Arbitration petition dismissed due to waiver of objections, MSME Act does not override existing agreements

The court dismissed the arbitration petition, ruling that the petitioner had consented to extending the arbitration proceedings' time and waived the right to object by participating without timely objections. The court affirmed that the MSME Act, 2006, does not override existing arbitration agreements, and the proceedings remain governed by the Arbitration and Conciliation Act, 1996. Consequently, the arbitrator's mandate was deemed not terminated, allowing the arbitration to proceed.

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Issues Involved:
1. Termination of the mandate of the arbitrator under Section 14 of the Arbitration and Conciliation Act, 1996.
2. Jurisdiction of the Micro and Small Scale Enterprises Facilitation Council under the Micro, Small and Medium Enterprises Development Act, 2006.
3. Validity of the continuation of arbitration proceedings beyond the stipulated time period.
4. Waiver of the right to object to the continuation of arbitration proceedings.

Detailed Analysis:

1. Termination of the Mandate of the Arbitrator:
The petitioner sought a declaration that the mandate of the arbitrator had terminated under Section 14 of the Arbitration and Conciliation Act, 1996, and that the petitioner could approach the Micro and Small Scale Enterprises Facilitation Council under the MSME Act, 2006. The petitioner argued that the arbitrator failed to make an award within the stipulated time of two years, extendable by one year with mutual consent, as per Clause 22(g) of the contract. The petitioner did not consent to any extension beyond this period.

2. Jurisdiction of the MSME Facilitation Council:
The petitioner, registered as a Micro Enterprise under the MSME Act, 2006, contended that the disputes should be adjudicated by the MSME Facilitation Council. The petitioner relied on Section 24 of the MSME Act, which provides that the provisions of Sections 15 to 23 of the MSME Act have an overriding effect over any other law. The petitioner argued that the MSME Act, being a special enactment, would override the provisions of the Arbitration Act, 1996.

3. Validity of Continuation of Arbitration Proceedings:
The respondent argued that the petitioner had participated in the arbitration proceedings without raising any objection about the expiry of the arbitrator's mandate. The respondent also contended that the petitioner had consented to extend the time for arbitration during a meeting held on 4.4.2011, as recorded in the minutes of the meeting. The arbitrator and the respondent's representative confirmed this consent in their affidavits.

4. Waiver of the Right to Object:
The court considered whether the petitioner had waived the right to object to the continuation of the arbitration proceedings by participating without raising timely objections. The court referred to the judgment in *Jayesh H. Pandya vs. Subhtex India Ltd.*, which held that a party must make its intention known at the earliest opportunity if it intends to assert a rigid adherence to the time prescribed by the arbitration agreement. The court also referred to the judgment in *Mascon Multiservices & Consultants Pvt. Ltd. vs. Bharat Oman Refineries Ltd.*, which held that when parties raise questions as to jurisdiction, it would be legitimate to infer that they have given a go-by to the stipulation as to the time within which the award is to be made.

Judgment:
The court dismissed the arbitration petition, holding that:
- The petitioner had consented to the extension of time for the arbitration proceedings during the meeting held on 4.4.2011.
- The petitioner had waived the right to object to the continuation of the arbitration proceedings by participating without raising timely objections.
- The provisions of the MSME Act, 2006, do not negate or render an existing arbitration agreement ineffective. The arbitration proceedings under the existing agreement would continue to be governed by the Arbitration and Conciliation Act, 1996.

The court concluded that the mandate of the arbitrator had not terminated, and the arbitration proceedings could continue.

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