MSME statutory arbitration prevails over private clause where the supplier invokes the Council's jurisdiction and the claim remains live.

The statutory dispute-resolution mechanism under the Micro, Small and Medium Enterprises Development Act, 2006 was treated as prevailing over a private arbitration clause where a supplier invoked the Council's jurisdiction. The claim was found to remain live because the final bill had not been settled and the security deposit had not been refunded, so it was not barred by limitation on the pleaded facts. The Council was also held competent to proceed with conciliation and, if that failed, arbitration, as Sections 18 and 24 of the 2006 Act override inconsistent contractual arbitration arrangements. In consequence, the writ challenge failed.

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Issues: (i) Whether the supplier's claim was live and not barred by limitation; (ii) whether the Micro and Small Enterprises Facilitation Council had jurisdiction to arbitrate the dispute despite the existence of an arbitration agreement between the parties; (iii) whether the petitioners were entitled to relief.

Issue (i): Whether the supplier's claim was live and not barred by limitation.

Analysis: The claim arose from a continuing contractual relationship in which the final bill had not been settled and the security deposit had not been refunded. In the absence of material showing settlement of accounts or forfeiture of the deposit, the dispute remained subsisting. Limitation was treated as a mixed question of fact and law, and on the pleaded facts the claim could not be held time-barred.

Conclusion: The claim was held to be live and not barred by limitation.

Issue (ii): Whether the Micro and Small Enterprises Facilitation Council had jurisdiction to arbitrate the dispute despite the existence of an arbitration agreement between the parties.

Analysis: The statutory scheme of the Micro, Small and Medium Enterprises Development Act, 2006 confers a special right on a supplier to seek reference before the Council. Section 18 requires conciliation first and, if conciliation fails, authorises the Council or the designated institution to arbitrate the dispute. Section 24 gives overriding effect to Sections 15 to 23. Read with Section 2(4) of the Arbitration and Conciliation Act, 1996, the statutory arbitration mechanism prevails where there is inconsistency between private arbitration under contract and the forum created by the 2006 Act. The Council had already assumed jurisdiction by issuing conciliation notices before the private arbitrator was appointed.

Conclusion: The Council was held to have jurisdiction to arbitrate the dispute notwithstanding the arbitration agreement.

Issue (iii): Whether the petitioners were entitled to relief.

Analysis: In view of the findings on limitation and jurisdiction, the challenge to the Council's communication could not succeed.

Conclusion: The petitioners were held not entitled to any relief.

Final Conclusion: The writ petition failed, and the Council's statutory jurisdiction to proceed with the dispute was upheld.

Ratio Decidendi: Where a supplier invokes the statutory mechanism under the Micro, Small and Medium Enterprises Development Act, 2006, the Council's jurisdiction to conduct conciliation and, if necessary, arbitration prevails over a private arbitration clause to the extent of any inconsistency.

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