and equity.”

2. The Petitioner and Respondent having entered into a ‘Bizom Customer Agreement’. The said Agreement is governed by clause 11.10, which is reproduced hereunder for easy reference:

11.10. Dispute resolution: In the event of any dispute arising out of or in relation to this Agreement, the Parties shall try and resolve the dispute amicably in good faith through negotiations. In case the dispute is not resolved within a reasonable time, the Parties agree to submit the same for arbitration. The arbitration proceedings shall be governed by the provisions of the Arbitration and Conciliation Act , 1996 and its amendments thereafter by a sole arbitrator to be appointed by mutual Agreement between the Parties. Arbitration proceedings shall be conducted in English language and the place, venue and seat shall be at Bengaluru. The award of the arbitration proceedings shall be final and binding on the Parties.

3. There being a dispute between the parties, the Petitioner invoked the arbitration clause vide notice dated 12.12.2025 and nominated the arbitrator, same not having been accepted by the Respondent, contending that there are no disputes which are required to be arbitrated and no amounts are required to be paid by the Respondent, the Petitioner has filed the above petition.

4. Notice having been issued, the Respondent entered an appearance and filed its objections.

5. The submission of Sri. Christopher, learned counsel for the Petitioner, is that,

5.1. The ‘Bizon Customer Agreement’ is governed by an arbitration clause; disputes having arisen, the matter will be required to be referred to arbitration as per clause 11.10, which is extracted hereinabove.

5.2. He relies upon the decision of the Bombay High Court in Porwal Sales -v- Flame Control Industries , (2019 SCC Online Bom 1628), more particularly para 22 and 28 thereof, which are reproduced hereunder for easy reference:

22. Now coming to the next submission as advanced on behalf of the Respondent on the MSMED Act. Learned counsel for the Respondent has argued that in view of the provisions of Section 18 of the MSMED Act, this Court would not have jurisdiction to entertain this Petition under Section 11 of the Arbitration and Conciliation Act . In support of this submission, learned counsel for the Respondent has placed reliance on the decision of the Division Bench of the Allahabad High Court in Paper & Board Convertors through partner Rajeev Agarwal v. U.P. State Micro and Small Enterprise²; in Bharat Heavy Electricals Ltd. v. The Micro and Small Enterprises Facilitations Centre of the learned Single Judge of the Delhi High Court³; and in Welspun Corporation Ltd. v. Micro and Small, Medium Enterprises Facilitation Council, Punjab of the learned Single Judge of Punjab and Harayana High Court⁴. The contention as urged on behalf of the Respondent referring to these decisions is that (4) of MSMED Act creates a bar on the jurisdiction of this Court to entertain any application under Section 11 of the Act and/or that the arbitration agreement between the parties stands obliterated, extinguished and superseded by the provisions of sub-section (4) of of MSMED Act.

23. To appreciate this submission as urged on behalf of the Respondent, Sections 17 and 18 of MSMED Act is required to be noted, which reads thus:

“Section 17 - Recovery of amount due

17. For any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the amount with interest thereon as provided under section 16.

Section 18 - Reference to Micro and Small Enterprises Facilitation Council

(1) Notwithstanding anything contained in any other law for the time being