Statutory MSMED arbitration overrides contract terms, fixing the seat at the Facilitation Council's place and defeating Delhi jurisdiction.

A petition under Section 34 of the Arbitration and Conciliation Act challenging an award of a Micro and Small Enterprises Facilitation Council was held not maintainable before the Delhi High Court because the statutory reference arose under Section 18 of the MSMED Act, 2006. The Court held that, where no separate arbitration clause fixed a different seat, the MSMED Act's statutory mechanism overrides inconsistent contractual terms, and the seat follows the Facilitation Council conducting the arbitration. As the Council acted at Nagpur, territorial jurisdiction lay there, not in Delhi, and the petition was dismissed as not maintainable.

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Issues: Whether a petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an award of the Micro and Small Enterprises Facilitation Council was maintainable before the Delhi High Court, or whether the seat of arbitration was at Nagpur so as to exclude the Court's territorial jurisdiction.

Analysis: The dispute arose from proceedings under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006. The purchase order contained a Delhi jurisdiction clause but did not contain an arbitration clause. The Court held that the contractual reasoning accepted in earlier authority, where an arbitration clause and jurisdiction clause existed, could not be applied to a case where the reference to the Facilitation Council arose purely under the MSMED Act. The Court further relied on the Supreme Court's interpretation of Chapter V of the MSMED Act, which gives overriding effect to Section 18 and makes the statutory mechanism prevail over inconsistent contractual arrangements and over the Arbitration Act once conciliation fails. On that basis, the location of the Facilitation Council and the conduct of the arbitration at Nagpur fixed the seat in Nagpur.

Conclusion: The petition was not maintainable before the Delhi High Court and was dismissed as not maintainable.

Ratio Decidendi: Where a dispute is referred to a Facilitation Council under Section 18 of the MSMED Act, 2006 without a separate arbitration clause conferring a different seat, the statutory scheme overrides the contract and the seat follows the Council conducting the arbitration, determining territorial jurisdiction accordingly.

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