2017 (2) TMI 1557 - HC - Indian Laws

West Bengal Micro Small Enterprises Facilitation Council has jurisdiction to arbitrate disputes despite separate arbitration agreement

National Projects Construction Corporation Limited & Anr. Versus West Bengal State Micro Small Enterprises Facilitation Council & Ors.

National Projects Construction Corporation Limited & Anr. Versus West Bengal State Micro Small Enterprises Facilitation Council & Ors. - TMI Issues Involved:1. Is the claim of the third respondent liveRs.2. Does the Micro, Small and Medium Enterprises Development Act, 2006 supersede an existing arbitration agreement between partiesRs.3. To what relief, if any, are the petitioners entitled toRs.Issue-wise Detailed Analysis:1. Is the claim of the third respondent liveRs.The court examined whether the claims made by the third respondent were barred by the laws of limitation. The first petitioner had awarded a contract to the third respondent in August 1995, and the third respondent claimed that not all dues were settled, specifically pointing to a security deposit still held by the first petitioner. The court noted that the first petitioner did not claim that the accounts were settled or that the security deposit was forfeited. Therefore, the presence of the security deposit indicated an ongoing jural relationship, and the claim was considered live. The court concluded that the claim of the third respondent was not barred by limitation, thus answering the first issue in the affirmative.2. Does the Micro, Small and Medium Enterprises Development Act, 2006 supersede an existing arbitration agreement between partiesRs.The court analyzed the provisions of the Micro, Small and Medium Enterprises Development Act, 2006, particularly Section 18, which allows disputes to be referred to the Micro and Small Enterprises Facilitation Council. The Act contains a non-obstante clause, allowing the Council to arbitrate disputes notwithstanding any existing arbitration agreement. The court highlighted that the Act of 2006 mandates statutory arbitration, which overrides any pre-existing arbitration agreement. The court noted that the Act of 2006 provides a statutory right to make a reference to the Council, which supersedes the arbitration agreement between the parties. The court concluded that the Council has jurisdiction to arbitrate disputes under the Act of 2006, even if an arbitration agreement exists, thus answering the second issue affirmatively.3. To what relief, if any, are the petitioners entitled toRs.Given the court's findings on the first two issues, the petitioners were not entitled to any relief. The court dismissed the writ petition, holding that the Council's jurisdiction to arbitrate the disputes was valid and that the petitioners' challenge to the Council's actions was unfounded. Consequently, the court dismissed the writ petition and the interim application seeking an extension of the interim order, with no order as to costs.