The arbitral award was set aside for lack of reasoning and consideration of vital evidence, reinforcing the need for compliance with procedural requirements under public policy.

JUDGMENT

(Order of the Court was made by G.Jayachandran, J.)

Being aggrieved by non-payment of the sale consideration for the goods sold, the appellant, a supplier of steel materials to the respondent for the Dedicated Freight Corridor Corporation of India Limited (DFCCIL) project had approached the District-Level Micro & Small Enterprises Facilitation Council at Fatehgarh Sahib Punjab (hereinafter 'MSMED Council'), claiming a sum of Rs.59,42,986.21 is due and payable, along with interest. The claim petition before the MSMED Council claiming a sum of Rs.59,42,986.21 is primarily based on the alleged admission of the respondent in its email dated 12.05.2017.

2. The respondent, who participated in the proceedings before the MSMED Council, had made a counter-claim, stating that the goods supplied was not in tune with the specifications and were not delivered in time. Therefore, for breach of the terms of Letter of Intent (LOI), the respondent attempted to invoke the Performance Bank Guarantee (PBG). However, the claimant approached the Civil Court at Punjab seeking injunction against the invocation of the Bank Guarantee. The said application for injunction was dismissed after hearing both sides. Meanwhile, the 1^st respondent claims to have suffered financial loss to Rs.70,44,017/- had laid the claim petition before the MSMED Council under Section 18(1) of the MSMED Development Act, 2006. The said claim is not maintainable in view of dispute pending between the parties and in view of dispute resolution clause in the contract ended between the parties.

3. The MSMED Council, based on the pleadings, framed issues regarding jurisdiction, the counter-claim and the civil dispute between the parties regarding invocation of bank guarantee. It held that the claimant, being the supplier of the goods, have a right to make a claim before the MSMED Council in Punjab by taking recourse to the provisions under Sections 15, 16 & 17 of MSMED Act, 2006. After upholding the jurisdiction to decide the dispute, the Council rejected the counter-claim made by the respondent and passed an award for payment of Rs.1,99,29,166/- as principal along with interest on delayed payment up to 02.07.2024. Additionally, future interest also was awarded on the delayed payment from 03.07.2024, till the date of realisation.

4. Aggrieved by the above award passed by the MSMED Council, the respondent herein under Section 34 of the Arbitration and Conciliation Act, 1996 read with Section 19 of MSME Act, had preferred the Arb.O.P.(Comm.Division) No.10 of 2025 before the High of Madras contending that the award of the MSMED Council, Punjab, is liable to be set aside since the findings squarely falls within the grounds envisaged under Section 34 of the Arbitration and Conciliation Act.

5. Before the Learned Single Judge, the appellant herein had contended that the petition under Section 34 of the Arbitration and Conciliation Act, before the High Court of Madras is not maintainable. The supply was effected at Punjab and the award impugned passed by the MSMED Council at Punjab. Therefore, only the High Court having supervisory jurisdiction over the MSMED, Punjab, can entertain the Arbitration Original Petition. The appellant had also raised a preliminary objection that under MSMED Act. As per the provisions of Section 19 of MSMED Act, appeal preferred against the award, 75% of the award amount ought to have been pre-deposited. Whereas, in this case, the respondent herein has not deposited 75% of the award amount.

Further, it was contended by the appellant herein that there was clear admission by