Arbitration agreement requirement under MSMED law bars Section 11 appointment where the Facilitation Council has not commenced arbitration.

Section 18 of the Micro, Small & Medium Enterprises Development Act, 2006 applies the Arbitration and Conciliation Act, 1996 only after conciliation fails and the Facilitation Council itself takes up arbitration or refers the dispute to an institution or centre. The deeming fiction in Section 18(3) does not create an arbitration agreement before that stage. In the absence of an arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996, jurisdiction under Section 11, including Section 11(6)(c), cannot be invoked merely because the Council declined to act as arbitrator. The petition under Section 11 was therefore held not maintainable.

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Issues: Whether a petition under Section 11 of the Arbitration and Conciliation Act, 1996 was maintainable in the absence of a written arbitration agreement, where the dispute arose under Section 18 of the Micro, Small & Medium Enterprises Development Act, 2006 and the Facilitation Council had declined to take up arbitration.

Analysis: The statutory scheme of Section 18 of the Micro, Small & Medium Enterprises Development Act, 2006 shows that the provisions of the Arbitration and Conciliation Act, 1996 apply only after conciliation fails and the Council itself takes up the dispute for arbitration or refers it to an institution or centre. The deeming fiction in Section 18(3) operates only at that stage and does not create an arbitration agreement before arbitration is initiated under the provision. In the absence of an arbitration agreement as contemplated by Section 7 of the Arbitration and Conciliation Act, 1996, the jurisdiction under Section 11, including Section 11(6)(c), cannot be invoked merely because the Facilitation Council has not acted as arbitrator.

Conclusion: The petition under Section 11 was not maintainable and the issue was decided against the petitioner.

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