The exclusive jurisdiction of the court as per the arbitration agreement revives post-award, and failure to follow statutory procedures under the MSMED Act warrants the award's annulment.

ORDER :

1. This petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996, (in short “the Act”) against the award passed by the Micro and Small Enterprises Facilitation Council, Jaipur, dated 17.03.2020, made in Case No.RJ/02/S/00630 arising out of an agreement in Tender No.CGMP/CH1/MM/NIT-1/2014-15 dated 19.05.2014.

2. The 2^nd respondent was the claimant before the 1^st respondent Council.The petitioner floated a tender for supply of PLB pipes and accessories. The 2^nd respondent participated in the said tender and was the L1 bidder. Advance purchase order was placed on the 2^nd respondent and the 2^nd respondent was expected to complete the supplies within a time frame. The time was extended twice, due to various reasons and the supplies was ultimately completed after 144 days against 57 days allotted by the petitioner. The petitioner chose to impose liquidated damages contemplated under Clause 16.2(a) of Section 5 Part A of the tender, for the delayed supplies, instead of resorting to forfeiture of performance security or termination of the contract for the default committed by the 2^nd respondent.

3. The liquidated damages were deducted from the running bills. A notice dated 13.11.2018 was received from the 1^st respondent Council, intimating the petitioner that the 2^nd respondent has filed a petition to resolve the dispute regarding delayed payment and recovery of liquidated damages from the 2^nd respondent. The 1^st respondent Council, through award dated 17.03.2020, directed the petitioner to pay a total sum of Rs.1,94,34,486/- along with monthly compound interest of three times per month as per RBI current interest. Aggrieved by the same, the present petition has been filed by M/s.Bharat Sanchar Nigam Limited (BSNL).

4. When this petition came up for final hearing on 20.01.2026, this Court after hearing both sides, passed the following order:

“1. This Court heard Mr.G.Sankaran, learned Senior Counsel appearing on behalf of the petitioner and Mr.Jeevanhari, learned counsel appearing on behalf of the 2nd respondent.

2. In the case in hand, there is no dispute with regard to the fact that the award under challenge has been passed by the Micro and Small Enterprises Facilitation Council, Jaipur, Rajasthan. The 2nd respondent had invoked jurisdiction of the said Council on the ground that the 2nd respondent had supplied from Jaipur, Rajasthan. Even though the seat of arbitration has been agreed to be Chennai under the agreement, the 2nd respondent had a statutory right under the Micro, Small and Medium Enterprises Development [MSMED] Act, 2006 to invoke the jurisdiction of the 1st respondent Council.An award has also been passed by the 1st respondent on 17.03.2020.

3. This Court raised the issue of territorial jurisdiction to the learned Senior Counsel appearing on behalf of the petitioner on the ground that the award passed by the 1st respondent does not fall within the jurisdiction of this Court and therefore, the present petition itself is not maintainable.

4. In reply to the above submission, the learned Senior Counsel relied upon the order passed by the Apex Court in Civil Appeal No.4463 of 2025 dated 28.03.2025 where the same parties were agitating against a different award. The Apex Court while passing the order remitted the matter back to the Division Bench of this Court to decide the case on merits except the issue of territorial jurisdiction. It was therefore contended that the 2nd respondent had never questioned the territorial jurisdiction of this Court and the present case can be heard on merits.

5. On a careful reading of the order